THE CRUISE INDUSTRY. Contribution of Cruise Tourism to the Economies of Europe 2015 Edition

Transcription

1 THE CRUISE INDUSTRY Contribution of Cruise Tourism to the Economies of Europe 2015 Edition

2 CLIA Europe Members Lines

3 Foreword Dear friends, Wecome to the 2014 CLIA Europe Economic Contribution Report. Prepared every year by G.P. Wid (Internationa) Limited and Business Research Economic Advisors, this report iustrates how the internationa cruise industry generates economic growth, investment and jobs across the European Union. This new edition confirms once again cruising s enormous contribution to the European economy at a crucia point in its recovery. The cruise industry continues to create vita jobs and weath as the continent sowy but surey emerges from the devastating economic sump. There are three reasons why Europe is a key market for the goba cruise industry. First, with 6.39 miion Europeans cruising in 2014, Europe represents the second biggest source market wordwide, after the USA. Second, Europe is aso the number two cruise destination in the word, after the Caribbean, having received 5.85 miion cruise passengers ast year. Third, Europe s word-cass shipyards continue to exercise near-tota contro over the goba order book, being schedued to buid 29 oceangoing cruise ships to be deivered unti A of this transates into economic vaue and jobs for Europe. Our industry s tota economic output reached 40.2bn in 2014, up 2% from the previous year, incuding 16.6bn in direct spending by cruise ines, their passengers and crew. Last year the cruise industry aso accounted for neary 350,000 European jobs cose to 10,000 more than the previous year amounting to 10.75bn in empoyee compensation. And yet we are not compacent; quite the contrary. We strongy beieve that the cruise industry can and must be an even bigger payer in Europe s economy. More can be done, particuary bringing non- Europeans to our shores. Of the 5.85 miion passengers embarking on their cruises from a European port, ony one miion came from outside Europe, a fact that underines the need for reguators to unock this tremendous potentia. CLIA Europe constanty engages with poicymakers and reguators from the EU and its Member States to make sure that Europe remains a good pace to do business. We remain confident that, with the right frameworks in pace, the cruise industry wi continue to thrive and so deiver sustainabe economic vaue to Europe for years to come. Pierfrancesco Vago Chairman, CLIA Europe and Executive Chairman, MSC Cruises Contribution of Cruise Tourism to the Economies of Europe 2015 Edition 1

4 Tabe of Contents Foreword 1 Executive Summary 3 Report Summary 4 Overview Facts and Figures 7 Cruise Industry Expenditures by Country 8 A Goba Industry 9 European Cruise Ports 10 Cruise Passengers Source Markets 12 Shipbuiding in Europe 14 Direct Cruise Industry Expenditures in Europe 15 The Economic Benefits of Cruise Tourism 18 Gossary of Speciaist Terms and Abbreviations 25 Sources of Information 25 GP Wid (Internationa) Limited and Business Research and Economic Advisors (BREA) were engaged by CLIA Europe to conduct a comprehensive anaysis of the goba cruise industry s operations in Europe and its contribution to the European economy using the most recent avaiabe statistics. 2 Contribution of Cruise Tourism to the Economies of Europe 2015 Edition

5 Executive Summary G. P. Wid (Internationa) Limited and Business Research and Economic Advisors were engaged by CLIA Europe to conduct a comprehensive anaysis of the goba cruise industry s operations in Europe and its contribution to the European economy in For the purposes of this report, uness otherwise stated, Europe is defined as the EU with 28 members pus Switzerand, Norway and Iceand. The EU-28 member states are fuy defined in the Gossary. 1 Some of the major highights of cruise operations in Europe during 2014 were: During 2014 there were 42 cruise ines domicied in Europe, operating 123 cruise ships with a capacity of around 146,000 ower berths. Another 60 vesses with a capacity of around 89,000 ower berths were depoyed in Europe by 18 non-european ines. An estimated 6.4 miion European residents booked cruises, a 0.5% increase over 2013, representing about 30% of a cruise passengers wordwide. An estimated 5.85 miion passengers embarked on their cruises from a European port, a 3.6% decine from Of these around 4.9 miion were European nationas and about 0.9 miion came from outside Europe. The vast majority of these cruises visited ports in the Mediterranean, the Batic and other European regions, generating 29 miion passenger visits at a tota of around 250 European port cities, a decrease of 7.1% from In addition, an estimated 14.4 miion crew aso arrived at European ports. As a resut of the European cruise operations and the investment in new cruise ships by the goba cruise industry, this industry generated significant economic impacts throughout Europe. In 2014, cruise industry direct expenditures grew by 2.8% from 2013 to 16.6 biion. As wi be discussed beow this increase was the net resut of gains in shipbuiding, cruise ine expenditures and empoyee compensation which were partiay offset by a drop in passenger and crew expenditures. The tota economic impacts of the cruise industry incuded the foowing: 40.2 biion in tota output biion in direct spending by cruise ines and their passengers and crew 348,930 jobs biion in empoyee compensation 4 These impacts are the sum of the direct, indirect and induced impacts of the cruise industry. In summary, each 1 miion in direct cruise industry expenditures generated: 2.42 miion in business output 19 jobs paying an average annua wage of neary 33, The EU was expanded to 28 states effective as of 1 Juy 2013 through the addition of Croatia. The scope of the report on 2014 has been extended to cover the EU By definition, tota output incudes a intermediate inputs, taxes net of subsidies, net surpus (profits, net interest, dividends and other items) and empoyee compensation. 3 Fu time equivaents. 4 As defined by the OECD. Compensation and remuneration are used interchangeaby in the report and are considered to mean the same thing. Aso, compensation is incuded in output. Contribution of Cruise Tourism to the Economies of Europe 2015 Edition 3

