History of the cruise industry in Spain 2 – Entry of large multinational corporations into Spain
The first part of this article described the creation, primarily by Spanish tour operators, of cruise lines that popularized this tourism product in the first half of the last decade. The country was experiencing a true economic boom at the time, and many social classes thus had the opportunity to take a cruise. The Spanish market, like all cruise markets, was based on supply, so that every ship put into service was filled.
The problem that arose in the mid-2000s was that there were no longer any reasonably priced second-hand ships available to sustain the growth that had led Spain to surpass 300,000 cruise passengers for the first time in 2005, with a fleet of nine ships. The only option was to build new ships or partner with shipowners who had vessels available to operate in Spain. This led to Royal Caribbean's entry into Pullmantur in 2006, and Carnival's into Orizonia in 2007. Both multinationals made a significant investment in Spain, contributing ships and expertise to continue a seemingly limitless growth trajectory. This increase in supply continued despite the economic crisis, with new ships, new destinations, and so on, which led to a year-on-year decrease in prices and, consequently, in profit margins. In 2012, the peak year of the crisis, the fleet dedicated to our market reached its maximum of twelve ships, which were also larger than those existing in 2005.
That year was the turning point, catalyzed by the Costa Concordia effect. The Spanish outbound market fell by almost 20%. The following year, the fleet dedicated exclusively to our market had been reduced by half. And our operators, who just a few months before had been defending the Spanish character of their ships, began to seek passengers in other markets. Demand for cruises in our country is not recovering, and to fill their ships they need other source markets. Thus, our shipping companies, which were founded with a national focus, have been forced to internationalize and now allocate their ships, sometimes exclusively, to markets other than Spain. In the meantime, their figures have dragged down the results of the multinationals to which they belong, at times casting doubt on their potential future viability.
In 2011, three cruise lines operated in the Spanish market: Pullmantur (five ships), Iberocrucero (four ships), and Quail/Happy Cruises (three ships). The bankruptcy of the latter, along with ship sales (both internal and external) by the first two, resulted in only half the number of vessels in 2012. This drastic downsizing, which it's worth remembering occurred before the Costa Concordia disaster, led to the first decline in cruise passenger numbers in Spain in decades.
In 2011, three cruise lines operated in the Spanish market: Pullmantur (five ships), Iberocrucero (four ships), and Quail/Happy Cruises (three ships). The bankruptcy of the latter, and the sale of ships (both internally and externally) by the first two, resulted in only half the number of vessels operating in 2012.
Spanish Cruise Operators Today:
It's worth remembering that the players in the Spanish cruise market in 2005 weren't traditional shipping companies, but rather large business groups in the tourism sector. These groups vertically integrated cruise lines into their conglomerates, which could offer combined packages that included air transport, transfers, and pre- and post-cruise stays. The entry of large multinational shipping companies into the capital of Spanish shipowners was evident: Carnival and RCCL obtained a privileged sales channel for their products without creating their own network of agencies; they strengthened the European base of their business at a time when the American outbound market had slowed down; both improved their sales in euros, not dollars, which was another advantage for their operating accounts; and they also fueled the growth of new joint ventures with the older units in their own fleets, many of which were already obsolete for mature markets like North America.
It's also worth noting that the two cruise line ventures that emerged in the second half of the last decade, Vision Cruises and Happy Cruises, did not prosper. Both were based on the same model as Pullmantur and Iberocruceros, offering chartered, all-inclusive cruises. But now Vision, and especially Happy Cruises, had to compete with them. Their affiliation with large shipping holding companies gave them access to vastly more powerful financial resources, making it a David versus Goliath struggle. Furthermore, they didn't target a specialized market niche but instead competed in the most popular sector, where price is the primary selling point.
Another factor is the virtual disappearance of general agents. This trend began in November 2005, when Royal Caribbean established itself directly in Spain, after the cruise tour operator Latitud 4 had represented it for nearly 20 years. A year earlier, the same thing had happened with MSC. Therefore, except for companies with a residual presence in the Spanish market, such as Princess and Mundomar Cruceros, shipping companies want to manage their product directly, and they are also eliminating a commission.
Iberojet Cruises.
In January 2006, during the FITUR tourism fair, Miguel Fluxá, president of the IberoStar group, announced that his company would be undertaking investments totaling 400 million euros. Of this amount, 200 million euros were earmarked for the purchase of two cruise ships, although he did not specify which ones. The continuation of IberoStar's investments required an urgent capital injection. Thus, on May 17, 2006, it was announced that the British investment fund Carlyle (60%), along with Vista Desarrollo (35%), had reached a preliminary agreement with IberoStar to acquire the Mallorcan group's travel division for nearly 900 million euros. The agreement encompassed the tour operators Iberojet, Viva Tours, Turavia, and Solplan; the travel agency network Viajes Iberia; the airline Iberworld; and the shipping company Iberojet Cruises. The remaining 5% remained in the hands of ten group executives. The new owners fully accepted the business plan presented by the managers of IberoStar's outbound division, which included a growth plan for the cruise division.
In 2006, Iberojet had the two most modern ships in the Spanish fleet, the Grand Mistral and the Grand Voyager, which clearly represented a significant competitive advantage. The Grand Mistral was based in Barcelona and the Grand Voyager in the Mediterranean, with two round-trip itineraries between Venice and Istanbul. That year, their commercial strategy also included the introduction of the "Express Savings" floating price formula, which led to an increase in the number of bookings in the first months of the year. Iberojet Cruises' target for 2006 was between 52,000 and 55,000 passengers, although it ultimately reached 70,000 passengers, with the Grand Mistral achieving a 104% occupancy rate.
