THE CRUISE REVIEW PUBLISHED MARCH 2013
CONTENTS
EXECUTIVE SUMMARY 3 CRUISE FANS STAY LOYAL 4 NORWAY NOW HOTTER THAN CARIBBEAN FOR CRUISING BRITS 6 UK PORTS SET FOR MILLION CRUISE PASSENGER EMBARKATIONS 8 NO INFLATION FOR CRUISE-BUYERS 10 OFFERS DRIVE LATER BOOKING 12 NORTH:SOUTH CRUISE DIVIDE WIDENS IN 2012 13 NEW SHIPS AND MORE INCLUSIVE PRICES DRIVE RIVER BOOM 14
EXECUTIVE SUMMARY 2012 UK CRUISE MARKET
Despite a double dip recession and the Concordia accident, ocean cruise passenger numbers increased Norwegian fjords trump Caribbean sun, sea and sand to become the hottest destination for cruising Brits Flight costs, inflated by Air Passenger Duty, prompt a fall in flycruise holidays with cruises departing from the UK now on the verge of catching up with flycruises for first time The number of overseas and UK passengers embarking at British ports has pushed the total to just short of the million mark Cruising continues to account for one in every eight of all package holidays taken More than half of all passengers took more than one cruise during the year - significantly more than in 2011 Sales of summer ultra-luxury cruises increased 30% A record 52 UK ports were visited by cruise ships Strong demand for European destinations boosts river cruise market by 14%
2
3
“
CRUISE FANS STAY LOYAL
“People are getting back to their normal buying patterns. Purchases, like cruises, that went from being a must-have to being an optional luxury are back to being a must-have. 2013 has the potential to be a good year for cruise sales. Many people went without a second holiday or even a first one in 2012 and, having suffered such bad weather last summer, they will not want to miss out this year, too. When I look at the price of cruise holidays compared to the 70s and 80s - the value now is fantastic” Phil Nuttall,The Cruise Village
More than 1.7m British passengers took an ocean cruise holiday in 2012, a record which represented a major achievement in a year which saw the Concordia tragedy, which impacted bookings in the immediate aftermath, and a UK economy which dipped back into recession. The percentage of first-time cruisers did fall from 40% to 36% - but this also reflected the willingness of regular cruisers to show their confidence in the cruise industry’s safety record.
They were also canny enough to recognise that the inevitable wave of special offers used by the industry to stimulate the market post-Concordia gave them an opportunity to book multiple cruises. More than half (54%) of cruise passengers in 2012 took two or more cruises compared with just 42% in 2011. As this increase was led by the regular cruising fraternity, it had the inevitable effect of pushing up the average age of cruise passengers from just under to just over
2 First Time Cruisers as % of UK Market
1 UK Ocean Cruise Market
Year
Passengers (000s)
%
2006
36
2007
38
2008
32
2009
29
2010
33
2011
40
The UK’s economic woes affected the entire travel sector. This meant that the upturn in 2011 in all foreign holidays turned out to be a false dawn with preliminary figures for 2012 suggesting a small decline.
However, a marginal increase in cruising’s share of the travel market means that it continues to account for one in eight of every foreign package holiday bought and now represents one of 21 foreign holidays compared with 1 in 22 in 2011.
