Europe's cruise industry faces stormy seas
by Francesco Guarascio
11 June 2012
The European cruise industry continues on its upward trend, but the economic and political crisis in the Mediterranean is making things tough for everyone - reports PublicServiceEurope.com from Turkey
When fans land in Mersin for next year's Mediterranean Games, they may find Eastern Turkey's biggest port crowded not only with containers but also with passenger ships, as the city tries to access the profitable cruising market. Although it is relatively unknown, Mersin and the surrounding region holds a number of trump cards. Saint Paul was born just a few kilometers away, in the historical town of Tarsus, which is a major attraction for Christian tourists. There are also a number of Greek and Roman archeological remains scattered throughout the region, offering a wealth of day trips for history minded tourists. For those interested in nature, this is a long coastline with some beautiful beaches on offer. Mersin is also the nearest port for those wishing to reach the mountains of Cappadocia and its staggering views.
Local business is working hard to improve the region's infrastructure and tourist facilities. "In two years, we plan to triple the number of high-end beds available," explains Numan Olcar, head of Mersin's tourist platform. With investment being made mainly by Turkey's hotel chains, such as Gloria and Limak, the area will soon add another 15,000 medium beds to the already existing 7,000. A project to build an international airport is underway, explains the president of Mersin Chamber of Commerce Serafettin Asut. Meanwhile, the port is widening its capacity and facilities to host giant cruise ships. When the work is complete, Mersin hopes to become a port of call for cruises sailing the Eastern Mediterranean, and also a point of boarding for international tourists arriving to the city through its new international airport.
Bundled into travel packages together with popular destinations, such as Antalya or Beirut, Mersin could become a valid attraction for European tourists in search of adventure in less well known locations. And MSC, the largest cruise company in terms of passenger numbers in the Mediterranean, may soon start operations here - reveals Luigi Pastena, who is in charge of the company's worldwide itinerary management. Mersin could also tap into a growing domestic market boosted by Turkey's impressive economic performance. The number of Turkish cruise passengers has grown from 18,000 in 2008 to 80,000 in 2011, according to data provided by the Turkish tourism industry.
Despite the progress that has already been made and the optimism filling the air in Mersin, the medium term outlook is not so rosy. "Local authorities are not always very supportive of the efforts of the business community," acknowledges a European consultant. Most top cruise lines are still shunning the port, preferring more popular destinations. Infrastructure is underway, but is far from being finished. A culture of mass tourism is also lacking still, as locals are used to small numbers of tourists. An intake of 2,000 cruise passengers in a single day can be hard to manage.
Such local issues are still only a limited concern, however. The real hurdle faced by Mersin comes from the wider security issues of the region. Adding Mersin onto routes with stops in Syrian destinations was the easiest match to make, but the current situation across the border has indefinitely postponed the plans. Israeli ports would also make an attractive call for cruises coming from Turkey, but the difficult diplomatic relations between the two countries hampers many business deals. The same goes for Cyprus, except for the impoverished northern side of the island, which is linked to Turkey. Lebanon remains an option but insurers are scared of covering routes close to Syria, making calls in Beirut too expensive. Longer itineraries are possible, but lower budgets and higher fuel costs make them a less obvious choice for cruise lines.
The tale of Mersin's ambitions and the challenges it faces are symptomatic of the entire European cruise industry. "Despite the current challenging environment there are good reasons to believe that we will come through this period of uncertainty in a strong position," says Manfredi Lefebvre D'Ovidio, chairman of the European Cruise Council, the main industry body. Indeed, the figures of the sector remain impressive. In a decade, the number of Europeans embarking in a cruise holiday has more than doubled to six million in 2011. The growth potential is even more stunning. Since 2001 - the capacity of cruise ships in the Mediterranean Sea, the most important market in Europe, have tripled; now exceeding 30 million beds. The industry directly employs some 55,000 people in Europe, and boasts that is has created more than 300,000 jobs in activities linked to its core business. For example, nearly all of the world's cruise ships are built in Europe. The ports which are chosen for calls by cruise lines make huge gains. "I reckon an average of €60 per passenger, without considering shop sales," says Kristijan Paviæ, general director of the Port Authority at Dubrovnik, Croatia - which receives almost one million cruise passengers a year.
The good news ends here though. Last year has been the worst in a decade for the European industry. The Arab Spring has dealt a heavy blow. "We had €1m of losses due to itinerary changes," says Elisabetta De Nardo, of Costa Crociere, the second biggest operator in the Mediterranean Sea. Egypt, Libya, Tunisia and other top destinations are still being avoided by most carriers. As the turmoil continues throughout the Arab world, the cruises will not be returning for some time to come. Furthermore, the eurozone crisis is hitting some top markets for the industry, with Italians or Spaniards being much less likely to holiday this way. As a consequence, in 2012 cruise lines in the Mediterranean are set to reduce their capacity by more than 9 per cent, says the maritime consultancy G.P. Wild. The Costa Concordia incident, off the waters of Tuscany in January, which cost 32 lives, was a new blow for the entire industry. Although, it has had less impact than first predicted. Increasing fuel costs are a much bigger concern and new European Union draft legislation to reduce the content of sulphur in shipping fuel will contribute to rising prices.
Against this gloomy background in Europe, Asia continues to grow and attract more international tourists - including rich Europeans scared of the turmoil in the Mediterranean. "In 2012, the global cruise industry is set to carry 19.3 million passengers and the Asian market is continuing to take a bigger percentage of that number each year," says Daniel Read of Cruise Shipping, a consultancy. The next annual conference of the European Cruise Council in Brussels at the end of June will be an opportunity to take stock of the evolving situation. Good captains know how to sail in rough seas, but for Mersin and the entire cruise industry - their efforts may be frustrated by control rooms which remain far from their reach.