At FITUR 2007, it was announced that the Express Savings formula had worked perfectly, and that by the end of January, 40% of the company's 2007 inventory had already been sold. It was also announced that the Grand Mistral's capacity would be increased with twenty-six new cabins in April 2007, and that it would remain based in Barcelona, while the Grand Voyager would be based in three different ports: Barcelona, Istanbul, and Venice. Gabriel Subias stated that Orizonia planned to add two more second-hand ships of around 40,000 gross tons. The possibility of having a third ship based in Valencia was also considered, but this ultimately did not materialize due to the lack of a suitable vessel.
However, on February 8, 2007, Subias and Pier Luigi Foschi themselves announced in Madrid that Carnival Corporation and Orizonia had agreed to create a joint venture valued at €320 million (€180 million in debt and €140 million in net equity) intended to offer cruises in the Spanish market. Orizonia contributed the Iberojet Cruceros fleet as an asset, representing an income of €240 million. The resulting new company was 75% owned by Carnival Corporation and 25% by Orizonia. This operation was the second example of Carnival's new strategy in Europe: instead of competing with the large, vertically integrated, nationally based tour operators, it created joint ventures with them, always ensuring a large majority stake. Thus, in January 2007, Carnival and TUI had signed an agreement to create a joint venture dedicated to the German market, with a shareholding structure similar to that announced for Iberojet Cruceros. In September 2007, it was announced that the joint venture would be called Ibero Cruceros, and that the new company's fleet would consist of the two ships from the Orizonia fleet and the Celebration, formerly with Carnival Cruise Line, which would be renamed Grand Celebration.
The agreement was also advantageous for Orizonia, as it allowed them to relaunch their cruise business, which had stagnated. In fact, in 2006, they carried almost 10% fewer cruise passengers on their ships, avoiding significant investment to increase their offerings, and also keeping management and marketing in Spanish hands. The CEO of the new company was Alfredo Serrano.
On February 27, 2008, it was announced that Ibero Cruceros would use the Palacruceros in Barcelona in 2008, like the rest of the Carnival Corporation's ships. Around that time, the Iberojet star was replaced with the new Ibero Cruceros logo, and the ship's hull decoration was updated. The Grand Celebration was based in Barcelona that year, while the Grand Voyager covered two very different destinations: the Adriatic and Aegean Seas, and the Norwegian fjords and the Baltic Sea. At the end of May, the Grand Voyager handed over the reins in Venice to the Grand Mistral. It then became the first Ibero Cruceros ship to offer cruises in Northern Europe, including the first cruises exclusively for the Spanish market to the Norwegian fjords. Later, the Grand Voyager was scheduled to begin seven-night Caribbean cruises in October 2008, Ibero Cruceros' first season in this destination, but these were suspended, as were the cruises from Barcelona and Malaga that were scheduled in their place, due to the rapidly escalating economic crisis that Spain was already experiencing.
On October 12, 2008, Mario Martini's appointment as the new president of Ibero Cruceros was announced. All Ibero Cruceros executives reported directly to Martini. Martini's arrival at Ibero Cruceros resulted in a decrease in commissions and the hiring of new professionals, such as Jordi Suñé. Around that time, Iberojet moved the marketing of Ibero Cruceros to Madrid, which until then had been handled from Palma de Mallorca.
Ibero Cruceros' three ships maintained their itineraries in 2009: the Grand Mistral in the Aegean; the Grand Voyager in Scandinavia; and the Grand Celebration in the Western Mediterranean. On May 29, 2009, Costa Crociere SpA signed an agreement with Orizonia to acquire 25% of the Iberocruceros brand, subject to approval by the Spanish competition authority. Costa Crociere SpA aimed to strengthen its leading position in the Spanish market. “At Costa Crociere, we are convinced of the importance and growth prospects of the Spanish market in the cruise industry. That is why we are very pleased with this transaction, despite the recent economic and financial crisis that has hit Spain and other European countries hard this year,” declared Pier Luigi Foschi, President of the Costa Crociere SpA Group.
In September 2009, Mario Martini reported that around 120,000 passengers had sailed on one of his ships in 2009, increasing his market share in Spain from 19% to 21%. Mario Martini indicated that they projected around 230,000 customers for 2010, following his company's entry into Brazil in the winter of 2009/2010. One of the consequences of Mario Martini's acquisition of Ibero Cruceros was its internationalization. The Grand Mistral first appeared in Brazil during the summer of 2005-2006, chartered by CVC. In the summer of 2009-2010, Iberocruceros launched its own brand in the Brazilian market: Ibero Cruzeiros. This became Costa's second brand, offering the same concepts as in Spain: included drinks, free fourth guest, Ibero promotion, etc. At that press conference, the addition of the Grand Holiday in the summer of 2010 was announced.
2010 was the first year Iberocruceros had a fleet of four ships, marking the peak of its expansion. This allowed it to open new destinations. The Grand Voyager was based in Vigo, offering transatlantic cruises, while in the autumn it was based in Malaga, offering short three- and four-night cruises. The Grand Mistral took over in Scandinavia, including two Greenland cruises, and finished the season based in Malaga. The Grand Holiday debuted from Barcelona in the Western Mediterranean, while the Grand Celebration continued serving the Aegean/Adriatic route. In December of that year, Mario Martini returned to Genoa, paving the way for a 100% Spanish management team, led by Alfredo Serrano.
