In Wake of Problems, Cruise Ships Cut Prices
Hurricanes and Crimes
Make Some Passengers Wary;
A Pirate Attack Off Africa
By AVERY JOHNSON
April 11, 2006; Page D1
A spate of high-profile problems on the high seas, hurricane fears and
weak demand for Caribbean sailings are leading cruise companies to
offer firesale discounts in an effort to lure leery consumers aboard.
The problems are combining to make this the most challenging cruise
season for the industry since 2003, when Iraq war fears and post-9/11
woes hurt bookings. The bulk of the issues are occurring in the
Caribbean, the most popular cruise destination and where most first-
time cruisers tend to sail. The busy port in Cozumel, Mexico, for
example, continues to be under repair after being severely damaged by
Hurricane Wilma last fall. Travel agents also say that memories of last
year's brutal hurricane season are dissuading some would-be cruisers.
And some travelers have been spooked by concerns about cruise safety. A
number of recent onboard incidents -- including a passenger
disappearance and a pirate attack -- have sparked a congressional
inquiry and increased the likelihood of new legislation or regulatory
oversight to help protect passengers.
Some of these factors are contributing to a slowdown in industry
growth: This year the increase in North American passengers is expected
to be 4.5% compared with almost two decades of growth that has averaged
over 8% increases per year. Some analysts are downgrading their
forecasts for major cruise companies, after Carnival Corp. reported
fiscal first quarter earnings late last month that showed signs of a
slower Caribbean "wave season," the first months of the year when the
cruise industry has traditionally sold the majority of its sailings.
To spur demand, cruise companies are now cutting prices, mainly for
Caribbean sailings from now to the fall. Royal Caribbean Cruises Ltd.,
for example, is offering a deal on a number of Bahamas, Mexico and
Caribbean trips in which the third and fourth cruisers can sail for
$99. Carnival has a seven-night eastern Caribbean trip beginning on
Aug. 26 with prices starting at $529. (Sailings later in the season go
for around $749.) Norwegian Cruise Line, part of Star Cruises of
Malaysia, has a Western Caribbean cruise for $439 per person for seven
nights out of Houston on Oct. 21, which is about $100 lower than normal.
Other factors are also contributing to the lower prices: Travel agents
say that Royal Caribbean's new mega-ship, Freedom of the Seas, is
stealing some bookings from other cruises. When it debuts in May,
Freedom of the Seas will be the largest cruise ship in the world, at
160,000 tons and carrying 3,600 passengers. (The ship will boast an
adults only "solarium" with cantilevered whirlpools and a 1,215-square
foot presidential suite.) Also, a warm winter in the Northeast is
dampening demand from sun-seekers.
There has been a broad array of bizarre cruise-ship mishaps recently.
Last summer, a man on his honeymoon disappeared off a Royal Caribbean
ship in the Mediterranean. In November, pirates attacked a vessel run
by Carnival's Seabourn Cruise Line off Somalia. In the past couple of
weeks, a fire killed one passenger on a Princess Cruises ship near
Jamaica, a busload of cruise passengers who had chartered a bus crashed
and died in Chile, and incidents of a stomach virus broke out on a
number of different ships.
In January, a group was formed called International Cruise Victims,
which is composed of alleged victims of cruise-line crimes and of
victims' families and friends. Rep. Christopher Shays (R., Conn.)
convened a hearing in December to look into cruise safety in the House
Subcommittee on National Security, Emerging Threats, and International
Relations. A second hearing was held on March 7. Now, Mr. Shays says
he's looking at the recommendations submitted at that second hearing by
International Cruise Victims.
Still, cruise industry officials point to a solid safety record.
Fifteen cruise lines reported that from 2003 to 2005, 206 passengers or
crew submitted complaints. There were 178 reports of .ual assault, 24
missing travelers and four robberies. That's during a time frame when
the industry carried over 30 million passengers, according to the
International Council of Cruise Lines, an industry group.
Nonetheless, Michael Crye, the group's president, is proactively taking
measures to assuage critics. Last month he met with the Bahamian
Maritime Authority (many of the major cruise ships are registered in
the Bahamas) in order to work toward a bilateral treaty that would ease
the way for the U.S. government to take action if an incident occurs on
a Bahamian-flagged vessel. (Investigating crimes that occur on board
cruise ships is sometimes complicated by factors including where the
ship is based, where it is sailing and the nationality of the crew and
passengers.) His group is reaching out to the Federal Bureau of
Investigation and the U.S. Coast Guard to put together a memorandum of
agreement about how to handle any future alleged crimes.
Safety concerns are putting off even some veteran cruisers. Debra
Werner, a 39-year-old from Paramus, N.J., who has taken five cruises,
says, "I am thinking of cruising again but am leery. I would love to do
a Mediterranean cruise but am concerned for my safety." She's a former
corrections officer and adds that, "I have dealt with murderers,
rapists, and armed robbers and the stuff on cruises still bothers me."
Some of the deals are on the newest ships, and not just in small inside
cabins with no view. Carnival, for example, has rates starting at $499
for seven-night trips beginning Sept. 24 on its Carnival Conquest ship,
the first of its largest class of ships, which debuted in 2002. About
40% of cruises take place in the Caribbean versus 12% for the second-
highest destination, the Mediterranean, according to the Cruise Lines
International Association.
In the Caribbean, on trips for less than seven days, A.G. Edwards &
Sons Inc. Equity Research finds that May and June prices for Carnival
cruises have dropped by percentages in the single digits per day and
Royal Caribbean is down by low double-digit percentages. For trips
longer than seven days in the Caribbean in August and September,
Carnival prices are down by mid-single digit percentages and Royal
Caribbean prices have dropped by percentages in the low teens.
Deals to other destinations are harder to come by because demand for
Europe, Alaska and Hawaii remains strong. Still, some isolated cruises
are weaker than usual and some price cuts are emerging. Regent Seven
Seas Cruises, a unit of Carlson Cos., for example, is extending some of
the discounts that would have already been closed by this time of year:
It is still offering a free airfare deal on 12 Baltic cruises in June,
July and August, which give customers a choice of a complimentary
economy airline tickets, a $499 business-class upgrade, or a $1,000
discount off the price of the cruise. Silversea Cruises Ltd. has 30%
savings on a Sept. 5 sailing between Vancouver and Los Angeles.
Dave Hickman, a 55-year-old retired marketing executive from Chino
Hills, Calif., who takes about one cruise a year, cashed in on one such
deal. He booked a September Caribbean sailing and snared a 500 square
foot suite with a balcony -- that normally would have cost $5,000 for
two -- for about $3,600.
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