A Look Beyond the Year 2000

Standing by an earlier prediction that five to six cruise companies will dominate the North American market by the year 2000, Kirk Lanterman, President and CEO of Holland America Line - Westours said other less fmancially capable operators must redevelop their market strategy in order to survive.

"In today's world, a cruise line needs to have a clean and viable market position. It must be able to diferentiate itself from other cruise lines and target a specific segment," said Lanterman at the recent cruise conference held in Miami.

Specifically, Lanterman said there are new regional markets with a growing middle and upper class in the Far East, Europe and Central and South America which are ready for development. However, Lanterman cautioned that lines must gear their products to address these potential audiences' ethnic needs and identification.

Among the companies Lanterman forecasts will emerge in the new millennium are Carnival Cruise Lines, Royal Caribbean Cruise Line, Disney Cruise Line, Holland America, and "perhaps one or two others." (Notably, Lanterman did not mention arch-competitor Princess Cruises.)

Lanterman underscored that in today's competitive environment, operators must have a sound bottom line and access to preferential financing.

Non-Growth Lines

He attributed the industry's recent business reversals to the presence of a "large number of non­ growth cruise lines," and noted that several lines, including Carnival, Holland America and Royal Caribbean, recorded profits for 1995, despite the "doom and gloom" industry reports.

"The numbers reported by one cruise industry are not the same numbers reported by the other cruise industry," Lanterman said.

However, Lanterman said that, "In all likelihood at least one and possibly two other lines will shut their doors this year."

And, although there are more than 24 anticipated new ships inaugurating in the next four years, the industry will be able to absorb them because of attrition as older ships leave the market. Several factors will make way for the 36,485 berths expected through the year 2000, including the 1997 deadline for new SOLAS regulations; the lack of a resale market because of competition and operating cost issues, and operators either ceasing business or moving to serve markets outside of North America.

To stay afloat, other operators must re-engineer their market strategy, especially because "the economies of scale and other efficiencies available to the majors - Holland America, Carnival and Royal Caribbean - make it impossible for lines dependent on price alone to survive."

At the same time, he added, these lines will benefit from the new capacity and the economic strengths of the major lines, which will provide more communications programs, and by the Cruise Lines International Association's intended generic advertising campaign to educate consumers about cruising.

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