Smooth Sailing Cruise Line Industry Riding Wave Of Strong Bookings, Bigger Ships

Cruise industry executives can take a vacation: Passenger counts are up, bookings are booming and megaships are popular.

The industry’s Big Three - Carnival, Royal Caribbean and Princess - combined for a record $1 billion in operating profit last year.

“That’s a very significant threshold,” Richard James, senior vice president of Princess and president of the Cruise Line Industry Association, said Wednesday at the industry’s annual Seatrade conference. “I am unashamedly bullish on the cruise industry.”

The mood is markedly better than this time last year when industry leaders complained about a 1.7 percent drop in cruise passengers.

So far this year, Carnival’s bookings are up 37 percent, and the company’s reservation agents extended their closing time from 11 p.m. to midnight to keep up with calls. Princess bookings are up 34 percent, and Cunard 20 percent.

More than 4.6 million people went on cruises last year, up 6 percent from the year before. The ships now sail at 88 percent capacity.

The industry now says that the lower numbers in 1995 reflected a shift from three- and four-day cruises to seven-day trips, and that the total number of days passengers spent on ships actually rose.

And this year, Bob Dickinson, president of Carnival, can’t keep from boasting about the Destiny, the world’s largest cruise ship. The $400 million vessel weighs 103,000 tons and can carry 4,400 passengers and crew. It is the length of three football fields and 116 feet wide.

“For a brief period of time, we have the largest ship,” Dickinson said. “From a marketing standpoint, all of us should be ashamed to be taking a salary. It sells itself.”

Two more huge ships have been ordered. Princess expects a 104,000-ton ship in May 1998, and Royal Caribbean expects a 130,000-ton vessel in 1999. All three are too fat to pass through the Panama Canal.

But Richard Fain, whose Royal Caribbean line built the first generation of megaships, 73,000-tonners, and has ordered ships nearly twice that size, sees limits.

“Size has to be properly designed,” said Fain, the company chairman. “I frankly would be doubtful that anyone would build anything bigger.”

The floating cities, by virtue of their very size, have caused some environmental concerns. The government of Ecuador has banned cruise ships in the Galapagos, and an environmental commission created under the North American free-trade pact took Mexico to task last year for authorizing a new pier near a fragile coral reef on the resort island of Cozumel.

But the cruise industry has been working to appease critics. Royal Caribbean last fall promised $1 million to fund ocean conservation. Princess Cruises received an environmental prize for initiatives that included more recycling.

The Caribbean, including the Bahamas and canal crossings, remains the most popular cruise destination for North American travelers, with 57 percent market share, followed by the Mediterranean with 10 percent and Alaska with 8 percent.

But foreign cruise passengers are a growing force in an industry dominated by U.S.-based lines, accounting for nearly one-third of travelers. While the mass-market industry is going global, it has trouble appealing to more than one culture.

“If you’re talking about developing local markets for non-Americans, then you have to be very careful about it,” said Princess chairman Tim Harris, cautioning something as simple as beer choices must be considered.

Meanwhile, the Cruise Line Industry Association will launch its first generic promotion, an $8 million campaign to debut in September, with the theme, “You haven’t lived until you’ve cruised.”