2015 WAS A SPECIAL YEAR FOR UK CRUISING CONTENTS. All the indicators suggest that 2015 will be the best year in the UK cruise market s history.

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1 THE CRUISE REVIEW PUBLISHED MARCH 2016

2 CONTENTS 2015 WAS A SPECIAL YEAR FOR UK CRUISING 2015: WAS A SPECIAL YEAR FOR UK CRUISING 3 EXECUTIVE SUMMARY NEW SHIPS, NEW UK RECORD 6 CANARIES FLYING HIGH 8 RECORD CRUISE VISITORS AT UK PORTS 10 SHORTER CRUISES TREND RESUMED 11 CRUISING REMAINS GREAT VALUE 12 CRUISERS CAN T HAVE TOO MUCH OF A GOOD THING 14 CONSUMERS STOP LEAVING IT TO LAST MINUTE 15 UK PORTS TO THE FORE AGAIN 16 CRUISE MARKET GOES (SOUTH)WEST 17 DANUBE IS THE STAR PERFORMER 18 All the indicators suggest that 2015 will be the best year in the UK cruise market s history. This was the forecast made in the last CLIA UK & Ireland Annual Cruise Review. And how accurate that turned out to be. For it was a record year thanks to a 9 increase in cruise passengers for a best-ever annual total of nearly 1.8m. The arrival of Britannia, the largest ship built for P&O Cruises and the largest dedicated to the UK market, together with Royal Caribbean International s Anthem of the Seas and Cruise & Maritime Voyages Magellan helped grow the number of cruise guests to new heights. And not to be outdone, the continued investment in river vessels has led to another record year for the number of UK & Irish consumers taking a river cruise holiday. As the world s cruise industry continues to invest, innovate and expand fleet sizes to attract greater numbers of guests, the UK is also looking forward to the arrival of new ships with a particular focus on the domestic market. In June, Thomson Cruises is launching its newest ship, Thomson Discovery, dedicated to the UK market which is showing many positive signs of a return to consistent growth. Looking into next year, Norwegian Cruise Line is returning to the UK after a 7-year gap while Thomson Cruises is also offering a series of cruises from Newcastle. Cruise & Maritime Voyages has also announced another new addition to its fleet in 2017 Columbus will be dedicated to the British market sailing year round from Tilbury. These developments should lead to more cruises being sold and more records being broken for the UK and Ireland cruise industry. 2 3

3 EXECUTIVE SUMMARY 2015 UK & Ireland achieves highest growth rate of all major European markets and its largest annual rise for seven years One in nine package holidays booked is a cruise - up from one in 10 in 2014 Huge rise in the popularity of Atlantic Islands cruises but the Mediterranean remains the No.1 choice for cruises from UK Cruising from a UK port increased sharply in 2015 and although fly-cruise also grew, ex-uk cruises are back on course to account for 50 of passengers within a few years Nearly two-thirds of cruise consumers took more than one cruise in 2015 the most multiple cruisers for a decade About a third of cruises were taken by first-timers The average age of passengers dropped by three years the largest annual drop for more than a decade Last-minute bookings at lowest level for five years River cruising s growth reflects that of ocean cruising as passengers top 150,

4 NEW SHIPS, NEW UK RECORD The record for cruises bought by UK and Irish consumers in a single year was not simply broken in 2015 it was smashed, thanks to the largest annual increase since The 9 rise in the number of cruise passengers also meant that the size of the market in the ten years since 2005 had grown by two-thirds (+67). Since 2008, the increase was a more modest 21; despite this slowdown the number of bednights grew an impressive 23 between 2008 and The slowdown coincided with the economic downturn in the UK following the credit crunch crisis in 2008 but that was not the only or even the main cause as the cruise industry has also been undergoing major changes as it becomes a much more global business. These have included ships being moved more frequently and all around the globe notably to the fast-emerging Chinese cruise sector and every market has had to fight to retain its share of ships and capacity especially as the ordering of new ships also slowed down post The demand for UK cruising remains although the cruise companies have more choices now and not always enough ships to meet the demand in all of their markets. But the brakes are off and orders are once again being placed on a regular basis for a variety of ships including those mega-ships with a breath-taking range of dining and entertainment features, not to mention wow factors from bumper cars to humanoid robots. In 2015, it was the arrival of brand new ships like Britannia (P&O Cruises) and Anthem of the Seas (Royal Caribbean International) along with the newly-acquired for the UK market, Magellan (Cruise and Maritime Voyages) which combined to fuel the 9 increase. The land/air-based package holiday business from the UK also went into a slump just prior to cruising s slowdown and it started its recovery slightly earlier in But it fell much further and unlike cruising remains nowhere near its peak. In 2015, cruising represented 10.8 of the package tour business, nearly treble the share it had in Its share of the overall foreign holidays market has more than doubled in the same period. 1 UK Ocean Cruise Market 2 Bednights booked by UK passengers 3 Ocean Cruising s Share of Foreign Holidays Market From The UK Year Passengers change , , , , , , , , , ,644 (4.8) , Year Bednights change , , , , ,472 (0.3) ,064 (2.2) ,915 (0.8) , Year Foreign Holidays Foreign Inclusive Holidays/tours Ocean Cruise Holidays** Ocean Cruises share of inclusive foreign holidays ,670 20, ,442 14,257 1, ,819 14,740 1, ,173 14,470 1, ,149 15,266 1, ,519 15,868 1, ,024* 16,614* 1, * Estimate ** Includes Republic of Ireland Source: IRN Research; International Passenger Survey Crown Copyright 2015 Ocean cruises share of all foreign holidays 6 7

