Cruise Insight Spring 2012

7/31/2019 Cruise Insight Spring 2012

1/124

The Global Cruise MarkeT MaGazine

Regulators set to endcruisings golden age?

Lingard ags up concerns as industry faceswhat could be its biggest challenge yet

Formerly Dream WorldCruise Destinations

Costa Concordia a defning

moment?

Port fees whopays who?

Carnival toinvest in newcruise ports

A question ofbrand loyalty

Spring 2012


2/124

VENICE, A DATE FOR YOUR DIARYA PROBLEM FREE HOMEPORT...

With its high quality and multi purpose acilities,

the Venice Cruise Terminals are impressively outstanding,

like the beauty o the Lagoon City Serenissima, which is only fve minutes away,

walking distance.

And why not mention its strategic position?

10 minutes rom the airport, railway station and motorways.

That means only a ew seconds rom a breathtaking view

o the most romantic getaway in the world.

The best destination for satisfaction.

Marittima_fabbricato 248_30135

Venice_Italy

Ph. +39 041 240 3000

Fax +39 041 2403091

www.vtp.it


3/124

CruiseInsightSpring

2012

3

Falling ticket revenues and the rising costs o operating cruise ships inEurope due in part to regulatory issues exploded into the open asa very real issue at last years European Cruise Council conerence. Formany o those attending this was a signicant reality check.

But the Costa Concordia tragedy is in another league. It has shocked the

industry to its core, just as it shocked the world. In act it was the mostsevere reality check I can recall. Although several weeks have now passedsince that ateul evening, a sense o numbness remains as the scale o theloss o lie sinks in.

Much has already been written about this incident, and it is certain tocontinue to attract global media attention or many months to come. This isnot, though, the time to join the ranks o those commenting on issues aboutwhich the ull acts are as yet unknown.

But there is one very important act that is known: all but 32 o the 4,200-plus passengers and crew were rescued a considerable achievement underthe circumstances. So there will be positives as well as negatives to be drawnrom what happened just how many o each will depend on what the ocial

inquiry reveals.Unsurprisingly Siim Kallas, Vice President o the European Commission andCommissioner or Transport, is unwilling to rush into new measures on saetyas he is an advocate o waiting or the outcome o the investigation.

IMO Secretary-General Koji Sekimizu has stated that IMO is the rightinternational body to deal with saety o passenger ships, and with theinevitable saety review which must ollow this accident.

But what o the impact o the tragedy on cruise sales? For Costa Cruises theposition is extreme. Pier Luigi Foschi, Chairman and Chie Executive Ocer,has stated that bookings are down by 35%. Foschi also says that the Costabrand is being massacred by the international media and may not survive even i the company does. There is though a steely determination within thecompany to rebuild condence in the brand dicult though that will be

given the starting point.Elsewhere initial indicators seem to suggest that consumer condence will

have no impact on booking patterns in the long term. It is in the short termwhere it has been reported that bookings are down in all major markets though it appears that a particularly strong booking period preceding theaccident has cushioned some brands rom what might otherwise have beeneven tougher trading conditions.Whatever the reality or individual brands, the resilience o the industry is

now being tested in ways never beore envisaged. But it has repeatedly provedthat it has the intellectual and technical resources to pass such tests.

Ashcrot & Associates Ltd. would like

to express their sincere thanks andgratitude to the many organisations that

have helped in the production o this

magazine by contributing to articles and

reports, or supplying acts and gures,

inormation and pictures, or provided

help in other ways.

We have made every eort to ensure the

accuracy o the inormation but changes

occur incessantly. Readers are advised

to check that any material acts are still

current with the responsible authorities.

For inormation about uture issues o

Cruise Insight please email:

[email protected]

or tel:+44 20 8994 4123

Cruise Insight is available annually or

35 (inc. postage). The contents o this

publication are protected by copyright.

All rights reserved. ISSN 1351-640X.

Publisher and Editr

Chris Ashcrot

Assciate EditrsTony Peisley

Maria Harding

Cntributrs

Susan Parker

Design & Prductin

marcusmacaulay.co.uk

Administratin and Finance

Gilly Ashcrot

Circulatin

Kerstin Jones

Printed by

Warners Midlands

Published by

Ashcrt & Assciates Ltd

PO Box 57940, London W4 5RD,United Kingdom


Chris Ashcrot

Publisher and Editr


4/124

Cruise

InsightSpring

2012

4

Comment, opinionand quotes insidethis issue

Sebastian Ahrens Roger Allard Mick Arison Alan Buckelew Richard Bastow

Michael Bayley Gerry Cahill Joachim Coens Mark Conroy

Frank del Rio Simon Douwes Nathan Dundas Richard Fain

Andrew Gardner Siim Kallas

Lynn LedwidgeBo Larsen

Nitsa Lewis Nigel Lingard Edwina

Lonsdale

Carol Marlow Tim Marking

Rafael Aznar

David Dingle Christine Duffy

WencheNygrd Eeg

Fraser Ellacott

Pier Luigi Foschi Nathalie Gaudet Roberto Giorgi Giora Israel

Lisa Kaufman Arthur Kordt Martin Lachance Gary LaGrange

Manfredi

Lefebvre


5/124

CruiseInsightSpring

2012

5

Betty MacMillan Barbara

Muckermann

Lise Nadeau Bob Nelson Priscilla Nemey

Steve Odell Otmar E. Oduber Kate O'Hara Giani Onorato Michele Paige

Neil Palomba Dominic Paul Amy Powers Tony Peisley VirginiaQuintaitos

RamaRebbapragada

Francis Riley Jo Rzymowska Graham Sadler Alfredo Serrano

Robin Shaw Kevin Sheehan Christina Siaw Ricky Skerritt Jens Skrede

Tom Spina Tor Stangeland John Tercek Jacques van

Staden

Pedro

Zaragoza


Pier Francesco

Vago


6/124

Chairman: Bert Swets, Disney Cruise Line

The European Cruise Council is gatheringexperts rom a variety o elds to present portrepresentatives with the detailed knowledge theyneed to take inormed decisions on whether to

install shoreside power. The main issues are:

Harmnising vltages and requencies

Hw d lcal authrities t in?

What is The Eurpean Cmmissinscurrent stance?

Energy cmpanies need t prvidecertainty in terms liability as well.

What cmmn standard are ICE andIEEE trying t achieve?

Cruise ships nw have a cmmnstandards what are they?

What is the cst installatin andperatin?

Will the regulatr subsidise energysupplies?

COLD IRONING

TECHNICALCONFERENCE

Venice, Thursday 26 April 2012 09.00-16:30

Prgrae: Background and drivers behind shore-

side power; Is shore-side power the right environmental

solution or ports?; Technical requirements (case study);

Dierences between cruise and erry ships -onboard andonshore; Utilities, equipment, construction; The view rom

the European Commission and European Parliament; Saety

Issues; Cost to port and ship owner: Equipment (supplier),

operation and maintenance; Energy supply capacity, cost

(including taxation); Seasonality; Berth availability/allocation.

Speakers: Pierro Susino, Princess Cruises; Robert Ashdown,

ECC; Michael Watts, Cochran Marine and Luciano Corbetta,

Cavotec will be joined by representatives o: ECC member

lines ; European Commission DG Move, DG Energy; European

Parliament; Equipment suppliers; Energy companies and

Ports to provide case studies and current thinking and

developments.

*Programme and speakers subject to change.

To register go to:www.ashcroftandassociates.com


7/124

25 June 2012

2nd PortsForumECC Ports sub-committee members and representatives rom

other ECC member lines descend on Brussels to meet the port

community during a period when the economic reality cruise

lines ace is underpinned by these actors:

Fact 1 Increased Prts Csts

Fact 2 Increased Fuel Csts

Fact 3 Reduced Ticket Prices

The action already taken by cruise lines will be presented -

supported by statistics - at the Ports Forum. It is expected

that the details to emerge rom the presentation will lead

to a wide ranging debate on the role and relationship ports

have with the cruise lines who see this as a critical moment

during a period o economic uncertainty.

Tw panes, ne bjectiveECC member cruise lines are eager to listen to port ocials

so that together this important partnership can come up with

ideas and solutions to the real challenges that exist in Europe.

ECC Prts Sub-cittee: Neil Palomba, MSC Cruises,

(chairman); Burkhard Mueller, AIDA Cruises; Robereto

Ferrarini, Costa Cruises; Luigi Pastena, MSC Cruises; Bjorn

Hansen, Norwegian Cruise Line; John Tercek, Royal Caribbean

Cruises Ltd.; Enzo Visone, Silversea Cruises; and Tine

Oelmann, TUI Cruises

26 June 2012

6th AnnualConference

BOOk EARLyOnl 200 delegateplaces available tonon-ECC members.

Conrad Hotel Brussels

ChairmanManredi Leebvre,Silversea Cruises

Vice-ChairmanPierrancescVag, MSC Cruises

Michael Bayley,Royal CaribbeanCruises Ltd.

