Page 38: of Maritime Reporter Magazine (July 1996)

ABOVE hip orders are in, joint ventures underway, consolidations are spreai (and a new player has emerged; yet key to long-term profitability in cruise shipping lies in the success of one strategy — the industry's ability to attract first-time pas- sengers. In the struggle to stay afloat, some cruise lines have stressed product differentia- tion in an attempt to capture specific passenger segments. Others have touted aggressive new- build schedules and European expansion pro- grams as the panacea for continued growth.

However, it has become increasingly clear that the industry must continue to convert "poten- tials" into "clients" if it is to support the volume of new berths produced before the turn of the century.

A. recent debate within the Cruise Lines

International Association (CLIA) concerning setting aside funds for generic advertising tar- geted at promoting cruising in the U.S. has recalled this idea in the minds of cruise execu- tives. As stated by Carnival Cruise Lines' Vice

President of Sales Maurice Zarmati: "Every time you advertise a bow, it doesn't really mat- ter whose logo is on it ... We need more bow advertising." And many tend to agree with him, including Royal Caribbean Cruises Ltd.

Chairman and CEO Richard Fain, Disney

Cruise Line President Art Rodney and

Carnival Marketing and Sales Senior Vice

President Vicki Freed. These executives dis- cussed the cruise marketplace and company strategies for growing business, as well as con- fided their views on the CLIA debate during recent sessions with MR /EN. 40 \ C row 11 Tradition vides stability and strength; a fitting logo for

Royal Caribbean Cruises Ltd. (RCCL) — a line which has emerged as a dominant player in the sector, consistently posting generous profits over nearly three decades of operation.

Richard Fain's description of the market con- ditions that contribute to the success of his out- fit is classically understated: "Where there have been more ships, there have been more passengers," he said, adding, "I think it's look- ing good. I feel a lot more bullish today than I did a year or two ago."

Mr. Fain admitted that passenger rates have fallen short of his expectations, although he countered claims of diminishing passenger counts by reasoning that 19 percent more pas-

Richard Fain makes no secret of his company's plans to infiltrate the European market.

By Bridget A. Murphy, assoc iale etlitoi I gjsapgp | carried on ships, despite the drop in capacity. The Royal lan agreed that the practice of iting" fares, instituted in order to woo passengers, has contributed to an over- all cheapening of his company's cruise product. "In 25 years, we have not been satisfied with the compensation we've received given the quality of the product we're offering," said Mr.

Fain. In order to reverse this situation, with- out discouraging first-timers, he explained

RCCL's updated strategy: "Discounting is now not across the board ... We will offer a series of specific, specialty discounts. We've become much more sophisticated in the targeting of dis- counts."

Although he expressed support for "overcom- ing myths of cruising," the Royal Caribbean executive discussed CLIA's proposal to fund generic ads with an air of caution, saying: "Nobody wants to spend money on what they feel is not an effective campaign, and everyone has an idea of what is an effective campaign."

However, Mr. Fain did stress the importance of increasing the visibility of cruising as a strate- gy for attracting passengers, and in this con- text, he spoke about the emergence of Disney

Cruise Line. "Disney's entry will add visibility and credi- bility to the industry and I think, that's very good," stated Mr. Fain. He said that the com- pany will bring recognition to cruise shipping "as a major substantive industry in the U.S.," and as a "significant economic engine for this country." He went on to compare RCCL's prod- uct with his perception of the product Disney (^L^ Telenor Maritime Reporter/Engineering News

Mfefeking New Berth^Demands:

Cruise Leader^Reienite Scorch For First-Time Business