This merger to create world's largest
By Laura Bly, USA TODAY
The cruise industry's already choppy
waters were roiling again this week when major players Royal
Caribbean and Princess announced plans to merge next year,
bumping off Carnival as the world's largest cruise line.
The $6 billion deal means that 80% of the
North American cruise market would be controlled by two
companies, but travel agents and other industry watchers
predict passengers won't notice much difference, at least in
the short term. And while the merger must be approved by
antitrust regulators, the consolidation takes place in an
industry that still attracts just 2% of all vacationers.
"It all comes down to supply and demand.
In a year or so, you might see some changes," says Anne
Campbell of the Web site CruiseMates. But a faltering economy,
post-Sept. 11 anxiety and a continuing armada of new ships
mean fares should stay near what have been historic lows, she
The new company would incorporate three
separate cruise brands: Royal Caribbean, a mass-market line
that targets families and baby boomers; Celebrity, a premium
line owned by Royal Caribbean that is popular with East Coast
residents; and Princess, which became synonymous with modern
cruising thanks to its association with the hit TV show Love
Boat. The line, part of London's P&O Princess Cruises, has
a strong presence in Alaska and attracts a slightly older
crowd than Royal Caribbean.
Despite rival Carnival Corp.'s successful
ability to differentiate its own brands — which include
Carnival, Costa, Cunard, Holland America, Seabourn and
Windstar — some industry experts question whether Celebrity
will survive as a separate entity, given its similarities to
"The old-time cruisers aren't going to
like it," says Patrick Webb of Galaxsea Cruises in Los
Angeles. "But the harsh view is that they don't make any
difference. As the industry continues to change and attract
new passengers, the brand distinctions are starting to
Together, Royal Caribbean and Princess
will have 41 ships and 74,000 berths, with orders for an
additional 14 ships to be delivered over the next three years.
The new capacity comes at a particularly turbulent time for
the industry: Renaissance Cruises and American Classic Voyages
have recently filed for bankruptcy protection, and Princess
reports that reservations are down by nearly a third since the
Sept. 11 terrorist attacks.
As a result, would-be passengers may
still see such unprecedented deals as a week-long Caribbean
cruise starting at $399 per person, says Mike Driscoll of
Cruise Week .
"They're still competing with hotels and
other vacation options," he says. "And when Disney drops their
prices, so do the cruise lines."