The sinking of the Costa Concordia in January 2012 sparked a turbulent year for the cruise industry in Europe, writes Michelle Grant, travel and tourism analyst at Euromonitor International.
"The sinking of Concordia in January 2012 impacted the entire European cruise market with bookings declining in the months after the accident.
Carnival Corp held prices steady after the accident and monitored consumer sentiment through weekly surveys.The company felt enough time had passed for it to restart its marketing campaigns in Costa's key markets of Italy, France and Germany at the beginning of April. The company found that it needed to discount by 20-30% to get experienced cruisers back on the ship—first time cruisers are still wary of cruising after the accident according to the company's research. The efforts have been working as the company stated in its second quarter call with investors that booking volumes for the Costa brand were up by 25% in May through June 2012 compared with the same period in 2011.
While the cruise industry gradually recovers from the reputation damage inflicted by the Costa incident, the economic troubles in Europe are also impacting performance. The pricing picture varies by country, but in general, yields are down in Europe for Carnival and Royal Caribbean. Both highlight significant weakness in the Spanish market due the severity of the country's economic problems. Spain is the fourth largest source market for passengers, accounting for 11.4% of European cruise passengers in 2011.Royal Caribbean's Spanish brand, Pullmantur, has gone from sourcing 87% of its customers from Spain to 40%, shifting more towards South Americans and Brazilians.
The good news is that Northern European markets are holding up relatively well. Carnival noted that the UK has been doing well and Germany bounced back from a dip earlier in the year. Those countries account for 49% of European cruise passengers.
European Cruise Passengers by Source Country 2011
Other EU + 3
Source:European Cruise Council
Population Over 65 in Western Europe 2011/2016
Population over 65 in Western Europe (000s people)
Share of Total Population(%)
Friday, August 17, 2012