To drive up the percentage of Americans taking cruises -- now fewer than 15%, according to the cruise industry -- cruise lines are now basing ships in new home ports such as Norfolk, Va., and Mobile, Ala. The approach means consumers need less time to get to a port and don't face either the costs of air fare or post-Sept. 11 fears of flying.
But do more ships based outside Florida portend limited growth in Florida?
"I think there's a lot of concern," says Mike Rubin, vice president of the Florida Ports Council. But, he adds, "Florida's still going to do well just because we're located close to the Caribbean." And Jacksonville and Tampa have gotten ships as part of the home port trend. Pensacola, which counts Atlanta in its drive market, hopes to join them. Pensacola port Director Chuck Porter says it takes several years to convince a cruise line to base a ship at a port. "We continue to be encouraged," he says.
Finding Ports of Call
Neither passengers nor the cruise lines like ships stacked up at ports of call. Key West, which last year saw more than 1 million passengers and 600 port calls by ships, is studying how much is too much.
"What we're looking at doing is identifying what's a satisfactory amount to all concerned," says port Director Raymond Archer.
Opening new destinations is a must for the industry. To that end, Carnival is spending $35 million to build a two-ship terminal on Grand Turk in the Turks and Caicos that will be completed for the 2005-06 season.
The price of a cruise hasn't risen much over the years. To compensate, the lines have broadened their offerings for which passengers have to pay extra, including art auctions and onboard restaurants that offer different fare at a price.
How aggressively cruise lines work their passengers depends on the line, but they're clearly capturing more passenger dollars: Fifteen years ago, customer spending on non-ticket extras averaged about 15% of the price of a cruise ticket. Today, customer spending on extras amounts to 30% to 35% of the ticket price, says British analyst Tony Peisley.
Given the barriers to entry -- $400 million for a ship, for starters -- not many lines will be able to rival Carnival or Royal Caribbean. However, competition is increasing. Italy-based cargo ship company MSC has hired former Celebrity President Rick Sasso as CEO to head its new Fort Lauderdale-based MSC USA cruise company.
MSC sells itself as a premium line with new ships and Italian spirit, Italian officers and Italian dining staff. In Florida, Sasso anticipates hiring 50 to 100 near-term in Fort Lauderdale to handle reservations and back-office work and up to 400 in a few years as the Florida-based unit grows from seasonal sailings to year-round in 2005.
Sasso says the industry has plenty of room to grow with less than 200 ships. "The cruise industry is doing very well and deserves to do well."