NEW YORK -- Already in the midst of a challenging year, cruise
suppliers now find themselves struggling to retrench financially
and operationally following last month's unprecedented terrorist
attacks on the U.S.
Unlike the airlines, cruise operators haven't felt the direct
impact of the suicide hijackings. After all, the anti-U.S.
terrorists involved targeted commercial airlines and not leisure
But there have been many indirect -- and profound -- effects for
cruise lines following the attacks.
The most immediate problem faced was the large number of
passengers unable to embark and disembark ships due to the closure
of almost all major U.S. ports. At the same time, thousands of
cruise vacationers were stranded, either en route to or from
Several ships remained in port with passengers aboard because of
the flight cancellations.
Later, as many U.S. ports reopened, albeit under very tight
controls, cruise operators still faced a maze of rescheduling
decisions due to the closure of New York's cruise-ship piers and
passenger terminal, which remained under the control of emergency
Within a week, it became clear that the incidents will take a
significant economic toll on cruise suppliers. Analysts predicted a
significant downturn in leisure travel in the days after the
attacks, and statements from the country's largest cruise suppliers
seemed to bear out those fears.
At Carnival Corp., the industry's largest supplier, bookings
were off 40%, and the publicly traded line's stock plunged 32% to
$16.95 -- at the time an all-year low and Carnival's lowest price
since 1997 -- when the New York Stock Exchange re-opened on Sept.
Micky Arison, Carnival's chairman, declined to give a specific
forecast for the future. "It is very, very hard to know what the
ripple effects of [the attacks] will be," he said.
Like other operators, Carnival's operations were heavily
impacted by the attacks, as several sailings to and from New York
were rerouted to other ports and the line dealt with thousands of
vacationers who encountered difficulties traveling to and from
Carnival ships because of the airport shut downs.
At Royal Caribbean Cruises Ltd., Richard Fain, the company's
chief executive officer, said the immediate financial impact of the
attacks, including "loss of revenue, extra security costs, lodging
and transportation costs" were in the range of $20 million to $25
million. The company's shares fell 40%, to $12.76, also a low for
the year, on Sept. 17.
Fain said the long-term costs of the attacks would be difficult
to determine. "It's hard for us to fully assess what this means to
our company," Fain said. "Obviously, the fear of terrorism is not
good for tourism."
Royal Caribbean's bookings for Sept. 12 to 14 were down 50% from
one week earlier; about 1,000 passengers had canceled their future
bookings by the week of Sept. 17, he said.
Still, said Fain, "It is far too early to draw conclusions from
this information. We will need to continue to monitor the booking
Otherwise, Royal Caribbean faced the same difficulties that
confronted Carnival and other lines.
Most of Royal Caribbean's sailings were about two-thirds full in
the days immediately following the attacks, said Fain, as "there
were many difficulties in getting our guests to and from the
Bermuda- and New England/Canada-bound ships homeporting in New
York were particularly affected, forcing Royal Caribbean to shift
ships to Baltimore, Boston and Philadelphia.
At the third-largest supplier, P&O Princess Cruises, the
story was similar. The London-based firm's American depository
shares fell 39%, to $13.10, on the New York Stock Exchange on Sept.
17, meaning the shares of all of cruising's three largest lines hit
52-week lows following the air attacks.
Like the other lines, P&O Princess faced the diversion of a
number of New York-bound cruises to Boston and difficulties getting
passengers to and from ships due to the air transportation shut
"The cost of the disruption we have experienced, including the
costs of the future cruise credits, reduced onboard revenue and
additional hotel and flight costs for disembarking passengers ...
will be in the range of $3 million to $5 million," said cheif
executive officer Peter Ratcliffe.
"Obviously Princess' bookings have been impacted by the
attacks," said Ratcliffe. "However, it is too early to draw any
conclusions about the medium-term booking pattern. We will be
monitoring the situation closely."
Ratcliffe, Arison and Fain all said that they expect bookings to
bounce back in the coming weeks. Indeed, industry watchers believe
that despite the losses, the largest cruise lines are positioned to
weather the travel downturn brought on by the Sept. 11 attacks. But
some of cruising's smaller lines may find it impossible to
Said Arison, "There are a number of [our] competitors who are in
question, and I don't know how long they can last."