MIAMI BEACH Like a ship in stormy waters, the cruise industry
this past year has experienced enough ups and downs to make anyone
queasy.
Direct bookings are inching upward, newbuild orders have
virtually stopped, a stomach flu generated negative and often
incorrect media coverage, reservations lines ring or fall silent,
depending on the day’s war news, and the economy is still in the
tank.
Yet cruise line executives are optimistic 2003 might turn out
OK. That was the tone of top executives speaking last week at the
annual State of the Industry panel discussion at the cruise
industry’s largest international gathering, the Seatrade Cruise
Shipping Convention here.
“Clearly, this is a much more disappointing Wave Period than any
of us hoped for,” said Richard Fain, chairman of Royal Caribbean
Cruises Ltd. “But it is remarkable how well this industry responds
to these kinds of challenges and I think this year will be no
different.”
Howard Frank, vice-chairman of Carnival Corp., said overall
passenger numbers are up over last year, although price and revenue
are down slightly. “People are waiting for the next shoe to drop in
Iraq,” Frank said. “But when the demand does come back, it will
come back even stronger than it was before. We haven’t given up on
this year by any means.”
Colin Veitch, president of Norwegian Cruise Line, said fear of a
war in Iraq has dampened demand even more than the Sept. 11
terrorist attacks.
“Last year, we had the specter of 9/11, but that turned out to
be a single, sharp shot to the system,” Veitch said. “This year, we
have a number of influences the possibility of war, the economy,
the Norwalk-like virus. It’s all having a longer-term, dragging
impact on demand, and it’s difficult to know where that will end.
Uncertainty is the great enemy of our business.”
Of course, cruise lines can and do lower prices to fill ships.
In fact, the number of worldwide passengers on CLIA-member cruise
lines in 2002 rose 15.5 percent to 8.66 million, filling 97 percent
of overall capacity, according to figures cited by CLIA Executive
Director Bob Sharak.
Cruise lines also moved many ships away from the Eastern
Mediterranean and other perceived hot spots to the U.S. after Sept.
11, gaining passengers who were relieved to drive not fly to cruise
ports. That close-to-home trend continues to gain steam, and is
also helping to generate business in trying times.
It’s a trend that is even spreading to Crystal Cruises, an
upscale line that has always boasted worldwide itineraries.
“We are looking at shorter, seven-day round-trip cruises out of
U.S. ports,” said Gregg Michel, Crystal’s president.
Even so, Michel said the new Crystal Serenity, scheduled for a
June delivery, will remain in the Mediterranean this summer
“notwithstanding unforeseen events.” Fain also said Royal Caribbean
International and Celebrity ships will remain in Europe “absent
something really quite dramatic.”
Veitch said the Orient Lines ship based in the Med is having a
“difficult time” filling up. NCL, he said, is focused on its
Homeland Cruising program and will increase the number of North
American homeports in 2004 from this year’s 13. “We have no plans
to increase Europe or Mediterranean deployment,” he said.
Meanwhile, several executives said direct bookings continue to
inch upward, especially among the largest, mass-market lines.
CLIA still says 90 percent of sales are made by travel agents,
but Carnival Cruise Lines President Bob Dickinson said his company
booked 13.6 percent direct in 2002.
Fain said he didn’t have exact figures but that direct bookings
were “under 10 percent.”
“The bulk of bookings for the foreseeable future will be through
travel agents, and travel agents who work aggressively through us
will see their business grow,” Fain said. “But there’s no question
[direct bookings] will grow. We are providing every opportunity for
consumers to buy our cruises.”
Cunard Line Ltd. President Pam Conover said about 10 percent of
Cunard and Seabourn bookings are direct while Veitch put the figure
for NCL at 5 percent. Michel said Crystal books exclusively through
agents. “If our direct business is over 1 percent, I’d really be
surprised,” Michel said.
Dickinson said that cruise lines’ main competition is land-based
resorts and hotels, which regularly book 75 to 80 percent of their
business directly with consumers.
Dickinson said the CLIA figure of 90 percent agent bookings will
“never be 80 percent direct because we’re not selling hotel rooms,
which are commodities, we’re selling an experience ... that depends
on personal, one-to-one interaction that a travel agent
provides.”