David Dingle,Carnival UK

Michael Thamm,AIDA Cruises

Andy Stuart,Norwegian Cruise Line

Event prgrae:25 June Ports Forum 2.30pm-5.30pm

25 June Reception 7pm-8pm

25 June Conerence speakers and delegates

dinner 8pm-10.30pm

26 June Conerence programme 9am-5pm

Join the Executive Committee (above) and board members

o ECC Member lines as they gather in Brussels to exchange

views with the European Commission on the key issues o the

moment: Economic impact and consumer condence; state o

the European cruise industry; saety; regulation; environment;

port partnerships and ECC meets the EU involving speakers

rom European Institutions and member states.

Fr up-dated inrmatin and t register g t:

www.ashcrtandassciates.cmSpnsre b


8/124

oto: Terje Rakke/Nordic Life, Region Stavanger

Photo: Bergen Tourist Board / Robin Strand

oto: C.H./www.visitnorway.com

oto: CH/www.visitnorway.com

Photo: CH/www.visitnorway.com

Photo: Sveinung Myrlid/www.visitnorway.com

Photo: Johan Wildhagen/Innovation Norway

Photo: Bjrn Eirik stbakken/Innovation Norway

Cs

owyThe ltimate atural xperience

Visit usat booth 829

in miami

Norway`s long coastline of 1300 nautical miles provides

immense possibilities for creative and interesting itineraries

in all seasons. Today, cruise ships call at about 40 different

Norwegian cruise ports. The forecast for 2012 is more than2000 calls and 2.3 million visitors. Norway is the leading

cruise destination in Northern Europe.

Ceck r cre cledr www.cre-rwy.


9/124

CruiseInsightSpring

2012

9


5012 Carniva prisesnew prts anestinatins r EurpeCarnival Corporation & plc has moved

quickly to help make sure Europe is

ready or signicant growth. Giora Israel

explains the thinking behind their plans

or port investment.

18 Prt ees

w pas w?The single issue that most polarises

opinion between cruise companies and

ports is a simple one: who should be

paying who or cruise calls? Tony Peisley

reports.

28 Interprting teprs an cnsIt is the new buzzword in cruising,

reports Tony Peisley, but just how global

could interporting go?

38 Cruisings ienquarterThree-quarters o global cruising may

be controlled by the major companies,

but that means a quarter isnt. Cruise

Insight talks to some o the operators

responsible or this sizeable chunk o

the industry.

50 Reguatrs set t encruisings gen age?Nigel Lingard explains how cruising

has changed over the past 30 years o

almost unbroken growth and how it is

acing up to what might be the greatestchallenge yet.

52 Cruising efesecnic pain in SpainDuring Spains economic woes the

cruise market has continued to grow

rapidly, as Tony Peisley reports.

58 Can suer cruisingt Canaa New Enganwrk?Extending the cruise season is every

destinations objective Cruise Canada

New England has the unusual task o

extending the cruise season into the

summer months. Sue Parker reports.

68 Caribbeangvernents ust actA clarion call or governments across

the Caribbean to step up to the plate to

revive the summer cruise season comes

rom CSAs Cruise Committee Chairman

Nathan Dundas.

70 Cruising cesin r te c inNrwaCruising is now part o the national

tourism strategy in Norway and

not beore time, as Cruise Norway

Managing Director Wenche Nygrd Eeg

tells Tony Peisley.

74 Csta Cncria aefning ent?

Was the Costa Concordia accident atragic one-o or does it provide the

industry with an overdue wake-up call?

Tony Peisley reports.

75 Trust anrespnsibiitFormer Royal Caribbean International

captain Tor Stangeland describes how

the relationship between the company

and its captains evolved between the

1970s and the modern era.

38

52


10/124

The year 2013 will be a very special

year r Amsterdam.

Look out or a line-up o spectacular eventsto celebrate some very remarkable cultural

milestones:

400-year anniversary of the CanalRing

Re-opening of the fully renovatedRijksmuseum

125th anniversary of theConcertgebouw (concert hall) andthe Royal Concertgebouw Orchestra

225th anniversary of Felix Meritis European Centre for Arts, Cultureand Science

175th anniversary of Artis Royal Zoo mainland Europes oldest zoo.

Fr mre inrmatin:


11/124

11

CruiseInsightSpring2012

92

76

76 Swit, sber anrespnsibeChristine Duy and Tim Marking have

been at the helm o CLIA and the ECC

respectively, or a year much has

happened in that time as Chris Ashcrot

reports.

82 Te Wr ViewLocal, national, regional and

international points o view.

88 Prts anestinatins awars

Which ports and destinationsdelivered in 2011?

92 A gaecanger rAsiaThis Mays arrival in Asia o Royal

Caribbean Internationals Voyager o the

Seas is being seen as a major stepping

stone in the regions cruise development

reports Susan Parker.

96 W wants t pa agreen ee?Would passengers eel better about

booking a cruise i they were paying

into a green und to oset their share

o its carbon ootprint? Tony Peisley

assesses current trends.

98 A questin bran atIn an increasingly cut-throat

international marketplace, cruise line

loyalty clubs are seen as crucial in the

ght to protect repeat passenger levels.

Maria Harding reports.

100 Te tipping pintUS cruise lines drive to build

international share has revealed major

cultural dierences in spending and a

reluctance to buy into the crew tipping

system. Maria Harding reports.

104 Was te frst cutte eepest?A year on rom Carnival UKs

announcement o a dramatic cut in

travel agent commission, Maria Harding

considers the eects.

106 Wat appenswen te sipsisappear?Cruise companies say that having

mobile assets (ships) gives them an

edge over their land-based vacation

competitors but this can be bad news

or ports.

110 A bran newappracAs Norwegian Cruise Line drops the

NCL tag to rebrand itsel around its

name and Celebrity Cruises launches its

new Modern Luxury brand platorm,

Maria Harding assesses the impact o

these initiatives.

114 Grwt in a-incusives caengesinustrIt is generally accepted that cruise

ships were the original inspiration or

all-inclusive resorts. It would be ironic

i the pupils came back to haunt their

mentors.

118 F r tugtAlternative dining at a supplement is

a weapon in cruise lines drive to boost

onboard revenues. Which are the trends

to ollow? Maria Harding investigates.

122 Vanising

passengersI cant imagine why but, or a recent

signicant birthday, a riend bought me

a subscription to The Skeptic magazine.

110

96


12/124

Cruise

InsightSpring

2012

12

Conrming the change o ocus which hasprompted Carnival Corporation to rename itsPort and Destination Development Division asthe Global Port and Destination Development

Group, the groups Senior Vice President Giora Israel says:"Europe has been a place where we have always gone totraditional ports like Livorno and Barcelona.

Now, as we expand our reach and attract even more mainly European - repeat passengers, we will be lookingto develop new ports and quite possible completely newdestinations in the EuroMed region.

I rule nothing out. In the last decade, my division hasocused on North America (excluding Alaska becausePrincess and Holland America Line/HAL are so strongthere) the Caribbean and Central America.

From the late 1990s until 2003 I was involved in someEuropean port projects but, as the company grew sorapidly, I had to reocus on that North America region.

This let the individual brands like P&O Cruises

with Southampton and Costa Cruises with Savona andCivitavecchia to lead their own negotiations and dealswith ports, though these did benet other Carnival Corp.brands, too.

Carnivalpromises newports anddestinations

for EuropeIn the last Cruise Insight, weasked i Europe would beready or millions more cruisevisitors over the next decade.Carnival Corporation hasmoved quickly to help make

sure it is - as its Global Portsand Destination DevelopmentGroups Senior Vice PresidentGiora Israel explains toTony Peisley


13/124

CruiseInsightSpring

2012

13

Port negotiations, contractsand developments are initiatedby individual brands as well asby Carnival Corp.

can justiy the investment to gain the required long-termcommitment rom the port.As Costa did at Savona, the brand also has to ensure that

any agreement or development will include other CarnivalCorp. brands that may want to visit the port.

Although we have consolidated nancial results or thecorporation, each brand has its own balance sheet and any

port projects or arrangements they make individually willshow up on these. They each take responsibility or theirown prot and loss.

Holland America Line (HAL) developed Hal Moon Cayin the Caribbean, so that went down on its balance sheet;but although it was a private island call originally just orits own ships, it has since been made available or otherCarnival Corp. brands.

As a corporation there are three scenarios under whichwe become involved with port deals or projects:

Firstly, i we identiy a project that works or the benetor two or more brands, we will take the initiative on their

behal and the cost and benet o such a project will appearon our corporate balance sheet. These involvements can beto build brand-new port destinations, like Grand Turk, orsimply to negotiate long-term contracts with existing ports,

The way Carnival Corp. is structured is unique in theindustry notably diering rom Royal Caribbean Cruises,which always unctions as a single entity as it not onlyhas a clearly dened corporate structure but there is alsoone or each o the individual brands.