6 Report Summary Direct Economic Impacts The direct economic impacts incude the production, empoyment and empoyee compensation that were generated in those European businesses that suppied goods and services to the cruise ines and their passengers and crew. The direct impacts aso incude the compensation paid to the European empoyees of the cruise ines. In 2014, the cruise industry generated direct expenditures of 16.6 biion. These expenditures incuded the foowing: 4.55 biion in spending for the construction of new cruise ships and the maintenance and refurbishment of existing ships with European shipyards, a 12.8% increase from This was the third successive annua increase foowing three consecutive years in which these expenditures had faen. The 520 miion increase in shipbuiding and maintenance expenditures was the primary driving force behind the cruise industry s European growth in These expenditures accounted for virtuay the entire increase in direct cruise industry expenditures. At the outset of 2014 there were 23 cruise ships on the order books of the European shipyards. Currenty, incuding deiveries during the first haf of 2015, European shipyards are under contract to buid 29 cruise ships with a combined vaue of 16.0 biion through to biion in spending by cruise ines with European businesses for goods and services in support of their cruise operations was virtuay unchanged from 2013, showing an increase of 0.8%. Among the major expenditures were the foowing. Cruise ines purchased neary 670 miion in provisions consumed on board cruise ships from European food and beverage manufacturers. An estimated 775 miion in commissions were paid to European trave agents. The cruise ines spent 1.39 biion on financia and business services incuding: insurance, advertising, engineering and other professiona services biion in cruise passenger and crew spending. Passenger expenditures incuded spending for shore excursions, pre- and post-cruise hote stays, air trave and other merchandise at ports-of-embarkation and ports-of-ca. Crew spending was concentrated in expenditures for retai goods and food and beverages. Given the 3.6% decine in embarkations and the 7.1% decine in passenger visits at European ports-of-ca, tota passenger and crew expenditures decined by 4.2% from Incuding airfares, embarking passengers spent an average of 292. Excuding airfares, cruise passengers spent an average of 81 at embarkation port cities. On average, cruise passengers then spent another 62 at each port visit on their cruise itinerary. Crew spending at each port ca averaged 23 per crew member biion in wages and saaries pus benefits, an increase of 2.2% from 2013, were paid to the European administrative staff and crew of the cruise ines. Cruise ines empoyed about 5,400 European nationas in their headquarters and administrative offices. An estimated 59,500 European nationas were empoyed as officers and ratings on cruise ships. These expenditures generated empoyment and empoyee compensation across a wide range of industries and in virtuay every country that sourced passengers and/or hosted cruise ship cas. As indicated in Tabe ES - 1, the 16.6 biion in direct expenditures generated about 169,800 direct jobs paying 5.09 biion in empoyee compensation. Tabe ES 1: Direct Economic Impacts of the European Cruise Sector by Industry, 2014 Industry j Expenditures Miion Jobs Compensation Miion Agr., Mining & Constr. k Manufacturing 7,988 42,559 1,707 Non-durabe Goods 2,023 6, Durabe Goods 5,975 35,815 1,461 Whoesae & Retai Trade Transportation & Utiities , ,696 21, Hospitaity 407 6, Financia and Business Services Persona Services & Govt. 1,576 13, , Subtota 15, ,958 3,610 Cruise Line Empoyees 1,480 64,873 1,480 Grand Tota 16, ,831 5,090 j The aggregate (bod) and sub-industries are based on standard industry definitions used by the OECD in its input-output accounts. The eve of detai in each tabe may vary but the definitions remain the same. k Agr, Mining & Constr. is the aggregation of the Agricuture, Mining and Construction industries. Generay, the estimated impacts for each of these industries is too sma and imprecise to show. Hospitaity incudes hotes, restaurants and bars and amusement and recreation estabishments. The foowing three economic sectors accounted for more than 75% of the direct economic impacts of the European cruise industry: The Manufacturing sector, ed by the shipbuiding industry, accounted for 48% of the cruise industry s direct expenditures, 25% of the direct jobs and 34% of the direct empoyee compensation. A of these percentages increased from 2013 as a direct resut of the increase in shipbuiding expenditures. European empoyees of the cruise ines accounted for 38% of the direct jobs generated by the cruise industry and 29% of the compensation. These percentages are virtuay unchanged from The Transportation and Utiities sector, excuding the direct empoyees of the cruise ines and their wages but incuding tour operators and trave agents among others, accounted for 22% of the direct expenditures, 13% of the direct jobs and 16% of the compensation impacts. As a resut of the decine in cruise cas and passenger visits from 2013, each of these percentages fe from Contribution of Cruise Tourism to the Economies of Europe 2015 Edition

