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The Honolulu Advertiser
Posted on: Saturday, May 18, 2002

Cruise travel bounces back

Advertiser Staff and News Services

For months, Trudi and Philip Borhaug dreamed of a weeklong summer vacation with their two teenagers in Hawai'i.

The Princess cruise ship Pacific takes passengers along the coast of Greece. In the U.S. market, cruises to Mexico are particularly popular, and Hawai'i has seen a big rise in cruise ship passengers as well.

Bloomberg News Service

But cost, airport hassles and a nagging feeling that the Islands are too far from home eventually convinced the Sylmar, Calif., couple to take a different route: They booked a four-night cruise to Mexico instead, for less than $2,000.

"We wanted to do something special, because all of us are feeling a little restless this year," Trudi Borhaug said, noting that last summer's vacation was a short stay in Monterey, Calif., while their children were at camp. "Yet we wanted it to be family-friendly, reasonably priced and close enough to feel safe. We think a cruise has all of that."

After experiencing steep drops in bookings after last fall's terrorist attacks and slashing rates to 20-year lows to fill ships, the cruise industry is shaping up to be a summer bright spot — even as prices creep back up to within 7 percent of last year's fares.

"It's safe to say that the cruise industry has bounced back in a very big way," said Mike Driscoll, editor of Wilmington, N.C.-based Cruise Week, a trade publication for travel agents. "And it's places like Texas and Southern California that have helped it along, because the drive market has become so critical right now."

Preliminary data from the Hawai'i Department of Business, Economic Development and Tourism for the first quarter of 2002 shows cruise-ship arrivals up 27.8 percent over the same time last year for a total of 52,360 visitors.

The number of cruiseline passengers for April alone is expected to be up 90 percent over April 2001. That's because nine out-of-state cruise ships stopped in Hawai'i in April, versus only four in April 2001.

Overall, the number of Hawai'i cruise passengers has jumped from 160,000 last year to a projected 250,000 this year.

The increase is due in large part to the homeporting of Norwegian Cruise Line's Norwegian Star in Honolulu in December. Norwegian also plans to keep its Norwegian Wind in Hawai'i for eight months following the Alaska summer season. And another eight companies are expected to send 18 or 19 ships through Hawaiian waters this year.

"Certainly for Hawai'i, it's been great," said Bill Thayer, president of Waldron Steamship Co. Ltd. "We've seen increases and it's been very healthy here."

The biggest cruise line, Carnival Corp., reported that 17 percent of its total business during the fiscal first quarter ended Feb. 28 came from air-sea packages — down from more than 40 percent a year ago. So popular are its Mexico cruises from Southern California that Carnival is planning to build a $40 million terminal in Long Beach next to the Queen Mary.

Cruise bookings dropped by at least half immediately following Sept. 11, and in November, the No. 2 and No. 3 biggest cruise ship operators — Royal Caribbean Cruises Ltd. and P&O Princess Cruises — announced they would merge in an effort to counter the post-attack travel slump with cost savings and higher volume.

Hawai'i's American Classic Voyages declared bankruptcy and abruptly shut down its two cruise ships operating in Hawai'i waters in October, leaving more than 1,000 workers without jobs.

But the industry rebounded faster than initially expected, and advance bookings for the third and fourth quarters are running above last year's pace, according to Fitch Ratings.

A spokesman for Carnival, which is trying to nix the proposed merger of its rivals, would not comment on a summer forecast but said recent booking levels "are running well ahead of last year."

Surveys indicate that overall summer travel will be up slightly from 2001, with air travel expected to be down 14 percent over last summer, according to the Travel Industry Association of America.

But while people still want to travel, they don't want to go far or stay too long. TIA officials predict vacations will be cut shorter this year, and hotel occupancy is likely to remain flat as a result.

Room rates, however, are expected to increase slightly as hotel operators scramble to get the most out of visitors. Vacation spending is expected to drop 10 percent this year, according to TIA.

"People are still looking for the sweet deals, and in many cases they are not having very much luck anymore," said Peter Yesawich, president of Orlando, Fla.-based Yesawich, Pepperdine & Brown, a marketing firm specializing in travel research. "So they're going to look inward, and focus on shorter trips with loved ones."