When fans land in Mersin for next year's Mediterranean Games, they may find Eastern Turkey's biggest port crowded not only with containers but also with passenger ships, as the city tries to access the profitable cruising market. Although it is relatively unknown, Mersin and the surrounding region holds a number of trump cards. Saint Paul was born just a few kilometers away, in the historical town of Tarsus, which is a major attraction for Christian tourists. There are also a number of Greek and Roman archeological remains scattered throughout the region, offering a wealth of day trips for history minded tourists. For those interested in nature, this is a long coastline with some beautiful beaches on offer. Mersin is also the nearest port for those wishing to reach the mountains of Cappadocia and its staggering views.
Local business is working hard to improve the region's infrastructure and tourist facilities. "In two years, we plan to triple the number of high-end beds available," explains Numan Olcar, head of Mersin's tourist platform. With investment being made mainly by Turkey's hotel chains, such as Gloria and Limak, the area will soon add another 15,000 medium beds to the already existing 7,000. A project to build an international airport is underway, explains the president of Mersin Chamber of Commerce Serafettin Asut. Meanwhile, the port is widening its capacity and facilities to host giant cruise ships. When the work is complete, Mersin hopes to become a port of call for cruises sailing the Eastern Mediterranean, and also a point of boarding for international tourists arriving to the city through its new international airport.
Bundled into travel packages together with popular destinations, such as Antalya or Beirut, Mersin could become a valid attraction for European tourists in search of adventure in less well known locations. And MSC, the largest cruise company in terms of passenger numbers in the Mediterranean, may soon start operations here - reveals Luigi Pastena, who is in charge of the company's worldwide itinerary management. Mersin could also tap into a growing domestic market boosted by Turkey's impressive economic performance. The number of Turkish cruise passengers has grown from 18,000 in 2008 to 80,000 in 2011, according to data provided by the Turkish tourism industry.
Despite the progress that has already been made and the optimism filling the air in Mersin, the medium term outlook is not so rosy. "Local authorities are not always very supportive of the efforts of the business community," acknowledges a European consultant. Most top cruise lines are still shunning the port, preferring more popular destinations. Infrastructure is underway, but is far from being finished. A culture of mass tourism is also lacking still, as locals are used to small numbers of tourists. An intake of 2,000 cruise passengers in a single day can be hard to manage.
Such local issues are still only a limited concern, however. The real hurdle faced by Mersin comes from the wider security issues of the region. Adding Mersin onto routes with stops in Syrian destinations was the easiest match to make, but the current situation across the border has indefinitely postponed the plans. Israeli ports would also make an attractive call for cruises coming from Turkey, but the difficult diplomatic relations between the two countries hampers many business deals. The same goes for Cyprus, except for the impoverished northern side of the island, which is linked to Turkey. Lebanon remains an option but insurers are scared of covering routes close to Syria, making calls in Beirut too expensive. Longer itineraries are possible, but lower budgets and higher fuel costs make them a less obvious choice for cruise lines.
The tale of Mersin's ambitions and the challenges it faces are symptomatic of the entire European cruise industry. "Despite the current challenging environment there are good reasons to believe that we will come through this period of uncertainty in a strong position," says Manfredi Lefebvre D'Ovidio, chairman of the European Cruise Council, the main industry body. Indeed, the figures of the sector remain impressive. In a decade, the number of Europeans embarking in a cruise holiday has more than doubled to six million in 2011. The growth potential is even more stunning. Since 2001 - the capacity of cruise ships in the Mediterranean Sea, the most important market in Europe, have tripled; now exceeding 30 million beds. The industry directly employs some 55,000 people in Europe, and boasts that is has created more than 300,000 jobs in activities linked to its core business. For example, nearly all of the world's cruise ships are built in Europe. The ports which are chosen for calls by cruise lines make huge gains. "I reckon an average of €60 per passenger, without considering shop sales," says Kristijan Paviæ, general director of the Port Authority at Dubrovnik, Croatia - which receives almost one million cruise passengers a year.
The good news ends here though. Last year has been the worst in a decade for the European industry. The Arab Spring has dealt a heavy blow. "We had €1m of losses due to itinerary changes," says Elisabetta De Nardo, of Costa Crociere, the second biggest operator in the Mediterranean Sea. Egypt, Libya, Tunisia and other top destinations are still being avoided by most carriers. As the turmoil continues throughout the Arab world, the cruises will not be returning for some time to come. Furthermore, the eurozone crisis is hitting some top markets for the industry, with Italians or Spaniards being much less likely to holiday this way. As a consequence, in 2012 cruise lines in the Mediterranean are set to reduce their capacity by more than 9 per cent, says the maritime consultancy G.P. Wild. The Costa Concordia incident, off the waters of Tuscany in January, which cost 32 lives, was a new blow for the entire industry. Although, it has had less impact than first predicted. Increasing fuel costs are a much bigger concern and new European Union draft legislation to reduce the content of sulphur in shipping fuel will contribute to rising prices.
Against this gloomy background in Europe, Asia continues to grow and attract more international tourists - including rich Europeans scared of the turmoil in the Mediterranean. "In 2012, the global cruise industry is set to carry 19.3 million passengers and the Asian market is continuing to take a bigger percentage of that number each year," says Daniel Read of Cruise Shipping, a consultancy. The next annual conference of the European Cruise Council in Brussels at the end of June will be an opportunity to take stock of the evolving situation. Good captains know how to sail in rough seas, but for Mersin and the entire cruise industry - their efforts may be frustrated by control rooms which remain far from their reach.
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