We are very decentralised so, or example, although I ambased in Miami, I have very little to do with what Carnival

Cruise Lines (CCL) does.In act it is extraordinary how independent our brands

are, and that includes their dealings with ports. The resultis that port negotiations, contracts and developments areinitiated by individual brands as well as by Carnival Corp.(through my division).

This has led to some unusual and to the outside world conusing situations whereby it was CCL that negotiatedthe long-term deal at the Port o Miami while it was Israelsdivision that set up and manages the $500 million portusage arrangement at Port Everglades, just 19 miles alongthe Florida coast.

The way it works, says Israel, is that i a brand likeCCL or Costa has a specic need at a certain port at acertain time and is the predominant user o that port, itmakes sense or that brand to take the lead as long as it

Carnival Corporations development at Grand Turk


14/124

in Norways Friendly Capital

Norways capital Oslo is at the heart of Scandinavia and at the

head of the Oslofjord so cruise visitors enjoy truly scenic arrivals anddepartures.The port itself is only 200 metres from the city centreand City Hall and is part of an exciting waterfront packed withshops, restaurants and entertainment options.

Contact: www.visitoslo.com

Attractions/Excursions

Akershus Fortress and the Defence Museum

The Opera House

The Vigeland Sculpture Park

The National Gallery

The Viking Ship Museum

The Norwegian Maritime Museum

The Kon-Tiki Museum

The Norwegian Museum of Cultural History

The Munch Museum

Henie Onstad Art Centre

Troll Cruise

Betine Yachting Icebar Oslo

Christmas House

Hadeland Glassworks

Sandvika Shopping Center

Modern international airport and new hotels

make Oslo the ideal cruise homeport

Oslo possesses all the necessary ingredients for a successful cruise

homeporting operation. On the cruise port pier, a large area can befenced off and equipped with check-in facilities. In the cruise terminal,disembarking and embarking passengers can shop, arrange for localand international telephone calls and exchange money. The Touristinformation ofce in the terminal is open during cruise calls.

Oslo Airport is one of the most modern airports in Europe, servingnumerous international destinations every day and the city offersclose to 10,000 hotel rooms of high international standard to meetthe needed capacity for pre-and post-cruise arrangements. Tworecommended hotels: Hotel Continental and Thon Hotels.

About 200 certied city guides working for experienced ground andtour operators using modern coaches ensure smooth and fulllingexcursions for cruise visitors.

Oslos location also means that itineraries can include Bergen,Stavanger and the famous fjords of Western Norway or the Balticcapitals of Copenhagen, Stockholm, Tallinn and St Petersburg.


15/124

CruiseInsightSpring

2012

15

like New York and Port Everglades.We may also become involved when a specic brand

asks us to help because it does not have the resources atthat particular moment to ocus on the port initiative itneeds. For example, CCL came to us because it had issuesat Los Angeles and wanted to develop Long Beach. We didit predominantly or CCLs benet, but other Carnival Corp.

brands like HAL do use the port occasionally.The nal scenario is when we are directly approached

by a government agency to develop a port rom scratch.We will evaluate the proposal to see i it makes senseor us and will benet more than one brand. But i wesee that it will be primarily or the benet o one brandin particular, we will usually advise the agency to talkdirectly to that brand to see i it wants to lead the project.I was negotiating a deal or Carnival Corp. in Jamaica,which did not work out but this did not stop CCL thengoing in and doing its own deal.

These criteria remain it is just that the geographical

goal-posts have been moved.We now have eight o our brands, and quite a lot o

our assets, directly involved in the EuroMed region, saysIsrael. Thereore there is a need or more emphasis onsome o the larger port projects which should be handledby an entity that is solely ocused on that area.

Simply, it is better to let the brands concentrate onoperating their ships in Europe and only negotiate portdeals that meet their specic brand needs while as acorporate group which does not operate ships directly we can set up a unit specically to handle the major portdevelopments we want to initiate in the region.

Initially this oce on the Carnival Corp. foor alreadyexisting within the Carnival UK oce in Southampton will have a three-man team led by a vice presidentreporting directly to Israel in Miami.

The corporate oce currently serves three unctions:shipbuilding, maritime and governmental compliance, andaudit service.

Our new team will have direct access there to captainsand other maritime expertise, and their location is withineasy reach o Heathrow and Gatwick airports or travel intoEurope. We are recruiting a completely new set o people toll these three positions.

They will be recruited rom outside the company but

rom within Europe. We need to build up a Europeanknowledge and relationship base, run by Europeans butbacked up by the experience my existing team has builtup through our work on North and Central American andCaribbean port projects.

Although it was initially a broad umbrella decision thatwas made to set up this European team, there is nothingspeculative about this development as ar as we areconcerned. We have a list o areas in which we have a keeninterest, and have identied a number o potential projects.Our new team will be looking into all o them.

For commercial and condentiality reasons, we cannot

yet name them but I can conrm that these are not smallprojects that can be developed within a year or even two.These are long-term schemes along the lines o several wehave carried through on this side o the Atlantic.

We need to build up a Europeanknowledge and relationship base,run by Europeans but backed upby the experience my existingteam has built up.

Grand Turk took ve years, as did Mahogany Bay, andthe negotiations or our agreement with New York. Andit was a six-year project to convert a 1930s shed into ourBrooklyn cruise terminal.

These were highly complex, and so would be someo those we are considering in EuroMed, as they will bedesigned to strengthen our brands position in the region.

They will include ports expanded to improve existingdestinations, and also probably completely new ports anddestinations in the years to come. We are not just talkingabout adding a terminal or two in established ports likeBarcelona. I there is an opportunity to do a Grand Turk,we will take it.

The port activities initiated by individual brands willcontinue in Europe just as in North America, whererecently it was CCL and not this division which negotiatedthe Baltimore deal.

But the expansion o Israels division into a global groupwith a European as well as a North American base will

mean Carnival Corp. is better placed to identiy and leadthe big port projects which will aect all its brands and,in the process, help Europe cope with the tsunami wave ocruise tourism which is heading its way.

A destination development conceptby Bermello Ajamil & Partners, Inc


16/124


17/124


18/124

Cruise

InsightSpring

2012

18

Port fees who pays who?The single issue that most polarises opinion between cruise companies

on the one side and ports and destinations on the other is a simple one:who should be paying who or cruise calls? Tony Peisley reports.


19/124

CruiseInsightSpring

2012

19

Port owners be they private or public are in nodoubt that cruise lines should be paying to usethe acilities and services in a port.And sometimes the local government

prompted by local residents and/or lobby groups believesthat the lines should also pay on their passengers behal ortheir use o the acilities and resources in the nearest town

or city.For their part although some do not express it as

orceully as others most cruise companies believe deepdown that, ar rom being taxed per passenger, they shouldreally be paid or bringing tourists to destinations wherethey will spend money, support jobs and quite possiblyreturn (as a result o their cruise visit) or a longer stay inthe uture. All that, goes their argument, at minimal cost tothe destination.

From the cruise companies perspective, this view shouldbe a no-brainer or destinations, regardless o whether itresults in actual incentives or cruise lines to call or (at the

very least) in minimising the charges or doing so.We do work hard as an industry to communicate the

substantial and wide-ranging economic benets that aport region gets rom our ship calls, says Royal CaribbeanInternational (RCI) President Adam Goldstein.

Regarding the specics as to who pays who and howmuch, this is just market orces at play. These evolve overtime as ports gain or lose stature in the industry.

In China, or example, there are the already establishedports such as Shanghai, Hong Kong and Tianjin whichhave had cruise trac or a long time but are now handlingmany more calls and so are building new inrastructure.At these, he intimated, cruise lines are being oered

ew special deals or incentives However, other ports(like Xiamen) are new to the game, having built cruiseinrastructure somewhat speculatively. These ports are verykeen on attracting cruise trac to utilise them.

We want to bring as many customers to ports as weprotably can, and that means managing our costs as wellas our sales. We always make sure ports appreciate that thisis an important actor in our decision to bring a ship to oneport or another. It is a competitive arena, and we alwayswant a win-win arrangement.

The ideal or cruise companies, o course, is ordestinations to actually oer money directly to the lines to

lure their ships.Royal Caribbean Cruises Ltd. (RCCL) Vice President

Commercial Development John Tercek explains thepotential benet o such a policy. Not long ago there wasno cruise tourism to Panama, even though many shipswere going through the canal. The government eectivelydecided to pay us $30,000 to stop our ships there or ourhours and now it has a thriving cruise tourism sector.

In airness, Tercek knows it is not a simple as that. Heis generally more understanding o the ports point oview than many cruise line executives. But the Panamaexperience is worth exploring, along with similar

developments in Puerto Rico and Izmir, Turkey. Especiallywhen contrasted with recent events in Alaska.The Panamanian government decided to maximise its

earnings rom cruise tourism by spending US$100 million

AdamGoldstein

Nathan Dundas

Michele PaigeJohn Tercek

Bo Larsen WencheNygrd Eeg

Goldstein:The specics

as to who pays who and howmuch, this is just market orcesat play. These evolve over timeas ports gain or lose stature inthe industry.