Following Mario Martini's arrival at Iberocruceros, a period of expansion and change began, based on fleet growth, product consolidation, and the internationalization of its distribution, especially in South America. Martini's departure left some challenges unresolved, such as expanding Iberocruceros' base market by incorporating the Portuguese market; strengthening the range of embarkation ports with six home ports in Spain, with a strong focus on Valencia, from where it expected to transport 20,000 passengers that year; and consolidating its year-round offerings. After adding two ships in the last three years, Iberocruceros only increased its offerings from Spain by 6% in 2011, thanks to charters of its ships (especially the Grand Mistral to TMR), the extended season in Brazil, and the charter of the Grand Voyager to Costa for operation in the Red Sea. For 2011, its forecast was to end the year with 140,000 passengers, maintaining its traditional destinations: the Atlantic with the Grand Voyager, which had four embarkation ports: Barcelona, Malaga, Vigo, and Valencia; the Aegean with the Grand Celebration; Northern Europe with the Grand Mistral; and the Western Mediterranean with the Grand Holiday. The Holy Land was added as a destination, mini-cruises were promoted, and the number of transatlantic cruises offered in the autumn was doubled. In July 2011, Costa Crociere announced that the Grand Voyager would sail the Red Sea during the winter of 2011-2012, alongside the Costa Marina and the Costa Allegra. The ship would be marketed as the Costa Voyager. However, with the sale of the Costa Marina, Costa Crociere decided that the Costa Voyager would remain in the Red Sea until December 2012.
Iberocruceros therefore faced the 2012 season with one less ship in its fleet, which meant losing its Atlantic destination, but it maintained its presence in the Aegean with the Grand Celebration (cruising from Venice and Piraeus), Northern Europe with the Grand Mistral (which this year debuted Stockholm as its home port), and the Western Mediterranean with the Grand Holiday from Barcelona. Finally, it offered spring cruises from Valencia and autumn cruises from Malaga, both with the Grand Mistral. In March 2012, Carnival Corporation decided to set aside €132 million in its balance sheet to account for the decline in value of its Spanish subsidiary, Iberocruceros, due to the negative impact of the economic crisis and the Costa Concordia shipwreck on its revenue. The adjustment, made in the first-quarter 2012 accounts, reflects the difficulty in making the Carnival group's investment in Spain profitable.
At the end of December 2012, the integration of the operational structures of the two brands under which the Costa group operates in Spain—Costa Cruises and Ibero Cruceros—was announced. The aim was to achieve significant synergies in two complementary products, resulting in substantial savings, so necessary in times of crisis. The resulting group was headed by Alfredo Serrano, and Bernardo Echevarría was in charge of the new commercial structure for both brands.
The most significant new offerings from Iberocruceros for 2013 were Mediterranean cruises departing from Barcelona without sailing days, but with stops in Marseille and Savona. It was also the only cruise line to offer Venice, Piraeus, and Istanbul in a single week, with two-day stops at the embarkation and disembarkation ports. Finally, there was the focus on fjord cruises at the expense of the Baltic, and the marketing of transatlantic cruises from South America. Iberocruceros continued to offer four embarkation ports in Spain: Barcelona, Valencia, Malaga, and Bilbao. For the upcoming 2013-2014 winter season, the Grand Holiday will offer extended Mediterranean cruises, instead of its usual wintering ground in Brazil, which will be sold in other European markets, such as France and Italy. On the commercial front, the introduction of Tariff 10 stands out, with special booking conditions. Group charters, including some full-ship charters for L'Oreal, Heineken, etc., are another important commercial asset. In the spring, Alfredo Serrano left due to problems that arose in the integration of the Costa group's brands in Spain.
Pullmantur Cruises. Internationalization of its Offerings.
In December 2005, it was announced that Pullmantur Cruises had purchased the Pacific Sky for $40 million, which was renamed Sky Wonder to serve the Adriatic cruises. In 2006, Pullmantur Cruises adopted two different operating systems on board: the two older "R" ships, the Blue Dream and the Blue Moon, operated under a conventional model, in which all onboard services (drinks, wines, etc.) were charged separately. The rest of the fleet offered an all-inclusive option. The "R" ships thus became, in effect, the second most select and refined option for those who had begun their cruising experience aboard the older ships in the fleet. In July 2006, Alfonso López, referring to new destinations, emphasized that Pullmantur Cruises had assigned a second ship to the Caribbean for the 2006-2007 winter season: the Blue Moon.
However, 2006 held an even bigger surprise. After months of rumors, it was announced in August 2006 that Royal Caribbean Cruise Lines had acquired Pullmantur. The total value of the transaction was €700 million, of which €430 million was in cash and the remaining €270 million in Pullmantur debt. The acquisition of Pullmantur increased Royal Caribbean's market share in Spain to over 70%, with total passenger numbers in 2006 reaching approximately 200,000.