7 Report Summary Tota Economic Impacts The tota economic impacts are the sum of the direct, indirect and induced impacts. The indirect impacts resut from the spending by the directy impacted businesses for those goods and services they require to support the cruise industry. The induced impacts resut from the spending by the impacted empoyees for househod goods and services. Thus, the indirect impacts primariy affect business-to-business enterprises whie the induced impacts primariy affect consumer businesses. The tota economic impacts are shown in Tabe ES 2. The tota economic impacts are more eveny spread among the various industries than the direct economic impacts as the indirect and induced impacts affect non-cruise sectors. Yet the manufacturing (primariy shipbuiding) and transportation sectors sti account for more than haf of the cruise industry s tota impact throughout Europe. The Transportation and Utiities sector, incuding the empoyees of the cruise ines, accounted for 21% of the tota output, 31% of the tota empoyment and 29% of the tota compensation impacts. The Manufacturing sector, which incudes the shipbuiding industry, accounted for 36% of the tota output, 24% of the jobs and 30% of the tota compensation generated by the cruise industry. Tabe ES 2: Tota Economic Impacts of the European Cruise Sector by Industry, 2014 j Industry Expenditures Miion Jobs Compensation Miion Agr., Mining & Constr. 2,353 17, Manufacturing 14,529 82,227 3,176 Nondurabe Goods 4,645 20, Durabe Goods 9,884 62,138 2,448 Whoesae & Retai Trade Transportation & Utiities k 2,382 31, , ,790 3,141 Hospitaity 1,246 17, Financia and Business Services Persona Services & Govt 9,279 66,852 2,363 1,873 25, Tota 40, ,930 10,753 j Since compensation is incuded in tota output, these impacts are not additive. Output is a measure of the industry s impact on the overa economy whie compensation is a measure of the industry s impact on empoyees and the househod sector. k Incudes the European empoyees of the cruise ines and their compensation. Country Impacts The economic impacts were spread throughout Europe. However, as indicated in Tabe ES 3 the majority of these impacts were concentrated in five countries, which accounted for about 80% of the cruise industry s impacts throughout Europe. The three countries of Itay, Germany and the UK accounted for 66% of the direct expenditures of the cruise industry. Primariy due to the 6.3% increase in Germany, these three countries experienced a combined increase of 2.4% in direct expenditures from These countries participated in a segments of the industry: Serving as major source and destination markets for cruise passengers. Maintaining headquarters faciities and providing crew. Providing shipbuiding and/ or repair services. Provisioning and fueing of cruise ships. Tabe ES 3: Tota Economic Impacts of the Cruise Sector by Country, 2014 Country Direct Expenditures Miion Growth from 2013 Tota Jobs Compensation Miion Itay 4, % 102,284 3,111 Germany 3, % 49,559 1,801 UK 3, % 71,022 2,594 Spain 1, % 25, France 1, % 15, Top 5 13, % 263,449 8,927 Norway % 14, Finand % 8, Greece % 10, Netherands % 6, Sweden % 3, Next 5 2,306 2.% 43,127 1,303 Rest of the EU % 42, Tota 16, % 348,930 10,753 The remaining two countries in the top five tended to be impacted in one or two major segments: Spain serves primariy as a source and destination market with some headquarters operations. France is principay a source and destination market with the addition of shipbuiding. As shown in Tabe ES 3 the top five countries experienced a combined 2.5% growth in direct cruise industry expenditures during Germany ed the way with a 6.3% increase in direct expenditures and accounted for neary 60% of the net increase in expenditures among the top 5 countries. Spending increased in each of the four expenditure categories in Germany. Shipbuiding ed the way with an 8.0% increase foowed by cruise ines and passenger and crew expenditures, each with a neary 5.0% increase. Compensation of cruise ine empoyees residing in Germany increased by 2.6%. The UK and Itay experienced smaer gains in direct cruise sector expenditures with respective gains of 1.0% and 0.7%. The growth in the UK was ed by a 2.0% increase in spending by cruise ines, incuding the compensation of their empoyees residing in the UK. This gain was partiay offset by a 3.5% decine in the combined spending of passengers and crew and ship repair expenditures. As noted above, Itay experienced a 2.5% increase in direct cruise industry expenditures in This growth in spending was the net resut of a 19% increase in spending at Itaian shipyards which was partiay offset by a 5.3% decine in expenditures by the cruise ines and their passengers and crew for goods and services in support of cruises, incuding empoyee compensation. Contribution of Cruise Tourism to the Economies of Europe 2015 Edition 5

8 Report Summary Direct cruise sector spending rose by 3.9% in France during As in Germany, spending increased in each of the four expenditure categories. Passenger and crew expenditures ed the way with a 7.7% increase foowed by a 2.3% increase in the compensation of cruise ine empoyees residing in France. Cruise ine purchases for goods and services rose by 2.0% whie expenditures at French shipyards rose by 1.4%. Finay, direct expenditures in Spain decined by 1.4% during Spending by passengers and crew at Spanish port cities decreased by 5.1% primariy due to a 6% fa in embarkations and transit visits at Spanish ports. Cruise ine expenditures with Spanish business in support of their cruises decined at a simiar rate, 5.5%. These spending osses were ony partiay offset by a 21% increase in expenditures by cruise ines for ship repair and empoyee compensation. Five-year Growth Trend Since 2009 European-sourced passengers have grown by 29% from 4.94 miion in 2009 to 6.39 miion in Foowing a sharp recovery in passenger growth in 2010 and 2011 after the 2009 recession, growth has sowed and has averaged just 1.7% per year over the past three years. Embarkations at European ports have grown at a more moderate pace of 21% over the 5-year period, increasing from 4.83 miion in 2009 to 5.85 miion in Overa, weakness in the economies of southern Europe and poitica turbuence in parts of the region have resuted in a redepoyment of capacity away from Europe. As a resut, embarkations at European ports decined by 3.6% in Finay, port-of-ca passenger visits have risen by 22% over the period, growing from miion to miion. Once again, the reduced capacity, especiay in the Mediterranean, resuted in a 7.1% decine in passenger visits in Tabe ES 4: European Passenger Statistics, Miions Category European-Sourced Passengers % Change % Percent Change 12.6% 9.0% 1.2% 3.6% 0.5% Embarkations from European Ports % Percent Change 9.3% 5.9% 3.2% 5.2% 3.6% Port-of-Ca Passenger Visits % Percent Change 6.0% 9.2% 4.3% 8.7% 7.1% Note: Historica data for European-sourced passengers has been revised to be consistent with data pubished by IRN Research. Since 2009, direct expenditures have increased by 18% from 14.1 biion in 2008 to 16.6, 3.4% over the five-year period. Figure ES 1 ceary shows the impact that the contraction in the vaue of shipbuiding from 2009 through 2011 has had on the growth trend for direct cruise expenditures, which finay experienced a rebound in growth in 2012 through 2014 after remaining virtuay fat over the prior three years. With the increase in shipbuiding over the period, the overa growth in direct expenditures has averaged neary 3.5% per year over the past three years. Figure ES 1: Direct Cruise Industry Expenditures in Europe, Whie tota direct expenditures of the cruise industry have steadiy increased over the five-year period, the growth in spending by category has varied. Over the five-year period, spending by cruise ines for goods and services and empoyee compensation has increased each year, averaging 5.2% per year. Expenditures for shipbuiding and repair decined in 2009, 2010 and 2011 primariy in response to recession conditions, they have since rebounded in the foowing three years. Since 2011, annua shipbuiding and repair expenditures have increased by 21% from 3.8 biion in 2011 to 4.6 biion in Given the contraction of embarkations and transit passenger visits at European ports, passenger and crew expenditures fe by 4.2% in 2014 after positive gains in each of the previous years since The tota output of the industries affected by the direct, indirect and induced impacts of the European cruise industry has risen by 18% from 34.1 biion in 2009 to 40.2 biion in The stronger growth in tota output reative to the increase in direct expenditures is partiay the resut of improved productivity throughout most European industries. Figure ES 2: Tota Output Generated by Cruise Industry Expenditures in Europe, Biions Passenger & Crew Purchases Vaue of Shipbuiding Cruise Empoyees Compensation Cruise Line Purchases The tota empoyment associated with the tota output discussed above has increased by 18% from thousand jobs in 2009 to thousand jobs in The tota empoyment impact in 2009 was the recession-induced ow for the cruise industry. The tota empoyment impact has increased each year since and has averaged 3.3% per year over the fiveyear period. Figure ES 3: Tota Empoyment Generated by Cruise Industry Expenditures in Europe, Thousands Direct Impacts Indirect Impacts Induced Impacts Contribution of Cruise Tourism to the Economies of Europe 2015 Edition