20/124


21/124

CruiseInsightSpring

2012

21

to create cruise ports at both ends o the canal: Coln 2000(Atlantic/Caribbean) and Amador (Pacic). And to ensurethat cruise calls grew rapidly to secure a return on thatinvestment, it introduced an incentive scheme which paidcruise lines or the number o passengers they brought tothe country.

The rate was between US$2.50 and US$12 per passenger,depending on the total brought by each brand in a year.

And lines registering their ships in Panama qualied or anadditional incentive.As a result RCI has homeported in Coln and the

Panamanian cruise ports now handle more than 320,000passengers annually rom nearly 200 calls. On average

those passengers are spending $106 per visit, about aquarter o it going on locally made crat goods.

Elsewhere, to preserve the status o San Juan as theCaribbeans main fycruise hub and to develop its othersmaller, niche cruise ports, Puerto Rico has gone down asimilar route. It recently expanded and enhanced its owncruise line incentive programme, which it originally set upin 2005 to run or three years. In 2008 it was extended oranother three, with a commitment to add another threeyears ater that through to 2014.

Having established that cruise tourism was worth US$250million to its economy and that it supported 4,000 direct

and indirect jobs, the government went to the cruise linesto seek their input on how the programme due to expirein June last year could be improved when it was renewed.As a result, the new Puerto Rico Law or the Promotion

and Development o the Cruise Ship Industry increasespayment per passenger (to the lines) rom US$2 toUS$4.95 or each passenger over 10,000 annually, and romUS$4.50 to US$7.45 once the total tops 140,000. Up to10,000 the payment remains at US$2.95. The homeportingpassenger incentive ranges rom US$1 to US$4 dependingon the size o the ship and number o calls.

Equally signicantly, incentives have now been extendedto travel agents selling cruises packaged with hotel stays inPuerto Rico; and cruise lines now receive a 10% discounton the purchase o local provisions or the contracting omaintenance and repair services within Puerto Rico. Anadditional 5% discount applies on the purchase o goods

manuactured in Puerto Rico.Florida-Caribbean Cruise Association President Michele

Paige said at the time that this was even better than wehad hoped or.

Other issues including a dispute with both RCCL andCarnival Corp. which cost millions o dollars to resolve,air uplit cutbacks by Continental and American Airlines,and the shit away rom the Caribbean to Europe and

Asia by the major companies have combined to limitcruise tourism growth in Puerto Rico. But things wouldclearly have been considerably worse without the incentiveprogramme; more than 1.2 million passengers on 493

cruise calls are expected this year.The concept o incentivising the cruise lines does appear

to be spreading around the Caribbean, although not astenough to please Nathan Dundas who is both Chairman


22/124


23/124

CruiseInsightSpring

2012

23

o the Caribbean Shipping Associations Cruise Committeeand President o the Antigua and Barbuda Cruise Tourism

Association. He believes the current shortall in summercruise trac could be turned around by the judicious useo incentives by ports and destinations.Antigua and Barbuda has introduced just such a scheme,

which includes a signicant lowering o taris to encouragesummer and year-round deployments.

Port charges in Caribbean ports are based on tariswhich did not take into consideration the subsequenthuge infux o cruise ships, says Dundas. Aimed at cargotrac, ees are based simply on gross tonnage. In manyplaces these have not been adjusted or amended to caterspecically or the cruise business.

Barbados is one exception, having recently introduceda new arrangement whereby the charges are based on thelength o the vessel. It thereore avours cruise ships.

Until our new incentive programme we had not adjustedour taris since 1985 and even then these were not cost

amendments but regulatory, so our taris really go back to1974 when cruising had barely started in the region.

We could now be accused o selling ourselves out but, justas cruise lines believe it makes no sense to sail with emptycabins because o the consequent loss o onboard spendingrevenues, it makes no sense or us as a destination to have anempty pier and lose all that onshore spending.

There is, though, a danger or ports that selectivereductions could rebound on them. Princess CruisesDirector o Market Planning, Development and ItinerariesCrystal Morgan says: We dont really accept the idea oseasonally adjusted ees. Our view is that, i costs can be

lowered in the summer or all, why not in the rest o theyear, too?AIDA Cruises has a dierent view, though. We would

like to have a longer season in Northern Europe, says VicePresident Yield Management and Flight Operations FelixEichorn, but the port costs are so much higher than in theMediterranean that, i they want to extend their season, weare looking or cuts o 30%.And Cruise Baltic Director Bo Larsen says its member

ports are open to negotiation. It is very likely that theywould introduce lower costs or late year calls, as we reallywant to grow the winter market.

But the real key or ports is that, whether public or

private, they need direct or indirect nancial support romtheir local, regional and possibly even national government.This is simply because some o the key payments leviedon visiting cruise ships go not to the port authority but toother public or private bodies.

In the Caribbean some government agencies are comingup with programmes to encourage that trac back,says RCCLs Tercek. They are taking a hit on charges bysubsidising the ees but its not being driven by the portsbut by the communities that depend on cruise tourism.

Most ports in Europe are publicly owned by quasi-governmental entities, so their costs are regulated and

oten not guided by tourism issues. As a result it is otennot the ports nor even the tourism authorities who are theright people to talk to about lowering costs we have to godirect to the governments.

The act is that ports can gain or lose cruise tracthrough price rises or reductions over which they have nodirect control Alaska being a classic example.

Having lost a substantial chunk o its cruise businessollowing the imposition o a US$50 head tax and otherscal disincentives or cruise lines, some o that business isonly now returning ollowing the state governors decisionto have the tax reduced.

Responding to Norwegian Cruise Lines decision to adda third ship to its Alaska deployment next year, GovernorParnell said it was more evidence that lowering taxes on abusiness leads to increased investment.

On the other side o that coin, the Turkish port o Izmirhad no cruise tourism until it came up with a scallycreative way o attracting cruise calls. In its case, theinitiative was taken by the citys chamber o commercewhich saw the potential o cruising above other kinds otourism to stimulate the local economy and jobs market.

Since 2004 it has been developing Alsancak Port and alsoensuring that it has a competitive oer to make to cruise

companies which had hitherto bypassed it.In conjunction with the Ministry o Culture and Tourism

and the Ministry o Transport, the chamber ensured thatthe passenger head tax was reduced rom US$10 to US$2

Morgan: Our view is that,i costs can be lowered in thesummer or all, why not in therest o the year, too?


24/124

BORNHOLM-Danish island in the Baltic Sea

550N

150 E

RNNE HAVN A/SPORT OF RNNE A/S

Munch Petersens Vej 2

P. O. Box 47 DK 3700 RnneTel.: +45 - 56 95 06 78

Fax: +45 - 56 95 06 31

A.o.: +45 - 51 36 37 47

E-mail: [email protected]

Web site: www. roennehavn.dk

The Port of Rnne welcomes you with open arms!

- Were here to serve you

T h E c h A R M A n D A T M O s P h E R E O F A V i B R A n T i s l A n D c O M M u n i T y

U N w i N d at - T h E P O R T O F R n n E


25/124

CruiseInsightSpring

2012

25

and then in 2009 to US$1, and it continues to pay thoseees itsel. This will cost it nearly US$600,000 this year,which will bring the total investment since the incentiveprogramme began to more than US$3.1 million.

But the result has been dramatic. 3,000 passengers visitedin 2003, and numbers have grown signicantly every yearuntil an estimated 550,000 came last year putting it

second only to Kusadasi among Turkish cruise ports.This means that one in every three o the 1.5 million

tourists to Izmir arrives by cruise ship. And their spendingalso keeps on rising, with the 2008 average o US$81 perperson rising to US$113 in 2010.

By 2010 cruise tourism was estimated to be contributingUS$40 million to the local economy, and it is also playingan important part in supporting the 100,000 jobs withinthe overall tourism industry.At the same time plans are in hand to privatise some parts

o the port to be used exclusively or cruise calls at whichpoint the chamber o commerce hopes that it can become

a signicant homeport, too. Invitations to tender to build-transer-operate the new cruise-specic port will go out thismonth (March).A local source market is emerging there were 12,500

Turkish passengers on cruises in 2010 which can only aidIzmirs homeporting ambitions.

Given the Izmir model, it was no real surprise whenTurkeys Minister o Transport, Marine Aairs andCommunications Binale Yildirim announced a 50%reduction in certain port ees or cruise ships as part o aUS$10 million government support package or the sector.The government is now looking at developing nine cruiseports as well as cities, airports and roads to support cruiseand other tourism growth through to 2023.

But not all governments are so enlightened about thevalue o cruise tourism. There are many examples o portswhich have had to reduce some o their own ees so that alocal governments oten signicant increase in charges didnot price them out o the cruise ship market.

The problem here is that the less income the port candirectly receive rom cruise calls, the less it has to spend onimproving the inrastructure or those calls.