Following approval from the Spanish and Portuguese competition authorities for the acquisition of Pullmantur SA, Royal Caribbean Cruises Ltd. announced its plans to strengthen the Madrid-based tour operator on October 31, 2006. Pullmantur's Blue Dream and Blue Moon were transferred to the US market, while Pullmantur received the Zenith in June 2007. Before sailing for Pullmantur, the Zenith underwent a refurbishment that increased the number of balcony cabins and expanded public spaces. Once refurbished, it offered seven-day cruises in the Adriatic. Pullmantur's CEO, Alfonso López, stated at the time that "it was gratifying to see the benefits of our new alliance materialize so quickly. Adding the Zenith to our fleet gives us more opportunities to meet the demand of the Spanish market, and I am confident that we will achieve greater synergies as our relationship grows."
For the Holiday Dream, this transaction had an immediate consequence. Due to the Helms-Burton Act, Royal Caribbean could not have any commercial relationship with the Cuban regime, so one of the points of the agreement was to modify the itinerary of its Caribbean cruises to avoid any stops in Cuba. On September 30, the Cuban crew members began to be replaced. The ship began offering cruises from La Romana, in Santo Domingo, that fall.
The second addition of a Royal Caribbean ship was announced on March 26, 2007, the date on which the transfer of the Empress of the Seas to Pullmantur Cruises was made public, effective March 2008. The first addition, the Zenith, had been inaugurated in Barcelona on Monday, June 11, 2007. In July, Alfonso López commented on "the tremendous success of the Zenith in the Spanish market, which has meant that the ship has sailed at full capacity throughout the season." That summer, Pullmantur Cruises chartered the Oceanic II to operate round-trip cruises between Piraeus and Istanbul, while the Sky Wonder accompanied the Oceanic. On October 12, 2007, it was officially announced that Royal Caribbean would transfer a third ship from its fleet, the Sovereign of the Seas, to Pullmantur Cruises in October 2008. But the biggest news that October was the definitive departure of Pullmantur's former managers, Alfonso López and Malik Alkarea, in August, who had announced their exit in August 2017. Alfonso López had been Pullmantur's director for sixteen years and had led the company to become the leader in the Spanish cruise market. Royal Caribbean appointed Joe Arriola, an American executive with no experience in the sector, to head the company. To address this gap, Bernardo Echevarría was hired in February 2008 as vice president of marketing and sales, although his time at Pullmantur was brief.
On November 7, 2006, it was announced that the Pacific would return to Europe in March 2007. Pullmantur had decided to expand its flagship product, Western Mediterranean cruises departing from Spanish ports, by introducing Valencia as a homeport. Meanwhile, in May 2007, the Holiday Dream took over from the Blue Moon in Aruba. On September 13, 2007, Royal Caribbean Cruises Ltd. announced the launch of a new cruise brand dedicated to the French market, called Croisières de France. 2007 was the year in which Pullmantur operated its largest fleet: seven ships.
On June 23, 2008, Gonzalo Chico Barbier was appointed President and CEO of Pullmantur, replacing Joe Arriola. The new CEO came from the logistics sector, having previously been responsible for TNT Worldwide Spain.
In March 2008, the Empress was delivered and assigned to round-trip cruises between Copenhagen and Helsinki, continuing the role of the Blue Moon in 2007. The Empress's Baltic season was extended until September, a significant expansion of the schedule compared to the 2007 season. On May 28, it was announced that Pullmantur Cruises had decided to explore the Canary Islands destination for the first time, offering week-long cruises from Malaga on the Empress. On the first four voyages, Pullmantur Cruises offered Portuguese passengers the opportunity to embark in Lisbon every Monday. In the 2008 season, the Zenith again sailed the Adriatic and Aegean, with round-trip cruises between Venice and Piraeus. That summer, the Sky Wonder was chosen to operate thirty-four week-long round-trip cruises between Piraeus and Istanbul.
On March 19, 2008, the Pacific Star was delivered in Singapore to Pullmantur Cruises, which renamed it Ocean Dream. The Pacific Star was the third ship that Royal Caribbean added to Pullmantur Cruises. That year, it was used as the second ship in Barcelona, complementing the Monday departures of the Oceanic with cruises every Sunday. However, after the Barcelona season ended, the Ocean Dream took over the year-round Caribbean route, leaving a vacant position since the Holiday Dream joined CDF Croisières de France as Bleu de France.
The first step in Pullmantur's internationalization was the creation of a French subsidiary, which received its first ship, the Bleu de France, in the spring of 2008. The Bleu de France operated on an all-inclusive basis, including gratuities and a wide selection of beverages, including wines and spirits. This marked the introduction of the Pullmantur Cruises philosophy to France.
Pullmantur Cruises had decided that in 2009, its ninth season, the Oceanic could offer a new product from a different homeport: short cruises, five and two nights in length, departing from Valencia starting in April. However, the Oceanic was sold in early March to the Japanese NGO Peace Boat. The cruise line's president, Gonzalo Chico, expressed his satisfaction with the transaction, the financial value of which represented "a small gain that is not substantial for the company's results." He also indicated that the sale would contribute to renewing the cruise line's fleet, along with the addition of four new ships from other Royal Caribbean group subsidiaries between 2007 and 2009. That year, the Empress would operate in the Adriatic and Aegean itineraries previously covered by the Zenith and the Sky Wonder. Overall, Pullmantur Cruises significantly reduced its capacity in the Adriatic and Aegean, as the number of berths offered in the 2009 season was only 65% of what it had sold the previous year. Right around that time, on April 14th, Pullmantur Cruises announced a season of four-night cruises embarking in Malaga and Lisbon in the autumn.
After the season in Brazil ended, the Zenith returned to Europe to serve Northern Europe for the first time in the summer of 2009, taking over from the Empress, with the same itineraries.