4 UK Cruise Market Age Analysis % passengers Year
Up to 26
26-34
35-44
45-54
55-64
65+
Average Age
2002
7
6
10
20
25
33
54.8
2003
8
5
9
18
25
35
54.6
2004
9
5
10
19
26
32
54.1
2005
10
5
9
18
25
33
53.5
2006
8
5
11
21
27
27
54.3
2007
8
4
9
19
27
31
53.2
2008
8
4
8
18
27
33
53.7
2009
7
4
8
18
28
35
55.6
2010
9
4
9
19
27
33
54.3
2011
9
4
9
19
26
35
55.6
2012
8
4
7
18
27
37
56.1
Source: PSA/IRN Research
2001
776
2.9
2012
2002
820
5.7
Source: PSA/IRN Research
2003
964
17.4
2004
1,029
6.7
2005
1,071
4.1
2006
1,204
12.4
2007
1,335
10.9
Year
1
2
3
4
5
6+
2001
2008
1,477
10.5
2008
50
32
11
4
2
2
2008
2009
1,533
3.8
2009
38
35
15
5
2
4
2009
2010
1,622
5.8
2010
43
33
12
5
3
6
2010
2011
1,700
4.8
2011
58
27
9
2
1
1
2011
2012
1,701
0.06
2012
46
30
14
4
2
2
2012
Source: PSA/IRN Research
4
% change
Year
56 with the 65+ generation increasing its share by two percentage points to 37% - the highest level for a decade.
36
5 Ocean Cruising’s Share of Foreign Holidays Market From The UK 3 UK Passengers Booking Multiple Cruises Annually Cruises taken in last year (%)
Source: PSA/IRN Research
Year
Foreign Holidays (000s)
Foreign Inclusive Holidays/tours (000s)
Ocean Cruise Holidays** (000s)
Ocean Cruises’ share of inclusive foreign holidays
Ocean cruises’ share of all foreign holidays
38,670 45,531 38,492 36,442 36,819 36,279*
20,631 17,914 14,507 14,257 14,740 14,463*
776 1,477 1,533 1,622 1,700 1,701
3.8% 8.3% 10.6% 11.2% 11.5% 11.8%
2.0% 3.3% 4.0% 4.5% 4.6% 4.7%
* Estimated ** Includes Republic of Ireland Source: IRN Research; International Passenger Survey Crown Copyright 2013
5
NORWAY NOW HOTTER THAN CARIBBEAN FOR CRUISING BRITS
The high air cost within a Caribbean flycruise package, which has been controversially inflated by the Air Passenger Duty element, is clearly deterring some UK holidaymakers. But the Caribbean’s loss has not only been a gain for Northern Europe but also for the Atlantic Islands (Canaries plus Madeira) which are enjoying a renaissance in popularity with a 24% increase last year.
A sea-change in British cruise passenger tastes is taking place with that aspirational choice of a sunshineladen Caribbean cruise now losing out to the more traditional appeal of the Norwegian fjords. In 2012, 197,000 passengers booked a cruise to Norway compared with the 189,000 who chose the Caribbean (including Bermuda itineraries).
The 9% drop in Mediterranean cruise passengers is more likely to be a one-off for what remains the number one choice for UK cruise fans. A decade of impressive growth saw cruises to the Mediterranean more than double (+130%) to 767,000 in 2011. The 2012 fall-back is mainly due to the impact of the Concordia accident at the beginning of that year.
As a whole Northern Europe, including the Baltic, enjoyed a 29% increase to 443,000 UK passengers while demand for the Caribbean dropped 21%.
6 Destinations Booked by UK Passengers (000s)
Two other trends also accelerated in 2012. One was for cruises from UK ports increasingly to outsell flycruises. Just five years earlier there was a 65:35 split in favour of flycruises but in 2012 this had dropped to almost level-pegging at 52:48. The Caribbean downturn was a major factor as overall flycruise holidays fell 6% while the number of British passengers choosing to begin their cruise in the UK increased 9%.
The second accelerating trend is the popularity of world cruises, both the full voyage and also the shorter sectors which are marketed as exotic cruises in their own right. These attracted 29,000 passengers last year - a 14% increase on 2011, a rise which means that numbers have more than trebled in less than a decade.