Cruise Norway Director Wenche Nygard Eeg says:The European Cruise Council has told us that our portmembers charges are among the lowest in the world. But

the cost o pilotage in Norway is so high that the total costo calling at our ports is just as high i not higher than ourcompetitors in the Baltic. The key dierence is that ourmembers are making ar less money out o the business.

It makes it dicult or them to re-invest in theinrastructure to ensure they maintain their high servicestandards, as they are reluctant to increase their charges.They would then become uncompetitive.

Pilotage costs rose by 40% in the past two years, but atleast this year the increase is much smaller. We now have acouncil, o which cruising is a part, along with the Coastal

Administration which controls the pilots. Co-operation

between us has improved, and this year pilotage ees haverisen just 1.8%.This is a common problem or ports. The Port o Venice

recently won an important victory in the Italian courts

with a ruling that the administration o such ancillary portservices such as pilotage and towage should become thepreserve o the local port and coastguard authorities.

Up to now these services have been in the handso monopoly providers operating under long-termconcessions, with the inevitable consequence that ees arehigh and increased on a regular basis.

Giving the ports more control over all the costs involved

in a cruise call is a start but, like many issues within theincreasingly globalised world o cruising, what may at rstseem a no-brainer to those on one side o the argumentdoes not have a single simple solution.

Nygrd Eeg: We now havea council, o which cruising isa part, along with the Coastal

Administration which controlsthe pilots.

Kusadasi, Turkey


26/124

Persuading Royal Caribbean International to bring the

original mega-ship Voyager o the Seas to Koper last

summer was a major coup or the Slovenian port.

But it was then that the hard work really began.

For the 3,838-passenger ship was not just making one

transit call it was making 22 o them.

The Port o Koper received its rst cruise calls in 2005.

Since then we have received more than 200,000 passengers

109,000 last year alone. To be ready or uture growth

potential rom larger ships and to be prepared or the arrival

o Voyager o the Seas last year we invested 2 million

dredging and putting in new enders and bollards, says

Terminal Director Bojan Babic.

The quay only has a small tent-terminal, but he was

rightly condent that this was suitable to handle passengers

o ships o all sizes. The operation is very ecient; we have

all the necessary acilities to service normal transit calls

with X-ray machines and metal detectors. Slovenia is a

part o Schenngen area and we should adopt the standard

Schenngen policy. Complete clearance procedure takes a

Ra Caribbeanwwe b te Kpereperience

Janez MacekJana ToljaBojan Babic

maximum 15 minutes he says.

Royal Caribbean monitored the rst two calls with their

X-Ray machines onboard, but the process went so smoothly

that they decided it was unnecessary or them to continue

doing so.

The inormation desk on the pier is manned by ve

multilingual sta, who give advice to those coming ashore

independently. But a more unusual pier attraction is the

ree wine and olive oil tasting, which is always available to

cruise visitors.

The passenger welcome is managed by the tourist

department o the municipality and overseen by Jana Tolja,

adviser to the Mayor. On the pier there is an electric train

with capacity or 100. It leaves every hal hour ree o

charge or the centre o Koper, which has a medieval

centre rich in Venetian Renaissance tradition, says Tolja.

And or just 1 there is an hourly 7-minute bus ride to the

shopping malls just outside the city.

Alternatively it is possible to take a hal-hour ride on

one o the Lipicana horses rom outside the terminal to

the city centre. The Lipica Stud Farm, which was ounded

in 1580 and is considered one o Slovenias cultural gems,

is where the rare Lipicana horse is bred. It has become a

popular excursion.

The municipality also produces a news-sheet which

summarises what is happening in Koper and the surrounding

area on each day. It includes a map and details o a walking

tour designed or independents; it takes a route whichincludes Kopers top ten highlights.

There is no shortage o taxis, and the drivers have been

made aware o the service levels required by international


27/124

visitors, says Tolja. They are allowed to oer three tours,

at xed prices rom 20 to 80.

There is space or up to 30 coaches close by, and local

tour operator Atlas Express packaged 21 dierent excursions

or cruise visitors.

The high activity-based tours proved highly popular,

says Director Janez Macek. More than 2,200 people

booked the 20km cycling tour, and a water rating trip on a

river in the Alps was also popular.

The best-seller, though, was the excursion to the Slovenian

capital Ljubljana, which is just an hour away. Once there

visitors could visit museums and galleries, take a river cruise

or enjoy a guided walking tour among its Baroque-style

buildings, cathedrals and bridges, and into the Tivoli Park.

There is also a sustainable tour taking passengers to

a small village in the hills. The locals have an open-door

policy, says Macek, so visitors can truly experience the

liestyle o this small rural community.

Atlas Express has access to 150 high-quality coaches,

and is gradually strengthening its group o guides. 20 are

currently undergoing training to add to the 50 we already

have, adds Macek. About 85% speak English and others

are fuent in Spanish, German and French.

Which was just as well, as the passenger mix on Voyager

o the Seas did not break down the way that had been

expected as: We expected 50% to be North Americans,

explains Babic. But as it transpired they accounted or

only 16%, with the rest coming rom all over Europe andScandinavia.

In act passengers rom the UK ormed the largest single

group, with 30% o the total. But wherever they came

rom, Royal Caribbean Associate Vice President Guest Port

Experience John Weis is certain that they enjoyed their visit

to Koper.

The experience in Koper is pretty extraordinary, he

says. The people are lovely, welcoming us with open arms

every time, and we have a great relationship with the town,

the port agent and the tour operators. I couldnt be happier

with the destination.

There really is no downside to Koper. We have a very

high opinion o the place, and only positive things to say

about the experience, he says.

We will soon have the ratings or last season, and I am

very much hoping it reads high or guest satisaction with

Koper. We measure the dierence between expectations

and reality, and I expect a positive result.

For us the destination is the core to the cruise

experience especially in Europe. Koper is clearly going

to be one o those up-and-coming Adriatic ports, and

we are going to look or ways to put it on to more o our

itineraries.

Cntact: Bjan Babic

Cruise Terminal Directr

Prt Kper, Slvenia

Tel: +386 5 66 56 159 Fax: +386 5 6395020

E-mail: [email protected]

Website: www.luka-kp.si


28/124

Cruise

InsightSpring

2012

28

Interporting the prosand consIt is the new buzzword in cruising, reports TonyPeisley, but just how global could interporting go?

AdamGoldstein

Kate O'HaraNeil PalombaFrancis Riley Alan Buckelew Robin ShawVirginiaQuintaitos


29/124

CruiseInsightSpring

2012

29

One o the many unexpected spin-os romthe industrys globalisation is that something

started by Costa Cruises simply to persuademore Italians to go cruising has now spreadaround the Mediterranean and across the Atlantic to theCaribbean.

This system o multi-embarkations within one itineraryis now called interporting, and it is no longer the solepreserve o Costa and its pan-European rival brandMSC Cruises. North American brands Royal CaribbeanInternational (RCI) and Norwegian Cruise Line (NCL)have also adopted it as they try to maximise their recentinvestments in Europe.

The attraction is clear: interporting has the potential toopen up new markets, and makes lines less vulnerable to

the vagaries o the source market around the homeport andto airlit disruption into that homeports country.

But this is by no means a guaranteed win-win situationor cruise lines as, i special attention is not paid toinventory management and also to the onboard challengescreated by a multi-point embarkation cruise itinerary,then there will certainly be trouble ahead. In act oneissue raised its very ugly head in the midst o the CostaConcordia tragedy when it became clear that saetydrills had inevitably become less structured with peopleembarking at dierent ports.

Policies on this are already changing as a result. MSC,

or one, now organises saety briengs immediately atereach new embarkation, instead o just within the required24 hours. But this is only one o a range o issues that thisstyle o cruising creates.

RCI President Adam Goldstein says: For many yearswe were very concerned about the implications or therhythms o the cruise experience i we had people gettingon and o at dierent places.

But, once it committed itsel to becoming a signicantMediterranean player and to source increasingly romEurope, the temptation to try interporting clearly overcamethose concerns. The change in the cruise dynamic turnedout not to be as signicant as we eared, says Goldstein. Itis something that we have to work on: making sure we give

the same excellent experience to passengers, whicheverpart o the cruise they embark at. But, as we have gainedmore experience o interporting, we have been able todeliver a positive experience or each sub-set o passengers.

Goldstein: For many yearswe were very concerned aboutthe implications or the rhythmso the cruise experience i wehad people getting on and o atdierent places.

Voyager of the Seas sails western Mediterranean cruises from Barcelona


30/124ROTTERDAMWORLDPORTWORLDCITYROTTERDAMWORLDPORTWORLDCITYROTTERDAM

www.cruiseportrotterdam.com

ROTTERDAM

The Cruise Terminal Rotterdam is a historic building, situated next to the Erasmus bridge. There is a 700 metre quay available and a

depth at the quayside of 12 metres to accommodate even the largest cruise ships. Cruise Port Rotterdam is a one-stop office for

anything you require in Rotterdam. Nothing is left to coincidence where safety and service are concerned and we work within our

frame of possibilities to prepare a warm welcome and a nice experience when visiting Rotterdam, Holland.