9 1. An Overview of the Importance of the European Cruise Industry Facts and Figures The cruise industry in Europe 5 is a dynamic source of economic activity providing economic benefits to virtuay a industries and countries throughout Europe. Cruise tourism in Europe impacts a of the major aspects of the industry, incuding: ports of embarkation, ports-of ca, shipbuiding, ship maintenance, provisioning, saes and marketing and the staffing of cruise ships and administrative faciities. Fisca and economic conditions in Europe during 2014 continued to constrain the growth in demand. In addition the contraction in depoyed capacity in Europe has resuted in a reduction in cruise passengers and crew visits at a many European ports. An estimated 6.4 miion European residents booked cruises in 2014, a 0.5% increase over In 2014, Europeans represented 29.0% of a cruise passengers wordwide, compared with 21.7% ten years earier. About 5.9 miion passengers embarked on their cruises from a European port, a 3.6% decine from Around 4.9 miion (83%) were European nationas. The vast majority visited ports in the Mediterranean, the Batic Sea and other European regions and generated 29 miion passenger visits during 2014, a 7.1% decrease from Cruise ines visited a tota of around 250 European port cities incuding in the Back Sea and Atantic Ises. In addition, an estimated 14.4 miion crew aso arrived on board cruise ships caing at European ports during The cruise industry s direct spending made by the cruise ines 6 and their passengers and crew throughout Europe increased by 2.8% in 2014 to 16.6 biion after increasing by 4.7% in 2013 and 3.4% in Figure 1.1: Direct Cruise Industry Expenditures in Europe, 2014 Cruise Line Purchases % Cruise Empoyees Compensation % 16.6 Biion Passenger & Crew Purchases % Vaue of Shipbuiding % 5 The European cruise industry is defined as those cruise-reated activities that take pace within Europe incuding cruise itineraries that visit European ports and destinations and aso directy impact businesses and individuas ocated in Europe. It is broady defined to incude cruise ines and their empoyees; the direct suppiers to the cruise ines, such as whoesae distributors, stevedoring firms, and financia and business service providers, such as insurers and consutants; shipyards; and cruise passengers. 6 Cruise ines are defined as those cruise companies that offer muti-day cruises in open waters. This definition thus excudes companies that offer river cruises. 7 These are fu time equivaent jobs (FTEs). Cruise passengers and crew spent an estimated 3.64 biion in purchases during their port visits, ranging from accommodations to retai purchases of jeweery, cothing and other simiar items. This represented a 4.2% decrease from This foows increases of 4.5% in 2013, 5.7% in 2012 and 10.7% in In fact this is the first decine in passenger and crew spending since this report was initiated in Europe is aso the centre of and word eader in cruise ship construction and refurbishment. After three successive years of decine from 2009 through 2011, spending for new buidings and maintenance at European shipyards has now increased in each of the ast three years having reached 4.6 biion in 2014, an increase of 12.8% over Incuded in the 16.2 biion is 1.48 biion in compensation paid to empoyees of the cruise industry that reside in Europe. Tota empoyee compensation grew by 2.2% in Finay, the cruise ines aso spent another 7.0 biion with European businesses to support their cruise and administrative operations, an increase of 0.8% from This spending by the cruise ines and their passengers and crew generated an estimated 348,931 7 jobs throughout Europe through the direct, indirect and induced economic impacts. This is a 2.8% increase from In turn, the workers in these jobs produced an estimated 40.2 biion in tota output and received biion in tota (direct, indirect and induced) compensation. The tota output impact increased by 2.2% whie the compensation impact rose by 2.4% from Cruise New Buiding and Investment Over the period from 2015 to 2018, 31 cruise vesses have been schedued for deivery for wordwide trading with capacity for 93,300 passengers of which 29 wi be constructed in Europe and two in Japan. In addition a further four ships are aready on order for , a in European yards. Thus, from the beginning of 2015 through 2021, Europe wi account for 34 of the 36 new cruise ships to be constructed. Out of the tota, 10 ships with 30,375 berths (30.0%) wi primariy serve the European source market, representing an investment of 5.2 biion. Many of the others wi visit European destinations. This new investment underines the cruise industry s continuing commitment to the future of its business both in Europe and esewhere in the word. Tabe 1.1: Cruise Ship Orders Year Competed Ships Berths Investment (Miions) ,930 3, ,546 5, ,124 3, ,708 4,211 Tota 31 93,308 16, saw a net increase of 5 in the cruise ship order book with six deiveries and 11 new orders. Athough Europe continues to dominate the cruise shipbuiding market, the emergence of competition from China remains a possibiity, athough Japan appears to have been discouraged by its current experience from further competing in the market. Contribution of Cruise Tourism to the Economies of Europe 2015 Edition 7

