Report from Cannes: Med Market

Cruise line executives gathered at a roundtable in Cannes voiced off on many issues regarding the Mediterranean and European markets, including the environment, passenger sourcing and a possible extended season.

Manfredi Lefebvre d’Ovidio, deputy chairman of Silversea Cruises, referred to what he described as “proliferation of regulations” hinting at a possible ECA-area in the Med, saying that “environmental issues will dominate the agenda in the future.”

Pierfrancesco Vago, CEO of MSC, mentioned that the U.S. market was “stabilizing” after years of growth and that the potential for growth and market penetration is now in Europe. He said Eastern Europe was poised to open up as a “big source market in the future.”

Vago also touched on winter cruising, where other executives chimed in that Europeans think of holidays as a right, not a luxury. It was also pointed out that Europeans generally have more vacation days, but are less likely to travel in the winter.

Gianni Ororato, president, Costa Crociere added that Costa’s winter customers generally wanted to go outside of Europe in the winter.

Kevin Sheehan, president and CEO of Norwegian Cruise Line, mentioned Norwegian’s capacity growth in Europe, along with a ship positioned year-round, “winter Med-cruising is here to stay,” he said.

But, Sheehan described both the American and European markets as the “wild west,” meaning that the penetration levels in both regions “are nowhere where they need to be.”

Norwegian will take delivery of new ships from Meyer Werft in spring 2013 and spring 2014, hinting that those ships will be positioned in Europe.

Sheehan noted that European sourcing for Norwegian will grow significantly, especially as the Norwegian Epic spends the summer homeporting in Barcelona in 2011.

Carnival UK CEO David Dingle said that sulfur regulations “are the single biggest threat to our industry,” and went into detail about scrubber solutions not being sufficient.

As far as LNG, he said: “it will be a long time before we see LNG ships,” and that with new fuel regulations eventually coming into effect worldwide, burning diesel would be detrimental for many reasons.

“Diesel demand will go up,” he said. “There isn’t more refinery capacity so there will be a huge increase in diesel pricings for everyone.”

Dingle also noted the value proposition of cruising might go away as prices for fuel skyrocket.

“We may have to slow the ships down more, which means less ports,” he noted.

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