Costa Cruise Lines has found a unique niche in the worldwide cruise market. Instead of being limited to the intensely competitive North American market, the company has tapped into a growing European source of passengers.

In addition, Costa has expanded the traditionally seasonal European market to become a year-round source of passengers. While European deployment has traditionally been limited by seasonality, Costa has overcome that by dedicating ships to the European market in the Caribbean as well.

Now, Costa is also taking a bold step towards establishing a year-round Caribbean program for the European market. Starting this fall, the 480- passenger Costa Playa will be based in the Dominican Republic for weekly cruises calling in Cuba. The first cruise is slated to call in Havana on December 2 (1995) where Nicola Costa, President and Chairman of Costa, said a cruise terminal was being renovated.

New European Formula

Shorter cruises, moderate prices, new ships and heavy promotion have paid off for Costa in Europe where the company enjoys a 75 market share in Italy and 60 to 70 percent in France, according to Costa.

Costa noted that while there had been some market resistance to the cost of a cruise, the company overcame that by offering seven-day cruises, which are a relatively recent concept in Europe, where most cruises have tended to be 10 and 12 days and longer."

Our objective is to develop Europe to become even stronger for us," said Costa, adding that "Europe has tremendous potential."

There are between 1.5 million and two million people in each of the major markets that identify a cruise as their number one vacation choice, according to Costa. The company is concentrating on Latin Europe as well as Switzerland and Austria, while the Anglo-Saxon markets are seasonal and group markets.

"We have defined our goal to develop the European market and to keep the U.S. as a seasonal market" Costa said. 

Pricing also favors Europe, especially Latin Europe, which does not suffer from the discounting so rampant in the North American and British markets, according to Costa. He said that summer pricing was 40 to 50 percent higher while winter pricing was the same as in United States.

Year-Round

This past winter, the 820-passenger Costa Allegra sailed seven-day Caribbean cruises from Guadeloupe. This coming winter, the larger 1,300-passenger Costa Classica will continue that same program.

"This program has been tremendously successful," said Costa. He explained that last year, the cruise line carried an even mix of French and Italian passengers who flew in on charter flights.

Since Guadeloupe is part of the French West Indies, the island is also part of France, which along with Italy, is a member of the European Community. Hence, French and Italian passengers do not even need to carry passports.

According to Costa, one of the keys to tapping the growing European cruise market is to find the quickest and most comfortable means of travel to the embarkation port.

He also noted that European air costs have come down partially due to the de-regulation of air traffic in Europe and more efficient planes.

North America

"We are trying to be as successful as we can be in the Caribbean," said Dino Schibuola, President of Costa Cruise Lines in North America, "and to focus on the development of marketing of European cruise programs in the United States."

According to David Christopher, Senior Vice President of Sales and Passenger Services, Costa has doubled its traffic to Europe in 1995 over 1994 and expects to double its North American bookings for Europe again in 1996 over 1995.

"We essentially put our product in the middle stream of the demand for cruises - featuring our Italian Style Cruise theme - to make us distinctive in the context of other cruises," added Will Chambers, Vice President of Marketing.

This winter, the 1,350-passenger Costa Romantica, sailing out of Miami, and the 820-passenger Costa Allegra, out of San Juan, will be marketed to North Americans in addition to the 972-passenger Costa Riviera sailing to the Canary Islands.

Next summer, Costa will offer a variety of seven­ day European cruises from Venice, Genoa and Copenhagen, including the new 1,950-passenger Costa Victoria which will sail seven-day cruises from Venice to the Eastern Mediterranean when she debuts in July.

Schibuola explained that he was very optimistic about the seven-day program which he said fits well with Americans' 14-day vacations. It allows them a few extra days for pre- or post-cruise land stays, he noted.

Schibuola added that the seven-day program had good potential for the incentive market as well. "We are the only major cruise line with a seven-day program in Europe," Schibuola said.

Another characteristic that differentiates Costa is the range of nationalities it carries aboard. ln Europe, the company's ships usually has a passenger mix of approximately 80 percent Europeans and 20 percent Americans, and the reverse in the Caribbean on the ships marketed in North America.

Fleet

Costa operates a fleet of nine ships. In addition, two new ships are under construction: the 76,000-ton, 1,950-passenger Costa Victoria slated to enter service in July of 1996, and an as-of-yet unnamed sister ship which will be somewhat larger at 78,000 tons and with a passenger capacity of 2,050.

As the new ships enter service, Costa's older ships may be affected. The 1,100-passenger Eugenio Costa, built in 1966, and the Riviera, built in 1963 and rebuilt in 1987, are immediately affected by the newbuilding program. In fact, the Eugenio Costa has been sold to the building yard, the Bremer Vulkan Group, and has been chartered back to Costa until the second newbuilding is delivered.

The Riviera's future is also pending, according to Costa, who said he expected the ship to be sold unless there is sufficient market growth to support her. Costa said that the company would also re-evaluate the 420-passenger Daphne, built in 1955, and 530-passenger Meanoz, built in 1957, which he said "are too small."

Costa is also closing down the Far East operations of its Pearl Cruises division this month, citing that the cruise line was unprofitable. Instead, the Pearl becomes the Costa Playa.

Paying Off

Costa's move seems to be paying off. The cruise line is today the largest operator in Europe and in South America and the fifth largest cruise company overall.

In 1994, Costa generated approximately 70 percent of its cruise revenues in Europe, primarily Italy and France, and some 24 percent from North America, with the rest from Brazil and Argentina.

Costa's fleet generated net income of 42 billion Lira on revenues of 922 billion Lira in 1994 and carried more than 280,000 passengers.

(The report is an excerpt of a Costa company profile in the upcoming Fall issue of the Cruise Industry News Quarterly.)