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Fewer cruise ships sail from US ports in 2008

Jul 28, 2009

MIAMI — Fewer Americans took cruises in 2008 than 2007, according to new industry data, showing that cruising's core constituency may be weakening despite continued growth in the passtime worldwide.

For the first time since 1998, when the Cruise Lines International Association started publishing economic impact reports, fewer cruise ships set sail from U.S. ports in 2008 than the previous year.

As recently as 2004, American embarkations accounted for 77 percent of all cruises. By last year their shares had fallen to 69 percent as business grew in Europe.

Norwegian Cruise Lines, for example, re-christened its Pride of Hawaii as the Norwegian Jade and now sails it year-round in Europe. The Pride's departure and that of a sister ship moved from Hawaii to Miami are being blamed for Honolulu's 59 percent drop in embarkations, while cruise traffic from Miami rose 11 percent.

But the decline in American cruises didn't keep overall traffic or revenue from growing between 2007 and 2008. Last year 13.05 million people worldwide vacationed on one of the giant, seafaring ships — a 4 percent increase. Gross revenue rose 9 percent to $24.88 billion and total spending in the U.S. rose 2 percent to $19 billion, though that was the smallest hike in the report's history.

"In 2008, considering all that's going on, we're reporting a 2 percent increase. There's a lot of businesses out there that would love to be reporting any increase," said Bob Sharak, executive director of the Cruise Lines International Association. "The biggest point to take away is when other people are suffering greatly, we're able to show an increase."

American passenger traffic increased each of the previous few years, though by shrinking percentages, and finally turned negative in 2008. About 9.3 million passengers took cruises originating in the U.S. in 2008, a 1.7 percent decline.

In addition to Honolulu's traffic loss, American cruising took a hit from Hurricane Ike in Galveston, Texas, where embarkations fell 28 percent. And New Orleans lost 30.6 percent of its embarkations. Florida, which accounts for 57 percent of all cruise ship departures, saw a 2.7 percent increase to 5.1 million.

Sharak doesn't think the American market is done growing. He said the industry was doing fairly well in 2008 until the economic crisis escalated in September.

Carnival Cruise Lines, for example, is positioning its new ship Carnival Dream year-round in America. Spokeswoman Jennifer de la Cruz said the company would carry more North American passengers in 2009 than any year in company history.

But operators may not be poised to recover quickly from the downturn. Royal Caribbean in January reported a 98 percent drop in fourth-quarter earnings. And it saw a $36 million loss in the first quarter of 2009. The company is expected to release second-quarter earnings results on Wednesday but cautioned last month that rising fuel prices and the swine flu outbreak will hurt its full-year results.

Both Royal Caribbean and much larger competitor Carnival have slashed rates to fill ships in recent months — with mixed results. In the quarter that ended May 31, Carnival's profit dropped 32 percent from the previous year, but the company still netted $264 million. However, it also lowered full-year guidance citing high fuel prices.

Fewer cruise ships sail from US ports in 2008
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Source: AP

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