Princess to sail
on as before in wake of Carnival buy
By Gene Sloan,USA TODAY
Don't worry, Princess fans. Your beloved line won't be
That's the word from Micky Arison, the head of industry
giant Carnival, which appears to have won its year-long battle with Royal Caribbean
to buy the Love Boat line. Princess broke off its engagement with Royal Caribbean
on Oct. 25, clearing the way for a marriage with Carnival, which offered a better
Nor will Princess rates likely go up, even though Carnival
would own n early half the cruise beds afloat.
Princess die-hards "have nothing to be concerned about,"
says Arison. "If there are changes in the Princess brand, it will be changes that
the Princess management were making anyway."
Arison says Carnival plans to take the same hands-off approach
with Princess that it has taken with past acquisitions Holland America, Windstar,
Seabourn, Costa and Cunard. "The fact that the brands are owned by the same company
is irrelevant. Princess will be operated independently, as it is today."
Many industry watchers are relieved that it appears Carnival
and not Royal Caribbean will control Princess, the third-largest line. "Carnival's
track record (with takeovers) has been spectacular," says travel agent Kathy Sudeikis
of All About Travel in Mission, Kan. "They haven't muddled with (the lines) when
they were working."
Still, there are worries about the long-term impact of
Carnival controlling so many cruise lines — particularly on pricing. The acquisition
of Princess would be the largest takeover in cruise-industry history and leave
Carnival with 65 ships that contain 96,960 beds. Carnival and Royal Caribbean
together will control more than 80% of the cruise business, according to Federal
Trade Commission figures.
The commission gave a thumbs up to a takeover of Princess
in a 3-2 vote on Oct. 4, but the two commissioners who dissented wrote that the
deal would leave Carnival and Royal Caribbean too powerful — a duopoly that could
result in less competition and higher prices.
Most industry watchers, however, agree with the majority
of the commission that competition will remain fierce and prices low.
"Sure they could double their prices, but they'd sail empty,"
says Anne Campbell, editor of CruiseMates, a Web site for cruise lovers (cruisemates.com).
There's such a glut of cabins that lines big and small
have no choice but to keep a lid on prices. "It's capacity that determines pricing,"
And, of course, there still are other (albeit smaller)
players besides Carnival and Royal Caribbean. Indeed, the commission's ruling
noted the competitive presence of Norwegian Cruise Line and its Asian parent Star
Cruises, which has 19 ships worldwide.
Industry watchers also note that while Carnival may dominate
the cruise business, it will control only a small portion of the overall vacation
business. Any attempt by Carnival to boost rates would send vacationers flocking
to land-based resorts.