Med Cruise Portimao

Why develop a cruise port?

Portimão – May 20th, 2009

By José Campos MedCruise Secretary General

The Boom in Cruising Europe and the Mediterranean are at the focal point of the current boom in the cruising industry.

Cruise is the fastest growing sector of the tourism industry. Some statistics: –

Only 2.6 million Europeans took a cruise holiday in 2001. By 2008 the annual number had leapt to 4.4 million, a 10.5% increase over 2007.

–

60% of Europeans cruising chose the Mediterranean and Altantic Islands.

–

21.7 million passenger visits in European ports in 2008, a 15% increase over 2007.

Source: GP Wild, Intl; BREA

Top 20 Cruise Ports Worldwide 08 Port

Ranking

2008 Projection (pax) Homeport

Transit

Total

Miami

1

3,880,000

8,690

3,888,690

Port Canaveral

2

2,600,000

65,0000

2,725,000

Port Everglades

3

2,539,461

12,423

2,551,884

Cozumel

4

1,200

2,520,800

2,522,000

Barcelona

5

1,200,000

800,000

2,000,000

San Juan

6

964,450

987,382

1,951,832

Civitavecchia

7

800,000

990,000

1,790,000

Nassau

8

400

1,787,280

1,787,680

St Thomas

9

8,250

1,715,000

1,723,250

Grand Cayman

10

0

1,598,000

1,598,000

St Maarten

11

860

1,400,360

1,401,220

Piraeus

12

695,882

594,000

1,289,882

Venice

13

1,160,000

105,000

1,265,000

Los Angeles

14

1,124,340

6,000

1,130,340

Naples

15

1,600

1,096,000

1,097,600

Palma de Mallorca

16

560,000

500,000

1,060,000

New York

17

992,800

16,600

1,009,400

Juneau

18

38,000

945,500

983,500

Vancouver

19

884,000

49,000

933,000

Ketchikan

20

0

900,000

900,000

Source – Lloyd’s Cruise International; GP Wild, Intl.

Highlights of the industry in Europe In 2008, cruise industry direct expenditures increased by 10% over 2007. These economic impacts included the following: •

€14.2 billion in direct spending by cruise lines and their passengers,

•

€32.2 billion in total output (direct and indirect), including: – 311,512 jobs, and – €10.0 billion in employee compensation.

Source: GP Wild, Intl; BREA

Highlights of the industry in Europe In 2008, €2.7 billion in direct cruise passenger spending at ports-of-embarkation and ports-of-call.

This is an 8% increase over 2007.

• Excluding airfares, embarking passengers spent on average €90 at embarkation port cities.

• On average, cruise passengers then spent another €60 at each port visit on their cruise itinerary.

60€(50,000) = 3,000,000€ in direct passenger expenditures.

Source: GP Wild, Intl; BREA; Passenger Shipping Association

Growth of European source market

This growth has been driven by the investment in new ships and new Europe-focused itineraries not just by home-based cruise lines but also by those previously concentrated on the North American market.

In 2008, Europeans represented more than 25% of all cruise passengers worldwide, compared with 19% in 1996.

Source: GP Wild, Intl; BREA; Passenger Shipping Association

Growth of European source markets Share per country:

Source: Passenger Shipping Association

Growth of European source markets Europeans mostly visit the nearby Med and Atlantic:

Source: Passenger Shipping Association

Traffic Growth – MedCruise Ports

GENERAL GROWTH Year 1998 2007

HOME 2.097.278 4.803.263

TRANSIT 2.680.929 9.300.543

TOTAL 4.778.207 14.103.806

Cumulative Annual Growth Rate Total Pax : 12,8% (Analysis includes MedCruise ports that submitted statistics from 1998 through 2007)

Traffic Growth – MedCruise Ports STATISTICS IN WESTERN MED/ATLANTIC (1998-2007) Western Med/Atlantic Annual ∆ (%) 16,00% 14,00% 12,00% 10,00% 8,00% 6,00% 4,00% 2,00% 0,00% Tot al (Pax)

Home (Pax)

Transit (Pax)

Cruise Calls

How seasons affect growth in Med 1. December, January, February Our busiest ports are experiencing very successful Novembers, and March can vary.

2. October through March Some medium-sized ports would claim November and March as low season – while others – even October.

3. October through April The season doesn’t currently take off in the Black Sea until April or later.

How seasons affect growth in Med Barcelona 2007 – Home port with Transit traffic 300.000 250.000 200.000 PAX by Month in 2007

150.000 100.000

DEC

0

JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV

50.000

How seasons affect growth in Med Lisbon 2007 – Atlantic repositioning 60000 50000 40000 PAX by Month in 2007

30000 20000

DEC

0

JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV

10000

Mediterranean Off-Season Trends Total Pax for: Barcelona, Cartagena, Cannes, Genoa, Gibraltar, Ibiza, Lisbon, Livorno, Mahon, Nice, Koper, Palma, Savona, Trieste, Venice.

600000 500000 400000 November December January February March

300000 200000

2007

2006

2005

2004

2003

0

2002

100000

Cruise: a good investment choice Average annual traffic growth of more than 10% in Europe and the Mediterranean Many Mediterranean ports saw growth rates greater than 20% between 2006 and 2007. The trend continues through 2008.

High levels of optimism in the industry High levels of passenger satisfaction – Product considered superior & better value than other tourism products – Repeat customers

Immense potential for growth (latent demand)

Industry trends – growth!

