Seatrade 2006
The State of the Cruise Industry
by Linda Coffman
Unlike 2005, when pyrotechnics signaled the opening of the annual Seatrade Cruise Shipping Convention, this year's event seemed almost subdued. Perhaps everyone was tired. After all, we'd learned the hard way that Miami Beach is "the new Cancun" for spring break. Boisterous students, whose loudvery loudvoices and music filled South Beach's Art Deco hotels nightly, don't seem to require as much sleep as normal people.
With little fanfare, cruise industry leaders took to the Miami Beach Convention Center stage for "The State of the Industry Debate." There was good news and not-so-good news for executives of the Big Four cruise lines presentCarnival Cruise Lines, Royal Caribbean Cruise Lines, MSC Cruises, and Norwegian Cruise Line. Celebrity Cruises and Holland America Line were also represented on the panel.
Andy Stuart, Chairman of Cruise Lines International Association (CLIA) and Executive Vice President of Norwegian Cruise Line (NCL) began with an overview of 2005, a year of strong growth and record numbers. With CLIA member cruise lines sailing at 103% capacity, 11.18 million passengers enjoyed a cruise vacation last year. There were challenges as well, including an active hurricane season, the rising cost of fuel, and government and media attention focused on safety concerns.
In terms of trends, Stuart gave examples of what passengers want...
- The good life"exclusivity" for all, which was once reserved for the rich
- To explore in style and collect experiences
- Active shore excursions
- Well-being at sea
- The ability to get away, but remain connected
- To travel with like-minded people; special interest groups
While the traditional wave seasonthe first few months of every year when most passengers book cruiseshas been more of a ripple thus far in 2006, cruise lines continue to be growth-minded and orders for nine new ships support their confidence. With increased demand and a higher number of available berths, 11.7 million passengers are expected to set sail this year. In regard to safety and security, Stuart stated the cruise industry has "a record to be proud of" that can stand up to public scrutiny.
When asked about soft 2006 wave season bookings, cruise line executives were reticent in their responses. All but MSC Cruises are publicly held companies and reserved comment until their quarterly results are released. Richard Sasso, President & CEO of MSC Cruises (USA), however, stated their wave season thus far has been good. Not tremendous; it got off to a promising start in early-January and tapered off for the rest of the quarter. Bob Dickinson, President of Carnival Cruise Lines added that yields are probably not up to the maximum levels achieved in 1999. In part, high fuel costs may account for that.
The cruise industry is working hard to overcome the financial effects of rising fuel costs by operating more efficiently; cruising speed and itinerary schedules are being adjusted to minimize costs. Sasso likened it to the way you drive your cartake your foot off the pedal. Additionally, energy conservation can even be realized by the way ship hulls are painted, according to Stein Kruse, President & CEO of Holland America Line. New technology is also a solution. Daniel Hanrahan, President of Celebrity Cruises, cited light bulbs that use less energy and create less heat as an example.
And what of the recent media portrayal of cruise ships as being unsafe in light of the George Smith 'missing bridegroom' case? Adam Goldstein, President of Royal Caribbean International (RCI), the most closely involved panelist, said it is having little effect on business according to the travel agent community. RCI remains focused on getting the positive side of the industry to the public. Bob Dickinson declared the incident a non-event and acknowledged that "news must be put out promptly and accurately" to reassure the public.
Asked about the federal government's charter of Carnival cruise ships following Hurricane Katrina, Dickinson emphatically stated that the line would absolutely do it again, despite unsubstantiated criticism of the cost. He said it made a big difference in the lives of those housed aboard the vessels and praised FEMA for the good job they did winding the program down and finding alternate housing when the charter expired.
And just how big is too big? With the launch of RCI's Freedom of the Seas just around the corner and the unveiling of an even larger Project Genesis class of vessels to follow, Goldstein said that RCI's desire is to grow the fleet progressively. Sasso observed that the cruise industry is diverse and there is room for ships of any size.
Modesty aside, it's pretty apparent that ship size matters to these men when it comes to bragging rights. Dickinson stated Carnival Cruise Lines' big-ship Pinnacle Project is presently on the back burner due to its failure to show enough return on the investment it would require. Despite displaying a pragmatic side, with an impish smile he added, "There is no end in sight as long as people have vision and ego."
The State of the Industry Debate may have been a more mellow occasion than in the past, but it certainly wasn't boring.
For more information and to find out how you can attend in 2007, see
the Seatrade Cruise Shipping Convention website
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