Cautious Optimism at Seatrade

Executives see the beginnings of recovery

By: By Marilyn Green

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Click here to read more about the new ships and terminals unveiled at this year's Seatrade

In Seatrade’s 25-year history there has never been such focus on the analysis of the market as there was at this year’s Seatrade Cruise Shipping Miami, held March 16-19. Sessions at this year’s conference concluded that the cruise market is starting to come back in terms of booking volume, although yields are still down.

Speaking to a turnout that was a close match to last year’s figures, executives looked to a strong future while acknowledging the seriousness of the current economic situation.

Cruise executives were optimistic about the future, while realistic about the economy. // (c) Andy Newman/CSM
Cruise executives were optimistic about the future, while realistic about the economy.

"We’re living in unprecedented times with huge growth," said Kevin Sheehan, Norwegian Cruise Line CEO. "Between 2000 and 2010 we will almost double our number of berths. But we also have had 35 economic indicators at or near historic lows since the recession started. More than 4 million jobs have gone and by 2008, 2.3 million homeowners faced foreclosure, many in our major source states."

Like other executives, Sheehan strongly supported aggressive marketing during this period. "Now is not the time for the industry to hold back."

Gerry Cahill, Carnival Cruise Lines president and CEO, said, "Cutting marketing would be the biggest mistake we could make. This is a real opportunity to attract first-time cruisers who will continue to cruise once they have tried it."

Cahill added that consumers have moved from conspicuous consumption to value.

At the upscale cruise session, executives agreed that cruising must capture new customers with value and that now is the time to do more for less. All agreed maintaining the product’s quality is paramount, although lines disagreed about how far pricing should drop to fill the ships.

There were differences of approach, too, between lines that want to cultivate the drive-up market and those that want to expand internationally. Adam Goldstein, Royal Caribbean International (RCI) president and CEO, said he sees a 100 percent chance of globalization continuing as a strong force in stimulating the market. Michael Bayley, RCI senior vice president, international, added that RCI will continue its aggressive international deployment as the international growth rate is now faster than that in North America.

"We see nothing that changes our strategy of extending more into international markets," Bayley said.

Richard Sasso, chairman of Cruise Lines International Association’s (CLIA) marketing committee and president and CEO of MSC Cruises USA, pointed out that international cruisers also look closer to home, meaning more seasonal to year-round markets in destinations such as the Mediterranean and New York. Dan Hanrahan, president and CEO of Celebrity and Azamara Cruises, said that, since 50 percent of North Americans live within driving distance of a homeport, it’s very much the same in Europe.

Sasso reminded conference-goers of the artistry of the industry and the deep appeal of the ships’ beauty. He cited a recent CLIA poll of North American agents with half expecting 2009 to be a good year.

"The reality is that 90-plus percent of people in the U.S. live in their homes and pay their mortgages," Stein Kruse, president and CEO of Holland America Line said. "Our best times are ahead of us and we should not forget about that."