Spain’s Cruise Outlook Cautiously Optimistic
While Spain might be the second most popular cruise destination in Europe, the ongoing European financial crisis continues to undermine the benefit of such a prestigious position. Latest figures from Puertos del Estadio, the national port agency, indicate that as of the end of February 2013, the number of passengers disembarking at ports in Spain fell by over 8 percent.
Cruise Industry Significant to Spanish Economy
The 8 percent reduction roughly translates into approximately 600,000 less tourists spending money in the country’s various ports of call. Some industry analysts fear that the industry may be headed toward a free fall as trends begin to shift. The cruise industry is a significant contributor to Spain’s tourism industry. In 2011, the country received over 5.25 million cruise passengers. That number of passengers represented an injection of at least €520 million to the Spanish economy. In addition, the cruise industry contributed around €1.3 billion in direct expenditures while creating more than 27,000 jobs for 2011. Much of this comes from Barcelona which was Europe’s leading cruise port by number of passengers in 2011.
In spite of the fewer number of passengers arriving in Spain this year, the number of cruise liners that docked in Spanish ports by the end of February 2013 had actually risen by nearly 5 percent or roughly about 15 cruise vessels for a total of 321 ships. The figure suggests that the cruise lines did not accurately match capacity with demand. That trend remained evident in the month of February where the Spanish ports logged nearly 7 percent fewer passengers but an increase of 7 more vessels over the same month the previous year.
While Barcelona remained the market leader in the Spanish cruise industry, the most significant growth in February was witnessed in the Balearic Islands followed by Cadiz Bay with an increase of 51 percent in new arrivals which translated to over 26,000 tourists and 7 new cruise vessels. Significant slumps in cruise visitor arrivals were recorded in Valencia and Malaga with decreases of as much as 48 percent. Results in the Canary Islands were mixed as Las Palmas saw a 21 percent increase in visitors but Santa Cruz de Tenerife recorded a decrease of 11 percent.
More North Americans Due to Arrive This Summer
What the rest of 2013 has in store for the cruise industry remains to be seen but early indications from the first two months of 2013 leave many feeling cautiously optimistic as the ports of Spain saw only a modest increase of 0.35 percent in passenger arrivals over the previous year. The mismatched capacity and demand could be a reflection of the sluggish economic outlook of Europe with fewer Europeans embarking on cruises. As unemployment continues to be a major issue, many industry analysts believe that Europe-based cruise vessels may just end up being filled by North Americans this summer.
In a recent conference call, Royal Carribbean’s CEO Adam Goldstein said that the cruise line would be hosting more Americans than previously expected on cruise itineraries outside North America in 2013. The increased traffic from the United States and Canada can be attributed to the relatively better performance of each country’s respective economies compared to most of Europe. Cruise lines are reporting that demand from within Europe has been weaker than originally anticipated, especially in countries located in southern Europe. To correct the mismatch of capacity and demand, the cruise lines are now cutting back capacity by as much as 25 percent. Royal Caribbean Cruises recently announced that European capacity would be cut in 2014.
However, nobody wants to write off the Europeans just yet. The modest increase for the first two months of 2013 led some to believe that there is a chance the Europeans might still cruise this year in spite of unemployment rates that have reached as much as 25% in some countries. While cruise lines remain cautiously optimistic, industry analysts indicate that Europeans tend to book their cruises much closer to the sailing. The last minute nature of bookings from Europeans leaves cruise executives to make estimates with little certainty.
Economic Uncertainty Offers Competitive Pricing
What is certain is that several European economies are showing no sign of improvement and in Spain which represents 9 percent of cruise passengers from Europe, unemployment rose to 27 percent. But the trend is far from consistent as German demand and that of other northern European nations remains solid while the United Kingdom which is the top source of European cruises has turned out to be weaker than expected.
Meanwhile, the cruise lines are making preparations for what they hope will be a promising summer cruise season. Royal Caribbean’s Independence of the Seas recently arrived at its Southampton port earlier this month in preparation for its 12-night Canary Islands cruises while Celebrity’s Eclipse vessel arrived to prepare for its Azores-Canary Island itineraries. Although the cruise lines may not be pleased at the state of the industry and many nations see reduced visitation and spending as a result of the downturn, the weak and unpredictable demand gives the consumer the upper hand especially for those that intend to embark on one of the many family cruises available this summer season. It should be welcome news to consumers that have yet to plan their summer vacation that competitive pricing action taken in Germany and the United Kingdom in order to maintain full occupancy has resulted in lower prices each year on European cruises and 2013 will be no exception.
