How was 2009 for Cruising?

| Tuesday, 05 Mar. 2013

The cruise industry must be doing better than most people expected. Carnival Cruise Lines just ordered a brand new ship, a third sister ship in the Carnival Dream class, and Royal Caribbean just announced that the financing for Allure of the Seas, the sister ship to Oasis, is already 80% in place with another loan guarantee (up to 95% of $1.13 billion) from Finnvera, the Finnish export credit agency.

In the latest Carnival Corp earnings statement CEO Micky Arison said "We weathered the most challenging economic environment in the company's history exceptionally well. In 2009, Carnival was the most profitable leisure travel company, which is testament to the strength and quality of our global portfolio."

2009 brought us several brand new ships of significant size and evolution in design; starting with Seabourn Spirit, the first of the next generation of luxury cruise ships carrying as many as 450 passengers without changing the spacious cabins and personalized service. Celebrity Equinox arrived last summer, the sister ship to the Solstice-class from Celebrity. In November Carnival launched their largest ship ever, Carnival Dream. Just two weeks later we saw Oasis of the Seas arrive from Royal Caribbean.

January 20th, 2010, Silversea Cruises, arguably the most luxurious cruise line in the world - the line for people who want the best at any price - will introduce their brand new 450-passenger ship, Silver Spirit, in Fort Lauderdale. The ship has six different restaurants onboard plus full room service where your butler will bring your entire dining room meal to your suite, if you wish, set up a table with linens and serve it to you course by course.

There will be a spa on Silver Spirit where you can actually get Botox and other surgical enhancements and recover in privacy. They also offer unique eastern medicine treatments such as acupuncture and bamboo massage. The ship's first cruise after her inaugural is a 91-day circumnavigation of South America, and is already nearly sold out.

Reports come in to CruiseMates that certain kinds of cruises are still doing remarkably well. River cruises in Europe, for example, are more popular with Americans than ever before due to a realignment of focus towards the American audience. They now offer a larger variety of shore excursions, which they are making longer than before instead of rushing back to the ship for lunch every day, a practice the Europeans expect but Americans view as an annoyance. Since these riverboats now sail with almost 90% passengers from the United States, there is no longer any reason to take up valuable time translating lectures or having different shore tours for different languages. In addition, the new riverboats are beautiful, with actual balconies for fresh air in every stateroom and even free Internet access available via Wi-Fi throughout the boat.

In fact, computer use onboard ships is finally emerging as a real priority. Carnival Dream has a "FunHub" where cruisers can log in for free at several stations onboard and leave messages for other passengers. Brad Ball from Silversea Cruises tells me more people are coming on cruises and continuing to do their work; almost as if they never left land. As long as they have their computer and Blackberry they are essentially just as connected at sea as they are in the office. Cruising has become the preferred vacation for people who need to work while they play. Although Internet access isn't free on any cruises other than riverboats yet, I personally see this as a very big future draw and I predict that the first cruise line to offer unlimited Internet access for a reasonable fee will find that to be a highly attractive option to draw new business.

One thing that has proven itself is that veteran cruisers will still pay a premium to go on the newest and nicest ships; just for a chance to see something different with all of the latest enhancements.

Meanwhile, the cruise lines also continue to upgrade their older ships by re-decorating them and adding more amenities such as Wi-Fi, new restaurants, new rooms for onboard enrichment such as computer classes and additional places to eat more varieties of food. Holland America has spent more than 500 million dollars now to upgrade their entire fleet by continuing the "Signature of Excellence" campaign started in 2004. Carnival upgraded all of their Fantasy class ships over the last four years to include new water parks for kids, serenity areas for adults, more varieties of food onboard, better Internet access and nicer pool areas with hot tubs and cabanas.

Even the luxury cruise lines are enhancing their older vessels. Regent Seven Seas, Seabourn and Crystal have all announced significant upgrades to their older ships during the last year, making them all highly attractive and utile vessels.

In the long run, while the economy has slowed down consumer spending, it doesn't mean the cruise industry has gone into any kind of suspended mode by any means. Unlike previous economic downturns or interruptions in travel, such as 9/11, this recession has not had the effect of putting any cruise lines out of business or even in the position where they have had to cut back on their plans to continue to grow and improve their fleets.

The only exception was the decision of NCL not to go forward with building two of the F3-class of new vessels, the first of which will debut in June 2010 with Norwegian Epic. So they are only building one instead of two; if the economy gets better and Norwegian Epic is as well received as we predict it will be they can always change their minds again. After all, no one expected Carnival to order a brand new ship just two weeks ago, and yet they did.

It is surprising, in fact, how little effect this recession has had on the continuing plans of the cruise lines. Cruise fares are down so cruising has never been more affordable, and with all of the continuing upgrades we have seen throughout the cruise industry you can truly say that cruising is a strong industry with a proven track record of financial stability. If you believe Micky Arison, CEO of Carnival Corp, cruising is arguably the strongest leisure travel industry in the world right now.

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