Cruise lines leave the doldrums

Expansion and competition are the current focus of the passenger liner industry, writes Richard Phillips 6 decky

ON 30 March, 450 travel agents from Thomas Cook shops around the country will descend on Southampton to be shown the delights of a new luxury liner, the Oriana.

Thomas Cook has insisted that at least one representative from each of its shops attend - a measure of the importance it, and the ship's owners, P&O, attach to the exercise.

P&O is banking on the fact that this and similar programmes will guarantee the success of one of the most widely promoted ship launches since the QEII's in 1967. Its maiden voyage in April is already sold out.

Built in Germany for £200m, the Oriana offers cruisers unrivalled luxury. It was designed specifically for the British market, and the pre-launch publicity boasts some impressive specifications. It is the fastest cruise liner built in 25 years, with an operating speed of 24 knots. That means the 69,000-ton ship can cover the distance to far-flung destinations quickly, ensuring it offers more cruises than older ships. Operating costs are also substantially lower than for older vessels - by up to 40 per cent, according to calculations by Ian Wild, an analyst at the brokers BZW.

With six lounges, nine bars, three restaurants and a plethora of other facilities, the ship should not leave passengers short of things to do. It can carry up to 1,975 of them.

At a stroke, the Oriana increases UK capacity by more than 10 per cent. Analysts estimate it could even add 20 per cent to the market, although many of the passengers will be from overseas.

The UK market is growing at a minimum of 15 per cent a year - and as much as 25 per cent according to some estimates. And David Dingle, head of marketing at P&O Cruises, is sanguine about the challenge ahead. "It requires 10 per cent growth in the market for Oriana to run at capacity. So if we take two-thirds of the current annual growth of 15 per cent, Oriana should pay off."

Although new ships have been ordered by continental and US competitors, overcapacity seems but a small cloud in otherwise sunny skies.

More effort is being focused on continuing to expand the home market. One of the problems P&O and its rival, Cunard, which owns the QEII, are trying to fend off is the stereotype attached to cruise passengers. This is the blue-rinse wife and her retired, billionaire husband, encapsulated in the film Carry on Cruising.

British passengers still tend to be in their early fifties, but the average age is falling. Both companies are now putting special emphasis on holidays designed to appeal to families with young children.

Moreover, any vestigial trace of the old image has been shattered by the arrival of a brash newcomer, Airtours. The company, best known for its mass-market package holidays, has already invested heavily in its attack on the sector. Last year, it paid £16m for the 1,000-berth MS Seawing. That was 94 per cent sold out for the 1995 season by the end of the year, and is now 98 per cent booked. Its success prompted Airtours to follow up with the £35m purchase of MS Carousel last October.

MS Seawing's inaugural voyage under new management kicks off on 25 March - ahead of the Oriana's maiden voyage on 9 April.

Airtours is the first British company to enter the market for decades - if not since the rise of P&O and Cunard during the Twenties.

Richard Carrick, marketing director at Airtours, says the company adopted a two-pronged attack. "We wanted to make it more affordable and more accessible. By that, we mean making it less stuffy and removing some of the stodginess that clings to the business."

Airtours' upmarket competitors may be wary of their arriviste rival, but on balance see it as a plus. Mr Dingle says: "The view of the industry is tending to the notion that Airtours will bring many more people into the market rather than steal business from the top tier, which can only be good for the industry."

Cris Rees, commercial manager at Thomas Cook, echoes his view. "Everybody is fascinated to see what happens with Airtours. We suspect it will appeal to a sector of the market that has never considered cruising before," he says.

"Ideally you will get new customers, of which some trade up and some stay with Airtours. This means that the overall market expands."

Airtours has already firmly signalled its intentions through the price of its cruises. Its cheapest deal is £249, for three nights in the Canary Islands. That includes the price of the flight there and back.

As Andrew Hunter, an analyst at stockbrokers Hoare Govett, comments: "What Airtours has done, is knock a nought off the price of these holidays."

So far, the strategy seems to be paying off. Airtours is claiming phenomenal success with its winter breaks, although some capacity remains on MS Seawing and MS Carousel over the peak period of the Easter and summer holidays.