5 CANARIES FLYING HIGH The Atlantic Islands (Canaries and Madeira) have been favourite destinations for British cruisers for many decades but they have never had a better year than 2015 when a record 188,000 UK and Ireland passengers chose to cruise there. This was all the more remarkable as there was a small drop in the number of Atlantic Islands fly-cruises sold but a two-thirds increase in the number cruising there from the UK more than compensated. Those choosing to take a cruise from a UK port totalled 141,000 and was more than 40 more than the next highest ever recorded (in 2013) and, again, was due to the additional ships cruising out of British ports in There were two other records for major cruise destinations. Firstly, the sixth consecutive annual increase brought the number of passengers cruising Western Europe (ports in the UK, Atlantic and North Sea) to 252,000 and maintained its position as the most popular cruise region from a UK port. Secondly, Mediterranean fly-cruise passengers went up 9 to a peak of 482,000 and still well ahead of Caribbean fly-cruises despite their 16 increase taking them back up to 220,000 the highest since Like the Atlantic Islands, Norway is a longestablished favourite with British cruisers and it has recently enjoyed rapid growth but there was something of a market correction in 2015 with a 17 drop to 128,000 UK and Ireland cruise visitors. There was strong growth in both fly-cruises and cruises from UK ports during 2015 but the result was a greater market-share for departures from UK ports which suggests that the reverse trend in 2014 was just a one-year blip and that a 50:50 split is imminent a major swing given that flycruises accounted for nearly two-thirds of UK and Ireland cruise pasengers as recently as Destinations Booked by UK Passengers 5 UK Port Cruises Vs Fly Cruises Destination change 15/14 Mediterranean Northern Europe Caribbean Atlantic Islands Other Areas Total 776 1,701 1,726 1,644 1,789 9 UK Port Passengers Fly Cruise Passengers Year Passengers growth share share ,477, , , ,533, , , ,622, , , ,700, , , ,701, , , ,726, , , ,644,000 (5) 739, , ,789, , ,

6 RECORD CRUISE VISITORS AT UK PORTS SHORTER CRUISES TREND RESUMED The number of UK & international passengers calling at a UK port during a cruise in 2015 topped the 1 million mark for the first time after the sixth double digit increase in eight years. The total has more than doubled in just six years. There were two more cruise lines operating three fewer ships but the number of ports visited equalled 2014 s record of 57. The number of passengers joining their cruise ship in a UK port was up 13 on 2014 but fell just short of 2013 s record number because while UK passenger embarkations rose by 23, - the recent rapid rises in overseas passenger embarkations fell back. The recent trend for UK passengers to book shorter cruises has resumed after a temporary blip and the average of 10.6 days is now a full half-day shorter than when it peaked in This reflects the popularity of guests joining their ship in a UK port for cruises to destinations including Northern France, Germany, Spain, the Netherlands, Belgium and the Channel Islands. 6 Embarkations at UK Ports Year Total Embarkations ,060 Increase (11) 13 UK Passengers Overseas passengers share of overseas Source: CruiseBritain 7 Port of Call Passengers at UK Ports Year Passengers ,017 change Ports Visited Ships Lines Average duration (nights) of cruises by UK passengers Year Summer Winter Year Source: CruiseBritain 10 11

7 CRUISING REMAINS GREAT VALUE There was good news for consumers in 2015 as they were paying just 7 per day more for their cruises than in But the most remarkable feature of cruise pricing remains its value with like-for-like prices hardly changing at all over the past decade. In fact, the average per day in 2008 was 1 higher than 2015 s 134. Value-for-money and the all-inclusive nature of pricing in the sector explains the steady rise in sales for the Ultra Luxury brands. Passenger numbers fell marginally in 2014 but this was reversed in 2015 with a small rise. 9 Price ( ) Trends In UK Cruise Market 501-1,000 1,001-2,000 2,001-2,500 2,501-5,000 Year , Average Revenue ( ) per UK Passenger Year Summer Winter Year UK Market Cruise Per Diems Year Ultra-Luxury Cruise Passengers Year Summer Winter Total of all cruises Included Crystal Cruises, Ponant, Hapag-Lloyd Cruises, Hebridean Island Cruises, Regent Seven Seas Cruises, Seabourn, SeaDream Yacht Club and Silversea 12 13

