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  • 1. New Challenges for the Cruise Industry: The State of the Industry Andy StuartExecutive Vice President, Global Sales & Passenger Services Norwegian Cruise Line October 25, 2012
  • 2. Agenda • 2012 – A Challenging Year • Cruising: A Global Industry • Cruising: A Major Global Economic Driver o Global o Europe o Spain • Cruising: An Exciting Future Ahead
  • 3. 2012 – A Challenging Year
  • 4. 2012 – A Challenging Year • Costa Concordia
  • 5. Post-Concordia: Operational Safety Review Since January 2012 Cruise Industry Taskforce Established launch: Proactively identified and implemented bestEffort Aligned and Supported by IMO, EU safety practices available 7 new policies announced Independent Panel of Experts Industry-wide commitment to continuous improvement Keeping Members informed 5
  • 6. 2012 – A Challenging Year • Economic Crisis in Europe • Political Instability • Volatility of Fuel Prices
  • 7. Cruising: A Global Industry
  • 8. Global Cruise Passenger Growth • 20 Million Global Passengers in 2011 • North America: 11.5 million • Europe: 6.2 million • UK: 1.7 million • Grew 10% from 2010 from 18.7 million in 2010 to 20.6 million in 2011 8
  • 9. Increasing Globalization of Cruising North America Rest of World Since 2000, the number of CLIA member passengers sourced from outside North America has tripled. 9
  • 10. Ship Growth 2012: 13 new ships 143 new ships 2000-2011 2000-2011 80 new 2013: 6 new ships 1990s 1990s ships ‘80s ‘80s40 new ships 10
  • 11. New Ships in 2012 Line Ship PassengersDisney Cruise Lines Fantasy 2,500Costa Cruises Fascinosa 3,012Celebrity Cruises Celebrity Reflection 3,030MSC MSC Davina 3,502Carnival Cruise Lines Carnival Breeze 3,690Oceania Cruises Riviera 1,260Paul Gauguin M/V Moana (reintroduced) 90 11
  • 12. GROWTH•102% capacity in 2011•$10 billion investmentin new shipdevelopment betweennow and 2015By 2015: 231 ships operatingglobally with more than361,000 beds 12
  • 13. International Growth•Over the past 5 years,deployment to theMediterranean increased bynearly 100%.•Deployments to ports inAustralia and New Zealandmore than doubled. 13
  • 14. Emerging Markets5 Year Change in geographic deployment(2006-2011): – Transatlantic: +111.2% – Australia/New Zealand/S. Pacific: +101.2 % – Mediterranean + 109.38 % – South America: +81.7% – Europe/Scandinavia +24.61 % – Caribbean + 13.5 % – Alaska + 4.66 % – Bahamas +7.2 % 14
  • 15. Port Development LOS ANGELESCruise port expansion:• Charleston • Mexico• New York • Panama• Los Angeles • Norway• Miami New ports: • Portland, Maine • Falmouth, JamaicaPANAM • Singapore 15
  • 16. Singapore’s Marina Bay CruiseCentre May 2012 Opened in$350 millioninvestmentChosen as homeportfor Royal Caribbean’sVoyager of the SeasExpected to welcome1.3 million cruisepassengers in 2013(up 30% from 2010) 16
  • 17. Potential of Asia 80% of global middle-class by 2030 growth will come from Asia 1% cruise market penetration in Asia of would mean: 17
  • 18. China’s Investments In 2011, the number of home-port calls overtook transit calls Homeports capable of serving large, luxury liners established in: − Shanghai − Xiamen − Tianjin − QingdaoNumber of international liners Number of ships arriving at portsarriving in Shanghai’s specialty on China’s mainland port for luxury ships 62 150+ 223 262 (2012) (2013) (2010) (2011) 18
  • 19. Cruising: A Major Global Economic Driver GLOBAL
  • 20. Global Economic Impact• Boosting Local Economies: Cruise line, passenger and crew spending generated over € 127 Billion globally• Globally, a total of 753,000 direct and indirect jobs were created by the cruise industry• Generating more than €42 Billion in wages
  • 21. Cruising: A Major Global Economic Driver EUROPE
  • 22. THE EUROPEAN CRUISE MARKET - ANOTHER YEAR OF GROWTH WITH 6.2M PASSENGERS IN 2011 6.2m European 240,200 Passengers 33.7m cruise 20.6m pax calls in lower berths Global Europe on ships Passengers deployed in EuropeGrowth 2010 10% 11% 10% 13% To 2011Source: G.P. Wild (International) Limited and Business Research and Economic Advisors, 2012 Edition
