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Cruise ship comeback

Posted: Tuesday, July 06, 2010

Juneau's top cruise ship companies say their Alaska business is improving, and a rebounding economy is enabling them to increase prices and book staterooms more quickly.

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Libby Sterling / Juneau Empire
Libby Sterling / Juneau Empire

Higher end cruises such as "Alaska and other exotic locations," are helping drive increased revenue in Carnival Cruise Line's North American brands, said David Bernstein, chief financial officer of Carnival Corp.

He was speaking to a group of industry analysts in late June about the quarter's most recent earnings report and outlook for the rest of the year.

Alaska has seen "significantly higher year-over-year pricing," he said, adding that the company wasn't having to do what it did last year: Drop prices to fill cabins.

Carnival Corp. is the world's largest cruise company, and operates Carnival, Princess Cruises and Holland America Line ships to Alaska.

Two months earlier, Royal Caribbean Lines gave a similarly upbeat assessment of the Alaska market.

"The Alaska product, where we are once again operating three ships, is also performing well and doing better than ... last year," said Daniel Hanrahan, president of Celebrity Cruises, in Royal Caribbean's most recent meeting with analysts.

Royal Caribbean operates Rvoyal Caribbean Line and Celebrity Cruises. Together Carnival and Royal Caribbean bring about 80 percent of the cruise ship visitors to Juneau.

The two companies, both of which had strongly fought Alaska's controversial cruise-ship head tax, did not identify that as a factor. The state recently agreed to partially roll back the head tax, with Gov. Sean Parnell signing a bill to do that in June.

Last year one million cruise ship passengers came to Juneau, but this year only about 860,000 are expected after Carnival and others relocated ships to other destinations, citing the head tax as one reason for the decline.

Those fewer ships may have helped boost ticket prices. Carnival's Bernstein said that while bookings had slowed more recently, they were getting "substantially higher" ticket prices.

"Fortunately, there is very little Alaskan inventory left to sell," he said.

Both companies said they foresaw good things for the remainder of the Alaska season as well.

Bernstein said Carnival was seeing important increases in revenues onboard its ships, such as for drinks and tour commissions.

One Juneau tour business, Caribou Crossings, said they were happy to hear the cruise ships were doing better than last season, but they personally haven't seen a turnaround in visitor spending.

In June business was down 10-12 percent compared to last year, owner Tanja Cadigan said. That is proportionate to the decrease in ship visits.

"It would have to be so explosive through September to get that back," she said. "I'm not saying that's not possible, but its going to be a lot less money in everybody's pockets, and in CBJ's wallet, too."

Cadigan said she's hopeful that people who have booked advance tickets for late in the summer will be more willing to spend.

"The potential is there, but so far they're holding tight," she said. "If they spend more to get here, it may mean that they've only budgeted "X" number of dollars for their trip and don't buy as many tours."

Carnival expects significant price improvement for Alaska and European tours for the remainder of the year, and even recent events such as volcanic activity that limited European air travel and falling stock markets haven't impeded advance bookings, said Howard Frank, Carnival's vice chairman.

"So, to sum it up, despite the events that have occurred around the world in the last six weeks, people are still booking their vacations and our business has held up well," he said.

• Contact reporter Pat Forgey at 523-2250 or patrick.forgey@juneauempire.com.



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