Europe has been a lucrative source market for the major cruise lines during the past few years, but due to the Costa Concordia accident and myriad economic issues affecting several European countries, 2012 could be a “soft” year for bookings from the continent, an analyst from UBS Investment Research said.
The analyst, Robin Farley, said in a research note that 56% of revenues from Carnival Corp. brands were generated from non-North American passengers in 2011, a figure that included its Europe-based lines as well as European passengers who cruised on the its North American brands. In 2010, that figure was 54%, Farley said.
At Royal Caribbean Cruises Ltd., 49% of ticket revenues came from non-North American guests last year, compared with 45% in 2010, and the company has said it expects the percentage to exceed 50% in 2012.
Major lines continue to rely on significant sourcing from Europe this year, based on deployment decisions that were made 18 months ago or longer.
“The Concordia accident, given its proximity [to Europe], could impair for 2012 the torrid passenger sourcing growth that the industry had seen in Europe over the last 10 years and continue to be a headwind to European yields," Farley said in the note.
“Europe has become an increasingly important sourcing market for the cruise lines, with 36% to 37% of Carnival Corp.’s 2012 capacity and an estimated 35% to 40% of RCCL’s sourcing capacity allocated to Europe,” Farley said.
Farley, like the cruise-line executives themselves, said she believed any downturn in European bookings would be short-lived.
And over the longer term, she indicated, the Europe source market is ripe for the picking. In 2011, Farley said, 6.1 million Europeans cruised, a 9% increase from the previous year. And there are more than 700 million Europeans, she said.
Disney's decision
The Concordia event, coupled with economic obstacles in Europe and the spike in air fares this year, will have a lesser impact on cruise lines that are deploying ships domestically.
One of them is Disney Cruise Line.
Line president Karl Holz said it was just luck that the company decided to keep all four of its ships homeported in the U.S. this year.
In a recent interview aboard the new Disney Fantasy, Holz said he was glad those decisions were made.
“It didn’t have anything to do with any geopolitical or economic issues or air fares or anything like that," Holz said. "Those things hadn’t even happened when we made these domestic deployments. We agreed that the year Fantasy launched this year we would deploy our ships from Port Canaveral and from New York, Galveston and Seattle."
“And, of course, now I’m glad we did that. But we will have Disney Magic back in Europe next year, and I’m happy about that, too,” he said.
Disney however, is hoping to make inroads in the Latin America market in 2012. Latin America passengers currently account for just “single digits” of the total number who cruise with Disney.
Randy Garfield, president of Walt Disney Travel Co. and executive vice president of worldwide sales and travel operations for Disney Destinations, said that courting the Latin America market was one reason why the new Disney Fantasy is operating seven-day cruises from Florida’s Port Canaveral.
“You can’t expect customers from Latin America to travel the distance to Florida for a shorter cruise,” he said. “With our seven-day option on Fantasy, customers from Latin America can book a cruise along with a land vacation in one of our parks and have a two-week vacation."