7 UK Port Cruises Vs Fly Cruises % growth
UK Port Passengers (000s)
% share
Fly Cruise Passengers (000s)
% share
Destination
2001
2008
2009
2010
2011
2012
% change
Year
Passengers (000s)
Mediterranean
334
606
592
697
767
698
(9)
2007
1,335,000
11.3
467,000
35.0
867,000
65
Northern Europe
98
247
296
303
342
443
29
2008
1,477,000
10.2
557,000
37.7
920,000
62.3
Caribbean
146
255
275
272
238
189
(21)
2009
1,533,000
3.8
594,000
38.8
939,000
61.2
Atlantic Islands
77
108
102
98
116
145
24
2010
1,622,000
5.8
653,000
40.3
969,000
59.7
Other Areas
121
261
268
252
237
226
(5)
2011
1,700,000
4.8
729,000
42.9
971,000
57.1
Total
776
1,477
1,533
1,622
1,700
1,701
0
2012
1,701,000
0.06
807,000
47.6
894,000
52.4
Source: PSA/IRN Research
6
With the cost of air travel only likely to increase over the next few years, this period should also see cruises leaving UK ports overtake flycruises in popularity - a significant shift given cruising’s history of most winter passengers preferring to fly to the sun to join their cruises.
There has also been a reduction in the number of UK cruises to the Mediterranean in favour of shorter itineraries to the near Continent.
Source: PSA/IRN Research
7
UK PORTS SET FOR MILLION CRUISE PASSENGER EMBARKATIONS
The fourth double digit increase in cruise passenger embarkations in just seven years has put UK ports on course to hit the million mark this year (2013). The 10% growth to 962,000 in 2012 comprised 78,000 extra UK and 6,000 additional overseas passengers and there was a similar (11%) increase in passengers visiting UK ports during their cruises.
This brought the total of passengers visiting British ports during their cruise to 723,000, double the 2007 figure. The number of UK ports receiving cruise calls also increased to a record 52.
8 Embarkations at UK Ports (000s) Year
2006
2007
2008
2009
2010
2011
2012
Total Embarkations
576
591
714
733
833
878
962
% Increase
15
3
21
3
14
5
10
UK Passengers
451
460
557
594
653
729
807
Overseas passengers
125
124
157
139
180
149
155
% share of overseas
22
21
22
19
22
17
16
Source: PSA/IRN Research
9 Port of Call Passengers at UK Ports (000s) Year
2006
2007
2008
2009
2010
2011
2012
Passengers
382 19 50
365 (4) 46
420 15 38
448 7 43
563 26 48
651 16 50
723 11 52
% change Ports Visited Source: PSA/IRN Research
8
9
NO INFLATION FOR CRUISE-BUYERS
“
“People will pay for customer service and knowledge. When you’re booking a luxury cruise, I don’t think a discount really comes into the equation very much. We sell lots of high-end cruises and that part of the market for the Caribbean has not been impacted by the higher airfare. Some of the TV advertising by the cruise lines is brilliant and is increasing the interest from families.” Julie Gibson, Midcounties Co-operative Travel
Everything else on the retail price index may be costing more every year but UK holidaymakers who bought cruises in 2012 were paying less than they did seven years earlier in 2005. With average durations varying year-on-year, the most accurate price comparison for cruise holidays are the daily rates and these show that cruises cost an average £128 per day in 2012 - £4 lower than in 2005. The average price paid for a 2012 cruise fell by £46 to £1,388 with nearly half (47%) of all cruises sold costing less than £1,000. The arrival of new, larger ships in the sector is helping ultra-luxury cruises increase their share of the market with their 10% increase in 2012 meaning that the sector has increased sales 54% since 2006 – ahead of an overall industry increase of 42%.
10 UK Market Cruise Per Diems
Value for money remained by far and away the reason passengers chose to book a cruise holiday - nearly three times as important as any other reason for booking, with “special offers” moving into joint second place alongside service and on-board atmosphere.