In its first season for the Spanish market operated directly by Pullmantur Cruises, the Sovereign was responsible for replacing the legendary Oceanic on its Barcelona cruises in 2009. Furthermore, Pullmantur Cruises did not allocate a second ship to Barcelona that season, effectively replacing the Ocean Dream as well. Pablo Alonso stated that they planned to transport around 100,000 passengers, representing approximately €100 million in revenue, on the 31 cruises scheduled on the Sovereign, whereas the Oceanic typically exceeded 40 cruises annually.
In 2009, the Sky Wonder offered cruises from Lisbon to Morocco and the Atlantic islands between April and September. The ship was renamed Atlantic Star after the negative publicity it received following its grounding in Kusadasi in 2008.
Finally, on October 6, 2008, Royal Caribbean Cruise Lines announced the sale of its 50% stake in Island Cruises to First Choice Holidays, a subsidiary of TUI. The Island Star, however, was returned to Royal Caribbean, which decided to transfer it to Pullmantur Cruises. But it wasn't until January 2009, at FITUR, that Pullmantur Cruises announced the new Pacific Dream cruises. The ship would depart every Sunday from Acapulco along the Mexican Riviera. However, the entire season was canceled due to cancellations resulting from swine flu, as well as the economic crisis. Instead, on May 13, 2009, Pullmantur Cruises announced that the Pacific Dream would replace the Atlantic Star on its Atlantic cruises departing from Lisbon.
On September 30, 2009, the Pacific Dream arrived in Santo Domingo, docking at the new Sans Soici terminal to offer the itinerary, called the Caribbean Wake. These cruises were even offered with a 2-for-1 promotion to launch the product. The last cruise of the season departed from Santo Domingo on March 6, 2010. In total, twenty-three cruises were offered, which were also marketed in France by Croisières de France, a source market from which Pullmantur Cruises expected 40% of its passengers to come.
Finally, on November 20, 2009, a preliminary agreement was signed between Pullmantur Cruises and Saga Shipping for the sale of the Bleu de France.
In 2010, its third season in Europe, the Empress was again used by Pullmantur Cruises in the Baltic, on round-trip cruises between Copenhagen and Helsinki, and vice versa, maintaining the same itineraries as in 2008.
Pullmantur Cruises completely changed its Eastern Mediterranean program in 2010. The most significant change was the shift to round-trip cruises, instead of round-trip cruises. As a result, the number of port calls decreased, and full days at sea were introduced. However, the distinct destinations of Venice, with a voyage across the Adriatic, and Istanbul, with stops at the Greek islands in the Aegean, were retained. The chosen hub was Piraeus, so all cruises began and ended in the Greek capital, despite opposition from Greek unions. The Zenith replaced the Empress in this destination. Another major development in 2010 was that, for the first time since 2001, Pullmantur Cruises offered cruises from Barcelona on the Sovereign departing on Saturdays, instead of Mondays, the day on which their voyages traditionally began.
The Pacific Dream also offered thirteen seven-night cruises from Cozumel. In the first week of April 2010, the port of Costa Maya received the ship's first call, which was also the first for a Pullmantur Cruises ship at that Mexican port. During the summer of 2010, the Pacific Dream was based in Lisbon and Málaga. Originally, the Pacific Dream was scheduled to return to the Caribbean in the winter of 2010/2011 to offer a new season from Santo Domingo, but this was canceled. Another autumn season in the Canary Islands was also canceled due to a serious mechanical failure in Lisbon on August 13, 2010. The Atlantic Star was reactivated as a replacement, with disastrous results. After repairs, the Pacific Dream was renamed Horizon and wintered in Brazil.
On November 17, 2010, Croisières de France simultaneously announced the sale of the Bleu de France and the transfer of the Horizon from Pullmantur Cruises at the end of 2011. In addition, during the summer of 2010, the Ocean Dream offered the long-awaited cruises for Mexicans from Acapulco, which it repeated in 2011.
In April 2011, Nautalia, the Pullmantur group's retail network, began operations, leading to a 13 percent year-on-year increase in revenue for 2011, reaching €466 million.
The Empress began its fourth European season in 2011, its third in Northern Europe. On May 7, the Empress made its first port of call in Getxo. Pullmantur Cruises continued to offer the Baltic Capitals cruise between Copenhagen and Helsinki, but introduced new itineraries compared to 2010, including a two-night stop in St. Petersburg. In 2011, Pullmantur Cruises resumed operations with two ships in the Eastern Mediterranean. The Zenith again offered the Venetian Rondo itinerary as a round-trip cruise between Piraeus and Ravenna. Venice became a port of call rather than a homeport. However, political instability in Egypt led Pullmantur Cruises to suspend its seven Holy Land cruises in the fall. Meanwhile, the Horizon resumed offering round-trip cruises in the Western Caribbean from Cozumel in the spring, followed by a series of seven-night round-trip voyages from Piraeus. However, after the Canary Islands season was cancelled again, the Horizon was assigned to the Caribbean from October 2011 to February 2012, offering a total of eighteen departures from Cartagena on Saturdays, La Guaira on Tuesdays, and Colón on Fridays, taking over from the Ocean Dream, which was reassigned to Brazil. These were the last cruises for the Spanish market for this ship before its transfer to the French subsidiary of Pullmantur Cruises. In 2011, Pullmantur Cruises did not base the ship in Málaga and Lisbon following the damage it suffered in August 2010. The Sovereign's third season from Barcelona offered the same itinerary as in 2010.
