The German Cruise Market A Growth Story Stefan Mathias -Projektmanager- Peter Deilmann Reederei & Co. KG Neustadt in Holstein

German Cruise Market Content: 1.Peter Deilmann Reederei GmbH & Co. KG 2.Development in figures 3.Simple breakthrough strategies for the German cruise market 4.Can short cruises accelerate market growth? 5.Trends and outlook

German Cruise Market 1. Peter Deilmann GmbH & Co. KG (PDR) In operation: nine river cruise vessels and one ocean cruise vessel (MV Deutschland) All vessels flying the German flag – MV Deutschland the only cruise vessel registered in Germany German Cruise Tradition as registered trade mark For 35 years on the cruise market guests per year Focus on ultra-luxury-segment MV Deutschland rated „5-star superior“ by DEHOGA

German Cruise Market

German Cruise Market 2. Development in figures Source: ”DRV Der Kreuzfahrtenmarkt 2007”. Figures from 2008 on are estimated.

German Cruise Market 2. Development in figures Cruise OperatorPax 2007% AIDA259,00034 MSC105,00014 Costa100,00013 All the Rest298,75339 Total , Conclusions: Shorter scheduled cruises attract younger target groups German market still discount resistant International major players gain market dominance Great opportunities for niche operators Growth strictly capacity driven Still only 1% of all Germans per year go on an ocean cruise (UK 2%, US 3%!!) 61 %

German Cruise Market 3. Simple breakthrough strategy for the German market 3.a. Deployment of constantly increasing tonnage into German cruise ports for embarkation/disembarkation Example: Costa Croicieres COSTA MARINA Until 2005 from Kiel GT 800 Pax COSTA CLASSICA 2006/2007 from Kiel GT Pax COSTA VICTORIA 2008 from Kiel GT Pax COSTA MAGICA 2009 from Kiel GT Pax Still missing in German ports: NCL, RCCL

German Cruise Market 3. Simple breakthrough strategy for the German market (cont.) 3.b. Germans still prefer a “German” ship Examples: AIDA, Phoenix, TUI Cruises... AIDA 9 vessels until 2012 Phoenix 4 vessels in 2008 TUI Cruises Former ”Celebrity Galaxy” in 2009 Peter Deilmann ”Traumschiff” MV Deutschland since 1998

German Cruise Market 3. Simple breakthrough strategy for the German market (cont.) 3.c. Germans like variety of destinations Germans are experienced in travelling -> destination is often of same interest as the vessel! Germans have been everywhere -> add ports apart from mainstream, but with attractive cultural, historical and scenic spots to visit! German cruise guests become more active and self-organized -> focus on selection of shore excursions -> mix of traditional and innovative tours! As long as destinations count, smaller niche operators will still be successful (examples: Transocean, Hapag-Lloyd, Phoenix, Deilmann, Delphin, Plantours etc.)

German Cruise Market 4. Can short cruises accelerate market growth? 4.1 Definition of “short cruising” Cruises with duration of up to 4 nights 4.2 Chances and challenges of “short cruising” Chances: Higher per diems and on-board spend Attracts cruise first timers (new target groups) Easy to sell Lower costs of logistics Event character (party cruises etc.) According to short- and city break travel trend Excellent promotion tool Challenges: Strong competition from cruise-ferry operators (Color Line, DFDS etc.) High operational costs Too often -> wear-out effect Limited destinations Core market is regional, close to port High marketing costs

German Cruise Market 4. Can short cruises accelerate market growth? (cont.) 4.3 Conclusions Short cruises ….... are suitable to enrich a cruise programme, but should not be offered too often... attract new customers and cruise first timers to come on board (low risk)... are a useful tool to operate special events at sea... might be an opportunity to extend the summer season... lack variation in itineraries... need special marketing efforts as they lead to a higher number of cruises per year... make only sense when starting from/ending at strong regional markets... face stronger competition from cruise-ferry-offers and city-break opportunities than long cruises

German Cruise Market 5. Trends and outlook Limits of growth: Market potential in Germany is estimated to be 2 million passengers p.a. (2.5%) Price development due to rising costs -> price elasticity of demand? Climate development and political changes -> more no-sail areas? Do niche operators still have the financial power to increase and refurbish tonnage? Do new-builds become simply unaffordable? -> Steel and technical components up to 20% per year! Fuel for growth: Societies of the Western world become older. Germany: Baby Boomers new cruise target group New-builds are highly innovative and operate with lower fuel costs per passenger Mass market orientation of large cruise operators -> marketing and sales intensified Travel trends: 50’s and 60’s -> era of individual travel by car, bus and rail 70’s to 90’s -> era of tour operator package tours by plane 00’s to ? -> era of cruising ??? !!!

German Cruise Market 6. Aktivitäten zur besseren Nutzung des Kreuzfahrtbooms Big ship day in Kiel

German Cruise Market Thank you for your attention and patience!!