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Cruise industry coming out of a trough

March 16, 2010|By Martha Brannigan

MIAMI -- Last week Kevin Sheehan, the chief executive of Norwegian Cruise Line, opened an e-mail from his pricing guru with an update on ticket prices and bookings.

"Yee-haw," wrote Crane Gladding, an NCL senior vice president.

After the worst-ever downturn for the industry in 2009, cruise bookings are going up. Cruise lines are starting to raise prices from the deep-recession bargain basement. And a few companies are even feeling bullish enough to start ordering new ships after a dry spell of nearly two years.

As the cruise industry gathers in Miami Beach for the industry's largest annual gathering, executives are far more upbeat than they were just a few months ago.

"We're really doing well. Our pricing is doing well," says Sheehan, whose company will debut the hottest new ship of the year this summer, the NCL Epic. The ship boasts the first ice bar at sea, South Beach-style night life, and Blue Man Group, a quirky live show aimed at a younger crowd. "We think we're hitting on all cylinders," he said.

The caveat: "Things are improving, but improving off a pretty miserable 2009 from a pricing standpoint," added Sheehan.

By all accounts, the cruise lines are basking in a robust "wave season," the industry term for the first couple months of the new year, when the largest chunk of cruises are booked. "The cruise industry has rebounded much better than the hotels or land tours," said Stewart Chiron, a cruise expert and CEO of cruiseguy.com. "A cruise is a great value," he said, offering more bang for the buck than other vacation options.

Cruise Planners, a travel agency in Coral Springs, Fla., has chalked up 30% to 40% gains in bookings each month since October, compared with year-earlier numbers. "We're seeing a huge upward shift," CEO Michelle Fee said. "Obviously, last year in the same time frame, everything fell off a cliff."

To be sure, the cruise lines face a long journey to get back to the prices of early 2008, before the financial crisis turned many people's vacations into loading up the car and driving to stay with relatives.

In 2009, a cruise berth fetched 14% less per day than the year before at the two biggest cruise operators. This year, that "yield" is expected to turn positive by several percentage points from 2009 levels.

Many consumers are more confident about their finances. If last year was the time for "staycations," this year people are feeling long overdue for a getaway.

"Now a year has passed and people are saying they want to get back to their lives," Fee said. "Most people are more comfortable at this point that if they have their job, they're going to keep their job."

Brannigan writes for the Miami Herald/McClatchy.

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