The Bleu de France began its final season from Marseille between June and October 2011 before being handed over to its new owners. Croisières de France had sold 35,000 tickets in 2010 and its goal for 2011 was to at least match that figure, given that it was also going to sell tickets for three other Pullmantur ships (Empress, Zenith, and Ocean Dream) in France starting in January.
While in 2011 Pullmantur, after several years of growth in its offerings and fleet, had already reduced its capacity in Spain by more than 10%, this trend became even more pronounced in 2012. Following the sale of the Ocean Dream in January 2012 (although it was delivered to its new owners in April) and the transfer of the Horizon to its subsidiary Croisières de France in 2012, it only had three ships in its fleet (Sovereign, Empress, and Zenith), which led to a further 32% reduction in its capacity. Furthermore, its penetration of the South American market in general, and the Mexican market in particular, which had experienced remarkable growth in recent years with Ocean Dream cruises from Cozumel and Acapulco, stalled in 2012. In contrast, its French subsidiary, CdF, had a much larger ship at its disposal. Its future growth was secured when, in mid-March, it was announced that the Monarch, a sister ship of the Sovereign, would be added in 2013, increasing capacity by 25%.
In 2012, the Empress saw several changes. Firstly, it continued to offer the Baltic round-trip cruise between Copenhagen and Tallinn, replacing Helsinki, which became a port of call rather than a homeport. The transfer of the Horizon to CdF meant that in 2012, Pullmantur Cruises operated only the Zenith in the Eastern Mediterranean, offering a mix of round-trip and port-trip cruises. Autumn cruises to Egypt and the Holy Land were canceled. The Sovereign's fourth season saw a change in its itinerary compared to 2010 and 2011, returning to Tunisia. Finally, in November 2012, Pullmantur began updating its corporate image: the ships' hulls were painted blue, and a new logo featuring four waves appeared on their funnels.
In 2012, CdF carried 52,000 passengers on the Horizon, which offered four round-trip itineraries departing from Marseille on Sundays. In November 2012, the Horizon sailed from Marseille to the Caribbean to offer Pullmantur Cruises nineteen rotations of the Antilles and Southern Caribbean itinerary, embarking in La Guaira, Cartagena de Indias, and Aruba.
Pullmantur Group revenues grew by 11% in 2012. In a statement, Pullmantur indicated that the internationalization of its business has been key to its strategy and noted that international markets now account for more than 65% of the company's revenue. However, despite these figures, Royal Caribbean was forced to set aside $413.9 million (€306 million) in its accounts due to the impairment of Pullmantur's business, just as Carnival did in 2012 with Iberocruceros. This provision, made in the fourth quarter of 2012, caused Royal Caribbean's 2012 profits to plummet by 97% to $18.3 million, compared to $607 million in 2011. "Booking volume and prices in Spain are falling substantially due to the effects of the new austerity measures in this country, the impact of the Costa Concordia tragedy [the cruise ship that sank in January 2012 off the Italian coast], and other factors," were the main reasons behind this decision.
Pullmantur Cruises' 2013 season in Northern Europe with the Empress began with the change of homeport from Copenhagen to Malmö, and Tallinn. In addition, the Empress continued to offer round-trip cruises between Malmö and Thornheim to the fjords in 2013. In 2013, Pullmantur Cruises resumed operating only the Zenith in the Eastern Mediterranean, maintaining a mix of round-trip and day cruises. On February 5, 2013, Pullmantur Cruises announced the transfer of the Zenith to Croisières de France in 2014. The ship debuted with Pullmantur's French subsidiary in April 2014. That same 2013 season, the Sovereign also improved its marketing in France and Italy with the addition of a Genoa port of call.
The first step in Pullmantur's internationalization was the creation of a French subsidiary, which received its first ship, the Bleu de France, in the spring of 2008.
Quail/Happy Cruises
On January 16, 2008, the formation of a new Spanish tourism group, Quail Travel Group, was announced. Its aim was to market the Quail Tours (tour operator) and Quail Cruises (cruises) brands. At FITUR 2008, Quail Travel Group stated its goal of achieving a total revenue of €45.8 million and transporting 45,000 passengers during its first year. The shareholders were Javier Gómez-Navarro (26%), Antonio Fernández, CEO of Ahorro Corporación (26%), the Brazilian company CVC (23%), Ángel Prieto (16%), who served as CEO, and the remaining 9% was held by various company executives, including Alfonso López and Malik Alkarea. Given CVC's shareholding, the choice of ship for the inaugural cruise season was straightforward: the Pacific, which returned to Valencia for the second consecutive year with an itinerary identical to the one offered in 2007 for Pullmantur, also all-inclusive.
In 2009, news broke of the Pacific's declassification, leading Quail Cruises into litigation with its previous owner. Unable to use the Pacific, in March 2009, Quail Cruises announced the addition of the Gemini to its fleet, which began operations on March 30th, sailing the Treasures of the Mediterranean itinerary. Following the bankruptcy of Vision Cruises, Quail Cruises renegotiated the charter for three years, with the intention of operating the ship in the Mediterranean during the summer and in Brazil during the winter, with the possibility of basing it in Cuba, as there were still no cruises departing from that island. In June, the Gemini began offering seven-night round-trip cruises in the Adriatic between Piraeus and Venice, called Treasures of the Adriatic and Turkey. The Gemini operated on an all-inclusive basis, including flights and transfers. In 2009, Quail had to charter a second ship, the Ocean Countess, to cover the itinerary from Valencia. By the end of 2009, more than 30,000 passengers had traveled with Quail. Furthermore, the Gemini became the only ship chartered by a Spanish operator to be based in the Mediterranean during the winter of 2009-2010, embarking in Valencia and Barcelona. Quail Cruises believed that the Gemini's low operating costs and compact size would allow it to withstand the challenges of the Spanish cruise industry during the winter.