  • 23. 2011 – HIGHEST ECONOMIC CONTRIBUTION€bn’s OF THE CRUISE INDUSTRY TO EUROPE €15.0 €12.9 €14.2 €14.1 €14.5 €10.6 €8.4Direct spending by cruise lines, passengers and crewSource: G.P. Wild (International) Limited and Business Research and Economic Advisors, 2012 Edition
  • 24. THE CRUISE INDUSTRY CONTINUES TO DELIVER GROWTH TO THE EUROPEAN ECONOMY• €6.4bn cruise line purchases – 14% compound annual growth since 2005• €3.4bn passenger and crew on-shore expenditure – 13% compound annual growth• 8.3% growth of economic impact without shipbuilding from 2010 to 2011
  • 25. CHALLENGING TIMES FOR EUROPEAN CRUISE SHIP BUILDERS• Shipbuilding and repair is 26% of European cruise industry direct expenditure, worth €3.8bn• Shipbuilding and repair economic impact fell 7.9% in 2011 – 3rd consecutive year• Share of shipbuilding of European cruise industry fell from 37% in 2005 to 25% in 2011 despite absolute growth• Europe remains the centre of cruise ship construction, but business becomes more global
  • 26. ITALY REMAINS THE LARGEST EUROPEAN CRUISE ECONOMY Direct Economic Impact of the European Cruise Industry 2011€bn’s Source: G.P. Wild (International) Limited and Business Research and Economic Advisors
  • 27. 100,000 JOBS CREATED BY CRUISE INDUSTRY SINCE 2005• 315,500 jobs in Europe depend on cruise industry • 100,000 jobs in Italy• 57,000 European seafarers and cruise line shoreside employees• 72,000 jobs in manufacturing • 22,000 jobs in shipbuilding• 61,000 jobs in financial and business services
  • 28. TOTAL OUTPUT IMPACT OF EUROPEAN CRUISE€bn’s INDUSTRY NEARLY DOUBLED SINCE 2005Total Output all intermediate inputs, taxes net of subsidies, net surplus (profits, net interest, dividendsand other items) and employee compensation.Source: G.P. Wild (International) Limited and Business Research and Economic Advisors, 2012 Edition
  • 29. OUTLOOK FOR EUROPEAN CRUISE INDUSTRY REMAINS POSITIVE• Cruise industry in Europe has further potential to grow from currently €37bn total economic output• Low market penetration rates in European source markets compared with US• Appealing destinations attract European and non- European passengers
  • 30. Cruising: A Major Global Economic Driver SPAIN
  • 31. DIRECT CRUISE INDUSTRY EXPENDITURES IN SPAIN• Cruise tourism generated €1.3 billion in direct expenditures in Spain in 2011• Spain represents 9% of the industry’s direct expenditures throughout Europe, a 9.2% increase over 2010 Cruise Line Purchases Passengers & € 469 Crew 36% € 595 46% Ship Repair € 201 15% Emp. Comp. € 33 3%
  • 32. Increased Growth Across the Board in Spain 1.4 Million Pax Embarking 5.2 Million from Spanish 703,000 Pax Visits to Ports Global Spanish Ports 27,500 Total Pax Sourced € 1.3 Billion € 834 Million Employment by from Spain Cruise Total Emp. Cruise IndustryExpenditures in Comp Spain 67% 74% 77% 80% 90% 93% Growth from 2006 to 2011
  • 33. Cruising: An Exciting Future Ahead
  • 34. New Ship Orders 2014 and beyondLine Tonnage Pax Delivery YardNorwegian Getaway 146,600 4,000 Jan 2014 Meyer WerftRegal Princess 141,000 3,600 Spring 2014 FincantieriTui Cruises 97,000 2,500 Spring 2014 STX FinlandRCCL Project 158,000 4,100 Fall 2014 Meyer WerftSunshine 1Costa Cruises 132,500 N/A Fall 2014 FincantieriP&O Cruises 141,000 3,611 March 2015 FincantieriAIDA 125,000 3,250 March 2015 MitsubishiRCCL Project 158,000 4,100 Spring 2015 Meyer WerftSunshine 2Breakaway Plus 161,000 4,2000 October 2015 Meyer WerftAIDA 125,000 3,250 March 2016 Mitsubishi
  • 35. Vast Potential Global Audience• In North America, only 16% of population has cruised• In Europe, only 1% of the population has cruised• Asia is untapped
  • 36. Innovation & Cruising Trends• Connection with the Sea• Recreation• Celebrity Chefs 36
  • 37. Innovation & Cruising Trends• Multi Generation Travel• Health and Wellness• Exploration and Adventure• Name Entertainment• River Cruising 37
  • 38. THANK YOU 38 38