Cruise line bookings, stocks take a beating

Shoreside businesses also affected

Posted: Friday, September 21, 2001

Cruise ship bookings have dropped in Alaska and elsewhere as passengers have had trouble flying to their embarkation ports.

In the past week, the three major U.S. cruise lines have sustained millions of dollars in losses and have seen their stock prices plummet, wiping out billions of dollars in market value.

Cruise ships visiting Southeast Alaska are running far lighter passenger rosters in the wake of last week's terrorist violence on the East Coast. The slowdown has affected businesses on shore.

"We did well in June, July," said Felipe Ogoy, owner of Felipe's Teriyaki in Juneau. "But last week it really slowed down. There were hardly any cruise ship passengers around after the incident happened."

The Carnival Spirit carried "a fair amount lower than 80 percent" of its 2,124-passenger capacity, said Jennifer de la Cruz, spokeswoman for Carnival Cruise Lines.

"We are certainly seeing reduced booking activity ... and increased cancellation activity," she said. "However, there is booking activity going on, which is a positive sign."

Celebrity Cruises, whose ships Infinity and Mercury stop in Ketchikan, Juneau and other Southeast ports, reported last week's sailings to be about two-thirds full. Only half the usual number of bookings were made in the days immediately following the attacks, said Richard Fain, chairman and chief executive officer of Royal Caribbean Cruises Ltd., which owns Celebrity.

The Holland America ship Ryndam had only 880 of its 1,266 beds filled when it sailed Southeast this week, and sister ship Statendam, which also can accommodate 1,266, is carrying about 700 passengers.

But Holland America's ship Zaandam had only 55 cancellations for this week's sailings and was expected to have 1,199 passengers this week.

"All in all, I think we're doing OK," company spokesman Erik Elvejord told the Ketchikan Daily News.

Major cruise lines took an added financial hit by offering travel vouchers to passengers who canceled a sailing because of last week's violence. This week, however, full penalties were back in effect at many lines.

"We're fairly full on (next week's) sailings. ... How we'll end up, I don't know," Elvejord said.

Next week is the final week for cruise ships in Southeast Alaska for the year.

Beyond the recent losses, analysts say a sustained military action could cripple the industry, which was already suffering from a sluggish economy.

Shares of Carnival Corp., the world's largest cruise company, have dropped 36.7 percent since Sept. 10. Royal Caribbean Cruises Ltd. has seen its stock drop 58.6 percent.

In the week following the Sept. 11 terrorist attacks on New York and Washington, cruise lines lost millions because passengers could not get flights to port cities. The companies also had to add extra security and turned some of their ships into floating hotels for passengers who couldn't fly home.

Royal Caribbean estimated it incurred between $20 million and $25 million in extra costs last week. Carnival said Thursday it expects similar losses.

Luckily for the cruise lines, bookings normally fall off in October. Companies see nearly their entire year's businesses booked in January and February, a period companies call "the wave."

But companies are changing routes, transferring ships that normally operate in the Mediterranean to other areas, such as Alaska or the Caribbean.

"The eastern Mediterranean area is going to be a ghost town for cruise ships and that's one of the most popular areas," said Mike Driscoll, editor of Cruise Week, a trade publication.

Although a lengthy military battle could force smaller cruise companies out of business, large companies such as Carnival are poised to weather any uncertainty. The company has $1.2 billion in cash and investments.

"Going forward, we are very well positioned in light of our balance sheet," Howard Frank, Carnival's chief operating officer, said Thursday. "We do think it will take some time to get through the storm."

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