In 2010, Quail Cruises began the year by changing its name to Happy Cruises and announcing the addition of the Ocean Pearl, a veteran ship built in 1970, to its cruises departing from Valencia and Barcelona. A third ship was also potentially added, but this plan ultimately fell through. The Gemini continued to offer the same itineraries as the previous year, namely, the round-trip cruises between Piraeus and Venice. In July 2010, Happy Cruises announced its intention to offer cruises from Havana to the Caribbean, reviving a destination that had not been served since the acquisition of Pullmantur Cruises by the North American group Royal Caribbean. The main attraction was the three-day stay the Gemini would have in the Cuban capital. With this program, Quail's offerings grew by 38.4% in 2010.
By 2011, Quail Cruises/Happy Cruises had carved out an exclusive niche market with cruises from Cuba, as it was the only Spanish operator without North American capital. The Gemini's season from Havana ran until May 2011, achieving an 85% occupancy rate for its all-inclusive package, which included flights. Meanwhile, Quail kept the Ocean Pearl for a second year, serving the more affordable cruise market with weekly departures from Valencia and Barcelona, fares starting at €238, with free admission for children and all-inclusive packages. With this fleet of two ships, its offerings grew by 88% in 2011. Furthermore, amidst the severe economic crisis, Quail/Happy surprised everyone in early March 2011 by chartering a third ship: the Happy Voyager. With this addition, the Gemini inaugurated cruises in the Baltic and Norwegian fjords, and the new ship began sailing to the Aegean/Adriatic, with the initial goal of reaching 100,000 passengers.
On September 23, the first alarms began to sound regarding the operator's financial situation, and when the Gemini docked in Lisbon the following day, Quail Travel Group announced the cessation of operations, coinciding with a drastic capital reduction. All departures scheduled for Sunday, September 25, and Monday, September 26, were suspended. Happy Cruises promised agencies from the outset that it would issue full refunds to affected customers, who were informed in advance by the cruise line. This promise was based on the solvency of the cruise line's shareholders. It proved prophetic that just a month and a half earlier, the Ordinary General Meeting of Quail Travel Group, held on August 9th, had approved a reduction in share capital, from €5.94 million to €60,000. This capital reduction was carried out through share buybacks to restore the balance between capital and equity, and the deadline for completing it was 45 days—a deadline that expired on the day operations ceased. According to the specialized press, it was the actions of Globalia, the majority shareholder, that triggered the demise of Happy Cruises.
During that time, Happy Cruises' management was fighting tooth and nail for the company's survival. To this end, they held meetings with ship owners and other suppliers, also seeking capital injections from financial institutions. Simultaneously, the partners attempted to renegotiate other debts with various suppliers, some of whom were receptive. Likewise, the raising of capital continued under the guidance of one of the majority partners, and they did not rule out the entry of monetary contributions from several financial entities.
Vision Cruises
On January 11, 2007, the creation of Vision Cruises was announced. This newly formed company would operate the Jules Verne cruise ship, based in Alicante. At an event presided over by the mayor, Luis Díaz Alperi, the president of the Port Authority, Mario Flores, and Santiago Labrador, president of Vision Cruises, the new shipping company was presented. According to company projections, it was expected to generate six million euros in revenue for Alicante, thanks to the 25,000 passengers who would pass through the city to board the ship. Vision offered three itineraries from Alicante, departing every Monday. Prices started at 790 euros, as, according to Santiago Labrador, "this is a luxury ship with a capacity for 600 passengers, plus 250 crew members, with low fares depending on the services, ranging from 790 to 2,600 euros, and where special attention will be paid to the quality and warmth of the service."
Vision Cruises' Marketing and Sales Director, Lucia Labrador, indicated that they held the general representation of the ship, allowing them to sell cruises from Latin America to Japan. However, their primary aim was to operate cruises exclusively for Spanish passengers, with a 100% Spanish-speaking crew, and a strong commitment to quality for a discerning, almost elite, clientele. In mid-April, Santiago Labrador stated that they expected to close the year with 22,000 passengers and a turnover of nearly twenty million euros, following "the excellent market reception of the Jules Verne cruise ship."
The inaugural event was once again attended by the Mayor of Alicante and the Valencian Regional Government's Minister of Tourism, Milagrosa Martínez, who remarked that Vision Cruises' choice of Alicante as its home port demonstrated "the quality of our infrastructure and services, combined with our diverse and internationally renowned tourism offerings." After completing the Mediterranean season, Vision Cruises planned to relocate the Jules Verne's home port from Alicante to Málaga, offering an itinerary that included the Canary Islands and Morocco. On August 27, Santiago Labrador declared that “Vision has enormous hopes for Málaga. The arrival of the Jules Verne also coincides with the inauguration of the AVE high-speed train, which will bring thousands of passengers. We have made a huge commitment by positioning the ship in Málaga for so many months, and we are absolutely convinced that we will have the full support.” On October 22, the presentation of the Jules Verne's winter season was held at the headquarters of the Port Authority of Málaga, with the presence of the Mayor of Málaga, Francisco de la Torre, and Santiago Labrador, who indicated that basing the Jules Verne in Málaga that winter would mean around six million euros in direct revenue for the city, from which they expected to embark around 15,000 cruise passengers. Vision Cruises also announced that it would have a second ship, the Vision Star, for the 2008 season.