10 2. Cruise Industry Expenditures by Country The cruise industry generated an estimated 16.6 biion in direct expenditures throughout Europe in These expenditures were derived from four major sources: cruise passengers; the construction and maintenance of cruise ships; cruise ine purchases in support of their operations; and compensation of cruise ine administrative staff and crew in Europe. Furthermore, this spending impacted to some degree on each of the 31 European countries incuded in the anaysis. The top ten countries accounted for 94% of the cruise industry s expenditures throughout Europe. Itay, as a eading centre for cruise ship construction in Europe (together with Germany) and the argest cruise embarkation and destination market, benefited from 4.6 biion in direct cruise industry expenditures, an increase of 0.7% over Germany was the argest market for cruise ship construction and maintenance and aso the argest source market for passengers in Europe in Spurred by an 8% increase in cruise ship construction at German yards and a 5% increase in passenger and crew spending at German ports, tota direct spending by the cruise industry in Germany rose by 6.3% from 2013 to 3.25 biion in The UK is the second argest source market for cruise passengers in Europe with 1.61 miion residents taking cruises during It ranks third in terms of cruise industry direct spending with 3.15 biion, a 1.0% increase over Figure 2.1: Cruise Industry Direct Expenditures by Country, 2014, Miions Itay Germany UK Spain France Norway Finand Greece Netherands Sweden Rest of Europe A Europe: 16.6 Biion 3,254 3,155 1,208 1, , ,000 2,000 3,000 4,000 5,000 The six major centres for cruise ship construction and maintenance, Germany, Itay, France, Spain, Finand and the UK, were among the top ten countries for cruise industry spending. These six countries accounted for 90% of construction and maintenance of cruise ships gobay and 84% of tota industry expenditures in Europe during Contribution of Cruise Tourism to the Economies of Europe 2015 Edition

11 3. A Goba Industry The cruise industry has enjoyed dynamic growth over a period of 30 years, driven initiay by demand from North America and more recenty by growing demand from Europe and the rest of the word. Tabe 3. 1 sets out internationa cruise sector growth between 2004 and Over the ten years from 2004 to 2014 demand for cruising wordwide has increased from 13.1 miion passengers to 22.0 miion (+68%) with 3.4% growth achieved in Over a simiar period, goba, mainy and-based tourism, has risen by 49% to an estimated 1.14 biion tourists in 2014, 4.7% up on Athough North American cruise passenger numbers have increased by 33%, the region s reative share of the tota market has decined from 69.9% in 2004 to 55.2% in Tabe 3.1: Internationa Demand for Cruises 2004 to 2014 Region Miion passengers N. Am Europe j Sub-tota RoW k Tota % NA j Incuding Russia and Centra and Eastern European countries outside the EU 7. k Rest of the word: Largey estimated and adjusted from 2009 to take account of dynamic growth in China and the southern hemisphere. Source: G. P. Wid (Internationa) Limited from CLIA, IRN and other sources. A European Growth Industry The goba share of the North American market has stabiised at around 55% over recent years, as expansion in Europe has sowed down compared with the earier period. This can be seen from the more detaied figures for European growth over the period, which are shown in Tabe Tabe 3.2: Key European Cruise Market Source Market Group Tota 1,000s Pax Market Share Group Tota % 1,000s Pax Market Share Group Tota % 1,000s Pax Market Share % Change 2012/14 Germany 1, , , UK j 1, , , Itay France Spain Other 1, , , Tota 6, , , j Incuding Ireand Source: IRN 8 Two ships operated by Israei companies have been incuded in the European-domicied feet. 9 The figures for the Mediterranean and North European feets cannot be compared with those given for the domicied and non-domicied feets as ships move between markets both within Europe and wordwide. Simiary the Mediterranean and North European feets are not directy comparabe. The Mediterranean tota incudes a few ships cruising to the Atantic Ises ony. In 2004 an estimated 2.8 miion Europeans cruised but by 2014 this figure had grown to 6.4 miion, representing an increase of 129%. Over the same period Europe as a source market for andbased tourism expanded by 38% to reach 584 miion tourists. The European Cruise Feet During 2014 there were 42 cruise ines 8 domicied in Europe which operated 123 cruise ships with a capacity of 146,271 ower berths. In addition there were 18 cruise ines domicied outside Europe participating in the European cruise market. These ines, predominatey North American, depoyed 60 vesses in the region with a capacity of 89,045 ower berths. This was a decine of 15% from 2013 and more than offset the 1.1% increase in capacity posted by the European ines. There were at east 152 cruise ships active in the Mediterranean and 101 in Northern Europe during , some of which repositioned from the Mediterranean for the shorter Northern season. These ships ranged in size from the 5,400 passenger Oasis of the Seas, currenty the argest in the feet, to ships with a capacity of ess than 100 passengers. The Mediterranean In 2014 a tota of 152 cruise ships were active in Mediterranean waters with a capacity of 205,656 ower berths with an average of 1,353 berths per ship. Coectivey these ships carried a potentia miion passengers on 2,478 cruises, offering a tota capacity of miion passenger-nights, giving an average cruise ength of 7.98 nights. A further 421,000 potentia passengers cruised the Atantic Ises. In 2014, North American operators depoyed 49 ships with 74,321 ower berths in the Mediterranean, incuding some ships targeted at European markets. In comparison, European domicied ines operated 103 vesses, which offered 131,335 ower berths. The market in the Mediterranean is expected to recover sighty in 2015 as a resut of increases in capacity both from European and more particuary American-domicied operators. Northern Europe In 2014 a tota of 101 cruise ships were active in Northern European waters with a capacity of 126,283 ower berths with an average of 1,250 berths per ship. Coectivey these carried a potentia of 1.51 miion passengers on 1,184 cruises, offering a tota capacity of miion passenger-nights, giving an average cruise ength of 8.93 nights. The Northern European market decined by around 3% in 2014 but is expected to recover much of this ost ground in In 2014, North American mainstream operators depoyed 30 ships, with 48,355 ower berths in Northern Europe. European mainstream operators depoyed 59 vesses with 75,273 ower berths. The baance was argey made up of niche market ships visiting the poar-regions. The Batic Sea is the argest segment in the Northern Europe market, generating capacity of around 4.99 miion passenger nights in 2014, increasing to just over 5.1 miion in Contribution of Cruise Tourism to the Economies of Europe 2015 Edition 9