After a 2 hour voyage from the North Sea, ships moor at the Cruise Terminal Rotterdam

in the city centre, in the heart of Holland. The city and its surroundings oer history,

modern architecture, culture, beaches and shopping...


31/124

CruiseInsightSpring

2012

31

For example, we need more dedicated linguisticsupport i, say, 30% switch at the interport with a

dierent language to those who remain who embarkedat the homeport. We need the right entertainment,dining and activities programming available or the newpassengers, even while the original 70% are enjoying adierent rhythm on their cruise.

I they all speak the same language, says Goldstein, it iseasier to integrate the activities; i they dont, it is more o achallenge. But we have ound that we can make it work oreveryone.

Having come to terms with the onboard issue, RCIsconcern now is on the sales and marketing component.

The questions we ask ourselves now are: Can we ndan attractive number o passengers rom each interporting

opportunity? Can we maximise the occupancy, as the lastthing we want is spoilage o inventory between the mainhomeport and the interport? And can we achieve the rightlevel o revenues to support the programme?

easyCruises plan was that passengers should be able toget on and o anywhere like a bus service. We dont wantto oer that, and I certainly dont think we are headed orsix dierent embarkation ports on a one-week voyage that is not the kind o cruise experience we want to deliver.

But we are condent that we can handle up to twointerports on a cruise in addition to the homeport, as longas they always get o at the same place they got on a week

beore so that everyone has a one-week cruise.NCL started interporting more recently. Go back a ew

years and we werent doing it at all, says Vice Presidentand General Manager International Francis Riley. All

our revenue management ocus was on selling NorwegianEpic out o its Barcelona homeport rom Spain, and theincoming fycruise market rom North America and the UK.

We wanted to ocus on Barcelona, with everythingonboard starting with the sailaway parties geared tothe one embarkation point. As we progressed with ourMediterranean programme, though, we started doing somecommit deals with travel partners that involved embarking

passengers in Civitavecchia, Malta and Palma.Our partners were committing to a certain number o

cabins, which we then took out o inventory. They werealso responsible or the empty legs (or their cabins) at the

Riley: Looking into the uture,it could end up being 50:50sourcing or us between our mainhomeport and the interports.

Norwegian Jade will be interporting betweenBarcelona and Malaga next winter


32/124

Step off the ship and rightinto Montrals unique and festive

atmosphere, where old meets new and

Europe meets North America. A few

moments spent walking along the

inviting streets, shopping and indulging

in some local treats, and youll want

to take a few extra days to make the

experience last. Montrals port being

right at the heart of the city and only

20 minutes from the airport, theres noexcuse to let the opportunity slip away.

No cruise along the St. Lawrence River

would be complete without a stop in

Montral. Enjoy!

The Ultimate Saint-Lawrence

Cruise ExperienceMontral...

TourismeMontral,StphanPoulin


33/124

CruiseInsightAutumn2011

33

beginning and end o the season.That gave us our rst experience o interporting, and

also a taste or it. We thought we could be doing some othis ourselves as we built our presence in Europe.

We were a relatively small player there, while Costa andMSC were huge and had large shares o the main marketsin Italy, Spain and France. They needed interportingmuch more than we did initially, but it has now becomepotentially more important or us, too.

But we believe in crawl, walk, run, so we are startingconservatively. This summer Epic will still be homeportingin Barcelona, but also embarking in Civitavecchia andMarseilles. Next winter Norwegian Jade will be interportingbetween Barcelona and Mlaga or its Canaries cruises.

But as this is our rst real toe in the interporting water,there is no general ree-or-all. There are limited numberso cabins available in Italy while we learn how to manage

the inventory.It is the same in Marseilles, where we have set aside

about 50 cabins, and only or the peak summer months.This has been driven by commercial conversations with ourpartners in France and our own revenue management team.

I have led a lot o it, having recognised that that therewas more demand rom Italy than we were able to meet.Early indications or the summer are that the interports aregoing very well, and we have since trebled the cabins orItaly but doing it relatively ar out, so we can pull back ineed be.

There is no doubt the concept brings a range o benets.

As well as opening up new source markets, it means we arenot stuck i airlit is restricted into one o our homeportsbecause o a conerence or some other event.

It also gives us access to the same drive-to market in

mainland Europe that is so important or us in the USA. Inthe current economic situation in Europe it also gives usthe opportunity to use variable pricing i we so wish.

From a commercial point o view, it really is a no-

brainer. Looking into the uture, it could end up being50:50 sourcing or us between our main homeport and theinterports.

NCL also benets rom the (by comparison with otherbrands) unstructured nature o its Freestyle onboardproduct. Our passengers hardly notice anything dierentgoing on, especially on a ship the size o Epic, says Riley.

The only thing that the interporting passengers missis the sailaway party. So, when the number in a partialturnaround reaches a certain level, we will put on a party

just or those joining passengers.He agrees with Goldstein about the optimum scale o

interporting on a one-week cruise. A homeport plus two

interports is probably the maximum we could do without ithaving an impact on the onboard experience.

Riley also points out that NCL in conjunction withVirgin is already interporting in the Caribbean, withBritish passengers joining cruises that start in Miami andNew Orleans at ports in Jamaica and Mexico respectively.

For several years RCI has been operating partialturnarounds in Santo Domingo (Dominican Republic) andColn (Panama) as it builds up Latin American business tocomplement its North American sales.

Next winter the cruise line adds Guadeloupe as a partialturnaround or its Brilliance o the Seas cruises, and MSC

is planning to do the same with MSC Lirica, embarkingfycruise passengers rom France there as well as inMartinique. The target is to ll hal the ship this way.

The big issue in the Caribbean is that there are no

OHara: We have to managethe ships in a dierent way roma security perspective, but itis not a problem as long as wehave the right communicationbeorehand.

The historic castle set on the white cliffs of Doveroverlooking the harbour


34/124

Mount Pele is just one of many exciting itineraries to explore.Discover the perfect day trips at martiniquepro.org/cruise


35/124

CruiseInsightSpring

2012

35

source markets there which require the opening o newembarkation ports, says MSC Corporate Operating OcerNeil Palomba.

Back in the Mediterranean, RCIs Navigator o the Seaswill this year do its rst partial turns at Messina and atToulon, where the port is upgrading its La Seyne Terminalor the purpose.

Sister brand Pullmantur is returning to interport in Maltathis year ater a three-year gap, while it continues to dopartial turns at Bilbao and at Villeranche (rom where MSChopes to triple the number o joining French passengersthis year).

MSC is also doing partial turns in Cork or the rst timeon August and September cruises, and is increasing itsinterporting calls at La Rochelle.

Technically there is no limit to the number oembarkation points on a cruise, says Palomba. Theirchoice is driven by a number o considerations which donot necessarily include the logistics o the process, but will

certainly cover sales and marketing, yield and inventoryissues.

We rst research where our customers would like toembark and where they want to go rom there. Some portsare strategically more useul than others i they have goodrail or air links to make it easier or passengers to reach theships.

We do try to anticipate new trends and, as a result, ourcruises have been brought within reach o a greater numbero people.

Costa, which interports at Cretes Heraklion or the rsttime this year, has also been interporting in Northern

Europe with partial turns at Dover. Several ships haveinterported here, says the UK ports Head o Commercialand Marketing Kate OHara. 14 o our 136 calls last year,and 12 o the 152 scheduled this year, are partial turns.

We have to manage the ships in a dierent way rom asecurity perspective, but it is not a problem as long as wehave the right communication beorehand. We appreciatethat it can be the rst step in a ship homeporting here.

Probably the most elaborate interporting is related toworld cruises, on which lines like Cunard and Saga embarkpassengers or sectors at several points en route.

But or regular cruises, the concept may not t so easilyinto the style o every brand. Princess Cruises President

and CEO Alan Buckelew says: We do a little interportingwhere we have signicant source markets that could hopon the middle o a cruise and get o in the middle o thenext.

But we are predominantly North America-based and,where we do have signicant other source markets, such as

Australia and the UK, we actually homeport so it is not atool that we over-use.

We use most in South America, Asia and Europe butnot in enough numbers to have any problems onboard.Essentially this is about creating more homeportswithin a cruise, and the operational issues are relatively

manageable.For Saga Cruises, interporting could be utilised to exploit

some untapped markets. We now carry almost exclusivelyBritish passengers, says Saga Shipping CEO Robin Shaw,

but we believe there are markets out there, both local andex-pat, into which we can tap.

We have oces around the world, so it is a question oocusing them on attracting passengers rom their markets.

We can either fy people to the homeport or embark themalong the way. We are small and fexible enough to be ableto do what people preer.

Intercruises Regional Director Virginia Quintairos hasidentied various other challenges or those partiesinvolved in interporting. Ground handlers will see moredomestic turnarounds limiting services (such as hotels andtransers) required by passengers, and will have the extracost o stang-up or the turns in ports, she says.