12 Ultra-Luxury Cruise Passengers
13 Price (£) Trends In UK Cruise Market
Year
% 500
% 5011,000
% 1,001 2,000
% 2,001 2,500
% 2,501 5,000
% 5,000+
Year
Summer
Winter
Total
% of all cruises
2006
12860
5655
18515
1.5
2001
19
22
37
7
9
6
2007
13816
7552
21368
1.6
2002
14
29
34
9
10
5
2008
13238
6427
19665
1.3
2003
11
30
34
10
12
3
2009
14710
7960
22670
1.5
2004
15
25
40
8
9
3
2010
16125
7899
24024
1.5
2005
15
27
41
8
6
1
2011
15371
10498
25869
1.5
2006
13
21
38
11
12
2
2012
20057
8393
28450
1.7
2007
12
26
42
10
8
2
Source: PSA/IRN Research Included Crystal, Compagnie du Ponant, Hapag-Lloyd, Hebridean, Regent, Seabourn, Seadream, Silversea
2008
11
24
40
11
11
2
2009
12
24
37
10
13
2
2010
14
26
38
10
12
2
2011
15
27
37
9
11
2
2012
13
34
38
7
6
2
There was a drop in the influence of allinclusive pricing and drinks packages on booking decisions but the wave of such offers put in place for 2013 suggests that these might rate much higher in this year’s survey.
Source: PSA/IRN Research
14 UK Passengers - Reasons* For Choosing Their Last Cruise
11 Average Revenue (£) per UK Passenger
Reasons
2009 %
2010 %
2011 %
2012 %
Price/value for money
68
66
67
62
Special Offer
25
19
17
24
Service on-board
--
--
29
24
On-board atmosphere/service
40
36
26
24
Dining
33
32
26
23
Facilities on board
--
--
25
21
Year
£
Year
Summer
Winter
Year
Special Occasion
18
20
20
18
2005
£132
2005
1267
1222
1253
Loyalty membership benefits
17
17
13
18
2006
£130
2006
1196
1524
1291
All-inclusive nature of package
--
24
19
17
2007
£137
2007
1270
1480
1334
Entertainment
17
15
16
15
2008
£135
2008
1313
1647
1409
Cabins and public rooms
30
24
15
13
2009
£120
2009
1238
1532
1330
All-inclusive drinks package
n/a
4
11
7
2010
£130
2010
1323
1629
1421
Cruise themes
7
6
5
5
2011
£132
2011
1331
1729
1434
Pre-post land stays
5
5
3
4
2012
£128
2012
1313
1573
1388
Maiden Voyage
2
2
1
1
Source: PSA/IRN Research
10
But there is little doubt that it has been the value-pricing of main-market companies that has been the principle reason cruising has been able to maintain its market share.
Source: PSA/IRN Research
* Asked to select three principal reasons Source: UK Cruise Survey 2012 (IRN Research)
11
OFFERS DRIVE LATER BOOKING
More than one in three passengers are now booking their cruises within three months of departure, reversing a decade-long trend towards earlier bookings. In 2012, 36% booked late - the same as in 2002 - but that proportion had previously dropped to as low as 17% in the intervening years.
NORTH:SOUTH CRUISE DIVIDE WIDENS IN 2012
This accelerating trend is the obvious result of the tactical promotional pricing the cruise lines had to employ in the difficult trading year that 2012 turned out to be. They have responded with a series of incentives including guarantees that earlybookers will benefit from any late reductions but it is too early to say how effective these will be for 2013/14.
% of bookings (no. of months) 12+
9 - 12
6-9
3-6
0-3
2012
13
12
17
23
36
2011
15
15
17
20
34
2010
16
16
18
22
28
2009
25
19
17
22
17
2008
18
17
18
22
26
2007
18
17
18
23
24
2006
15
18
18
24
27
2005
17
17
18
22
22
2004
11
15
18
23
33
2003
8
12
14
24
41
2002
7
13
17
22
36
Over the same six-year period, the number of passengers from the North of England (North East, North West and Yorkshire/ Humberside) fell back from three in ten (30%) to 27%. Although several cruise companies have deployed more ships out of northern and Scottish ports, the most substantial increase in capacity has come in the south coast ports of Southampton, Dover and most recently Portsmouth.
