Cruise Lines Under Scrutiny

*Flooding on Kauai
*Cruise Commissions Questioned
*ASTA's IDE Wraps Up

The cruise industry underwent a shake-up in March, due to two separate tragedies that claimed the lives of 13 cruise ship passengers on the Celebrity Millennium and Star Princess. The incidents took place a day apart and came at a time when the industry was already under increased scrutiny from reconvened congressional hearings on cruise ship safety and security.

The first tragedy took place on March 22, during a two-week Celebrity Millennium South American cruise. While the vessel was docked at Arica, Chile, a group of passengers embarked on a tour of the Andes. Their minibus was returning to the ship when it swerved off the highway and plunged down a 300-foot hillside. Officials believe that the driver may have fallen asleep at the wheel. Twelve passengers died; two survived with broken bones. The passengers were not on an official Celebrity Cruises shore excursion, and the company, Andinatours, was not properly licensed as a tour operator.

The day after the Millennium bus accident, fire broke out on the Star Princess while en route from Grand Cayman to Montego Bay. The fire eventually damaged 100 staterooms, and a 72-year-old passenger from Atlanta succumbed to a heart attack. Two other passengers suffered serious smoke inhalation. The cause of the blaze is still under investigation at press time, but initial reports blamed a smoldering cigarette that was tossed overboard.

Princess terminated the cruise in Montego Bay, and flew all the passengers home with a full refund, a future cruise credit and reimbursement of out-of-pocket expenses. The Star Princess’ remaining Caribbean sailings (April 9, 16 and 23), as well as a scheduled transatlantic sailing on April 30, have been cancelled, and passengers will receive the same refunds. The vessel is expected to resume service in time for its European season, which begins with a cruise from Copenhagen on May 15.

The two cruise line disasters come at a time when the industry was already receiving some unwanted attention. The disappearance last summer of honeymooner George Smith from a Royal Caribbean cruise in the Mediterranean has prompted a steady stream of media reports and allegations of a cover-up. The Smith family’s congressman, Rep. Christopher Shays (R-Conn.), convened hearings of the U.S. House Subcommittee on National Security, Emerging Threats and International Relations last December, examining the issues of cruise ship safety, security and accountability. After requiring cruise lines to submit statistics about onboard crimes and disappearances, Shays reconvened the hearings earlier in March.

A group of individuals including the family of George Smith have launched the International Cruise Victims organization and urged congress to impose stricter accountability and special safety measures on the industry.

The two recent tragedies will no doubt bring added pressure to bear on the industry. Ana Figueroa

Flooding on Kauai

As Kauai recovers from the Kaloko dam disaster, government and tourism officials have stepped up efforts to let travelers know the island is open for business.

“Kauai’s airport, its harbor and businesses are open and ready to accept our visitors in the same way they always have. Kauai’s aloha spirit remains intact and the island is green and beautiful,” said Kauai mayor Bryan Baptiste.

In addition, officials said that flights are operating normally, and all accommodations and major roads are open.

Area resorts including the Princeville and Sheraton Kauai resorts experienced some cancellations but nothing substantial, officials said.

One person was killed after the 40-foot-tall dam burst on Kauai’s North Shore, launching a wall of water that damaged homes and roadways, according to reports.

The closing of Kuhio Highway left hundreds of residents and vacationers stranded, sending the island’s visitor industry into chaos. Traffic has since resumed between Kauai’s North Shore and the rest of the island, although officials said the highway will be down to a single lane for months in the collapse zone.


Report Questions Cruise Commissions

The world’s two largest cruise lines have no intention of following a recommendation by Goldman Sachs to reduce travel agent commissions and increase direct sales, and the American Society of Travel Agents released a statement defending agents’ roles in selling cruises.

Goldman Sachs analysts released a report earlier this month suggesting that Carnival Corp. and Royal Caribbean Cruises Ltd. had “overlooked” opportunities to cut expenses in the current high-fuel-cost environment.

The chief recommendations were to redirect bookings to their own Web sites, hedge fuel costs and cut commissions to travel agents.

“Unlike other industries, the cruise sector does not appear to be as aggressive in cutting non-fuel expenses, raising prices or adding a surcharge to offset the rise in energy costs,” the report said. “In many ways, the cruise lines seem to be passively waiting for energy prices to abate.”