However, almost simultaneously, the owner of the Jules Verne canceled the charter due to non-payment, leaving Vision without a ship to operate its season from Malaga. This led them to desperately search for a replacement, which ultimately became the Orion, a much smaller and older vessel. It was soon replaced by the Athena. However, a lack of bookings forced Vision to cancel the season after the New Year's cruise.
In 2008, Vision Cruises offered longer itineraries than usual, deviating from the typical one-week schedules. After several cruises from Malaga, the Athena was based in Barcelona, offering two alternative itineraries of ten and thirteen days. In addition, it offered a weekly itinerary departing every Monday in May, as well as in October and the first week of November. “More than half of cruise passengers return and want different itineraries and longer trips. The reason is the sense of satisfaction and fulfillment that the cruise experience provides, in addition to its highly competitive price. Cruising is, in fact, the trip that allows you to visit the most places for the best price, while also offering high-quality service,” explained Lucía Labrador regarding this offering in the tourism market. The Athena was also going to be chartered by Vision Cruises in 2009 to offer cruises from Barcelona. However, in another change of strategy, instead of focusing again on long cruises, Vision decided to compete in the most competitive market niche: week-long cruises in the Western Mediterranean.
But with a very attractive itinerary, clearly different from the competition. Finally, in early March 2009, Vision Cruises left the Spanish market “due to a lack of profitability,” according to Santiago Labrador. This situation in our outbound cruise market was explained by Mr. Labrador argues that “the Spanish market is not profitable for cruise companies. Some shipping companies are pursuing erratic strategies with lower prices, which is seriously affecting the prestige and image of this product.”
The Gemini became the only vessel chartered by a Spanish operator that was based in the Mediterranean during the winter of 2009-2010, embarking in Valencia and Barcelona.
Globalia
, through TravelPlan, informed travel agents in November of that year that it would market New Flamenco cruises in 2006 on an all-inclusive basis, and that the ship was undergoing extensive refurbishment. The only things excluded from the price were optional excursions, premium brands of beverages, all drinks served between 2:00 and 10:00 a.m. in bars and cafes, gratuities, and extension and cancellation insurance. In 2006, the schedule only included the New Flamenco departing from Barcelona… and its itinerary was reduced in the fall. The 2007 season for the New Flamenco from Barcelona was again cut, offering only twenty-five cruises between May 7 and October 22. Globalia had lost interest in the cruise product, and at the end of the Barcelona season, the sale of the New Flamenco was announced.
CONCLUSION
Analysts say the Spanish economy has structural problems. And so does our cruise industry. There's a certain saturation of cruise supply. The Spanish market initially grew, partly due to the emergence of language-specific products (from Royal Hispania to Happy Cruises) and partly due to affordable prices compared to other types of vacations, aided by the all-inclusive model pioneered by Pullmantur, which other cruise lines had no choice but to imitate. These two factors allowed them to meet the demand of a very specific type of customer: generally infrequent travelers, not fluent in other languages, with a limited budget (requiring almost everything to be included), and belonging to the middle or lower-middle class, drawn by the all-inclusive image of cruises, which almost miraculously became affordable. Another customer profile consisted of older people seeking the convenience of exploring European destinations in a controlled environment, without the hassle of luggage and hotel changes, with all meals included, and so on.
The 2012 slowdown is mainly due to two reasons. The first is the exhaustion of the model: the cruise passenger profile described in the previous paragraph used to sail first the Western Mediterranean, then Greece/the Aegean, and perhaps a third time to Northern Europe. But once these itineraries are completed—which, interestingly, constitute the offerings of Spanish-based companies (Pullmantur, Iberocruceros)—the number of cruise passengers returning to other itineraries/regions plummets. The typical Spanish cruise passenger is not inclined to take long trips, so if they have followed these basic itineraries for 10 years, they are unlikely to repeat them for some time. The second reason is that the economic crisis has disproportionately affected this segment of society, resulting in less disposable income and much more careful consideration before booking a trip, even though prices have fallen significantly. Consequently, the Spanish outbound cruise market will shrink, both due to a decrease in demand (customers) and a reduction in supply (cruise lines). Thus, in 2014, we will have one less ship, as the Zenith is being transferred to Pullmantur's French subsidiary.
The avid Spanish cruiser, who for years relied on Ybarra and then Costa as their benchmarks, discovered premium cruise lines (Holland America, Celebrity, Princess, Oceania, etc.) and even luxury lines like Silversea, and has opted for this segment. This profile has been much less affected by the crisis, but it is still a minority. The bulk of Spanish cruise passengers were those who filled the ships of Pullmantur, Iberocruceros, Costa, MSC, and to a lesser extent, Royal Caribbean. These are the ones who have stopped traveling, and all indications are that this trend will continue at least through 2013. The advantage is that this middle class is already familiar with the cruise product. And if the economic situation improves, they will book again. It should not be forgotten that cruise penetration in Spain is only 1.4%, a third of that in the United States and half of that in the United Kingdom, so there is room for improvement.
