Safety concerns may slow cruise industry’s growth
Before the ship Costa Concordia ran aground off Italy’s Tuscan coast with 4,200 passengers aboard, the cruise industry had been enjoying smooth sailing and a bright future.
Now, safety concerns could cloud sunny industry forecasts.
The $40-billion industry has been growing steadily over the last few years, thanks in part to an improving economy and the construction of new ships, including several “mega ships,” complete with shops and nightclubs.
The worldwide cruise industry carried an estimated 16 million passengers in 2011, an 8% increase over 2010, and is expected to grow 6% in 2012, according to the Cruise Line International Assn., a trade group for the world’s biggest cruise companies.
It may be too early to tell, experts say, whether the fatal cruise ship accident in Italy will put a damper on the industry’s growth. The Costa Concordia is operated by Costa Cruises, a subsidiary of Miami-based Carnival Cruise Lines, whose stock dropped about 14% on Tuesday. Carnival officials estimated the accident could cost the company nearly $100 million.
Shares of Royal Caribbean Cruises Ltd. fell 6.2% as analysts predicted ripple effects through the industry.
The Costa Concordia struck a rocky reef Friday and rolled on its side. On Tuesday, the death toll rose to 11; at least 24 others are missing. The ship’s captain was questioned in an indictment hearing Tuesday. He has been accused of steering the giant vessel too close to the rocky shore of the island of Giglio and abandoning the ship before the evacuation was completed.
Carnival issued a statement Monday, sending condolences to the victims of the accident.
“We are working to fully understand the cause of what occurred,” the statement read. “The safety of our guests and crew members remains the No. 1 priority of Carnival Corporation and all of our cruise lines.”
The accident could have a small, short-term effect on the sale of cruise vacation, say travel agents. But they say they have yet to see a mass movement of vacation-goers canceling cruise trips.
“I don’t think it’s going to be a long-lasting effect,” said Jay Johnson, president of Coastline Travel Advisors of Garden Grove. “People will see it as a fluke.”
Simon Hudson, a tourism professor at the University of South Carolina, agreed.
“I don’t think it will have a long-term impact,” he said. “The industry has been very resilient considering all the other problems with the world’s economy.”
In fact, Florida-based CruiseOne, one of the nation’s largest cruise vacation retailers, reported a nearly 6% increase in sales in the three days since the accident, compared with the same period last year, said CruiseOne general manager Dwain Wall.
“Knock on wood, we have thankfully not seen the impact,” he said.
Still, the Italian disaster forced Carnival Cruise Lines to address safety issues on its Twitter and Facebook pages, assuring passengers that “cruising continues to be one of the safest means of travel.”
Although most online comments indicated that fans of the cruise line plan to continue to take cruise vacations, some were more critical.
“But your captain deserted the ship like a rat,” a longtime cruise traveler responded on Facebook. “Explain that!!”
The cruise industry had a very good safety record until the Italian accident, said Michael Crye, executive vice president of the Cruise Lines International Assn. Until the accident, Cruise ships had carried more than 100 million passengers since 2005, with 16 maritime deaths.
The industry suffered a blemish to its reputation in November 2010, when the Carnival Splendor lost power because of an engine fire off Mexico and had to be towed to land four days later. No one was injured, but passengers went without air conditioning, hot food, laundry services and flush toilets for a time.
Industry officials said the cruise industry has enjoyed healthy growth in the last few years partly because cruise trips are relatively inexpensive vacations compared with other alternatives.
“People want their dollars to go as far as possible,” said Wall of CruiseOne. “Consumers see it as a value vacation, and it is.”
The cruise companies have also kept longtime cruise vacationers returning by introducing new and larger ships.
Royal Caribbean International’s Allure of the Seas, the world’s largest cruise ship, with a capacity of 6,360 people, was introduced in 2010.
Disney Cruise Lines last year launched its first new ship in over a decade, the Disney Dream, which has a maximum capacity of 4,000 passengers. In March, Disney plans to launch the Dream’s sister ship, the Disney Fantasy.
“The industry is increasing the number of beds to sell, and that keeps the price relatively flat,” said Johnson of Coastline Travel Advisors. “Once someone gets on a cruise, they almost always go again.”