The report suggested that there would be “significant” cost savings for RCCL and Carnival if they lowered average agent commissions to at least 10 percent and redirected bookings to their Web sites.

As for cutting commissions, the two cruise lines were firm.

“Travel agents play a very important role in our overall success,” said Carnival spokeswoman Vicki Freed. “They earn that money.”

Royal Caribbean agreed.

“Our travel agent partners are very important to us, and we are not contemplating modifying our commission structure,” said Michael Sheehan, a spokesman for Royal Caribbean Cruises.

ASTA responded to the report stating that travel agents add value to a cruise sale, not expense. In a letter to cruise line executives, ASTA president and CEO Kathy Sudeikis pointed to the fallacies and shortcomings of the Goldman Sachs analysis, which failed to take into account the true competitive situation that cruise lines face.

“The recent statement by Goldman Sachs shows a complete lack of understanding of the travel agency and cruise industries and travel agents’ relationships with the consumer,” said Sudeikis. “The report did not even attempt to analyze cruise lines’ competitive position against land-based tours. Nor did it attempt to analyze the impact of a shift that might occur should a drastic commission change happen.”

Between 1980 and 2004, the cruise industry market grew by 8.2 percent annually; more than 88 percent of Royal Caribbean Cruises and Carnival Corp’s berths are sold by travel agents.

New Ensemble Partners

Ensemble Travel Group recently announced the expansion of its air consolidator and Ensemble On Location partners programs.

The newest preferred specialty and Ensemble On Location suppliers include Premier Gateway, an air consolidator; Dubrovnik Private Tours, a Croatian specialist; Exclusively New Zealand, specializing in customized New Zealand itineraries; Arno Travel & Tourism, which offers packages in Italy; and Culture Trips, one of Germany’s leading luxury travel partners.

Signature Program

Signature Travel Network announced new enhancements to its hotel and resorts program, including a collection of over 265 hotels and resorts an increase of more than 100 properties since the launch of the program a year ago.

Over the past few months Signature has added hotels and resorts, including Rocco Forte Hotel de Russie, the St. Regis Shanghai, Little Dix Bay, Park Hyatt Chicago and the Plaza-Athenee New York.

The Network expects to add new properties in the coming months. All participating hotels offer Signature clients exclusive added-value benefits, such as complimentary breakfast for two, spa treatments, special rates, room upgrades, or resort/dining credits, as well as late check-out and early check-in if available.

Spas Found

Spa Finder, the global spa resource, has partnered with Virtuoso, the upscale network of more than 6,000 member luxury travel consultants. The deal will promote Virtuoso’s services and the company’s preferred spa properties on Spa Finder’s leading media outlets, including and the Spa Finder Worldwide Directory.

By using the travel agent section of, Virtuoso’s member consultants can access spa overviews as well as “best buys” and discounts they can pass along to clients. Virtuoso agents will also receive VIP status and special service from Spa Finder, including industry news, updates on Virtuoso spas and insider tips on spa trends, treatments and products.

ASTA’s IDE Wraps Up

The American Society of Travel Agents announced that 1,200 travel agents, suppliers, tour operators and other travel professionals were in attendance for the first International Destination Expo (IDE) in Prague, which concluded March 25.

The 2006 IDE attendees represented over 40 countries around the world and was designed to immerse conference attendees in the culture, attractions and travel business of the Czech Republic and Eastern Europe.

A new type of seminar was also offered to allow agents to earn specialist certificates on up to 13 Central and Eastern European destinations.

Going Green

With a July 12 opening, San Francisco’s Orchard Garden Hotel will be California’s first hotel built to the nationally accepted standards for green buildings developed by the U.S. Green Building Council.

The hotel’s green practices include chemical-free cleaning products, a tobacco-free environment, recycled paper and soy-based inks and the San Francisco debut of a guestroom key-card energy-control system.

The 86-room boutique hotel set one block from Union Square will offer the “Love Your Mother (Earth)” opening package complete with deluxe accommodations at $149 per night. Suites are available at $249 a night.

The package will be offered from opening day through Sept. 30, based on availability.

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