2004 yearend review: smooth sailing for the cruise industry in the wake of last year's record passenger numbers

Cruise Travel, Jan-Feb, 2005 by Theodore W. Scull

For the first time in three years, just about It everything in the world of cruising has been on the up and up--with mostly well-booked ships, at slightly higher prices (good for the cruise lines' ledgers). In 2004 the projected figure for North American passengers sailing in North American cruise-industry ships is expected to reach a record 10.6 million, according to the Cruise Lines International Association, the industry's marketing organization. Occupancy rates, based on two to a cabin, reached 102 percent for the first half of the year, up a percentage point compared to all of 2003.

CLIA-member lines now operate 184 ships with a staggering total of 215,405 lower berths. About 87 percent of the market take cruises of from one to eight days, while cruises of 18 days or longer account for about one-half of one percent. Not surprisingly, the average cruise is seven days. New ships continue to be delivered, and additional ones are on order. At the beginning of the year, new orders were soft, but since then two major players and an emerging one have announced impressive newbuildings.

"Our next ship is going to be bigger than your ship" is underlying the fierce one-upmanship between Royal Caribbean Cruises Ltd. and Carnival Corporation. The former has sprung for a pair of 158,000-gross-register-ton "Ultra Voyagers," while the latter is posturing vessels upwards of 180,000 tons. It would be pure folly to speculate what the ultimate size might be, especially with floating resort concepts, designed to do very little actual sailing, also being touted from time to time. After all, in the 1970s predictions were that 20,000-25,000 tanners would be the largest built; that era seems like ancient history now.

In late September, Carnival Corporation & plc signed an agreement with Italian shipyard Fincantieri to construct four new cruise ships as well as significantly redesign the previously announced Queen Victoria for Cunard Line. Two of the newbuilding orders have been placed in U.S. dollars and two more in euros to balance the strength of the European currency and the weakness of the American. The Queen Victoria redesign is priced in a combination of euros and dollars. At Fincantieri Marghera shipyard, the significant redesign of the Queen Victoria, originally ordered in April 2004, includes a lengthening by 35 feet, a tonnage increase to 90,000, and a lower-berth passenger capacity rise to 2,000, with a delivery now scheduled for 2007. Carnival and Fincantieri will continue working on the "Pinnacle Project," a huge prototype vessel, possibly as large as 180,000 grt, for Carnival Cruise Lines.

Altogether, Carnival Corp. lines operate 77 ships totaling more than 128,000 lower berths with 12 new ships scheduled for delivery between November 2004 and spring 2008. The corporation's 12-line fleet comprises Carnival Cruise Lines, Holland America Line, Princess Cruises, Seabourn Cruise Line, Windstar Cruises, AIDA, Costa Cruise Lines, Cunard Line, Ocean Village, P&O Cruises, Swan Hellenic, and P&O Cruises Australia.

Carnival Corp. is once again transferring Cunard's North American headquarters, this time west to move into the Princess complex in California. Anticipated annual savings in overhead costs are in the neighborhood of $20 million. Cunard's overseas operations will combine with Carnival Corp.'s European lines. Seabourn will stay in Miami and become independent from Cunard. But in effect, with so many operations taken over by Princess, Cunard becomes more of a brand than a freestanding line.

The most publicized shipping event of the year goes to the Queen Mary 2's spectacular entry into service, starting with the January 8 celebratory naming service in Southampton, the maiden voyage four days later, then the much publicized tandem eastbound crossing with Cunard fleetmate Queen Elizabeth 2 from April 25 to May 1. There is no question that Cunard has a wonderful new ocean liner to carry on the 165-year-old company's traditions. Apart from start-up service problems, the QM2 has had a sterling reception in the face of the highest expectations.

Elsewhere under the Carnival Corp. banner, Princess has taken delivery of the 2,670-passenger Diamond Princess and Sapphire Princess and 3,110-passenger Caribbean Princess; Carnival debuted the 2,124-passenger Carnival Miracle and 2,974-passenger Carnival Valor; Holland America accepted the 1,848-passenger Westerdam; and Costa introduced the 2,720-passenger Costa Magica.

Cunard is releasing the line's 1973-built Caronia. After a major overhaul and some new improvements, she will return this year as the Saga Ruby for Saga Cruises. She should receive a warm welcome, especially as she joins her former running-mate, the 1965-built Saga Rose--the two originally traded for Norwegian America Line as, respectively, the top-rated Vistafjord and Sagafjord.

The ripple effect continues with Princess's 1984-built Royal Princess moving over to P&O as the Artemis, while P&O's adults-only Adonia, a failed operation, returns to Princess along with her original name, Sea Princess. And Windstar Cruises will move its Wind Star (which had replaced the Wind Song that was lost to a fire) from Tahiti to Costa Rica for a start-up early this year.