Cunard launches new ship Queen Elizabeth as boss sounds optimism for cruises

The British cruise market has weathered the recession and grown by 6% this year according to Peter Shanks, chairman of the Passenger Shipping Association and managing director of Cunard.

Today the Queen will launch Cunard's third ship, the £350 million Queen Elizabeth, at a ceremony in Southampton. Shanks expects that it will run at full occupancy next year thanks to competitive pricing.

"One of the real reasons for growth of the cruise industry is not just the quality of the experience, it is value for money," Shanks said. "The average fare of a cruise comes to between £110 and £120 per day and for that, you are getting very fine accommodation, all your food included, all your entertainment included and your soft drinks. You cannot get that in a hotel."

Fares on the Queen Elizabeth start at £799 for a five-day cruise but Shanks said guests were paying an average of £1,400 to £1,700. The ship's capacity for 2,092 passengers gives the ship revenues of £3.2 million a cruise and £86.4 million across the 27 cruises it will make next year.

Its maiden voyage, on which it sails to the Canary Islands tomorrow, was fully booked 29 minutes after it went on sale last year and more than 50% of its remaining 2010 cruises were sold within one and a half hours.

The Queen Elizabeth is expected to boost Cunard's revenues by about 30% next year which will add to the fortunes of the company's parent Carnival, the world's largest luxury cruise ship operator. Last month Carnival announced a 22% increase in its third quarter net income to $1.3 billion (£816 million) on revenue up 7% to $4.4 billion (£2.76 billion).

JPMorgan analyst Kevin Milota said Carnival benefited from cost cutting and the introduction of the Queen Elizabeth should also give it a helping hand.

Shanks said: "As you grow in terms of scale there are benefits to be had behind the scenes in terms of synergies you can get and there will be scale efficiencies for Cunard as a business."

Although Cunard does not disclose its profits, the biggest margins in the new ship are expected to be made on its suites, which have butler service, personalised stationery and marble bathrooms with whirlpool baths. They cost up to £118,499 for a 103-day world cruise.

Shanks said Cunard's 170-year-old brand drew in customers worldwide with a third from Britain and a third from America.