They may also need to make greater investment tocover more ports, some o which may not be utilised everyseason, while shore excursions will have to be adapted tosuit the greater range o nationalities.

Interporting will be a catalyst to prolong the growth othe cruise industry because it shows greater considerationor passenger needs (by bringing ships closer to them), andit will develop more source markets.

I expect mass-market brands to increase interportingbecause o their larger ships, but Luxury lines may never

want to do it.In the extreme, interporting could develop into hop-on/

hop-o with people embarking/disembarking where andwhen they please possibly paying on a per call, per nightor per distance travelled basis.

Looking at the dismal easyCruise experience, this lastremains an unlikely scenario. In act, MSCs Palomba saysthis will never happen: We want passengers to enjoy theircruise as relaxation, entertainment and discovery, not justas a erry-style transportation rom one point to another.

But there seems little doubt that the inexorable riseo the current orm o interporting will continue or

the oreseeable uture. As Palomba says: It opens upopportunities, but also creates challenges. The secret isnding the balance, and understanding each potentialmarket.

Quintaitos Interporting willbe a catalyst to prolong the growtho the cruise industry because itshows greater consideration or

passenger needs"


36/124

T

he number o cruise ships using Stockholm or

turnaround calls is scheduled to reach 50 this year

equalling the highest number in the ports history.

Turnaround passenger numbers are likely to set

another record: up rom 71,000 last year to around 85,000

in 2012, out o an estimated 480,000 total passengers

another record.

We can really see the dierence since we ramped up

our eorts to attract more turnarounds a couple o years

ago, says Stockholm Cruise Network Project Manager

Josen Haraldsson. The economic impact rom these or

the city and our network members is signicantly higher

than rom transit calls, so we are very pleased with the

numbers.

Royal Caribbean Internationals Vision o the Seas has led

the way on its turnarounds, ollowed by Regent Seven SeasCruises, Silversea Cruises,Oceania Cruises and Crystal Cruises.

Ports o Stockholm Cruise and Ferry Passengers Manager

and Deputy Harbour Master Henrik Ahlqvist says: We are

Ecnicipact

bsteb recrturnarunsin Stck

Haraldssn: We are verydetermined t d what we have td t stay cmpetitive ater 2015 a year which we believe will besmething a turning pint r

the cruise sectr in Sweden.

denitely going or more o this business. Opening the new

terminal (Stockholm Cruise Center) in the Stora Tullhuset

building at Stadsgarden last summer has been a big help.

Stadsgarden, which is also the location or the Birka and

Viking erry services, is one o our cruise acilities operated

by Ports o Stockholm. The other three are Frihamnen/

Vartahamnen, adjacent to the docks on the northern

outskirts o the city, also the base or the Silja Tallink erries;Skeppsbron, right in the Old Town and primarily used by

small Luxury cruise ships; and Nynashamn, south o the city

and mainly used by the largest cruise ships.

At the Cruise Center terminal we can handle 3,000

passengers with no trouble, says Ahlqvist. And the

eedback on its operation has been very good.

Those passengers are coming rom an ever-widening

range o nationalities. In the second hal o the last decade

the most rapid growth was rom Southern Europe. This

trend has slowed down in the past couple o years, but

Italy/Spain still account or nearly a third o cruise visitors to

Stockholm. North America contributes about a quarter and currently the astest-growing source Germany approaches

20%.

We did initially have some issues with nding enough

guides with the right languages, especially Spanish, but

weve since resolved that, says Haraldsson. We now

have enough trained guides or all the nationalities we are

welcoming.

And there is no shortage o suitable, mainly upscale

hotels or the turnaround business. Last year alone six major

new properties opened including the Nobis, Radisson Blu

Waterront, Scandic Grand Central, Elite Eden Park and Elite

Hotel Marina Tower and the budget Connect.

Opening this summer will be at least one major new

city attraction: the Museum o Spirits (Spiritmuseum)

incorporating the Absolut Art Collection. This promises a


37/124


38/124

Cruise

InsightSpring

2012

38

Cruisingshidden quarterThree-quarters o global cruising may be controlled by the major mega-ship-owning companies, but that means a quarter isnt. Tony Peisleytalks to some o those collectively responsible or operating what one othem accurately describes as a sizeable chunk o the business.


39/124

CruiseInsightSpring

2012

39

The mega-companies with their mega-shipsmay have bought or simply blown awayall competition in North America, but theindependents with their smaller ships (styled as

classic or budget) are still alive and kicking in Europe.There have been casualties in recent years, with Spains

Happy Cruises only the most recent, but many otherscontinue to trade relatively successully although, justlike the big boys, it has been ar rom easy or them overthe past three years.

One o the largest, Cyprus-based Louis Cruise Lines, hashad to scale back its Mediterranean operations drasticallythis year, laying up ships in the process. And in the UK,Cruise & Maritime Voyages (CMV) Operations DirectorRichard Bastow has been in the thick o the battle toovercome the impact o economic downturn coincidingwith constant upward pressure on operating costs.

2011 was without doubt our most challenging year,says Bastow. It was one o rising costs and reducing yields,which meant having to ll the ships at any cost to try tomake up with volume or the lost revenue.

This in turn creates other issues, such as having thewrong type o passengers. The more cheapies you get, the

more it can alienate your usual clientele.My aim is always to increase onboard revenues and reduce

costs, while still maintaining the quality o the product.Concentrating on volume passengers does ll a hole in theticket revenues but, i they dont spend onboard (and theytend not to), it does make you wonder i its worth it.

One o our competitors did decide to depart with 3040empty beds rather than discount heavily at the last minuteand risk damaging the product quality. But we simply cantaord to do that i we had another year like last year wewould have to ll up the berths again. Fortunately 2012got o to an excellent start, even though we were late out

with our programme.In act we have had a very steady booking period since

July, and sold out our winter programme.For winter 2010/11 we struggled badly the very cold

Richard Bastow

Nigel LingardRobin Shaw

Fraser Ellacott

Bastow: One o ourcompetitors did decide to departwith 3040 empty beds ratherthan discount heavily at the lastminute and risk damaging the

product quality.


40/124

PHOTO:

Den

isVINSON-C

ORBIS-

Com

itdu

Tourisme

desle

sde

Gua

de

loupe

Basse-Terre, Grande-Terre, La Dsirade, Les Saintes, Marie-Galante

the 5 sides of paradise

Guadeloupe Islands Tourist Board (European Office)

23/25, rue du Champ de lAlouette - 75013 Paris

Tl. : +33 (0)1 40 62 99 07 - Fax : +33 (0)1 40 62 99 08

E-mail : [email protected]

www.lesilesdeguadeloupe.com


41/124

CruiseInsightSpring

2012

41

weather did not help us sell our cruises out o Tilbury, andthe media had talked us into a recession. Although theyhave tried to do that again this year, people are ortunatelystill spending.

We were out early or next winter, which is vital not somuch or advance cash fow but because we are more likelyto get close to brochure rates on early bookings.

CMV operates two ships on charter: Marco Polo andOcean Countess. It has usually operated Marco Polo out oTilbury, with Ocean Countess using various UK regionalhomeports; but this year there are regional departures orMarco Polo, too.

This is a direct reaction to the poor spring we had in2011, when we scheduled a couple o southbound cruiseswhich did not work, says Bastow. The southboundmarket is getting too saturated [rom southern UK ports],with all the other mega-ship brands cruising rom Doverand Southampton.

We also wanted to boost our northern market because

Leith departures, in particular, attract very good ratesrom passengers. So we decided to take eight weeks outin the spring or Marco Polo to sail out o Leith and Tyne(Newcastle).

Our traditional market wants to cruise north, but thereare times when we have to go south or get complaints rompassengers asking why we dont cruise to the Canaries orthe Mediterranean.

But when we do oer these cruises they are dicult tosell. The trouble is that we are not picking up rst-timers togo south any more. They used to be a good, staple source,but nowadays they wont go on the smaller ships they

only want the big ones.This is simply a perception o value. Getting 100,000tons or 699 or two weeks inevitably appeals to them,and it is only when they get there that they realise they aresharing their value experience with 4,000 other passengers.

The net result is that the old Budget sector business builtup by the likes o Airtours and Travelscope in the UK hasnow switched to the mega-ships.Well not entirely, it must be said. Although it would

position itsel above the Budget level, and its ships havegradually crept up to average around the 1,500-passengerlevel, Thomson Cruises does attract its share o rst-timersto its essentially mass-market but non-mega-ship product.

Although it is part o major travel company TUI Travel,which has some other (non-UK) cruising interests and isthe third largest brand in the UK, it is not owned by a majorcruise group and so shares many o the same challenges assmaller and less well-resourced independent brands.

In act, CMV took care to avoid going to head-to-head with Thomsons departures rom the port when itscheduled Marco Polo out o Tyne.

