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Cruise executives optimistic going forward

Posted by Anita Dunham-Potter On March - 16 - 2010

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.

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