CRUISE



	"GUESTS"--AN ALL TOO APPROPRIATE TERM Discounting may indeed be down somewhat, but all the indicators are that, with lots of new capacity coming on stream, the cruise lines are filling ships the old fashioned way: by cutting prices. Indeed, the industry’s use of the word “guests,” rather than “passengers,” may be becoming totally appropriate. Carnival Corp. has entered an exclusive marketing and sales agreement with Walmart.com, a unit of discounter Wal-Mart Stores, Inc., to “provide dream cruises at every day low prices—prices so low, in fact, that customers will be refunded the difference if they find a better deal on an identical cruise vacation within 14 days of booking.” These rock bottom prices will not last forever, of course. Since the print version of this article was written in January, some specialist cruise travel agents are reporting that the best of the bargains--particularly aboard new ships-- have been snapped up. But on sites like cheapcruisesnetwork.com there some very attractive prices were still being offered in early February. It has to be noted that, the older the vessel, the easier it seems to be to get a steeply discounted ticket. DISTRIBUTION IS KEY The Carnival tie-in with Wal-Mart is an indication that distribution and deployment will be of key importance in the cruise market in the months ahead. Distribution means getting cruise packages sold through as many retail outlets as possible. Deployment means putting ships where they are easily accessible to passengers—without necessarily having to endure the hassle of getting on an airplane. The industry was starting to do this even before Sept. 11 and since then the trend has been accelerating—much to the delight of port directors around the U.S. Norwegian Cruise Line, now owned by Star Cruises, last month introduced a new “Homeland Cruising” program claimed to offer passengers “regularly-scheduled, seven-day, round-trip cruises from more ports in the United States and Canada than any other cruise line.” Colin Veitch, president and CEO of Norwegian Cruise Line, says, “Current travel trends indicate consumers are willing to travel but many want to remain closer to home. So we have deployed all but one of our ships out of U.S. and Canadian ports throughout 2002. We want to provide as wide a range of choice as we can. And in these times when everyone is feeling the need to reinforce the bonds of family, we are pleased to have so many NCL ships close-to-home making it much easier for family groups to get together in an economical way.” CIRCLE THE WAGONS Though the major cruise lines, at least, are filling berths, there’s no doubt that the cost of doing so is making their eyes water. That being so, the three largest players in the game—Carnival, P&O Princess and Royal Caribbean—have evidently decided that, in present economic circumstances, consolidation is the better part of valor. Initially, the current bout of merger mania started off with P&O Princess and Royal Caribbean deciding that now would be a good time to circle the wagons. They announced a proposed merger between P&O Princess and Royal Caribbean in a “dual listed company” arrangement that appears to be another one of those ways of painting an acquisition as something else. After the merger, the top jobs in the new entity would be held by Royal Caribbean people and the combination would be the world’s largest cruise operator, displacing Carnival Corp. This situation is not much to the liking of Carnival Corp. management which has decided that the P&O Princess wagons would be better circled with those of the Carnival family and has launched its own offer for the company. At press time, the take-over battle remained unresolved, but the only thing that seemed likely to stop Princess from going to one suitor or the other would be action by either U.S. or European antitrust regulators. MOTHBALLED IN MARSEILLES While the larger lines can—at least for a time—afford to cut prices to whatever level is needed to fill capacity, that’s not the case with everyone. Right now, the Alstom group has been trying desperately to contain a $680 million financing exposure to the 10 Renaissance ships built by Chantiers de l’Atlantique. Alstom would undoubtedly be grateful if the French National Assembly could think of some use the French Navy might find for 10 lightly used cruise ships. Ownership of six of the vessels, all delivered over the past four years, has now been vested by Alstom and the financial institutions involved in Cruise Investment Management, a Marshall Islands-registered company created to get the best possible price for the R-Ships. Apparently, they will be mothballed in Marseilles, at a cost of around $4 million, until a buyer can be found. Asking price for the larger, 702 passenger, 600 ft R-ships is reportedly $130 million to $140 million apiece. LONG TERM PROSPECTS BRIGHT For cruise lines with pockets deep enough to outlast current problems, the outlook is bright. In research recently conducted by CLIA, “The Cruiser and Cruise Prospect Study,” nearly nine out of 10 vacationers—including 85% of pleasure travelers who have yet to cruise—say they are interested in cruising. “The Cruiser and Cruise Prospect Study validates the tremendous product enhancements that have been introduced in recent years. CLIA-member lines are continuing to create experiences that appeal to people who seek choices in what they can do on their vacation, a comfortable setting in which to do it and a great value,” says CLIA president James G. Godsman. ML PREVIOUS HIGHLIGHTS FROM PRINT MARINE LOG HOME