Construction of megaships – and the need to expand port infrastructure More ships, bigger ships – multiple ships at one port Opportunities to expand marketing to new niches New itineraries needed – growth in new regions New ports needed – marketing opportunities Increased fuel costs – itinerary modifications, new opportunities

The current economic crisis

MedCruise survey of 2009 cruise traffic projections show continued potential growth for 2009, albeit, at a smaller rate – 4%-6% at large ports Huge variations in growth rates (or rates of decline) at smaller ports. – Some smaller ports show large jumps in growth, and others large declines.

So far the ships are calling with high capacity rates.

Cruise lines are implementing aggressive tactics to fill ships.

2010 projections need to be watched.

Cruise Industry Model : the Players TOURS & VENUES RECEPTIVE AGENTS

HOTELS/RETAIL DESTINATION

AIRPORTS

TRAVEL AGENTS

PASSENGERS

PORTS

PORT AGENTS

SHIPS CRUISE LINES SHIPYARDS

Why would a port want cruises?

Requires a separation of uses at the port Requires expensive new port infrastructure Requires qualified personnel Requires state-of-the-art security systems Requires building new relationships with local tourism, city officials and the cruise industry community

The benefits Prestige

The benefits The development of a passenger port

… the main benefit Tourism – local industry with local profit Cruise tourism doesn’t compete with other landbased tourist products Cruise ship passengers aren’t always the same tourists that would visit your destination on their own Cruise passengers can experience your destination and decide to return to spend more time, and money

Cruise industry model: port finance Indirect/Induced Impacts Private and/or Public Investors

PORT PRODUCTS

€

€ Financing

Port Infrastructure

COMPETITION

MARKET

Infrastructure needs for megaships

• November 2008 MSC Fantasia 333,3 mts LOA

• June 2009 MSC Splendida 333,3 mts LOA

• December 2009 MSC Magnifica 293,8 mts LOA

Developing your port’s strategy What cruise lines look for in a port: – – – – – – – –

Shared vision at the destination Understand the market and the client Experiences that are seamless Regional interdependence A long-term action plan Take advantage of own resources Product differentiation Respect, appreciation and preservation of historic heritage » Courtesy Princess Cruises

Evaluating your port/destination

What type of port are you?

What type of destination are you?

Evaluating your port/destination Are you a home port or a transit port?

Evaluating your port/destination Requirements for a home port – Security equipment, warehouse and baggage handling equipment – Passenger terminal Or alternative infrastructure

– Parking area for coaches, taxis and private autos – International flights, sufficient air lift to source markets – International airport within 45 minutes of port

Evaluating your port/destination Are you a “marquee” or a “discovery” destination?

– A “marquee port” … is world-famous Absolutely necessary for every itinerary

– A “discovery port” benefits from being included in the itinerary Where do you fit in the itineraries?

Evaluating your port/destination Survey courtesy of Princess Cruises “Marquee” port: How did passengers rate their visit to Venice?

– Reason for purchasing cruise: 91% – Port score after visit: 93%

Non-”marquee” port. How did passengers rate their visit to La Rochelle?

– Reason for purchasing cruise: 66% – Port score after visit: 85%

Evaluating your port/destination Many home ports are also marquee destinations – They have well-developed tourism infrastructure and – An airport with direct international flights Barcelona Civitavecchia (Rome) Venice

Some transit ports are also marquee destinations Naples (Pompeii) Livorno (Florence, Pisa) Nice

(Dilemma of popularity – Congestion!)

A port’s development strategy

1.

2.

3.

4.

Know how to promote your destination Invest in basic services and in human resources Develop relationships Capital improvements

Development strategy First, know how to promote your destination

Authenticity The Product Discovery Know your Source Market

Development strategy Second, preliminary investment in the destination Organisation on all levels (services, promotion, coordination) Action plans – short- and long-term Human resources Basic infrastructure

Development strategy Third, expand relationships 1.

2.

3.

4.

Cruise Lines Industry Press/Shows Industry Associations Cruise Clubs – local collaboration

Port Agents Tourist Board Town Hall Chamber of Commerce Merchant Organisations

Development strategy Fourth, capital improvements 1.

2.

3.

4.

Passenger terminal (necessary?)

Berths, piers, dredging‌ infrastructure for megaships?

Logistics zones for ground transportation Port-City relationship = Ship-Destination relationship

MedCruise – a regional stakeholder The Association of Mediterranean Cruise Ports: founded 12 years ago in Rome, and now represents 75 ports in 20 countries.

However difficult, MedCruise helps propagating new approaches to maritime tourism, and puts value on making the passenger-shore contact a unique, rich, peaceful experience, for the benefit of both sides.

MedCruise Brings Ports Together General Assemblies and other events.

TRIESTE SOCHI

CEUTA

AZORES ALEXANDRIA

MedCruise - the Seas Unite Main objectives: – Promote the cruise destinations and the ports in the Mediterranean and adjoining seas.

– Develop quality passenger shipping experiences: Preserve diversity and authenticity.

Manage congestion.

Shared return: local communities, ships, passengers.

– Collaborate on solutions: Security.

Environment.

Training.

MedCruise Tools Networking forum (assemblies, associate member scheme, trade fairs).

Promotion/information sharing (newsletters, directories, press relations, economic studies).

Maritime policy : security/environmental/transportation (European Commission stakeholder role) et l’Union pour la Méditerranée.

Professional development role (collaboration with Escola Europea de Short Shipping).

The MedCruise family

The Leisure Yachting Industry: Defining New Directions for Tourism Portimão – May 20th, 2009

Thank you.

José Campos MedCruise Secretary General