Three itinerary trends characterize the cruise industry in 2010: capacity reduction in Alaska, increased capacity in the Caribbean and a build-up in Europe, according to Terry Thornton, senior vice president of market planning at Carnival Cruise Lines.

“Cruise lines are struggling to make a profit in Alaska,” Thornton said, noting that the head tax is part of the problem, “because ultimately that cost is passed along to the consumer,” adding to the cost of the cruise. More ships will be leaving Alaska in 2011, and Thornton predicted further migration.

This has been declared the Year of the Seafarer by the IMO, and both Nautilus International and the Norwegian Seamen’s Union (NSU) said they hope that this will be more than a PR effort.

“We support the Year of the Seafarer,” said Johan Oyen, director of cruise operations at the NSU and chairman of the ITF Cruise Ship Task Force. “And we hope the ILO Maritime Labor Convention (MLC) will be ratified for implementation to start next year.

After breaking a two-year lull in newbuilding orders in December, at press time, Carnival Corporation and Fincantieri also announced an agreement to build two prototype ships for Princess Cruises. In addition, MSC Cruises announced that it has signed a letter of intent with STX Europe for the delivery of new ship, the Favolosa, in June 2012 

In December, Carnival ordered a third sister ship to the Carnival Dream for spring 2012 delivery. A second sister ship, the Magic, is under construction for 2011 delivery.

Carnival Cruise Lines is the only cruise line in the world with a clearly defined product, according to Gerry Cahill, president and CEO. “All the other lines are trying to go up-market,” he said, “and tend to blend. We are truly defined: we offer a memorable vacation experience and a great value, targeting middle-America. Our target guy is 40 some odd years old and may have a family, but he is not making $1 million a year – he just want to have a great vacation experience.”

The cruise industry is facing a range of challenges on the marine operations side, ranging from environmental regulations to human engineering, new technology, alternative fuels and public perception.
 
"Today, environmental regulations are clearly a challenge,” said Eirik Nyhus, director of maritime environmental strategic issues, at Det Norske Veritas (DNV). “We are looking at the regulations already in place and those that are coming – all of which will drive up costs for the cruise lines – whether for ballast or waste water treatment or for those related to fuel qualities. Whether cruise lines resort to scrubber technology or go to low sulfur fuels, they are looking at higher costs."

There is more pressure on the hotel department than ever before. With reduced ticket prices, the ships not only have to be mindful of spending, but have the job of making up the lost (ticket) revenue, while keeping passengers happy.

Both Carnival Cruise Lines and Royal Caribbean International introduced new ships this past fall. Carnival introduced the newest generation of what started as its Destiny class, built by Fincantieri in 1996, going from 101,000 to 102,000, 110,000 and now 130,000 tons and raising the passenger capacity along the way from 2,600 to 3,650.