What to Expect in 2004

| November 24, 2003

What's the outlook for cruising in the New Year?

We asked an expert, and he predicts in 2004, potential passengers will find that:

*The price of a cabin will still provide one of the biggest bangs for the buck in the travel industry, as fares remain relatively low.

*The odds are that you'll book your cruise between 60 and 90 days before departure -- but if you wait that long, suites may well be gone.


*More ships will sail from domestic ports, as cruise lines are still showing hesitation to return large numbers of vessels to European waters.

To get a glimpse of what 2004 will bring, we turned to Leonard Levine, senior director of marketing at National Leisure Group (NLG) in Boston. His job is helping cruise customers find the ideal product for them, and keeping his finger on the pulse of the market. i.e., knowing what potential passengers want.

With 1,400 employees, Boston-based NLG is one of the largest travel companies you probably never heard of, selling roughly 750,000 cruises a year. If you've purchased a cruise through Orbitz, Yahoo, Vacation Outlet, Priceline, or AAdvantage Cruise, you've already done business with NLG, which provides cruise inventory and booking services for them. In addition, NLG recently purchased MyTravelCo and its subsidiaries CruisesOnly, 1-800CRUISES and Cruises.com, making it the largest provider of cruise vacations in North America.

Current consumer trends indicate that "bookings are definitely close-in, with people still booking 60-90 days out," Levine says. "The majority of bookings are under 90 days (before departure). In some areas, we're seeing the trend go to 30 days.

"Consumers think that the longer they wait, the better the deal they'll get," Levine explains. But he adds a caveat for late-bookers: "Owners' suites sell out first, followed by (cabins with) balconies." He advises that cruisers who have their heart set on those cabin categories would be wise not to wait too long to book.

Between now and the end of 2004, 12 new mega-liners will enter service, and the industry will have to fill an additional 30,820 lower berths. This capacity growth comes on top of aggressive building programs by all major cruise lines over the past five years, with new vessels ranging from 700-passenger luxury vessels to Royal Caribbean's gigantic Voyager-class ships that carry up to 3,800 people.

According to Levine, the main effect of this continuing growth in the number of ships is to keep cruise prices down for consumers -- a simple result of the law of supply and demand. He predicts that growing demand won't start to outpace the supply of cabins until 2005, so for the consumer, 2004 will provide another opportunity to get a great price on a cruise vacation.

"New ships command a pricing premium over old ships." Levine says. "However, new ships today have low price points that I never thought I'd see. I push my friends to the newer ships; they'll pay a bit more, but they get more. There are tremendous values in new ships."

When I asked Levine if there's any single ship he directs family and friends to seek out, he confessed that Oceania Cruises' new Regatta is a personal favorite.

"The luxury segment is the most interesting," Levine said. "While they generally don't want to compromise their product, nonetheless some are discounting a great deal." In some cases, luxury cruise prices are as low as they've ever been, he said.

After 9/11, the cruise industry responded to Americans' desire to stay closer to home with something we now call "Homeland Cruising" -- i.e., basing more of their ships at various U.S. home ports. That turned into a booking bonanza, and in 2004, you'll find even more ships sailing from U.S. ports, Levine notes. For example, Royal Caribbean's 3,500-passenger Voyager of the Seas will summer in the already crowded Port of New York -- the first time RCI has based a mega-ship so far north. "My sense is that North Americans will still prefer departures that are close to home, and we'll see that continue," Levine said. "Some people will return to Europe, but I think it will take a decent amount of time for it to bounce back like it was.

"When I see seven-night Caribbean cruises for $299, I'm concerned; but overall, the number of passengers has increased over last year. There are more ships with balcony cabins and we see more cruisers upgrading to this category."

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