Seatrade is the sponsor of the
Cruise Shipping Miami Convention
every March in
South Beach, Miami.
Seatrade 2010 Update
I am currently attending the largest cruise industry trade convention of the year, the Seatrade Cruise Shipping Conference taking place in South Beach, Miami . So not only do I get to hobnob with my colleagues, I also get to ogle the models and rub elbows with the likes of the Kardashians.
I love Seatrade for a number of reasons, as you know if you have read the introduction to the conference we published on Monday: Seatrade Convention 2010: http://www.cruisemates.com/articles/feature/seatrade-2010-031510.cfm. Both Kuki and myself are here and leaving updates about our experiences and impressions in the CruiseMates forums here: Seatrade Convention Updates.
This morning we had the "State of the Industry" panel where the CEOs of several companies: Gerry Cahill (CEO Carnival), Adam Goldstein (Royal Caribbean) Kevin Sheehan (NCL), Stein Kruse (HAL) Dan Hanrahan (Celebrity) and Rick Sasso (MSC Cruises USA) all made presentations and spoke on their own impressions about where we are in the cruise industry now.
By far, the consensus is that we are far ahead of last year, in terms of making money, and even more importantly, in terms of knowing we are going to recover from this economic downturn. Most agree we can actually see the light at the end of the tunnel, although no one will say exactly when they think we will reach it.
One definite sign of recovery is thesudden rash of new ships on order starting with the third ship in the Carnival Dream class ordered last month. This was followed by a new order by MSC and then the announcement of two brand new Princess Cruise ships of an entirely new class coming in at 139,000-tons.
Still, the consensus on the panel is that ship building will be slower for a few years, at least until the economy recovers. And until then the focus will be on refurbishing older ships, such as the Fantasy Class of Carnival, the ongoing Signature of Excellence of Holland America vessels and a new program by Celebrity Cruises called Solsticization - which is another way of saying they are putting some of the features os the Solsctice class onto the older Celebrity Millennium class.
Kevin Sheehan, the new CEO of NCL (replacing Colin Veitch) has brought NCL into profitability for the first time in many years. Of course it helps that Norwegian Epic is now officially on sale. It also helps that Hawaii has picked up substantially as a cruise destination and NCL has the franchise to sail there. Prices for the NCL-America ship in Hawaii have never been higher. These are both projects that were stared by Colin, but a lot of people now refer too him as the whipping boy for all the mistake NCL apparently made over the years - whether or not that is true.
Colin even gets the "blame" for the design of Norwegian Epic which so far no one seems to like, on the exterior anyway. The bow of the ship appears very front heavy making the profile seem very unbalanced. But in the long run, once you are onboard you won't really care how the ship looks from a distance, anyway.
Getting back to the state of the industry, Stein Cruse, president of HAL said "never underestimate the American consumer." The recovery does seem to be one, at least for the cruise demographic, and demand is back and rates are going up. In truth, the recovery has so far been pretty much limited to the stock market, therefore it is the upper income people who are feeling this recovery more than lower income people.
Many things went wrong last year, but one thing that went right (in a sense) was that H1N1 did not turn out to be the disaster many people (including the WHO and several stock market analysts) predicted it would be. The cruise lines do not seem to be bitter that they were essentially forced out of Mexico for what turned out to be something of a false alarm, but only because it could have been worse.
Mexico still has not recovered, by the way, so if you are still looking for a cruise bargain west coast Mexico cruises are the place to look.
Stein Kruse of Holland America raked the governor of Alaska over the coals for that state's restricting legislation towards the cruise industry. Holland America has been one of the biggest players in the Alaska cruise market for decades, and business has never been worse there.
Kruse said "there will be fewer ships there in 2010 and even fewer in 2011, the question is 2012 and 2013. Right now there is a state head tax and local port fees as well. Currently we cannot bring on water in Alaska because if we discharged the same water they give to us we would be violating their ecological limits (due to the levels of copper in the water)." He added "some $200,000,000 in taxes have been collected from the cruise lines in the last two years already, and so far they don't even know where to spend over $120,000,000 of it." This is due to a ruling that says these cruises taxes must be spent on projects that benefit the cruise & tourism industry.
Royal Caribbean's president, Adam Goldstein, discussed his ideas for Royal Caribbean putting a new focus on emerging markets in Asia, India and South America. Ho pointed out how these world regions have an emerging middle class that is ready to start cruising.
Gerry Cahill, the new Carnival CEO responded "are those places in the Caribbean?" He extrapolated his point that "Carnival wants to focus on the local consumer. They are concerned about airfare and other expenses, and we prefer to develop new destinations in the Caribbean than wait out new markets."
To be fair - RCL (Goldstein) said such world markets are perhaps 6 to 10 years away from fruition. But he said Asia may represent the biggest opportunity in the world ever. With 1.4 billion people in China and 100 million landlocked Japanese on a small island it seems plausible to me.
Stein Kruse added "we are already visiting 300 ports around the world. We see plenty of opportunities out there." Meanwhile, NCL is still largely focused just on the US however with a number of ships deployed in various ports around the United States, The NCL fleet is smaller, plus they already have an Asian partner (star Cruises, Malaysia).
Hanrahan praised the newer ships like Oasis and said "all of the pre-cruise publicity had to do with doubt about whether the ship would float - especially in terms of crowd flow. The Oasis has been a smashing success and any doubts about it have been erased. The vast majority of people leave the ship raving about it.
Kruse added that "the biggest benefactor of all the pre-release doubt that surrounded Oasis will probably be Norwegian Epic." He also looked over to Kevin Sheehan and said "please let us know who that single cabin thing works out." Norwegian Epic will have 150 "Studio Staterooms" to sell to single cruisers for no single supplement fee. They are essentially like dormatory rooms that share a single public area the serves as a large "living room" only accessible to the "studio stateroom" guests.
To read more about our adventures at Seatrade, be sure to follow our tweets and check into our message board at Seatrade Convention Updates
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