Thomson itsel has only returned to UKUK cruising thisyear ater a two-year break. The decision was made beoreFraser Ellacott arrived as its new Managing Director earlyin 2011; but, he says, The decision has proved the right

one because the demand or this years cruises has beenexceptional.With the cruise operation part o a vertically integrated

company that has its own airline and contracted hotels, the

fycruise programme nevertheless remains at the core owhat the brand does.Although it continues to charter (primarily rom Louis)

rather than own its ve ship feet (including the separatelybranded Island Escape), he says that the vertical integrationenables Thomson to exercise better quality control and

provide a seamless service to customers.Having the option o 22 UK regional airports means thatour cruise holidays start within a hour or twos drive o alarge part o the population, says Ellacott.

But it does leave the company exposed to the escalatingcost o fying, particularly with the imposition oeven higher air passenger duty (APD) rom this year.This particularly aects its winter Caribbean fycruiseprogramme.

The last thing we want to do is just pass on these taxesdirectly to the customers, says Ellacott. The Caribbean isa very popular destination or us, and something we wantto continue to oer in the uture; but the APD rise has a big

impact on the selling price.It is a challenge one o a number our travel industry

aces but we just have to be innovative to overcomesuch problems.Another problem is the escalating cost o marine uel . We

have a total uel management system that we operate withour ship-owning partners, and we are always looking athow eciently we operate the ships and their itineraries.

Destinations are all-important, though, as we knowthey are a big decider or bookings. But we also have to beaware o the impact o the planned MARPOL requirementsin 2015. We have a team looking at exactly what changes

we will have to make.Our stand is absolute support or regulations on

sulphur, but we must be given enough time to develop thetechnologies. Devices like scrubbers need a lot more ocus.

Ellacott: Our stand isabsolute support or regulationson sulphur, but we must be

given enough time to develop thetechnologies.


42/124

Cruise

InsightSpring

2012

42

Fuel cost is inevitably a crucial operational area or brandsoperating older, usually less ecient, ships. Saga ShippingCEO Robin Shaw says o the Saga Cruises operation: Weare very ocused on costs, as uel is only likely to becomeeven more expensive both as a product and also with thenew rules on using more costly, low-sulphur types.

But our itineraries remain marketing-led, as there is

no point in operating cruises with ewer ports i it meanswe have to lower prices to persuade people to bookthem. Losing a couple o pounds on the per diems soonoutweighs any uel cost saving.

Our starting point is what our passengers want. Aterthat we can tinker with a change o an hour here and thereto departure times, but reducing time in port has to beweighed against passenger appeal and shore excursionrevenues.

It is always a ne balance, but Ive seen seven-day cruisesmarketed with just three ports. I dont think that is the wayto go it is taking uel savings too ar.

But uel cost was a actor in the short-lived nature o

Sagas move towards more regional departures a ew yearsago. The two ex-UK ships now cruise only rom Dover andSouthampton.

Also, says Shaw, we believe that our chaueur carservice to join ex-UK cruises, and our regional departuresor the fycruises, eectively bring our customers to theships instead o having to bring the ships to them.

CMVs Bastow adds: Our itineraries are seeing a airamount o modication to oset the rising uel cost.

We used to have a lot o double calls, with a hal-day ineach port. These have all been cut out, but people come onour ships to go places so we cant be seen to be dropping

lots o calls. They simply wont book a one-week cruisewith just three ports.

Onboard spending is important or us, though o courseit is not at the level o the mega-ships. But ewer ports

means ewer shore excursions to sell, and the revenue romthem is very important to us.

But because o the high marine gas oil prices even thetime we spend in EU ports is now much more expensivebecause o new regulations. It is becoming almost as costlyto be in port as to be at sea, and that is just not helpul.

Ellacott says: This whole regulatory issue is being

considered within the strategic review into our whole cruisebusiness that I initiated last year especially as it impactsour decisions on the long-term disposition o the feet.

We are also looking at the whole product and branding.This is going to result in some exciting developmentsor us, which we will make known later this year. Themodernisation o the feet, though, is certainly a long-termobjective, although there are also many things we can do toenhance the brand on our existing ships.

We have some key USPs notably the no tips andservice charges policy and our cruise-and-stay programme.In act I believe there is a lot o scope to develop that parto the business.

Traditionally lines have used cruise and stay to tempt rsttimers unsure about committing to a holiday which is solelya cruise. But now, says Ellacott, a new market is developing.

Whereas rst-timers would normally take the stay partrst, we are now nding that on port-rich itineraries suchas our Red Sea one our more experienced passengers arelooking to add a ew days at the end to chill out. I want toexpand the fycruise and stay oer, and will look at wherewe might align with those sub-brands within the hotel sideo our company.

I am also excited about some o the uture destinationswe are going to bring into play. Libya is denitely one, as

and when the situation stabilises there.But the real opportunity or us will come when our

airline takes delivery next year o a new long-haul aircrat the B787 which has a antastic range o up to 8,000


43/124

CruiseInsightSpring

2012

43

nautical miles. That means it can reach South America andAsia, which are out o the reach o our current long-haulplanes.

In two or three years time these will be our new (mainlywinter) destinations, and we will be rming up our plansover the next year or so.Although it has always promoted itsel strongly as a no-fy

cruise brand, CMV has never been averse to the idea o itsown fycruise programme.

It has always been in the plan, says Bastow. I we couldget to the position o having a third vessel on a seasonalbasis, we would operate it in the Mediterranean romspring through to autumn.

It is dicult to make money on a small fycruise ship,and we are not even thinking about it at the momentbecause o the prevailing high fight costs. But ourintention is to expand; and we need fycruising to do that,because there is a limit to how ar ships can reach runningat 16 knots out o the UK.

Bastow is also ocused on the impact o the 2015regulatory changes. We need to plan ahead, but whatno-one can predict is how the markets are going to react toolder, classic ships like ours a ew years down the line.

Inevitably some o the traditional market or themwill literally be dying o, and we have to replace thosepassengers rom somewhere.

We do pick up some business rom second-timers people who go on mega-ships rst. They like the cruiseconcept but not the crowds, so switch to our smaller shipsor their second cruise.

But we cant be sure whether that will continue much

beyond 2015. It only needs another social revolutionsimilar to that which has happened in the media or shipslike ours to go out o ashion.

There will be opportunities to upgrade our feet whenthe larger brands ofoad older (but still more modern)ships than ours, but we dont want to go rom an 800 to a2,000 passenger ship. The next step up should be to 1,200passengers, but there are not many ships o that capacityaround.

For economies o scale, 1,500 passengers is probablybest or us anyway; but that is still a big jump or ourpassengers. Would they accept it? They may have to, as thesmall-to-medium-sized ships could be less a niche than a

distant memory by the end o the decade.That would be a shame, because there is nowhere else in

the world with such a wide range o cruise products as inthe UK.

But the nature o the passengers attracted by the smaller,classic cruise ships is already changing in any case. NigelLingard, who stepped down as Marketing Director o Fred.Olsen Cruise Line (FOCL) at the end o last year, saw thisat rst hand during his 23 years with the company.

Passengers have changed physically, becoming muchtter. People in their late 60s or early 70s now considerthemselves late middle-aged rather than old. They are

much more active and are up or a lot more in the way othrills and spills, not just on land but also onboard.

They have to be oered a more active nightlie, as theyare not all in bed by ten oclock any more. But then you

will need a larger ship to oer all the options at multiplevenues, so that those who do want to be quiet and read abook can do so while those who want to go dancing canalso be catered or.

Middle England is also now much more adventurous inits eating. Lines cannot get away with just serving roast andtwo veg any more.

At FOCL we ound with our older ships that to balancethe less-than-wonderul tonnage we needed better sotware:our-star-plus ood on a three-star-plus ship equals a our-star rating.

Passengers also have more enquiring minds now, andneed a much more cerebral experience onboard thanbeore.

Things have not changed that much on the operationalside, but the degree o measurement o compliance andthe standards required or certication do make it morelabour intensive. Lines can no longer simply say they aredoing it they need a department to produce a manual todemonstrate that they are complying, and that creates a

larger overhead.On the other hand technology has moved on, so there

may be scope or reductions in deck and engine crew; butthese do need to be slightly better educated and trainedthan in the past. Fortunately the Third World is producingpeople with good education and technical skills, in anenvironment where there are limited job opportunities.As ar as the passengers are concerned, it is not just their

tness levels that have moved on. The over-50s comprisethe astest-growing users o social media, and they havenow become key players in the new digital age.

Saga Cruises, like its sister travel company Saga Holidays,

specically targets the silver surers. We now have a TripAdvisor-style eedback orum where people can tell us whatthey think o their cruises, says Shaw. And we welcomecriticism so long as it is not oensive.

Bastow: Even the time wespend in EU ports is now muchmore expensive because o newregulations. It is becoming almostas costly to be in port as to be atsea, and that is just not helpul.


44/124


45/124

CruiseInsightSpring

2012

45

On our new ship Saga Sapphire we are going to makeiPads available, and there will be WiFi zones around theship. With

Documents

Cruise Insight Spring 2012