SOUTHAMPTON is set to reap rich rewards as the rapidly expanding cruise industry continues to surge ahead with 1.25 million Britons taking a holiday afloat this year.

With new ships coming into service next year, 2007 is likely to see cruise numbers rising to 1.35million, according to new figures from the Passenger Shipping Association, which represents cruise ship operators.

At present it is estimated that the cruising industry generates about £250m a year for the city's economy by using local suppliers and service industries, hotels, marine engineering experts and transport companies.

The latest figures from Southampton docks owners Associated British Ports, indicate that around 700,000 passengers will have used the city's three cruise terminals his year. By the end of 2006, a total about 250 cruise ship calls will have been handled, more than all the other UK ports put together.

With the arrival in Southampton during 2007 of massive ships, such as Royal Caribbean International's Navigator of the Seas which can accommodate up to 3,840 passengers, and the entry into service of Cunard's Queen Victoria this passenger total will increase again next year.

The 17 per cent increase in 2006 comes at a time when the overall package holiday market is in decline, added the PSA which was releasing statistics during the Association of British Travel Agents' convention in Marbella, Spain.

The Southampton-based Ocean Village cruise company, which aims at a younger market, is launching its new Ocean Village Two, which will be named in an official dockside ceremony in the city next April.

The entry into service of this second vessel to fly the Ocean Village flag is expected to have a significant impact on the number of new cruisers to the market.

PSA chairman and Cunard president, Carol Marlow said: "The level of customer service and overall quality of experience continues to set cruising apart from other types of holiday.

"Continued innovation and investment in product, service and itineraries over the next three years will ensure that cruising maintains a leadership position in delivering new and exciting holiday experiences."