The State of the Industry
The opening plenary session of the 28th annual Cruise Shipping Miami event got under way Tuesday with a full range of cruise industry issues and topics addressed by top cruise executives. Since last March, the cruise industry reached record passenger levels, sailing to more than 120 countries, establishing new destinations, implementing the latest on-board technologies and building innovative ships. The future couldn't be brighter. But that doesn't change the fact that the Costa Concordia accident is still top of mind for most of the cruise industry.On a lighter note, before Bob Dickinson retired as top gun of Carnival Cruise Lines, the State of the Industry address was always a highly anticipated event at Seatrade because Dickinson could always be counted on to shoot a few zingers at the executives of competing cruise lines, particularly targeting his counterpart at Norwegian Cruise Line, which was then Colin Veich. This year it seems that Stein Kruse of Holland America Line has picked up Dickinson's torch. Kruse, who is a Norwegian, got laughs from the normally staid attendees by asking NCL's Kevin Sheehan what exactly it meant to "cruise like a Norwegian." Maybe you had to be there to get the funny and we hope to be back in person next year.
Daniel Read, director of UBM's Cruise Shipping Group, began Tuesday morning's "State of the Industry" session with somber acknowledgement of the tragedy. "Recent months have been challenging," he said. He tempered his reflections with hope for continued growth.
Keynote speaker Howard Frank, vice chairman and COO of Carnival Corporation and CLIA chairman, said the Costa Concordia tragedy affected not just one company, but the entire industry. He offered his deepest sympathies for the families and loved ones of the victims, some of whom he visited personally. He also paid tribute to the heroic efforts of Concordia's crew as well as the residents of Giglio Island, who opened their homes to passengers. He also thanked everyone in the industry for their confidence and support. On a personal note, Frank mentioned that whenever he visits a Carnival company, he wears that company's lapel pin. For the last two months, however, he said he's only worn his Costa pin. He said he couldn't be more proud of Costa and firmly believes the cruise line will come back even stronger.
Frank also spoke of the global response to the Costa Concordia tragedy and how safety is CLIA's number-one priority. He mentioned a top-to-bottom industry safety review, which so far has resulted in a mandatory muster of all embarking passengers prior to departure. This new policy exceeds existing legal regulations and has been voluntarily initiated by cruise line members of CLIA, the European Cruise Council and the Passenger Shipping Association. Frank added that the industry has every reason to look to the future. Last year a record 16 million passengers throughout the world went on a cruise, and he expects this growth to continue. He also reminded those in the industry they have the privilege of bringing joy to passengers as well as the responsibility to provide a safe and secure environment for all.
The State of the Industry forum took on a different format this year, with the CEO panelists taking part in a round-table discussion rather than making individual presentations. Topics, as well as questions submitted to moderator Christine Duffy, president of Cruise Line International Association, touched on a range of subjects and were addressed throughout the session by the six cruise line executives.
In light of the Costa Concordia incident in January, the discussion began with industry safety and regulations policies. Adam Goldstein, president and CEO of Royal Caribbean International, spoke about bridge management and the need for continuous improvement in safety practices, even with the industry's excellent safety record. Royal has gone as far as to implement a new training program in Fort Lauderdale, Fla., to bolster their bridge practices and techniques.
Stein Kruse, president and CEO of Holland America Line, agreed with Goldstein that the industry is fundamentally very safe, yet he believes that we need to do a better job of communicating and explaining safety successes.
"Our primary focus is on prevention," said Gerald Cahill, president and CEO of Carnival Cruise Lines. "But sometimes things can go wrong, and we have to be prepared with a flexible plan." Carnival's plans include identifying people to perform certain duties in the event of an emergency and training those people who are both shipboard and shoreside.
Carrying mostly European clientele, MSC Cruises pays careful attention to their ability to communicate in a variety of languages should an emergency arise, said CEO Pierfrancesco Vago. The line features in-cabin videos, booklets and door plaques in several languages, and trains crew to communicate with guests.
All panelists agreed that shipboard crewmembers are well prepared in emergency-response and crisis situations because of their regular drills and training. Kevin Sheehan, president and CEO of Norwegian Cruise Line, suggested that having the officers be more visible would help ease safety concerns among guests.
The session then turned to public health, a topic that continues to plague the industry due to norovirus outbreaks. However, Dan Hanrahan, president and CEO of Celebrity Cruises, was quick to point out that the U.S. Public Health organization is a great partner to the industry and that it is incumbent upon the lines to get the word out about health practices aboard ships.
Corporate social responsibility also plays an important role with lines. Cahill noted that often when a natural disaster hits a port, the cruise industry is one of the first responders. Goldstein added that the industry also often supports the recovery process, such as his line building a school in Haiti, long after the situation is out of the news.
Social responsibility goes beyond aiding in recovery, however. Sheehan, who also is chairman of Florida-Caribbean Cruise Association, spoke about that organization's ability to raise funds to donate Christmas gifts to needy children. Social responsibility also includes building port infrastructure, guests shoreside spending and commitment to the environment.
Goldstein recently met with the Environmental Protection Agency to discuss regulations regarding emissions-control areas that go into effect Aug. 1, 2012. The new laws will require lower-sulfur fuel options or some type of equivalent, said Goldstein, and he's hoping the meetings will help EPA understand how cruise lines make decisions. Kruse is scheduled to meet with EPA this week to continue the talks, and he's hoping the agency understands that the lines have assets that can move, which could be devastating to smaller ports.
When discussing earnings, Cahill said bookings looked good and not so dismal as they are being made out to be. In fact, the line is ahead of where it was at the same time last year. Hanrahan said Celebrity regularly conducts surveys of potential cruisers, and the number of "cruise rejecters," or people who will never cruise, hasn't changed despite recent industry challenges. Norwegian Cruise Line, said Sheehan, has not seen a change in cancellations since the Concordia incident.