Seatrade Cruise Connection

June 2005

State of the Industry -- Cruise Execs Agreed on Key Issues

Moderator Christopher Hayman, managing director of Seatrade, kicked off the 21st annual State of the Industry with a united display of optimism in "this strong recovery year." However, the panel of cruise industry executives conceded that despite a successful 2004, the industry still has a long way to go.

Howard Frank, vice chairman and chief operating officer for Carnival Corp., expressed concerns that the value of a cruise vacation doesn't match pricing, which still hasn't reached 1999 levels.

"We have a huge opportunity to grow our business and prices," said Frank. "Yet our prices are still well below our competition in land-based vacations."

Colin Veitch, president of Norwegian Cruise Line, noted that "over the past few years consumers have gotten used to paying lower prices. You can't just jump back to increased pricing. With the improved products, new destinations, and tremendous momentum, we can continue with the upward movement in pricing."

In his 21st appearance on the panel, Carnival Cruise Lines President Bob Dickinson discussed his thoughts on the industry's recent hiccup during the spring break period. Calling it the "sold-out syndrome," Dickinson went on to explain that there was a misperception among cruisers that unless they book well in advance, good pricing won't be available.

"This just reinforced our dependency on travel agents," said Dickinson. "Never assume that a cruise is sold out, and work with a travel agent to find the best cruise and best deal."

Relative newcomer in the cruise shipping business, MSC Cruises, is ready for growth despite the weak dollar-to-euro exchange rate. With two firm ship orders with Chantier de l'Atlantique, the audience was told to look for an announcement about a capacity increase in the very near future.

"We need to have newbuilds and we need to have expansion," said Rick Sasso, president of MSC Cruises, North America. "Part of our business strategy is to look at further newbuilds."

Rising oil prices have impacted the lines across the board, yet all agreed that they are not driving negative financial results. Determining the best way to reduce consumption and optimize fuel efficiencies is commonplace at all of the lines. The executives agreed that rising fuel costs "won't make or break a company."