Indeed, all the signs in the cruise market continue to be bullish. It escaped the recession unscathed. Growth and healthy margins must seem like manna from heaven, especially at Trafalgar House, where other problems have overshadowed its Cunard cruise arm.

Ian Wild at BZW believes P&O has the right strategy. He reckons that within six months the company will announce plans for another ship. It already has a further three ships ordered, the first of which is due for delivery at the end of this year, while another two are due in 1997. All of these are for the US business.

"We are a buyer of the stock, with the good fundamentals in the cruise division very much the basis of our recommendation," he says. Last year P&O sold half a million cruises worldwide.

With the fiasco over the QEII's disastrous refurbishment still fresh in the mind, Cunard might be expected to be under pressure. But in an irony that suggests all publicity is good publicity, the ship's disastrous voyage seems to have actually attracted more customers. Figures from holiday industry sources show bookings for the QEII are up 12 per cent year on year, even after deducting cancellations from its abandoned voyage.

Start your day with The Independent, sign up for daily news emails
News
ebooksAn unforgettable anthology of contemporary reportage
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Digital Optimisation Executive - Marketing

£30000 - £35000 per annum: Recruitment Genius: The UK's fastest growing, multi...

Recruitment Genius: Financial Reporting Manager

£70000 - £90000 per annum: Recruitment Genius: A Financial Reporting Manager i...

Recruitment Genius: Payments Operations Assistant

£23000 - £25000 per annum: Recruitment Genius: They win lots of awards for the...

Recruitment Genius: Telephone Debt Negotiator

£13500 - £20000 per annum: Recruitment Genius: This nationwide enforcement com...

Day In a Page

Sepp Blatter resignation: The beginning of Fifa's long road to reform?

Does Blatter's departure mean Fifa will automatically clean up its act?

Don't bet on it, says Tom Peck
Charles Kennedy: The baby of the House who grew into a Lib Dem giant

The baby of the House who grew into a Lib Dem giant

Charles Kennedy was consistently a man of the centre-left, dedicated to social justice, but was also a champion of liberty and an opponent of the nanny-state, says Baroness Williams
Syria civil war: The harrowing testament of a five-year-old victim of this endless conflict

The harrowing testament of a five-year-old victim of Syria's endless civil war

Sahar Qanbar lost her mother and brother as civilians and government soldiers fought side by side after being surrounded by brutal Islamist fighters. Robert Fisk visited her
The future of songwriting: How streaming is changing everything we know about making music

The future of songwriting

How streaming is changing everything we know about making music
William Shemin and Henry Johnson: Jewish and black soldiers receive World War I Medal of Honor amid claims of discrimination

Recognition at long last

Jewish and black soldiers who fought in WWI finally receive medals after claims of discrimination
Beating obesity: The new pacemaker which helps over-eaters

Beating obesity

The new pacemaker which helps over-eaters
9 best women's festival waterproofs

Ready for rain: 9 best women's festival waterproofs

These are the macs to keep your denim dry and your hair frizz-free(ish)
Cycling World Hour Record: Nervous Sir Bradley Wiggins ready for pain as he prepares to go distance

Wiggins worried

Nervous Sir Bradley ready for pain as he prepares to attempt cycling's World Hour Record
Liverpool close in on Milner signing

Liverpool close in on Milner signing

Reds baulk at Christian Benteke £32.5m release clause
On your feet! Spending at least two hours a day standing reduces the risk of heart attacks, cancer and diabetes, according to new research

On your feet!

Spending half the day standing 'reduces risk of heart attacks and cancer'
With scores of surgeries closing, what hope is there for the David Cameron's promise of 5,000 more GPs and a 24/7 NHS?

The big NHS question

Why are there so few new GPs when so many want to study medicine?
Big knickers are back: Thongs ain't what they used to be

Thongs ain't what they used to be

Big knickers are back
Thurston Moore interview

Thurston Moore interview

On living in London, Sonic Youth and musical memoirs
In full bloom

In full bloom

Floral print womenswear
From leading man to Elephant Man, Bradley Cooper is terrific

From leading man to Elephant Man

Bradley Cooper is terrific