CHANGES COMING FOR THE CRUISE INDUSTRY
By Mike Vaughn
The gloom and doom apparent immediately after the World Trade Center attack resulted in a number of bankruptcies for cruise lines such as Renaissance, Silver Seas and American Classic Voyages.
A number of other companies sought mergers to strengthen their positions and ride out the immediate crisis.
Tourism around the country suffered great setbacks and everyone began to re-evaluate their positions. Smaller operators looked into the next year to see if they could defer any expense and get a good estimate of their cash positions. Many operators realize that times of crisis are times of opportunity. This means that well run and financed operations can solidify their positions in the market by acquiring vessels and routes from companies in need of cash. The term "buyer’s market" has taken on a very important aspect as companies evaluate the opportunities out there.
The large ship cruise market has been growing at an incredible rate for the last 10 to 12 years, and many analysts openly speculated that an end would come. No one anticipated the way the market would end. Now however, we should see the strong lines divesting themselves of older more expensive vessels to operate and acquiring newer vessels from lines in trouble.
The very low costs of cruising has brought many people back to the market and only time will tell if the market remains strong as prices increase to reflect the true costs of operations.
Alaska has become the refuge of all that wish safe travel. We anticipate that the Alaska market will boom in the next season or two as travelers seek safer areas free of potential terrorism. Small operators who specialize in the environmental and eco-cruises will probably find that their market will reflect a greater interest in “getting away” from the large crowds that may be terrorism targets. Small ships have greater security due to the small number of employees and passengers involved.
So, regardless of the current world situation, we see a slow trend forming that hopefully will allow a substantial recovery for the market in late Spring.
Best wishes for the New Year from all of us.