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2006 looks bright for cruise ship industry

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MIAMI BEACH, Fla. — Trips on cruise ships remain a popular vacation value and 2006 looks encouraging despite rising fuel prices and media reports focusing on crime and safety problems on vessels, top cruise executives said yesterday.

With six new ships hitting the seas this year to increase capacity and reports from travel agents of a good performance during "wave season" — the January-to-March booking season for summer trips — the industry is in good shape, said Andy Stuart, chairman of Cruise Lines International Association.

"When you combine that with reportedly strong pre-wave season booking and recent positive public statements, the outlook for the year looks very encouraging," said Stuart, who also is an executive vice president of marketing, sales and passenger services with Norwegian Cruise Line Ltd.

He spoke before a panel discussion featuring leading cruise executives at the annual Seatrade Cruise Shipping Convention in Miami Beach.

Stuart said the association projects the number of cruise travelers to increase by about 500,000 people from last year, to about 11.7 million.

Trips have become more attractive values because of larger ships, diverse entertainment options, and onboard innovations with luxury amenities — supper clubs, bowling alleys, afternoon tea, movie theaters.

"Guests are getting twice as much ship for the same dollar they were paying in 1985 or 1990," said Richard E. Sasso, president and CEO of MSC Cruises USA Inc. "The value proposition is probably four times greater today than it was 20 years ago."

Citing upcoming earnings reports, executives from publicly held companies such as Carnival Corp. and Royal Caribbean Cruises Ltd., didn't elaborate on their performances during wave season, a key indicator of a cruise line's success in booking trips.

Tim Conder, a senior leisure analyst with A.G. Edwards & Sons, said yesterday via e-mail that wave season booking and pricing trends have remained healthy but were being obscured by factors including a larger percentage of 2006 bookings taken late in the last quarter of 2005, and changes in booking and rebating policies throughout the industry.

Colin Veitch, president and CEO of Norwegian Cruise Line, said that while ticket prices weren't back to the record highs of 1999, overall net revenue yields may have returned to 1999 levels because of added ships and new ways for companies to generate onboard revenue.

Still, the industry faces challenges.

Bob Dickinson, president of Carnival Cruise Lines, said the world's biggest cruise operator was taking steps to cut fuel usage such as shaving time off schedules and reducing speeds.

Carnival warned in February that its 2006 profit might be worse than expected because of rising fuel costs.

Adam Goldstein, president of Royal Caribbean International, added there were opportunities to mitigate fuel expenses, such as new engine room technologies and using different fuel grades.

Source: Adrian Sainz, Associated Press

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