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  • The cruise ship Costa Concordia leaning on its side, near the shore of the Tuscan island of Giglio, Italy. Thirty-two people died when the ship ran aground on Jan. 13, 2012. Associated Press

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February 7, 2013

Cruise industry starts to recover

Concordia disaster affects prices, safety and 1st time trips

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NEW YORK (AP) — Cruise watchers looking back at the industry's past year say the Concordia disaster affected everything from prices to safety drills to first-time cruisers, but bookings appear to be picking up as the 2013 cruise booking season gets under way.

The first three months of each year are known as "wave season," a period when many cruisers book trips as they plan ahead for summer vacations. The Costa Concordia ran aground and capsized Jan. 13, 2012, killing 32 people just as last year's wave season began. Experts have blamed the captain for the disaster, saying he took the ship off course in a stunt. The wrecked ship is still lying on its side in waters off Tuscany, Italy.

"In hindsight the market took a bigger hit than anticipated," said Michael Driscoll, editor of the industry newsletter Cruise Week. "First-time business (from people taking their first-ever cruise) was off in particular." The lowered demand led to a decline in prices because cruise lines are loathe to sail a ship without filling every room, so they'll drop prices until the ship is at capacity.

Driscoll said a gradual recovery for the cruise industry began to emerge in the fourth quarter of 2012, and now, said Driscoll, a year after the Concordia disaster, "top travel agents are reporting a surprisingly strong winter season bookings for sailings that depart in later 2013, not great, but good." Heidi Allison-Shane, spokeswoman for CruiseCompete, said "cruise demand and prices were down significantly last year at CruiseCompete, with first quarter demand down in the 15 percent to 18 percent range. This was largely a result of the negative publicity surrounding the Costa Concordia sinking, but a very warm winter in most of the U.S. and a slow economy were also factors." She added that "the low booking volume early in the year led to more inventory being available throughout the year, causing prices overall to be down an average of about 5 percent to 7 percent across all cruise lines according to our measures." Allison-Shane also said booking activity picked up on CruiseCompete in January of this year, about 7 percent overall but even more for premium and luxury cruises, "but we are still seeing some lower prices as a result of lower sales in 2012 as the lines have more promotions." Allison-Shane said CruiseCompete, which is a cruise-booking website for consumers, generally sees 30 to 35 percent of cruises for the year booked during wave season.

Carolyn Spencer Brown, editor of CruiseCritic.com, said "we're definitely seeing everything rebounding. I see advertising is going back to appeal to first-time cruisers. And we're seeing more fresh sign-ups" on CruiseCritic.com.

She added that 2012 had been expected to be "the first bullish year for the cruise industry in the last three or four years. The cruise industry was going to go all out and reach out to virgin cruisers — people who are new to cruising, who are so important to the lifeblood of cruising." But after the accident, "people who were thinking about cruising but who'd never done it before took a step back," Spencer Brown said, adding that ads that had been planned for 2012 geared to the new-to-cruising market were pulled. "They changed the marketing stance back to the people who already cruise and who understand that this tragedy was an anomaly," Spencer Brown said.

The good news, said Paul Motter of CruiseMates.com, is that "many predicted the anniversary would mean a drop in sales this January, but I think it passed largely unnoticed." Motter said the impact of the Concordia was worse in Europe and still hangs over the market there "because that was where it happened, it got far more publicity there, and it was a European cruise line (Costa) marketed to Europeans. The worst part is that it only adds to the chill hanging over Mediterranean cruises in 2013," which have also been hurt by political strife in North Africa and the bad economy in Greece, Spain and Italy.

A report issued in November 2012 by PhoCusWright, the global travel market research company, said the cruise industry continued to grow in 2012, but at a much slower pace than the 10 percent growth rate of 2010 and the 7 percent growth rate of 2011. PhoCusWright said revenues for the industry would "rise only 4 percent in 2012 ... as the challenge of recent years — the U.S. recession, the European financial crisis, and high airfares — remain unresolved and have been compounded by the worst shipwreck in recent memory." High airfares depress cruising because many cruisers fly to the port of embarkation for their ship.

PhoCusWright's forecasts for cruising for 2013 and 2014 are better: 6 and 7 percent respectively.

Spencer Brown said one positive thing to emerge from the Concordia disaster was improvements in safety, for example more attention being paid to emergency drills. Prior to the accident, international conventions dictated that the drills, called muster drills, be held within 24 hours of embarkation. Since then, members of the Cruise Lines International Association, which represents most major cruise companies in North America and many international companies as well, have agreed to conduct the drills before ships leave port. If guests happen to board after the drill takes place, they will be given individual or group briefings.

"One of the things that was so tragic about the Concordia was, they were planning to do the drill the next morning," Spencer Brown said. "People got on board that day who didn't know where the emergency exits were."

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