12 4. European Cruise Ports The European cruise industry is to a arge extent destination-ed and the Mediterranean and Northern European regions incude many attractive destinations. Many of the eading ports are regarded as must see or marquee destinations that destination panners wi wish to incude in their itineraries. Other ports, some of which are aso marquee ports in their own right, have advantages of strategic position, access to major hub airports and suitabe bed-stock, enabing them to feature prominenty as home ports. Tabe 4. 1 summarises the position in 2014 for the eading European ports 10 in respect of the embarkations, disembarkations and port-of-ca visits at each port. Some data has been estimated, indicated by itaics. Tabe 4.1: Leading Cruise Ports in 2014 Thousands of Passengers Port Revenue Passengers, 2014 Embarking Disembarking Port Ca Tota Mediterranean Top ten Barceona ,142 2,364 Civitavecchia ,409 2,140 Venice ,734 Pama Majorca ,336 Marseie ,311 Napes ,014 1,114 Piraeus ,055 Savona ,019 Genoa Dubrovnik Northern Europe Top ten Southampton ,573 Copenhagen Hamburg St Petersburg Lisbon Bergen Tainn Stockhom Hesinki Cadiz Major European Home Ports The principa home ports in the Mediterranean and Northern Europe are shown in Tabe 4. 2 with passenger throughputs (or revenue passengers), where avaiabe for Tabe 4.2: Revenue Passengers Major European Home Ports Home Port Country Mediterranean Civitavecchia Itay 2,394,423 2,538,259 2,140,039 Venice Itay 1,739,501 1,815,823 1,733,839 Pama Majorca Spain 984,785 1,245,244 1,336,437 Piraeus (Athens) Greece 1,198,047 1,302,581 1,055,556 Savona Itay 810, ,038 1,018,794 Genoa Itay 797,239 1,051, ,109 Barceona Spain 2,408,960 2,599,232 2, Northern Europe Southampton UK 1,577,790 1,683,160 1,573,428 Copenhagen Denmark 840, , ,000 Hamburg Germany 430, , ,690 Kie Germany 348, , ,000 Amsterdam Netherands 289, , ,092 Note: Where a port aso handes port-of-ca passengers, these are aso incuded in the totas shown in the above tabe. Source: MedCruise, Cruise Europe and individua port data. Estimates in itaics. Source: MedCruise, Cruise Europe and individua port data 10 In this and the subsequent port tabes non-european Mediterranean ports are incuded. 10 Contribution of Cruise Tourism to the Economies of Europe 2015 Edition

13 4. European Cruise Ports Key European Ports-of-Ca The principa home ports in the Mediterranean and Northern Europe are shown in Tabe 4. 2 with passenger throughputs (or revenue passengers), where avaiabe for Tabe 4.3: Major European Ports-of-Ca Port-of-Ca Country Mediterranean Marseie France 890,124 1,188,031 1,311,284 Napes Itay 1,228,651 1,175,018 1,113,762 Dubrovnik Croatia 743, , ,000 Santorini Greece 838, , ,000 Corfu Greece 655, , ,368 Livorno Itay 1,037, , ,356 Mykonos Greece 657, , ,207 Côte d Azur j France 702, , ,685 Istanbu Turkey 564, , ,353 Bari Itay 618, , ,602 Kusadasi Turkey 560, , ,231 Paermo Itay 354, , ,712 Vaetta Mata 611, , ,594 La Spezia Itay 50, , ,563 Tunis Tunisia 582, , ,433 Maaga Spain 651, , ,298 Northern Europe St Petersburg Russia 452, , ,885 Rostock k Germany 300, , ,000 Lisbon Portuga 522, , ,872 Tainn Estonia 440, , ,031 Stockhom Sweden 467, , ,000 Bergen Norway 446, , ,759 Hesinki Finand 368, , ,000 Cadiz Spain 334, , ,302 Geiranger Norway 312, , ,174 Stavanger Norway 277, , ,500 Havre, Le France 212, , ,904 Oso Norway 303, , ,000 Zeebrugge Begium 170, , ,000 Fam Norway 199, , ,874 j Mainy Nice, Viefranche and Cannes. k Incudes Warnemunde. Notes: 1. Where a port aso handes some home porting passengers, these are aso incuded in the totas shown in the above tabe. 2. Three of the five eading ports of ca in Northern Europe are in the Batic Sea. Source: MedCruise, Cruise Europe and individua port data. Contribution of Cruise Tourism to the Economies of Europe 2015 Edition 11

