Seatrade Europe, the bi-annual cruise industry gathering in Hamburg, was kicked off this morning (9 September) with the State of the Industry address by the eloquent Pierfrancesco Vago, Chairman, CLIA Europe & Executive Chairman, MSC Cruises. He sounded a positive note by highlighting the immense growth that had been achieved by the cruise industry in Europe. But the growth has been faltering in the last two years due to a number issues.
The pressing issue
The most pressing issue is finding a way of reversing the slowdown in European cruise business. Only 0.5% growth in passenger numbers and 2% increase in revenue were recorded between 2013 and 2014. A lot of this, according to Pierfrancesco Vago, was due to the 11.2% reduction in capacity deployed in the Mediterranean, which, in turn, was due to geopolitical issues and the unfavourable exchange rates.
In his view, Europe could return to the golden years of growth if all the necessary frameworks were in place and the issues plaguing the industry were properly addressed. These issues included patchwork applications of the EU Sulphur Directive and the inadequacy of port reception facilities. “How can we grow if we have only a handful of ports that can discharge waste water?” he asked.
The industry also needed to source passengers from outside of Europe. This suggestion once again brought to fore the stringent visa policy exercised by the Schengen member states. Visa reform was not happening quick enough, according to Dominic Paul, SVP International, Royal Caribbean International, Celebrity Cruises & Azamara Club Cruises, and Managing Director, RCL Cruises Ltd., who cited a survey suggesting that about 20% of Asians were dissuaded from coming to Europe during the visa application process.
But Michael Thamm, CEO, Costa Group, looked at the visa issue from another angle. “Is visa really our number one priority?” he asked. “What about the low penetration rate? Only 1% of the population in Europe is cruising. We ought to look at the potentials closer to home.” Europe certain has no shortage of opportunities when it comes to growth.
The geopolitical issue
The cruise industry seemed to have learned to cope with geopolitical conflicts better in recent years, to the point that it no longer sees them as an issue. “We have been able to absorb the fallout from Tunisia,” said David Dingle, Chairman, Carnival UK & Vice Chairman, CLIA Europe. “The industry is getting more used to geopolitical conflicts. We are now very good at finding alternatives; we are good at opening up new ports; and we are also good at encouraging Europeans to cruise beyond Europe.”
Geopolitics has also become less of an issue for the industry’s customers. “People are well informed of the reality,” said Manfredi Lefebvre d’Ovidio, Chairman, Silversea Cruises. “They still go to France, for example, despite what happened there recently.”
“We have not noticed any of our passengers cancelling for geopolitical reasons,” said Wybcke Meier, CEO, TUI Cruises GmbH. “Our passengers depend on us and trust us to keep them safe.”
“One of the big advantage of our industry is that we are able to re-group and re-deploy,” said Karl J. Pojer, CEO, Hapag-Lloyd Cruises. “We think very carefully what we do. Our passengers are becoming more and more informed. They follow world affairs and they know what is going on.”
Driving the objectives
Various suggestions were put forward in an effort to address other issues, such as port congestions, logistics, local resistance to cruise business and environmental protections. “Much depends on the level of engagement we have with ports and help them understand the value of cruise industry,” said David Dingle. “The onus is on the cruise industry to drive its objectives harder.”
Cooperation and dialogue were again highlighted as the way forward for the cruise industry in Europe. “Only by working together can Europe remain a cruise powerhouse,” said Pierfrancesco Vago. “We face some big challenges; CLIA and the cruise industry will do whatever is necessary to overcome them.”
“There is a fundamental issue here in Europe,” concluded David Dingle, “that is, Europe is very good at regulating, but not good at spotting opportunities. CLIA will engage and address this issue through dialogues between all interested parties.”
The conference continues …
