Cruiser ready for Hawai'i start-up

By Michele Kayal
Advertiser Staff Writer

Colin Veitch said Hawai'i cruises are popular.

Inspired to base a ship here by the success of 10-day seasonal cruises the company has offered in the Islands for the past few years, Norwegian will offer a seven-day Hawai'i itinerary, with a stop in Fanning Island, posing the first head-on competitive challenge to interisland cruises offered year-round by American Classic Voyages.

The Advertiser caught up with Veitch last week during his first trip to meet and greet Hawai'i government officials and tourism executives. Following are excerpts from a wide-ranging interview.

Q. What do you see as the long-term potential of Hawai'i?

A. We survey our passengers on every ship to find out how they like the product and also where they want to go next with us, and the top three destinations always are Caribbean, Alaska and Hawai'i, and everywhere else is a poor second to that, a poor fourth to that, if you like. And Caribbean and Alaska we have well covered. All the cruise lines offer the seven-day product. But in Hawai'i there isn't a modern ship offering seven-day cruises in any cruise line, and our passengers are crying out for it...

Caribbean is our biggest destination at the moment. Alaska is our second-biggest destination at the moment.... But from the fall of this year on, Hawai'i is our second-most important destination in terms of numbers of passengers that we need to attract to our ships. In 2002, we will be bringing about 120,000 people to Hawai'i to take cruises on our ships, most of them on the seven-day ship, some on the 10-day. For us, it's our second biggest trade.

Q. What are the possibilities of having a second ship based here?

A. I think the possibilities are good. If the first ship succeeds then there is certainly space for another ship, there's space for several ships, but it's never the case that you bring a new ship into a new market and obtain a fantastic result in the first year. It takes awhile for travel agents to get used to the fact that we have a ship here. It takes awhile for consumers to learn that we've got this product. It takes awhile for the feedback from the people that experience it to get through to the distribution channel, so the second year's always better than the first and the third year and so on....So there comes a point where you say that this is really going gang busters, we should put another ship in. I can't tell you how quickly or slowly that will happen. But we're off to a good start.

Q. Late last year, Congress passed a measure introduced by Sen. Daniel Inouye to bar ships with casinos aboard from beginning and ending cruises in Hawai'i. That excluded the ship you planned to bring here, the SuperStar Leo. What was your first thought when you heard about the legislation? Did you know that it was in the works, that it was coming?

A. No. It was a surprise to us. Our reaction was that we were disappointed. We hadn't got our message across about what we were actually doing here, because we don't run gambling ships, and it never was the intention to run a gambling ship in Honolulu.

We're running a mainstream cruise product everywhere we go in which gambling is an incidental, on-board activity. It's actually a relatively small part of the total profitability of the ship. Hawai'i state law already prohibits gambling interisland, and so we knew that even with the casino, we wouldn't be gambling for several nights out with the seven-night cruise. So what it did to us was remove the casino being open for three or four nights out on the seven-night cruise. At the end of the day we said that really isn't worth making a fuss about. If this is the price for coming into the market and being well accepted, because what we do recognize is that there are some very strong feelings here about gaming, and we really don't want it to be the focus of the debate, so we made the decision to pull the casino altogether out of the ship and actually deploy a ship in here that's being built without a casino. So the ship is being purpose built for Hawai'i without a casino in it. It's not a question of stripping it down or shutting it down or turning it to some other use.

Q. And that was more economic, I would assume, than retrofitting an already existing ship?

A. That was more economic than retrofitting an existing ship. To tell you the truth, the initial bookings on the existing ship that we had announced for the market were so encouraging that we felt good about putting a bigger ship in, the one that was under construction we could produce without a casino.

Q. Why not abandon Hawai'i altogether?

A. For the sake of not having gaming for a few nights? Because it's not that important. The potential of the Hawaiian market as a main stream cruise market is so attractive to us that without casino revenues we can make a very good return. Our principal source of revenue is selling tickets. Following that we have on board earnings and to get an idea, we make about as much money from the casino as we do selling drinks to people. We would expect in Hawai'i to make more money selling tour excursions than either drinks or the casino if we had a casino. So it's revenue that we would have liked to have but at the end of the day it doesn't make the difference between coming here and not coming here. It's certainly not worth a fight, given the local feelings about it.

Q. What local legislation or issues are of interest to you that you might be talking about with legislators or the governor?

A. We are talking about the pier facilities and what the long-term plan for the pier facilities is. We don't have any immediate requirements for improved pier facilities but we're giving our input as to how the improved pier facilities should develop if cruising is to become a bigger part of tourism here. Facilities that are there today are adequate for us to get started, and then once we show that this is a major benefit to the local economy, we think there are some further improvements that could be made. But we're happy to work with what there is and just get going.

Q. Is there some incentive Hawai'i could offer to the cruise industry that would make doing business here more attractive?

A. I don't think so. We have here a very well-developed infrastructure to take people from ports into the islands and be involved in different activities. We have good infrastructure servicing the ships. We have good air lift in here. This is not an emerging destination. This is a world-class destination. So I don't think the Hawai'ian government needs to do anything to entice more cruise ships to come here. Cruise lines are keen to come here...

Cruising used to be just Caribbean and Mexico and then logically Alaska developed and Europe developed and I think Hawai'i's the next one up.

Q. Would the opening of Cuba draw traffic away from the Hawai'i cruise market?

A. The industry has 53 new ships arriving in the next four years. I think maximum growth in Hawai'i and the opening of Cuba could both be served by more ships coming in.