Florida Recount: Cruise Sector Still Upbeat Despite Economy

Conference meeting

Stein Kruse, left, president and CEO
of Holland America line, makes a point at the 2008 Seatrade Cruise Shipping Convention’s State of the Industry
panel discussion; also shown is (l-r): Colin Veitch, president and CEO of Norwegian Cruise Lines; Adam Goldstein, CEO of Royal Caribbean International; and Gerald Cahill, president and CEO of Carnival Cruise Lines

It’s Been only a year  since my last Florida sojourn for CLIA’s cruise3sixty conference and the Seatrade Cruise Shipping Convention, yet so much has changed. The annual events are gatherings of all walks of life that serve the cruise industry, from cruise line CEOs to travel agents, to suppliers who manufacture marine-fire doors. Basically, if your business is premised on anything cruise ship or ocean related, you are in South Florida in March. As my line of work is reporting on the cruise industry, I, too, was present.

This year, optimism still abounded for the cruise business, yet omnipresent was the 800-pound gorilla shuttling between each event with the nametag “Economy.” Point being, unless you’re a poor soul without basic cable, you’ve heard reports of economic doom and gloom spewing forth from CNN to MSNBC and all outlets in between. Sub prime has quickly become a part of our daily vernacular, while the two words “fuel prices” are frequently bookended with expletives.

A Change in the Tide
Last year, the buzz at Seatrade and cruise3sixty was quite different. In place of uncertainty was unmitigated growth, as cruise lines announced plans to build new ships, which had interested parties fumbling for pad and pen to make sure that all the details were caught. Executives also gushed over the opportunity in Europe (remember last year’s Seatrade session: “Go western Mediterranean, young man,” was the cry from MSC Cruises USA’s president and CEO, Rick Sasso), a movement that is still ongoing as the U.S. dollar continues to devalue against international currencies.

But the question this year was, “Will the industry continue to flourish in the face of a bearish market landscape?” Cruise line executives tend to think so, though they are now a bit more cautious. “I’m not going to tell you cruising won’t be affected; it will be,” said Gerry Cahill, president and CEO of Carnival Cruise Lines. “But the industry has great resilience. During the last two recessions [1990/1991 and 2001], the cruise industry continued to increase passengers carried and rode them out.” Time and again, executives pointed to the “value proposition” of a cruise, which helps sustain the industry during leaner times.

I’ll buy that, but it’s even better to hear it straight from the mouths of travel agents—the frontline professionals who have the truest grip on consumer sentiment and spending. According to the most recent research and polling done by CLIA, “travel agents express confidence in continued consumer interest and growth of cruise vacations.” In fact, of the 900 agents who participated in the January 2008 CLIA survey, 90 percent said they expected their 2008 sales to be as good or surpass 2007. “We’re weathering this quite well,” said Dan Hanrahan, who serves as both president and CEO of Celebrity Cruises and Azamara Cruises and chairman of CLIA’s marketing committee. “Travel agents remain very bullish on what is going on, and they are our leading indicators, since they are having the conversations with customers.”

David Eisen

David Eisen

Another trend witnessed by agents is a lesser reliance on wave season as a period that makes or breaks a year; steady cruise sales throughout the year is now becoming more the norm. That’s important in a recessionary environment, where consistency can be the attribute that keeps agents and businesses afloat. “The industry has gone through recession before,” said MSC’s Sasso. “The agents’ optimism is correct. We’ll deal with it.”

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