Rough Sailing for S.D.’s Fledgling Cruise Ship Industry
Measured against every yardstick but the most important one--the bottom line--last month’s Homeport Festival celebrating San Diego’s emergence as a major port for cruise ships was a smashing success.
Promoters for the day-long event expected a crowd of 30,000, but 100,000 showed up. They were lured by the inaugural sailing from San Diego of the Pacific Princess, better known as the “Love Boat,” made famous by the popular television series.
The accompanying media saturation attracted hordes of “lookie-loos” but apparently precious few prospective passengers.
These are troubled times for cruise ship companies. And the slump affecting carriers nationwide has made it all the more difficult for San Diego to get a foothold in this potentially lucrative branch of tourism.
The supply of new ships has raced far ahead of the demand for staterooms. As a result, major companies charged less for vacations in 1984 than they did for comparable trips in 1978, according to a recent study performed by The Boston Consulting Group for Cruise Lines International Association (CLIA), an industry umbrella organization.
CLIA represents 76 cruise companies that have about 50,000 berths available, said Anne Campbell of New York-based Diana M. Orban Associates Inc., CLIA’s public relations firm. Campbell said the nose dive in prices is continuing this year throughout the cruise industry.
“The number of berths available has increased about 10% in the last year alone, so you’re seeing substantial reductions in rates, (with) deals such as free air fares to Miami and other ports,” said Campbell. “We’re confident the demand will eventually catch up. The glut is very temporary, but it makes for a great situation (for the consumer) this year.”
‘Untapped Market’
Campbell said CLIA has targeted a “huge untapped market” of 35 million Americans under 45 whose annual income is about $25,000.
“More than 80% of these people have never been on a cruise, but we have to reach them because they fit the profile of the modern cruise vacationer,” she said. “Almost half of our passengers fit those demographic categories now, and the number increases every year.”
The failure to tap this new market more effectively frustrates Margo Mosbury, a travel agent with San Diego-based Adventures in Cruising.
“There are a tremendous number of new ships out there now, and we have a lot more berths to fill,” she said. “Things have never been better for my clients; we’ve never seen such a buyer’s market.”
The problem, said Mosbury, is that the industry hasn’t been able to “get that word across to the general public.”
Many of the newer cruise lines are trying to lure younger passengers to affordable tours, bidding bon voyage to the lavish and expensive cruises.
“But probably 95% of those people out at the Homeport Festival, as successful as it was, were operating under the fallacy that cruises are too expensive for the average traveler. People are not aware that cruises are not only for people between the ages of 65 and ‘Hello, God.’ ”
If San Diego is to realize the millions of dollars in revenues anticipated from the cruise ships based and stopping here, Mosbury and her colleagues must come up with an answer to the marketing dilemma.
Appeal to Youth
Craig Wilson, spokesman for Crown Cruise Lines, acknowledges that “booking has not been what we had hoped it would be.”
Crown is among the companies appealing to the younger, less-affluent traveler. The firm last year began one-day round trips between San Diego and Ensenada, as well as four-day excursions calling at Ensenada and Santa Catalina Island on the “Viking Princess.
One-day cruise prices start at $89, while four-day trips cost $289 and up. Bookings during the first year have averaged about 30%, about 10% less than company projections.
Last week, only 65 passengers took the four-day trip, which has a capacity of 350.
“We haven’t finished carving out our niche in the middle ground we’re seeking,” said Wilson. “But we’re still very optimistic when we view things over the long term.”
Wilson and other industry officials said San Diego is not yet regarded as a major port for cruise ships and cannot expect such nationwide recognition overnight.
Until the city becomes better established in the cruise business, they said, ships based here, including the “Love Boat,” will struggle to attract passengers.
Indeed, the San Diego inaugural cruise of the “Love Boat” did not come close to selling out. Travel agents from around the country were offered last-minute free trips on the ship to fill the empty staterooms.
On subsequent cruises, Princess Cruise Lines has offered $400 discounts and special promotions featuring members of the Los Angeles Dodgers and San Diego Padres baseball teams. Despite the celebrities, the cruise lines still had trouble attracting passengers.
Repeat Clients
“Tradition and familiarity are very important to a successful port,” said Wilson. “San Diego lacks those aspects now, simply because it has only recently entered into the field.”
When travelers and travel agents become accustomed to booking cruises out of San Diego, the local industry could turn profitable, officials said.
“You find a great number of repeat clients in the cruise business,” Mosbury said. “And once they find a cruise liner they like--and a port they enjoy embarking from--they tend to stick with it. That will pose a challenge for these new companies in San Diego.”
Demand for the high-priced trips--to the Caribbean and Alaska, for example--remains strong, added Mosbury.
The task of establishing the city’s port credentials falls largely to the San Diego Convention & Visitors Bureau (ConVis) and the San Diego Cruise Ship Consortium, a coalition of politicians and business leaders formed to attract the ships docking here.
Each remains optimistic about San Diego’s future in the cruise ship business.
“We’re confident that (business is) going to pick up by this summer,’ said Dave Hutchinson, national public relations coordinator for ConVis. “This isn’t the type of venture where you plan on overnight success, particularly considering the current economic state of the industry.”
Hutchinson said the home-porting of the “Love Boat,” here for 16 weeks each year, gives the city instant recognition among cruise ship travelers. And he believes the shorter, less expensive trips on the “Viking Princess” will eventually become a well-established side trip for large groups using the new convention center.
Strong City
According to Campbell, 20% of the passengers on CLIA ships are Californians, so San Diego is considered a strong cruise ship city.
“People here are acclimated to the ocean, and many are older, with money and time to spend on vacations,” said Mosbury.
However, the local business interests that orchestrated the city’s entrance into the market have their eyes on both the out-of-towners and their pocketbooks.
“Cruise ship vacationers are high-yield visitors,” Hutchinson said. “They tend to stay longer and spend more than the average tourist. Naturally, it’s a group we’re looking to attract.”
Don Harrison, a spokesman for the Cruise Ship Consortium, estimated that passengers on the “Love Boat” spend $100 per day in their ports of call. If the ship reaches capacity, it would generate $12 million to $15 million in annual revenues to the city, Harrison said.
The consortium and ConVis have gotten high marks for their efforts at promoting San Diego. “Homeport was really a big success, and it generated a lot of good will for the cruise ship business in San Diego,” said Mosbury.
