North America dominates the world market for cruising with an estimated 9.8 million passengers in 2004 or 73%…
North America dominates the world market for cruising with an estimated 9.8 million passengers in 2004 or 73% of the world total of 13.4 million passengers. With a population of nearly 330 million that’s equivalent to a penetration rate of 4% or 1 in 25 North Americans cruising each year. Western Europe with a population of approximately 282 million has only 2.8 million passengers, equivalent to a penetration rate of 1% or 1 in 100 Western Europeans cruising each year. The difference between the North American and Western European markets illustrates the enormous untapped potential of Western Europe as a source market although Western Europe does not have the homogenous consumer base that has encouraged the development of the North American market.
Western European Cruise Market by Country 2004
|
Passengers (000s) |
2003 |
2004 |
% change |
|
UK |
964 |
1,029 |
7 |
|
Germany |
529 |
551 |
4 |
|
Italy |
346 |
400 |
16 |
|
Spain |
307 |
300 |
-2 |
|
France |
212 |
222 |
5 |
|
Switzerland |
47 |
50 |
7 |
|
Austria |
35 |
38 |
10 |
|
Sweden |
33 |
29 |
-12 |
|
Norway |
16 |
21 |
29 |
|
Belgium |
21 |
21 |
0 |
|
Netherlands |
22 |
21 |
-5 |
|
Greece |
42 |
14 |
-66 |
|
Portugal |
14 |
14 |
1 |
|
Denmark |
5 |
6 |
27 |
|
Finland |
2 |
2 |
28 |
|
Other |
69 |
85 |
23 |
|
2,662 |
2,804 |
5 |
Source: ECC/IRN Research
The Western European market can be thought of as the five core markets; UK, Germany, Italy, Spain and to a lesser extent France with the rest of the Western European markets tapping into the supply to these core markets. The five core markets are characterised by major national cruise line operators and a string of overseas operators and niche operators competing for the market although it can be argued that France does not follow this model as it does not have a national operator as a market leader. The fragmented competitive structure of the Western European cruise industry means that Western Europe has been less cohesive that the North American cruise industry but this is beginning to change with the formation of the European Cruise Council in 2004.
From its inception, one of the cohesive objectives of the European Cruise Council was to provide an authoritative size of the Western European market. In 2004 and 2005, it commissioned IRN Research, to survey all cruise lines marketed in Western Europe for passengers by market and broad destination. Although not all cruise lines participated in the survey, and those that didn’t were given estimates, there is, for the first time, an authoritative assessment of the size of the Western European cruise market.
In 2004, the Western European cruise market grew by 5% to exceed to 2.8 million passengers. However, market growth was not consistent throughout the region and the national markets of Greece, Sweden, Netherlands and Spain contracted. One of the principal reasons for the contraction in these markets was the demise of Festival Cruises and Royal Olympic Cruises (ROC) but as most of the ships from these operators have been redeployed by other European cruise lines in 2005, it is likely that this contraction in these markets is temporary. There is no doubt that the underlying growth in the Western European is nearer to the growth in world demand of around 8%.
The top five markets in Western Europe account for 90% of the market. Any trends in these markets or moves by major competitors in these markets will have great effect on the Western European market overall. The major operators in the UK, Germany, Italy and Spain have added capacity in 2005 and capacity is in place to allow for increased growth in Western Europe overall.
While the ECC is bringing a cohesive voice to the European Cruise industry, it is unlikely that a homogenous Western European product will develop in the short term as the cultural and language preferences for leisure products in the five main markets remain strong. The national players in the five main markets will continue to dominate their own markets while they will continue to infiltrate subsidiary markets. Nevertheless, North American cruise products are growing in Western European markets and the large Italian operators are successful at crossing national boundaries. There are parallels in other industries.
Cruising is one of the fastest growing travel markets and now commands over 5% and nearly 3% of the outbound package holiday markets in the UK and Germany respectively. The financial impact of cruising is even greater. More than ever, it is important that Western European market trends and competitive structure are tracked. This is one of the main aims of the ECC and it is encouraging its members and others to help it achieve that end with its collection of market statistics.
Theodore is the Co-Founder and Managing Editor of TravelDailyNews Media Network; his responsibilities include business development and planning for TravelDailyNews long-term opportunities.
