2011 State of the Cruise Industry

Michael CryeExecutive Vice President

Cruise Line International Association

October 12, 2011

26 CLIA Member Lines

Executive Partners: Cruise Newfoundland; Labrador and Corner Brook Port Corporations; The St. John's Port Authority; Cruise the St. Lawrence Association; Halifax Port Authority; Port of Sydney; Saguenay Port Authority; he Port of Saint John-New Brunswick Canada; and Tourism Quebec.

Celebrating a History of

Passenger Growth Over the Years

Average Passenger Growth Rate 1980-2010: +7.5%

•16.0 million passengers (+ 6.6%)

•• 11.68 million passengers – North America, 73%

•• 4.32 million passengers – International, 27%

CLIA 2011 Passenger Forecast

New New CLIA Ships: 2008–CLIA Ships: 2008–20112011

2011 New Ships = $4.6 billion Investment

Canada/New England Cruise

Market

Canada/New England Market

• Over the past decade the bed day capacity and passenger arrivals in the CNE market has almost doubled.

• The CNE share of global capacity has been fairly stable between 1.5 and 2%.

• Its growth has come in spurts with increases in excess of 30% in 2000, 2004 and 2007.

• Since 2008 capacity has remained fairly stable but passenger arrivals have increased by more than 10%.

Cruise Capacity in the Canada/New England Market

Source: CLIA

Canada/New England Market

• Since 2002 passenger embarks in CNE have more than doubled.

• The CNE share of embarks in North America has increased from 6.4% in 2002 to10.2% in 2010.

• Its growth has also come in spurts with increases in excess of 20% in 2003, 2004 and 2010.

• Growth leaders have been New York and Baltimore, especially over the past two years.

Embarkations in the Canada/New England Market

Source: Port Authorities and BREA

Passenger Expenditures• Atlantic Canada Passengers

– More than 95% of passengers report going ashore for an average of 4.7 hours.

– 85% of these passengers reported purchasing a shore excursion at an average cost of $53 per passenger.

• 84% of shore excursions were purchased from the cruise lines.

– Passengers that went ashore spent an average of $93 per passenger.• Tours, clothing and souvenirs account for 80% of the onshore expenditures

• New York Passengers– Almost half (46%) of embarking passengers have a pre- or post-cruise stay

of 2 nights.

– Passengers with an overnight stay spend an average of $437 per passenger during their visit.

• Lodging ($274) and food and beverages ($65) account for 75% of their expenditures.

– The average expenditure across all passengers is $213.

• 7-Day Itinerary (4 calls) - $585 of onshore expenditures per pax– 3,000 passenger ship will generate $1.75 million in total passenger

expenditures

Source: BREA

CNE Passenger Source Markets

• Passengers cruising in the CNE market are sourced from around the globe….but more than half reside in the northeast quadrant of the U.S.

• Survey data from 2007 for Atlantic Canada ports showed:– 60% of passengers lived in the northeast quadrant of the U.S.– 30% lived elsewhere in the U.S.– 10% resided outside of the U.S.

• Survey data from 2010 for New York showed:– 50% of passengers lived in the northeast quadrant of the U.S.– 35% lived elsewhere in the U.S.– 15% resided outside of the U.S

Source: BREA

ECA UPDATE

North American Emission Control Area

ECA Requirements

Range of Options for ECA

Compliance via distillate fuel consumption

After treatment devices

Alternative fuels (Biofuels; LNG; Shorepower)

Equivalencies

Review operations

“Cruise lines are the environmental leaders in the marine industry. They’ve invested millions in state-of-the-art wastewater treatment systems, recycling equipment and training programs. The ships carry a dedicated environmental officer whose main duty is to ensure compliance with applicable environmental regulations.” Peter Lehmann, James Bay Neighbourhood AssociationApril 24, 2011 (Times Colonist)

Alternatives & Equivalencies

MARPOL Annex VI, Regulation 4 provides for broad equivalencies:

“any fitting, material, appliance, or apparatus to be fitted in a ship or other procedures, alternative fuel oils, or compliance methods used as an alternative” if they are “at least as effective in terms of emission reductions.”

Potential alternatives or equivalencies include:

Mechanical removal (scrubbers)

Alternative fuels or non conventional propulsion

Emissions Averaging

Other means not yet identified.

Goal Regarding Operational

Equivalencies Work within the existing MARPOL Annex VI framework to provide

equal or greater public health and welfare benefit in a more economically efficient manner by:

1. Focusing sulfur emission reductions where they provide the greatest benefit

2. Ensuring that air quality is not degraded for any persons affected by cruise ship sulfur emissions

Potential Averaging Programs

Vessel Averaging Single vessel or within and between vessel fleets

Weighted Averaging Account for dispersion of emissions, secondary PM formation

and population exposure

Achieve lower emissions close to shore where impact is most significant

Achieve lower emissions closest to major population centers

Allow higher sulfur levels far from shore and far from population centers

Total population impact at or below levels achieved by spatially uniform ECA

Population/Distance Weighted Averaging

19

Significant emission reduction benefits: ship close to shore and population centers

Significant emission reduction benefits: ship close to shore and population centers

Limited emission reduction benefits: ship far from shore and major population centers

Limited emission reduction benefits: ship far from shore and major population centers

High Emissions Weighting Factor

Low Emissions Weighting

Factor

Voyage Segment A

Voyage Segment B

Ongoing engagement with US EPA, US Coast Guard, & Transport Canada

Discussions with flag States initiated & ongoing

Engagement with other shipowners

Briefing of selected US Congressional staff

Discussions/Briefings with Transport Canada

ECA ACTIVITIES

mcrye@cruising.org

DISCUSSIONAND

QUESTIONS?