8 CRUISERS CAN T HAVE TOO MUCH OF A GOOD THING CONSUMERS STOP LEAVING IT TO LAST MINUTE Exactly half of cruise passengers took two or three cruises during 2015 and nearly two-thirds (63) took at least two and some more than six. This is the highest share of multiple cruise-taking passengers for at least a decade. There was also a downturn in the average age of cruise passengers at 55.2 years, a full three years down on 2014 the biggest single year drop for two decades. 13 UK Cruise Market Age Analysis In recent years, the average had been creeping up but the younger age in 2015 is a reflection of the success cruise lines have had attracting younger guests. The share of first-timer cruise passengers remained at 33 but with the overall market rising 9, it does mean a similar rise in first-timers so progress is being made in attracting a new generation of cruise passengers. Last minute bookings were at their lowest level for five years in the UK cruise market in 2015 with just one-third being made within three months of departure. This is reflected in the price-stability detailed earlier in this review. A quarter of bookings were made at least nine months ahead, something which used to be more common pre-2009 but which appears to be returning to the market with increases in the last two years. passengers Year Up to Average Age First Time Cruisers as of UK Market 15 UK Passengers Booking Multiple Cruises Annually 16 UK Cruise Market - Trends in Booking Lead Times of bookings (no. of months) Year Year Cruises taken in last year () Year

9 UK PORTS TO THE FORE AGAIN CRUISE MARKET GOES (SOUTH)WEST The renewed surge in passengers choosing to begin their holiday from a UK port is mirrored in the answers to the latest UK Cruise Survey which shows significant increases in those taking a cruise because it is a no-fly itinerary or because of the convenience of a local departure port. There remains little doubt, though, that destinations remain the most frequent trigger for the consumer s choice in taking a cruise holiday with previous experience with a cruise line or ship the key in choosing the actual cruise. And it is the level of service, quality and choice of dining and the overall onboard ambience that play into the decision whether to return to the same ship. 18 UK Passengers - Reasons* For Choosing Their Last Cruise Reasons Service on-board Dining On-board atmosphere/service Facilities on board Cabins and public rooms Entertainment Loyalty membership benefits Special Occasion All-inclusive drinks package Cruise themes Maiden Voyage * Asked to select three principal reasons Source: UK Cruise Survey 2014 (IRN Research) Reasons Itinerary/Destinations Cruised with this line before Price/Value for Money n/a n/a n/a No flight Cruised on this ship before n/a n/a n/a Local departure port n/a n/a n/a Departure Date Special Offer n/a n/a n/a Duration All inclusive nature of the package n/a n/a n/a To try another cruise line To try another ship Flights from local airport Personal Recommendation Pre and post land stays n/a n/a n/a 3 3 Travel agent recommendation Recommendation on web review/blog * Asked to select three principal reasons. Source: UK Cruise Survey 2014 (IRN Research) 17 UK Passengers - Reasons* For Choosing To Take A Cruise Holiday The UK region showing the most consistent growth in providing cruise passengers has been the South West and, with a further increase to a 14 share, it now has easily the highest penetration rate of any UK region. Its increased share appears to have come mainly at the expense of Scotland, the North East, Northern Ireland and London (which remains the place with the lowest penetration of all). However the South East remains the UK s top source for cruise passengers. 19 Cruise Passengers as by Region of Residence Region UK pop South East North West South West Scotland Yorkshire & Humberside West Midlands East Midlands East of England Wales North East London Northern Ireland

10 DANUBE IS THE STAR PERFORMER A fifth successive year of growth saw the UK river cruise market rise by 8 to top 150,000 passengers, with the Danube continuing to be the star performer. The rise of the Danube accelerated in 2015 with a 38 increase in passengers that took it close to the Rhine (Moselle and tributaries) as the most booked destination. There is still an overlap between the ocean and river cruise markets but there are strong signs that river cruise brands are reaching a broader, non-cruising market. This is reflected in the percentage of river cruise passengers who have previously taken an ocean cruise reducing from 67 in 2011 to 59 in River passengers do not take as many cruises per year as ocean passengers with just 21 taking more than one in 2015 and only 3 more than two. But they do repeat cruises over a longer period with nearly three-quarters (74) of those surveyed in 2015 having taken more than one and nearly a quarter (23) having already been on more than five. Just like for ocean cruisers, destinations are the key incentive to book a river cruise and 2015 saw the same trend towards no-fly cruises. 20 UK River Cruise Market European Destinations change 2015/14 Rhine/Moselle/tributaries Danube Rhine/Danube Rhone/Seine Russian (30) Italian (Po) (28) Elbe Douro Netherlands (16) Other European (35) Total European Non European Destinations change Nile (21) Far East/China (6) Other non-european Total non-european

11 Cruise Lines International Association (CLIA) is the world s largest cruise industry trade association with representation in North and South America, Europe, Asia and Australasia. CLIA represents the interests of cruise lines, travel agents, port authorities and destinations, and various industry business partners before regulatory and legislatory policy makers. GUIDED TOURS & RIVER CRUISES RIVER CRUISES European River cruising CLIA UK & Ireland