14 5. Cruise Passengers Where do they come from and where do they go? Source Markets There were an estimated miion goba cruise passengers in The countries of Europe accounted for 29% of them in terms of a source market. Figure 5.1: Goba Source Markets by Cruise Passengers North America Miion Passengers Note: UK incudes Irish Repubic; USA incudes Puerto Rico; Asia/Pacific incudes a of Asia (except the Midde East) and Austraia, New Zeaand and the South Pacific. During 2014 an estimated 6.39 miion residents of the countries of Europe [NB IRN figs incude Russia and other non- EU/EEA] cruised. The top five source markets Germany, UK, Itay, France and Spain accounted for 83% of the market. Tabe 5.1: European Cruise Passengers by Source Country, 2014 Country Passengers Share of Tota Germany 1,771, % UK/ Ireand j 1,644, % Itay 842, % France 593, % Spain 454, % Norway 176, % Switzerand 143, % Austria 122, % Netherands 109, % Sweden % Begium 73, % Denmark 37, % Finand 12, % Other Europe 331, % Tota 6,387, % j Of which Ireand, est. 35,000. Source: IRN for CLIA Europe. Asia/Pacific 2.40 Rest of the Word 1.09 Europe 6.39 Germany 1.77 UK/Ireand 1.64 Other Europe 1.10 Itay 0.84 France 0.59 Spain 0.45 The European market has grown by 128% over the ast ten years but with economic growth moderating over the past five years, European-sourced passengers have ony increased by about 4% over the past three years. Fifty-six percent of Europeans cruised in the Mediterranean and Atantic Ises in 2014, 22% in Northern Europe and the remaining 22% cruised outside Europe, primariy in the Caribbean. Passenger Embarkations An estimated 5.85 miion cruise passengers embarked on their cruises from European ports in Itaian ports, ed by Venice, Civitavecchia, Savona and Genoa, were European market eaders with 1.95 miion passenger embarkations in Spain was in second position with 1.26 miion passenger embarkations during Barceona and Pama were Spain s major embarkation ports. The United Kingdom was third behind Spain with just over 942,000 embarkations. The principa embarkation ports for UK passengers were Southampton, Harwich and Dover. The next three most important cruise embarkation countries were Germany, France and Denmark. Ports in Germany generated 600,000 passenger embarkations, foowed by France with 306,600 and Denmark with 244,000. The major embarkation ports in these countries were: Hamburg, Kie and Rostock/Warnemunde in Germany, Marseie in France and Copenhagen in Denmark. Tabe 5.2: Cruise Passengers by Country of Embarkation, 2014 Country Passengers Share of Tota Itay 1,957, % Spain 1,258, % UK 942, % Germany 584, % France 306, % Denmark 244, % Greece 176, % Netherands 86, % Sweden 48, % Mata 46, % Cyprus 38, % Portuga 23, % Croatia 18, % Other EU , % EU+3 5,772, % Other Europe j 81, % Tota 5,853, % j Russia, Georgia and Ukraine Source: G. P. Wid (Internationa) Limited. Port-of-Ca Visits The vast majority of cruise port cas in Europe are at the Mediterranean and Batic Sea ports. Incuding the Back Sea and Atantic Ises the region as a whoe incudes around 250 ports visited by cruise ships. The top ten destination countries accounted for 84% of cruise passenger visits in The top three are in the Mediterranean 11 and accounted for 52% of a European passenger visits. 11 The majority of cas in Spain are at ports on their Mediterranean coast. 12 Contribution of Cruise Tourism to the Economies of Europe 2015 Edition

15 5. Cruise Passengers Where do they come from and where do they go? Led by Civitavecchia, Napes, and Livorno, Itaian ports aso hosted 6.17 miion passenger visits in 2014 making Itay the argest cruise destination in Europe. With the incusion of the Canary Isands, Spanish ports received neary 5.0 miion cruise passenger visits in Spain s ranking rose from third in 2009 to second in 2010 and has remained second since then. Greece has maintained its ranking as the third most popuar destination in Europe with 4.1 miion passenger visits in Piraeus, Santorini, Mykonos, Corfu and Katakoon were the eading destination ports. Norway s rank rose from fifth in 2011 to fourth in 2013 and has remained as the fourth highest destination market throughout Europe and the eading destination in Northern Europe with 2.6 miion passenger visits, ed by Bergen, Geirangerfjord, Oso and Stavanger. Just over 2.4 miion cruise passengers arrived at French ports in 2014 and paced France as the fifth highest cruise destination in Europe. The principa destination ports in France are; Marseie, the Cote d Azur ports, Corsican ports and Le Havre. Tabe 5.3: Cruise Passengers by Country of Destination, 2014 Country Passengers Share of Tota Itay 6,174, % Spain 4,890, % Greece 4,075, % Norway 2,618, % France 2,439, % Croatia 1,118, % Portuga 1,105, % United Kingdom 922, % Sweden 562, % Estonia 471, % Beneux 461, % Mata 426, % Finand 416, % Denmark 359, % Germany 358, % Gibratar 299, % Iceand 234, % Ireand 179, % Sovenia 118, % Cyprus 106, % Poand 105, % Other EU j , % EU+3 27,654, % Other Europe k 1,312, % Tota 28,966, % j Latvia, Lithuania, Romania and Bugaria. k Incuding foowing in thousands: Russia, 538; Montenegro, 309; Monaco, 167; Turkey (Europe ony), 441 (estimates in itaics). Contribution of Cruise Tourism to the Economies of Europe 2015 Edition 13

