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Cruise industry’s trust in further growth suggests continued prosperity in Falklands

Albeit intensely debating the global economic downturn and its impact on tourism, this year’s Seatrade Miami Cruise convention – the world’s most important gathering of cruise industry professionals – has emitted a generally positive signal: The industry believes in continued growth.

However, cruise lines and destinations – including the Falkland Islands which are just approaching the end of another record-breaking season – also face important challenges.

In this feature Frederik Naumann * summarises the main trends revealed at the Seatrade Miami 2009, putting them into context with the recent development of cruise tourism in the Falklands and South Georgia.

“The world of today is a very different one from that of twelve months ago, but although the cruise industry is not recession proof, it is better placed than many other travel sectors to weather the economic storm.

Our research shows that people are still looking to go on holiday and the inclusive nature of a cruise, along with exceptional service and exciting destinations, means its future continues to look assured”.

With this statement, William Gibbons, Managing Director of the UK based Passenger Shipping Association (PSA), aptly summed up the comments of many cruise trade professionals who gathered at the 25th Seatrade Cruise Shipping convention in Miami, USA, from March 16 - 19.

Ever since it first took place in 1985, “Seatrade”, as it is simply known in cruise circles, turned into an important sentiment indicator of an industry which has recently gone through unprecedented growth. This year many cruise tourism stakeholders – including destinations, port agents, tour operators and others – were particularly excited to learn what the industry leaders had to say about their expectations in times of global economic turmoil.

They got an altogether encouraging response: Although cruise shipping is facing serious short-term challenges the industry remains unanimously positive about its medium and long-term growth perspectives.

Adam Goldstein, President of renowned Royal Caribbean International, claimed there was, “a one hundred per cent chance that the trend of global expansion of the cruise industry will continue,” and while admitting that this development was not

made any easier by current conditions he still said, “it isn’t going to be stopped by them.”

Industry analysts predict between 13.4 and 13.5 million people will go on a cruise this year, corresponding to an increase of about 2.3% of last year’s result. Compared to previous years this is a modest rate – on average, the US cruise industry alone has grown by 7.4% annually since 1980. Longer term, however, experts predict a return to stronger increases, not at least on the important European source market. According to figures released by the European Cruise Council (ECC), the number of Europeans taking a cruise reached a new all-time high in 2008, totalling 4.4 million (+10% compared to 2007).

The British market, which accounts for one third of all European cruise passengers, grew by as much as 11%. David Dingle, ECC Chairman and CEO of Carnival UK (to which – among other brands – Cunard belongs), pointed out that the number of European cruise passengers has grown by 66% in the last five years. “This is a tremendous result and suggests cruising is in a strong position to face today’s challenging economic climate,” he said, adding, “We anticipate the upward trend in the number of Europeans taking a cruise holiday to continue in 2009.”

A German analyst went even further, predicting that the number of German passengers will double from one million this year up to two by 2018 – in spite of the current economic downturn. Yet, despite such optimistic assessments, certain impacts of the crises became quite obvious at the Seatrade Convention:

Cruise holiday booking patterns are in a process of severe change, with consumers increasingly deferring their booking commitment closer to the sailing date. Moreover, operators are attempting to attract passengers by slashing prices and offering all sorts of discount packages. This, in turn, results in a pressure on yields fuelling the trend towards larger ships carrying more passengers. However, cruise professionals agree that significant demand will also continue to exist for smaller ships including expedition cruise vessels.

Demanding times for cruise destinations

Despite generally positive indications of continued market growth, the current price slashing creates a challenging environment for destinations, port agents and local tour operators.

“There is in fact a double-sense challenge for these cruise tourism stakeholders,” an experienced travel professional commented, “while requiring at least the same level of quality and service as before, the cruise lines are currently attempting to cut costs wherever they can. Onboard sales, which include shore excursions, are becoming an ever more important revenue source in times of fare slashing.”

Creating uniqueness for their visiting passengers and value for the cruise lines is thus the order of the day for all cruise destinations in this fiercely competitive environment.

“The successful destinations have done something in a truly authentic way and they look at the experience from the guest standpoint,” commented Terry Thornton, Carnival Cruise Lines’ VP Market Planning, in Miami.

A successful Caribbean shore excursion operator suggested destinations should create “unique experiences” and find out what guests were really looking for, working closely with cruise lines and listening to their visitors. Another speaker added that, “attention to the overall welcome” of a destination might also contribute to the success of a destination:

“Friendly staff at the port and a helpful taxi driver can form an important part of a destination’s positive image, while local people treating cruise passengers in a dismissive manner have every potential to spoil a port’s image in these competitive times”.

Luxury cruise lines, such as Silversea Cruises (which recently called at the Falklands with their MV Prince Albert II), have begun to develop shore excursion branding in order to make orientation for their passengers easier. Presenting them under the brands of ‘Silver Shore Collection’, ‘Silver Shore Expeditions’ and ‘Silver Shore Concierge’, the cruise line offers its guests various sorts of excursions meeting different tastes. Tours typically offered in the Falklands fit into the ‘Silver Shore Expeditions’ brand which aims to offer passengers light adventures.

