But some worry that the state is ill-prepared for the giant ships docking at its harbors, releasing hundreds of thousands of additional tourists each year onto aging docks.

Norwegian Cruise Line plans to sail its first 2,000-passenger U.S.-flagged ship to Hawai'i next July. A second 2,000-passenger ship begins cruises in October 2004, and a third U.S.-flagged ship is set to launch in 2006.

The cruise line already operates a foreign-flagged ship that cruises the Islands and stops at Fanning Island in the Republic of Kiribati.

The new Norwegian ships will bring the total of cruise passengers to nearly 200,000 in 2004, a 40 percent increase over this year. While the numbers are relatively small compared to the more than 6 million tourists who arrive by air annually, the cruise industry is growing at a pace that is surpassing that of the airlines.

All of the cruise-related activity means tourism businesses are preparing for floods of visitors — as well as potential competition from the cruise lines.

New questions are being raised, too, about the state's ability to protect the environment and respond to outbreaks of diseases with the dramatic increase in ship traffic.

Officials say they are working to upgrade infrastructure for everything from roads to parks. And Norwegian is setting up land tours while hiring and training 2,000 employees for the cruise ships.

Business leaders are most concerned about Hawai'i's harbors, originally built for cargo years ago. They wonder aloud whether the facilities will be upgraded in time to adequately accommodate more cruise passengers.

"We are as prepared today as we can be," said Marsha Wienert, Gov. Linda Lingle's tourism liaison.

But Bill Thayer, president of shipping agent Waldron Steamship, said the shipping industry has been trying to work with the Department of Transportation on harbor upgrades for years and progress has been too slow.

"As far as the scheduling and everything, it's a nightmare. I think it's a crisis in the ports here," Thayer said.

"We have 15 pounds of potatoes trying to get into a 5-pound bag right now."

He said his biggest fear is that other cruise operators may not be accommodated "and it's going to send a bad message abut the business climate and the responsiveness of our state."

Some businesses have already been turned away from ports, he said.

"They're here with a big opportunity. The state is not ready," Thayer said.

"There was a lack of real consensus as to what needs to be done in all of the harbors and who's going to pay for it," he said.

Norwegian's advantage

Norwegian was lining up its ships and preparing for U.S.-flag operations in Hawai'i even before Congress granted the cruise line an exemption from the Passenger Vessel Services Act. The action allowed Norwegian to fly a U.S. flag on certain ships and skip a costly and inconvenient foreign port stop.

With the help of Sen. Dan K. Inouye, Norwegian sought to quietly get the legislation passed without raising the ire and opposition of competing cruise lines and destinations that would not benefit.

Outmaneuvered by Norwegian, other cruise lines cried foul, but they admit they did not have their sights on the potentially lucrative Hawai'i market.

Norwegian's major basing of about a third of its fleet into Hawai'i is not without risk.

American Classic Voyages went bankrupt and shut down its Hawai'i cruises in 2001, and Norwegian itself shifted some of its ships to domestic-based cruises after the Sept. 11 terrorist attacks.

But Norwegian's shrewd purchase of half-constructed ships that it could finish off in a German shipyard left it with less debt to pay off for its Hawai'i cruises. Couple that with the savings it will enjoy being spared foreign stops in places like Fanning Island — a nearly 2,000-mile, four-day round trip from Hawai'i — and Norwegian's advantage over competitors is clear.

Improvement plans

The U.S. General Accounting Office is in preliminary stages of a study of the competitive impact of Norwegian's exemption. Sen. John McCain requested the investigation, criticizing the legislation as one that will lead to higher consumer costs by limiting interisland cruise competition.

Norwegian's congressional victory led to a rapid ramp-up in preparations once the exemption was official. But it remains uncertain whether needed improvements by the state, which moves at a glacial pace for many businesses, will be done on time for the first ships.

Improvements are needed on each of the major islands but money for some projects has not yet been approved. Many of the projects will take years to complete.

Sue Kanoho, executive director of the Kaua'i Visitors Bureau, said a local committee has been working with harbors officials to plan for the ship arrivals.

"We're trying to say we have a sugar barge that comes in, we have Young Brothers, we have Matson, and now we have NCL. How are we going to work to accommodate that? It's a little bit of a juggling act," Kanoho said.

Many piers will need improved accommodations for the ships as well as heavier activity by taxicabs and tour buses.

Norwegian Cruise Line chief executive Colin Veitch is confident the state will make improvements as they are needed. So is the state.

"It's gonna be kind of tight with the scheduling," acknowledged Scott Ishikawa, state transportation spokesman. "But we're going to find a way to make it work."

The state also faces risks. It could pour millions into harbor upgrades but find itself left high and dry if Norwegian for whatever reason pulls out of the Islands.

Brian Schatz, chairman of the House economic development committee, said lawmakers plan to include harbor capital improvements in the budget, but the state may not have enough money.

Veitch indicated the company, which pays fees for harbor use, would not support higher assessments.

Tourism industry executives and government officials also want to upgrade land-based visitor facilities before the influx of cruise visitors. Parks, bathrooms and attractions on Kaua'i could use fixing, Kanoho said. Again, money is a problem.

She said Kaua'i depends on state support while other islands have federal attractions like the Arizona Memorial, USS Missouri and Hawai'i Volcanoes National Park that "are in a little bit better status funding-wise."

Now hiring

Norwegian has begun hiring its 2,000 employees for the first two U.S.-flagged ships, both of which require a 100 percent U.S. crew protected by American labor laws.

Norwegian pledged to hire as many of the employees from Hawai'i as possible. More than 100 have been placed in jobs so far. The company is also negotiating Honolulu office space.

To help with employee training, Inouye's office helped to secure $400,000 from the U.S. Department of Labor directed to the Hawai'i Community Foundation.

"The purpose is really to work with the employer, NCL, to maximize opportunities for our people to be hired," said Jennifer Goto Sabas, Inouye's chief of staff in Hawai'i.

Norwegian and the Seafarers International Union, which supported the legislation for the cruise line's U.S.-flagged operations, are coordinating training of the employees at a Barbers Point facility. Community colleges around the state are also helping with training.

Norwegian's work with the Seafarers could lead to union representation of the cruise ship employees. Veitch said Norwegian is in discussions with all major labor groups representing cruise ship employees.

The cruise line expects its labor costs to more than double compared with foreign-flagged ships, but it hopes to offset that with a "premium price" for U.S.-flagged cruises.

Tourism industry fit

At a gathering of business leaders last week, Veitch said he would not be competing with Hawai'i companies for visitors. Instead, he said, Norwegian would be adding to tourist arrivals.

With competition literally on the horizon, some in the tourism industry have their doubts.

They have proposed the state consider treating cruise lines like hotels and impose the transient accommodations tax or hotel room tax on ship passenger rooms.

"Should they have to pay their fair share of occupancy taxes?" Outrigger's Carey asked. "I believe that all those that benefit — such as time-shares, such as hotels — should pay their fair share of the dollars."

Veitch said the transient accommodations tax is designed for hotels and it doesn't make sense for cruise lines to pay it.

Their differing views on the hotel room tax may be just the first sign of coming rifts in the industry as cruises take on a larger role in delivering visitors to the state.