16 6. Shipbuiding in Europe Athough conventiona merchant shipbuiding has been in decine in Europe since the ate 70 s in the face of ower-cost competition from the Far East, the European industry has been more successfu in retaining market share in a number of speciaist sectors. The most important of these is cruise ship construction in which the European industry has been the word eader for neary 50 years. A but two of the oceanic cruise ships currenty under construction through the end of 2018 are being buit in European yards. The yards in Itay, Germany, France, and Finand are the most important suppiers to the market and currenty account for a new ships due for deivery within Europe from 2015 to Germany and Itay are the current eaders with 70% of the order book between them. Japan currenty has orders for two ships but its market participation in the past has been sporadic, previous ships having been deivered in , 1998 and Athough other non-european yards have the capacity and technoogy to buid cruise ships, they may not have project management capabiity, aptitude or the desired baance of abour and skis required to deiver a cost effective resut within a required budget in the contracted deivery time. However, Far Eastern yards have been studying the market diigenty and two prospective orders have been reported for yards in China. The majority of cruise ships serving the European market are dry-docked in Europe, together with a number of North American ships summering in the region. European yards aso undertake major conversions such as repacement of main engines and insertion of a mid-body to engthen the ship. The outstanding reputation of European yards has meant that US cruise ines have continued to order ships in Europe despite the fuctuations of the US doar against the euro. Europe offers an abundance of speciaist skis and sophisticated technoogy in areas such as navigation and outfitting, which support European cruise ship construction and assist the yards in maintaining a competitive edge over their rivas in other parts of the word. Tabe 6. 1: Ocean-going Cruise Vesses Schedued Newbuidings, Country of Buid No. GT Pax (LB) Cost M Share of Cost Itay 15 1,347,800 33,420 6, % Germany 7 1,126,200 27,688 5, % France 4 734,564 18,200 3, % Finand 3 293,500 7,500 1, % Tota 29 3,502,064 86,808 15, % Note: GT (Gross Tonnage), LB (Lower Berths), Pax (Passengers). Tota excudes non-european buid (Japan). Source: G. P. Wid (Internationa) Limited. The current aocation of the order book by European country of buid is shown in Tabe Contribution of Cruise Tourism to the Economies of Europe 2015 Edition

17 7. Direct Cruise Industry Expenditures in Europe: A Broady Based Fow of Spending Major Segments Cruise tourism generated an estimated 16.6 biion in direct expenditures throughout Europe in 2014, a 2.8% increase from As indicated in the foowing figure, these expenditures were broady distributed across the four major source segments. Figure 7. 1: Direct Cruise Industry Expenditures in Europe, 2014 Cruise Line Purchases % Cruise Empoyees Compensation % Shipbuiding Passenger & Crew Purchases % Vaue of Shipbuiding % The goba cruise industry spent 4.55 biion, 27% of tota cruise industry expenditures in Europe during Expenditures for new construction and maintenance increased by 12.8% from 2013 after increasing by 4.7% in 2013 and 0.3% in Prior to 2012, shipbuiding expenditures had decined for three consecutive years. Since the cruise ship order book peaked in 2007, new orders fe in each of the next three years. As a consequence, the growth in shipbuiding expenditures decined in 2008 and actua expenditures fe during the period. Despite the increase in the tota order book during 2014 the contracts paced in Japan and potentiay in China represent a threat to Europe s continued pre-eminence in cruise shipbuiding. Tabe 7.1: Cruise Industry Expenditures for Newbuidings and Refurbishment (Miions), 2014 Country Newbuidings Refurbishment Tota Germany 1, ,651 Itay 1, ,328 France Finand Other EU Tota 3, ,552 Eighty percent (80%) of these expenditures reate to the work-in-progress for the construction of new cruise ships, with the remaining 20% covering conversion, refitting, refurbishment and maintenance of cruise ships. Among the four major shipbuiding countries in Europe, expenditures for new construction increased in Germany and Itay during 2014, by 7.8% and 47% respectivey. Expenditures remained virtuay unchanged in France and rose by 12% in Finand. Cruise Line Purchases Cruise ines spent an additiona 7.0 biion with European businesses in support of their cruise operations. This was 42% of the tota and a 0.8% increase over These purchases incuded a broad range of products and services and touched virtuay every industry in Europe. Among the major industries that benefited from the impact of direct cruise ine spending were the foowing. Food and beverage manufacturers produced 670 miion in provisions consumed on-board cruise ships by passengers and crew, virtuay unchanged (+0.6%) from This sight growth was the net resut of a decine in passengers which was offset by an increase in prices. Driven by faing capacity and fue costs, the petrochemica industry received an estimated 982 miion from cruise ines in 2014, a 4.8% drop from Petrochemica products incude bunker fues, ubricants, paint and ceaning suppies. Another 965 miion was spent for the manufacture of metas and machinery, incuding materia handing equipment, engines, ighting equipment, communication equipment and computers. This represented a 12% increase over Spending for transportation and utiities totaed 1.6 biion and incuded spending for pubic utiities, trave agent commissions, port charges and ground transportation. This was unchanged from The cruise industry aso spent an estimated 1.38 biion on financia and business services incuding: advertising, engineering and other professiona services, computer programming and support services and direct mai and market research. This was an increase of 3.7% from Tabe 7.2: Direct Cruise Lines Purchases by Industry (Miions), 2014 (Excuding Shipbuiding) Industry Purchases Share of Tota Ag. Min., & Const % Food & Beverage % Texties & Appare % Paper & Printing % Petroeum & Chemicas % Stone & Gass % Metas % Machinery % Other Manufacturing % Whoesae Trade % Transportation &Utiities 1, % Financia & Bus. Services 1, % Persona Serv. & Gov t % Tota 6, % Note: In this and subsequent tabes in the economic impact sections, the totas may differ from the sum of the components due to rounding. Contribution of Cruise Tourism to the Economies of Europe 2015 Edition 15