The Falklands experience from a passengers point of view

In light of the comments made at Seatrade Miami it is interesting to hear what cruise passengers have to say about their stay in the Falkland Islands. A recent survey conducted by the Falklands Islands Tourist Board (FITB) reveals a thoroughly positive assessment: Out of 377 passengers interviewed at the Stanley Jetty Centre from October 2008 until February 2009, 98% rated their stay as good or even excellent. Fritz Lücke and Christel Aschmoneit- Lücke, two German passengers who recently visited the Islands onboard the expedition cruise ship M/V Bremen, are an example of satisfied cruise guests. Considering their visit “enriching” and “an adventure adding much to the Antarctica cruise”,

Mr Lücke gave a brief account of their visit. He and his wife, two highly experienced travellers who have seen many parts of the world on either private or professional journeys, arrived at Stanley on February 28, towards the end of their 22-day cruise onboard Bremen. Among other sites, they visited the Falkland Islands Museum which left a particularly good impression: “We found it very well done and charming,” Fritz

Lücke revealed, “it gave us an absorbing roundup of the place we were visiting”. Also Stanley itself, which the two travellers found to be, “truly British in the best sense of the word,” was received favourably. Next day, on March 1, Bremen called at Carcass Island and New Island, tendering her passengers ashore by zodiac.

While they found their stay at Carcass – which featured teatime at the McGills’ farm – an interesting and “fancy” insight into farming life, they were particularly impressed by New Island and its abundance of wildlife. Standing on the cliff top they felt instantly reminded of Norway. Fritz Lücke commented: “this place, with its abundance of albatrosses and penguins, turned into a breathtaking experience for us.” By the time they left the Falkland Islands bound for Ushuaia (the end port of their cruise), Mr and Mrs Lücke had gained many new impressions. “It is definitely worth visiting the Falklands”, the two commented, adding that they found their stay and the accompanying excursions, “very well and professionally organised.”

However, what they also particularly remember is the warm welcome they were given: “We found the people in the Falkland Islands extraordinarily friendly and we were pleased how easy it was to get into contact with them. For instance we called at a restaurant in Stanley for a meal and instantly got talking with the owner there,” said Fritz Lücke. Apart from the organised excursion programme not at least these chats shaped their positive impression of the Falklands.

Falklands and South Georgia statistics

Like the M/V Bremen with the Aschmoneit-Lücke couple on board, many cruise ships call at the Falklands in the context of an Antarctica cruise. The Antarctic itself is going through a drop of passengers this year, with a forecast made by the IAATO in February indicating that volumes might total 36,000 after 46,069 in 2007/08. Preliminary FITB statistics reveal a different trend: The Falkland Islands are expected to close this season with a new record of some 64,000 cruise passengers after 62,489 in 2007/08, corresponding to an increase of about three per cent. Over the past ten years the number of cruise passengers visiting the Falklands has grown dramatically by some 225%, starting from 55 calls with 19,638 guests in 1998/99. Average annual growth has been about 13%. The average number of passengers per cruise ship arrival has likewise grown, increasing from 407 in 1997/98 to 523 in 2007/08 (+28.5%).

Contrary to the Falklands situation, the Government of South Georgia and the South Sandwich Islands (GSGSSI) does not foresee a new passenger record this season. Government Officer Emma Jones expects 2008/09 to close with about 7,800 passengers arriving onboard 72 ships. Last year, the South Georgia Government recorded 64 ships bringing 8,089 visitors. Yet, again, longterm growth is significant: Compared to 1998/99, when a total of 29 calls bringing 2,180 visitors were registered, passenger figures have increased by 258%. The average number of passengers per landing grew from 75 to 108. South Georgia’s three most popular landing sites are Grytviken (visited merely for the South Georgia Museum, Ernest Shackleton’s grave, the Whaler’s Church and the disused whaling station), Gold Harbour and Salisbury Plain. All vessels visiting South Georgia are required to call at Grytviken at some point to clear customs.

As from this season regulations for cruise tourism in South Georgia and the South Sandwich Islands have become more restrictive, with vessels carrying in excess of 500 passengers no longer permitted to visit the archipelagos or to enter within 12 nautical miles of the territorial baseline. A single exception has though been granted for a ship with more than 500 guests as the visit had been booked before the new regulation entered into force.

Outlook for 2009/10+

Both the FITB and the GSGSSI indicate it was too early to give a forecast about the 2009/10 cruise season at this stage. A number of calls for next summer have already been scheduled in the Falklands, featuring familiar vessels such as “Expedition”,

“ Le Diamant”, “Amsterdam”, “Deutschland”, “Bremen” and “Hanseatic”. Indicators suggest a continuing interest in expedition and luxury cruises which account for most of the calls in the region – for example, the German Travel Association (DRV) recently claimed this segment had been among the most stably developing ones over the past months. Nevertheless there are challenges on the horizon, such as a trend towards shorter ‘homeland’ cruises departing directly from ports in the USA or Europe without the need of long transfer flights, or the retirement of some elder ships due to new safety regulations. Moreover cruise operators are intensely amending their schedules in response to the market challenges brought about by the global economic crisis. All these developments will also impact on the South Atlantic – as an example, the port of Ushuaia expects a reduced number of cruise ship visits during the 2009/10 season.

However, there are encouraging developments as well. Only last week, a new expedition cruise ship has been re-delivered after a lengthy 15 million USD conversion in Rauma (Finland) – the 105 metres long MV Expedition was rebuilt from a former Baltic Sea ferry initially inaugurated in 1972. Fitted with completely new cabins and public areas, the handsome ship carrying up to 120 passengers will operate for Canadian G.A.P Adventures.

She eventually replaces G.A.P’s M/V Explorer which was lost near the South Shetland Islands on November 23, 2007. Operating under the brand of ‘Expedition Cruises’ and an own logo, the new Expedition is going to be deployed on Antarctica itineraries as from the forthcoming 2009/10 season. She will call into the Falkland Islands and South Georgia for the first time on a 22-night itinerary from Ushuaia to Antarctica in the beginning of November.

By Frederik Naumann. The author of this feature works for a German maritime services company and writes for a number of shipping and logistics trade publications. He is in the process of preparing a portrait of the Falkland Islands for “Seatrade Cruise Review”, one of the cruise industry’s leading magazines. The article will be published in June. Source: Penguin News