| 11.1°C Belfast

Costa Concordia disaster may cost billions

The Costa Concordia disaster off Tuscany could cause major damage to the cruise ship industry in the near future - although the insurance industry may bear the brunt in the long-term.

In 2010 cruises generated revenue of $24bn (£15.6bn) and last year an estimated 16 million people worldwide set sail, a substantial rise from around 500,000 people in the early 1970s.

Wyn Ellis, an analyst at Numis Securities, said over the coming years the cash implications for Costa Concordia's parent company Carnival could be up to $1bn (£652.7m) once the potential loss of sales are taken into account and it addresses safety issues, although he added this was a worst case scenario.

He said there would be negative short-term implications for bookings across the entire industry, but added that "memories are short" and he expects demand to recover in the long-term.

Mr Ellis believes Carnival, which made profits of £1.2bn last year, would comfortably be able to afford such a loss.

Other analysts have reportedly suggested that the shipwreck could reduce the company's profits by a tenth this year.

The disaster is also expected to have wider ramifications for the insurance industry, with most London-based stocks expected to have some kind of exposure to the incident. One analyst put insurance claims at up to $800m (£522.2m).

Some 31 cruise ships visited Belfast in 2011, bringing in the region of 58,000 people to the city.

A spokeswoman for the Belfast Visitor and Convention Bureau said it was expecting 41 cruise ships to dock in Belfast between April and September, with roughly 73,000 passengers and crew.

Mark Davidson, manager of Oasis Travel in Belfast, said none of his customers had raised concerns about upcoming holidays.

"Cruise holidays are a huge market in Northern Ireland," he explained. "Many of our customers know that while this was a tragic accident, it's unlikely to happen to them."

Belfast Telegraph

Top Videos