15 UK Cruise Market - Trends in Booking Lead Times
Year
Four in every 10 (39%) ocean cruise passengers were sourced from the south of England - a significant increase on 2006 when it was only just over three in ten (31%).
So the growth in popularity of cruises departing from a UK port is built largely on the ease of access to the ships for those living in the south although, ironically, London continues to underperform, contributing only 4% of passengers despite it having 12% of the UK population.
Source: PSA/IRN Research
17 Cruise Passengers as % by Region of Residence
16 UK Passengers - Reasons* For Choosing To Take A Cruise Holiday
12
Reasons
2009 %
2010 %
2011 %
2012 %
Region
2006
2012
Itinerary/Destinations
14
24
65
75
69
70
South East
Enjoyed Previous Cruise with line
16
14
54
58
64
55
North West
Departure Date
31
38
11
39
10
36
South West
Duration
22
24
11
27
11
31
Scotland
Flights from local airport
22
13
8
17
8
19
Yorkshire & Humberside
No flight
21
25
7
28
8
26
West Midlands
To try another cruise line
7
5
21
17
9
17
East Midlands
To try another ship
7
4
--
--
10
9
London
Personal recommendation
9
6
6
7
5
11
Wales
Travel agent recommendation
4
5
5
5
6
6
North East
Recommendation on web review/blog
4
2
4
4
5
7
East Anglia Northern Ireland
3
2
* Asked to select three principal reasons. Source: UK Cruise Survey 2012 (IRN Research)
Source: PSA/IRN Research
13
NEW SHIPS AND MORE INCLUSIVE PRICES DRIVE RIVER BOOM
“
“Safety was a big thing for our clients immediately after Concordia so we kept them informed about changes being made but this concern quickly receded and has completely gone now. Ocean cruise clients have rarely switched to river cruising but there is such a strong demand for rivers now that I think we are seeing a genuine crossover, probably because the many new river boats being built have much more to offer now.”
18 UK River Cruise Market (000s)
An unprecedented number of new river cruise ships is driving a boom in bookings with 130,000 British passengers taking a river cruise holiday in 2012. The scale of the increased demand is still being masked by depressed sales of Nile cruises due to the continued unrest which followed the Arab Spring. Although Nile sales did recover a little in 2012, they are still running at about half their normal levels. As it has always been the most popular individual river destination, this factor is keeping the UK passenger total below the 150,000 mark.
14
There have, though, been several years of consistent growth in demand for European and, to a lesser extent, Asian river cruises in China and the Mekong. Just as with their oceangoing counterparts, the new river cruise ships are offering more facilities and flexibility with alternate dining venues and more spa options. Operators are also increasingly offering more inclusive pricing with drinks, tips and transfers being included in the package and in the current economic climate, this is attracting more first-time river cruise passengers, some of them coming from the ocean cruise market.
European Destinations
2009
2010
2011
2012
Rhine/Moselle/tributaries
21.2
23.6
20.0
26.9
Danube
11.3
12.5
12.9
Rhine/Danube
1.8
4.1
8.3
Rhone/Seine
8.6
8.0
10.1
Russian
3.8
4.4
4.9
Italian (Po)
3.9
2.0
2.9
Elbe
2.1
2.5
2.2
Douro
5.0
8.7
9.4
Other European
11.3
9.1
9.6
Total European
69.0
74.9
80.3
90.0
Non European Destinations
2009
2010
2011
2012
Nile
57.4
58.0
25.2
28.3
Far East/China
5.5
4.7
5.0
6.9
Other non-European
4.9
4.6
3.3
4.6
Total non-European
67.8
67.3
33.5
39.8
Andrew Gardner, Cruise.co.uk
15.0 4.6
10.2 5.2 3.0 2.4 9.3
13.4
Source: PSA/IRN Research
15
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