Growth challenges

Cruising to success?

One segment of the tourism market is standing out as the growth champion at present. But is it all plain sailing for the cruise business?

Regardless of who you talk to in the German tourism industry these days they all agree on one thing. There are plenty of uncertainties about how demand for winter 2015/16 and summer 2016 might develop but cruises are riding on a wave.

Bookings for ocean cruise holidays are soaring at present with strong double-digit growth, as the latest figures from TATS show. Long seen as a niche business, the segment is fast approaching 20% of the overall German tourism market. As the recent exclusive fvw study showed, German travel agents are confident that this growth will continue for the foreseeable future, expanding the market size by about 50% to three million passengers by 2020.

Not surprisingly, many shipping and tourism companies are investing strongly in the cruise sector which they see as a lucrative area for profitable growth. In Germany, both TUI Group and Aida Cruise, part of the Carnival Corporation-owned Costa Cruises group, have ordered more ships for the next few years.

So is it a clear horizon and full steam ahead for the cruise industry? No, far from it. In fact, there are diverse challenges looming ahead, including over-capacity, pricing, insufficient land infrastructure and environmental issues.

German travel agents, who should know their customers best of all, warned in the fvw study that prices could drop due to over-capacity and predicted relatively low demand for the new generation of mega-liners for up to 5,000 passengers. This is worrying. Most cruise firms still declare that “big is beautiful”, pointing out that large ships can offer the best holiday experience with a wide range of activities. But will more and more customers really want to holiday in these gigantic ‘floating hotels’? Or could smaller vessels offering more space and personal contact make a comeback?

Pressure is also increasing massively on ports and destinations as these large ships empty out thousands of tourists at a time who then flood through city centres and crowd out the most famous tourist attractions. Some destinations are already talking about imposing limitations on cruise passenger numbers so that their infrastructure can cope.

Environmental concerns have not disappeared either. New ships are certainly much better performers in terms of emissions than their predecessors. But there is still much to be done, especially in terms of fuel and waste discharges.

So it was encouraging to see that cruise executives faced up to these topics at the recent Seatrade Europe conference. The next stage will be to discuss them with other organisations and also consumer representatives, and then take active steps before the generally good image of cruise holidays starts to be damaged.

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