With mishaps in the past, cruise industry CEOs optimistic

03/11/2014 2:39 PM

03/11/2014 7:19 PM

With a couple of tumultuous years in the rearview mirror, the leaders of the world’s largest cruise companies are focusing on introducing new audiences to their product both in the United States and around the world.

Chief executives of Carnival Corp., Royal Caribbean Cruises, Norwegian Cruise Line and MSC Cruises sized up the state of the global cruise industry Tuesday morning with a calmer-seas outlook at Cruise Shipping Miami. The industry’s largest annual conference, which is expected to draw about 11,000 attendees,runs through Thursday at the Miami Beach Convention Center.

For the first time in several years, conference organizers were free to focus on positive developments. Last year, the disabling fire of the Carnival Triumph in February dominated conversation at the event; the year before, the deadly Costa Concordia shipwreck in January claimed the headlines.

“I think the focus is on how much better things are now — and it’s nice to see how much better,” said Richard Fain, chairman and CEO of Miami-based Royal Caribbean Cruises.

Fain pointed out that incidents over the last couple years — including a fire on a Royal Caribbean ship in 2013 — drew widespread attention because they were so unusual. And, he said, the industry showed its resilience.

“I’m a little sorry that we had to prove it so many times,” he said. “We’re though that, so I’m feeling very good about the years ahead.”

The discussion, moderated by BBC World News America anchor Katty Kay, touched on global expansion, first-time cruisers, regulations, taxes and onboard technology.

But the conversation still returned to recent hurdles.

Kevin Sheehan, president and CEO of Doral-based Norwegian Cruise Line, pointed out that hardships began several years ago with the economic downturn. He said he hopes a strengthening economy and other indicators will enable cruise lines to set prices with more confidence.

“It’s a ridiculously strong value, which is a good thing for the consumer. We don’t want it to be quite as good a value,” he said. “We deserve a higher price…I think we’re poised for that right now.”

Arnold Donald, in his first appearance at the conference since taking over as CEO of Carnival Corp. last summer, said that cruising should thrive in a recession because of its value proposition.

“We’re probably more cost effective than visiting your relatives, and depending on your relatives, we’re a lot more fun,” he joked.

Donald said the opportunity and the challenge is to reach those who have never taken a cruise and “have no concept or the wrong concept of what this really is.”

“We’re a great industry,” he said. “We’re a happy industry. We provide joyful vacations.”

Later Tuesday, leaders of some of the largest cruise brands drilled down on the outlook for the industry in the Americas.

The panel, which included executives from Royal Caribbean International, MSC Cruises (USA), Princess Cruises and Carnival Cruise Lines, touched on challenges presented by destinations such as Mexico, Brazil, Canada and New England, Bermuda and the Caribbean.

On the agenda: strict air pollution standards that go into effect in 2015. While several operators are installing “scrubbers” to clean emissions, Royal Caribbean International president and CEO Adam Goldstein said the industry cannot yet say that the problem has been solved. “We’re pretty early in that game,” he said.

Cruising from South Florida is particularly attractive when it comes to the “emission control areas” because the restricted area is smaller due to the proximity of the Bahamas.

But several cruise executives spoke about the importance of keeping the Caribbean fresh and attractive for repeat cruisers as well as first-timers. The industry has seen significant capacity increase — and competitive pricing — in the Caribbean as well, as operators have shifted capacity from troubled European markets.

“Someone asked me: ‘Is the Caribbean old and stale?’” said Terry Thornton, senior vice president of itinerary development and revenue planning for Carnival Cruise Lines. “My response: ‘We need to continue as an industry to innovate in the Caribbean.’”

Goldstein joked that the last time he checked, “Caribbean was still our middle name.” He added: “What we’re keenly interested in is how the development in the Caribbean will occur so we find it as compelling as possible to keep as much of our capacity there.”

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