USATODAY
11/23/2001 - Updated 10:04 AM ET

This merger to create world's largest cruise line

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 adds.

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 Princess.

"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 blur."

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."