Cruising Away

For months, Trudi and Philip Borhaug were dreaming about a weeklong summer vacation with their two teenagers in Hawaii. But cost, airport hassles and a nagging feeling that the island was too far from home eventually persuaded the Sylmar couple to take a different route: They booked a four-night cruise to Mexico instead, for less than $2,000.

“We wanted to do something special, because all of us are feeling a little restless this year,” Trudi Borhaug said, noting that last summer’s vacation was in Monterey while their children were at camp. “Yet we wanted it to be family-friendly, reasonably priced and close enough to feel safe. We think a cruise has all of that.”

After experiencing steep drops in bookings after last fall’s terrorist attacks and slashing rates to 20-year lows to fill ships, the cruise industry is shaping up to be a summer bright spot--even as prices creep back up to within 7% of last year’s fares. Especially in Southern California, where several cruise lines redeployed ships to increase capacity after Sept. 11, an increasing number of families are opting to sail rather than fly.

The biggest line, Carnival Corp., reported that 17% of its total business during the fiscal first quarter ended Feb. 28 came from air-sea packages--down from more than 40% a year ago. So popular are its Mexico cruises from Southern California that Carnival is planning to build a $40-million terminal in Long Beach next to the Queen Mary. A larger vessel, the 2,124-passenger Carnival Pride, will replace the 2,000-passenger Elation next year.

Carnival has a second L.A.-based ship, the 2,052-passenger Ecstasy, and Royal Caribbean and Princess lines have one each.

Cruise bookings dropped by at least half immediately after Sept. 11, and in November, the No. 2 and No. 3 biggest cruise ship operators--Royal Caribbean Cruises Ltd. and P&O; Princess Cruises--announced they would merge in an effort to counter the post-attack travel slump with cost savings and higher volume.

But the industry has rebounded more quickly than initially expected, and advance bookings for the third and fourth quarters are running above last year, according to Fitch Ratings.

“It used to be if you lived in California, you’d have to fly to Miami to catch a nice, gleaming, new ship,” said Mike Driscoll, editor of Wilmington, N.C.-based Cruise Week. “All of the cruise lines are positioning new ships in that market now.” A spokesman for Carnival, which is trying to nix the proposed merger of its rivals, would not comment on a summer forecast but said recent booking levels “are running well ahead of last year.”

The trend toward cruises is reflected in several summer travel forecast surveys released this week, including one by the Auto Club of Southern California that reports cruise bookings among members to be up 25% over the same time last year.

The surveys indicate overall summer travel will be up slightly from 2001, with air travel expected to be down 14% over last summer, according to the Travel Industry Assn. of America.

Trips by car or RV will account for 85% of all summer vacations--up 5% from last year, the TIA survey said. As such, car rentals are up this year; Enterprise Rent-A-Car Co. anticipates all of its 500,000 vehicles to be rented out over Memorial Day weekend.

But while families still want to travel, they don’t want to go far or stay too long. TIA officials predict vacations will be cut shorter this year, and hotel occupancy is likely to remain flat. Bruce Baltin, a lodging specialist at PKF Consulting in San Francisco, said occupancies at Southern California hotels should remain between 75% and 80% for June, July and August.

Room rates, however, are expected to increase slightly as hotel operators scramble to get the most out of visitors--a development that may turn off families who are watching their spending, said Peter C. Yesawich, president of Orlando-based Yesawich, Pepperdine & Brown, a marketing firm specializing in travel research. Vacation spending is expected to drop 10% this year, according to TIA.

Indeed, TIA notes about 37% of all leisure travelers plan to attend a family reunion this year, with half intending to go with a spouse and a third with children.

Anne McCurdy, a La Canada attorney, said it was a need to spend quality time with family--along with safety concerns--that prompted her to book a seven-night cruise to the Mexican Riviera in June. “I just felt that value-wise and security-wise, taking a cruise was our best choice,” she said. “I’ll be sailing on the ocean instead of driving on the road with the rest of America.”