If there was one resounding message amongst cruise line executives at Cruise Shipping Miami’s State of the Industry session it was – the customers are back! The tone was a far cry from last year’s convention where the weakened economy overshadowed each presentation.

Kevin Sheehan, CEO of Norwegian Cruise Line joked that everyone should have taken his advice last year to buy Carnival Corporation and Royal Caribbean stock, shares in these companies have risen by almost 100 and 300 percent, respectively. Continuing on the stock theme Sheehan noted that the stock market is usually a leading indicator as to where an industry is headed. “We should all feel a sense of cautious optimism that the industry is being looked upon so favorably,” said Sheehan.

Now that the industry is rebounding the other message is prices are going up. “Most lines lost 10 to 20 percent off their ticket price in 2009”, said Gerry Cahill, president and ceo of Carnival Cruise Lines. He added, “We’re all pushing to rebuild that price.”

“It will take time for us to get to the pricing that the industry deserves,” said Dan Hanrahan, president and CEO of Celebrity Cruises. Hanrahan said he expects the industry yields to increase by 3 percent to 4 percent this year. Still, he doesn’t think the cruise industry got the yields it deserved back in 2006 when the economy was stable.

Cruise executives touted the value of a cruise vacation as key to its continued growth. “A study found a family on a five-night cruise could save 15 percent compared with going to Las Vegas or Orlando,” said Norwegian’s Sheehan.

The executives also talked about the growth of worldwide fleet deployment and new destinations. There were also harsh words for Alaska governor (Sean Parnell) who was seated in the audience. Holland America Line president and ceo Stein Kruse stated that Alaska’s 30 year record of cruise passenger growth ended in 2009 and capacity is down 17 percent this year – the only place in the world where there is a decline in cruise tourism.

“Alaska’s regulatory environment is more burdensome and costly than anywhere else in the world,” Kruse said. He went on to state that since the 2006 citizens’ ballot initiative, Alaska has collected $200 million in taxes that they don’t know where to spend it on.

Kruse added that the cruise industry supports reasonable environmental but is concerned with “overzealous regulations” when the technology does not exist to meet those regulations. “We can redeploy to other destinations if we’re not able to comply with reasonable operating requirements,” he added.

It was only a matter of time – in-stateroom gaming. Pittsburgh-based Allin Corporation has unveiled “DigiCasino” at the annual Cruise Shipping Convention in Miami. Allin Corporation says the casino application works on Allin “DigiHD” interactive stateroom televisions, which are currently available on a number of cruise ships.

The application offers a number of games and has a “interactive cashier” enabling guests to purchase or redeem gaming credits . The company hopes to launch the application on various ships in late 2010.

Stay tuned for more breaking cruise news as ExpertCruiser will be reporting live from Cruise Shipping Miami this week.

Cruise executives at the annual Seatrade Cruise Shipping convention in Miami said deteriorating consumer confidence, a recoiling in discretionary spending and widespread job loss have hurt their bottom line, forcing them to slash fares and pump up onboard spending bonuses just to stay afloat.

“Things are not as rosy as we’d like them to be, but we’ve recovered from adversarial times before and we will again,” said Rick Sasso, chair of the Cruise Lines International Association (CLIA) Marketing Committee and president and CEO of MSC Cruises USA. Sasso noted that the industry continued to grow during past downturns, including the Iranian revolution and oil crisis in 1982, 9/11 and the Iraq war.

Worldwide, about 13.35 million passengers are expected to cruise in 2009, up about 2.6 percent from last year. But growth in 2009 is forecast to be the weakest in five years as the recession holds down consumer spending along with the revenues major cruise lines.

“We are facing unprecedented challenges,” said Kevin Sheehan, president of Norwegian Cruise Line.

Despite the looming economic challenges, ships are expected to sail at a 102 percent occupancy rate this year, said Sasso. Ships can exceed 100 percent of their capacity when some staterooms carry more than the standard two passengers.

This year, 14 new ships will be delivered to CLIA members for a net berth capacity increase of 6.5 percent or 18,031 beds — double the number introduced in 2008. Among the new ships debuting this year is Royal Caribbean’s 220,000-ton Oasis of the Seas, which will be the world’s largest cruise ship when it begins sailing from Fort Lauderdale in December. The massive vessel will carry 5,400 passengers and 2,165 crew and offer seven distinct ‘neighborhoods,’ including a Central Park, and an open-air area in the ship’s center with activities that include the first-ever zip-lining at sea.

Cruise value

Despite the recession, the cruise industry is holding on and executives say it will emerge as healthy as it always has during down periods because the value of cruising will get the industry through hard economic times. Executives cite recent travel agent studies that show cruises rank highest in consumer interest and perceived value compared other vacations and is the top reason consumers will be motivated book a cruise.

“The cruise industry is poised to get through these hard times and will come out stronger in the end,” said Sasso, stressing the value of cruising as the reason. He added that the “value component” is a more powerful message today than ever before. Still a number of executives said they have been forced to slash fares and expand onboard spending bonuses to avoid empty staterooms.

“We need to stay strong on the value message,” said Sheehan. He noted initiatives like job loss insurance and reduced deposits are helping skittish consumers book a cruise vacation. “Now is not the time for the industry to hold back. We need to showcase the value of our product,” he said.

Executives were quick to point out that about 50 percent of North Americans live within driving distance of a U.S. homeport, making cruises a more affordable option when air service is not required. Carnival Cruise Lines’ CEO Gerry Cahill said having more cruise ports within driving distance is helping consumers, especially families, make the decision to book a cruise. Cahill said Carnival’s 17 North American homeports have helped the company during the economic crunch.

Celebrity Cruises CEO Dan Hanrahan noted that the average booking window at Celebrity has shortened quite a bit since last year, but he said it’s a temporary situation. “I think the consumer needs to see that the economy is starting to recover,” he said. “When the consumer gets that confidence I think you’ll see the booking window extended again.”

Mixed messages

Carnival’s Cahill said the current market presents opportunities through marketing. “Current conditions present a big opportunity to attract people who would never have cruised before. Plus, marketing is the engine that drives people into the travel agencies to book cruises,” Cahill said.

But, Cahill cautioned that with so many new media channels springing up marketing is now more complicated than before. Cruise operators have to recognize that with the rise of Web 2.0 and social networking, they can’t always control the messages. “Once in awhile, there are negative posts. You have to be willing to live with that.” Clearly, he was alluding to the recent controversy surrounding Royal Caribbean’s Royal Champion program where a select group of fans recruited by the line were encouraged to post only positive reviews and news on various cruise boards.

Holland America CEO Stein Kruse blamed the media for consumer fears with the nightly reports of economic gloom and doom. “Ships are full and we’re not getting the coverage in mainstream media it’s just lots of doom and gloom.” He noted the fact that more than 90 percent of Americans have jobs and pay their mortgages. “Our best times are ahead of us and we should not forget about that.”