The cruise industry has survived the economic downturns brought on by the 9/11 terrorist attacks, two wars in Iraq, the stock market crash of 1987 and the ensuing recession in the early 1990s.
Throughout those gloomy periods, the industry continued to grow, prosper and, in the case of the largest cruise lines, always sail full.
Today, however, many economic analysts are predicting that the current decline will affect discretionary consumer spending more than in earlier downward cycles. And since the cruise industry is among the most discretionary of travel products, it stands to be affected significantly.
If consumer spending drops, the cruise industry will have to become more creative in finding ways to fill its ships, and that might include leaning harder than ever on the travel agent community.
"People who say cruising is a great value relative to land-based vacations, that's absolutely true," said Bob Simonson, an analyst with William Blair & Co., a Chicago-based investment firm. "And it has a very high satisfaction rate. But that doesn't make it bullet-proof to an economic slowdown."
Simonson noted that even during the recession of 2002, following 9/11 and the bursting of the dot-com bubble, consumer spending never actually went into a single quarter of decline. This time, he said, with unemployment rising and incomes falling, discretionary spending will shrink.
"I don't think any subset of consumer spending will get through this unscathed," Simonson said.
Celebrity Cruises President Dan Hanrahan said in March that though the cruise industry was not necessarily recession-proof, it had proven to be "recession-resistant."
Historically, the industry has managed to fill its ships, whether by discounting its prices or using its mobility to move vessels to stronger markets.
Just last week, Celebrity said it would be pulling the Millennium out of Australia and New Zealand next year and relocating it to San Juan, where it will replace the Mercury. The Mercury, in turn, will sail out of Baltimore and Charleston.
Also cited is the notion that when people cut back on spending, vacations are still high on their list of priorities, especially affordable ones.
"History suggests that vacations and cruises in particular are fairly resilient to downturns," said Tony Peisley, a U.K.-based cruise industry analyst. "There is even an argument that cruising might actually increase its market share against other vacations because of its stronger value-for-money proposition."
This could benefit mass-market brands like Carnival Cruise Lines and Norwegian Cruise Line. Leisure equity analyst Tim Conder of Wachovia noted that consumers were "trading down to more value brands."
Carnival Corp. CEO Micky Arison said during an earnings call earlier this month (in which the company reported a $1.3 billion Q3 profit): "Although bookings have slowed compared with the strong booking levels of a year ago, pricing is holding up quite well."
While the luxury segment has been better off during the economic downturn of the last two years, that could change with the financial industry taking a hit. Last week, Travel Weekly reported that 10% of luxury travel was tied directly or indirectly to the financial industry.
Thus, luxury lines, whose target market is more mature, could also be hit hard by the plummeting value of homes and investments on which retirees depend.
"Retired individuals ... are especially vulnerable to the current volatile economic circumstances," AARP CEO Bill Novelli wrote in a letter to Federal Reserve Chairman Ben Bernanke and Treasury Secretary Henry Paulson that urged swift action on the recent market turmoil.
Exploration-focused Cruise West, which depends heavily on the 55-and-older market, is expanding into Europe and the Galapagos next year. It would have expanded further if conditions were better.
"We're being cautious," said Dietmar Wertanzl, president and CEO of Cruise West. "Could we have [expanded] more? Yes. But 2009 sales are softer than this year, and of course, in '06 and '07 everybody made money. ... Now everybody is soft."
Wertanzl said he was hopeful that his clientele -- cruisers looking for an exploration experience -- would make vacations a higher priority than other discretionary products.
Wendy Epstein said that her agency, All Ways Travel, which serves an upscale clientele in Bethesda, Md., was already feeling the pinch.
"I have never seen the calls not coming in like this. People are just not calling," she said. "The only time I've seen it this quiet was after 9/11. ... It's scary."
Bob Sweeney, president of Innovative Travel Acquisitions, a travel and tour business brokerage firm in Alpharetta, Ga., said that in this environment, agencies that focus primarily on the leisure side "are under siege."
"It's brutal for them right now," Sweeney said. "Niche players and corporate agencies that aren't top-heavy with financial accounts, they're doing fine."
On the other hand, some analysts predict that the travel agent's role will become more vital if cruise lines struggle to fill their ships.
"One of the principal functions [travel agents] serve for the cruise industry is topping off the ships," Simonson said. "Topping off the ships in a difficult economic environment is a tougher job. Therefore, the agents become more of a necessity."
Agents, for their part, are hoping the cruise lines will make it more attractive for them to help fill ships.
"The cruise lines are finding ways to pay on the absolute bare-bones, basic cost of the cruise. The margins are getting chopped by the suppliers, and the consumers have less dollars," Sweeney said.
Epstein concurred. "It takes the same amount of time to book a Royal Caribbean cruise as a Regent cruise," she said. "So I'd rather book the Regent one."