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Now that we’re a few days into the New Year, I thought it was time to gaze into my crystal ball and predict some of the trends we’ll see in cruising during 2010:

Pricing: Cruise fares will continue to face downward pressure as consumer demand remains soft (particularly in the U.S.) and new ships come online. Look for another year of good cruise deals, particularly in the Caribbean, Mexico, Europe, and New England/Canada. However, this may be the final year for these kinds of rock-bottom prices if the recovery continues, employment expands, and stock markets continue to show strength.

Refurbishing old ships: After decades of growth, the number of American cruise passengers actually shrank in 2008 and 2009. As a result, almost all new ship building has come to a halt except for ships ordered before the recession began. Going forward, we are likely to see cruise lines investing in refurbishing their existing fleets rather than adding new tonnage – at least until passenger growth returns to more normal levels. While there are a number of new ships being delivered over the next 18 months, there won’t be much after that for several years.  So if you enjoy maiden voyages, now’s the time to sign up for one.

Fuel surcharges: When crude oil dipped below US$46 per barrel a year ago, most cruise lines dropped their fuel surcharges which at the time ranged between $8 to $15 per person, per day. However, most lines reserved the right to re-introduce fuel surcharges if oil prices hit $70. Since then, crude has gone up 76% and recently closed at $79.62 per barrel. If oil prices continue to rise, and some analysts predict it will, we can expect to see fuel surcharges again this year. Or at the very least, we may see some itineraries shortened to save fuel.
A la carte charges: In order to compensate for lower cruise fares, most cruise lines (except the ultra-luxury lines) have introduced extra fees or raised existing ones for almost everything including fitness classes, specialty restaurants, spa treatments, alcohol, special coffees, some types of room service, shore excursions, onboard tours and some ship activities. In fact, most cruise lines have revenue budgets for their main money-making departments (e.g. food & beverage and shore excursions) that they depend upon to help make the cruise profitable. As long as cruise fares remain soft, we can expect this trend to continue.

More port-intensive itineraries: We’ve seen a growing number of cruise lines (particularly the smaller, luxury lines) promoting longer stays in ports and extended land excursions. In fact, Azamara Cruises recently relaunched its entire brand around a more port-intensive experience, and Oceania has been offering longer port stays for some time. We can expect this trend to continue in 2010, especially for smaller ships that don’t count as much on shipboard revenue from casinos and shops that usually can’t operate when the ship is in port.

Loosening of dress codes: A number of cruise lines, including luxury lines like Regent, have introduced new dress codes that make formal wear optional. In addition, some cruise lines have reduced or eliminated formal dress evenings during cruises to tropical climates like French Polynesia. With airlines restricting baggage and a growing number of people eschewing formal wear, we can expect this trend towards looser dress codes to continue.

New & more exotic ports of call: A number of luxury and niche cruise lines have been adding new ports of call to their itineraries in far-flung places that have rarely been visited by cruise ship before. These lines are hoping to benefit from a growing number people who want to visit unusual and off-the-beaten track destinations. In fact, Crystal, Regent, Seabourn and Silversea have all added a number of new and unusual ports to their itineraries this year.

Fewer Alaska cruise options: Many cruise lines have cut back on the number of ships and sailings they will offer in Alaska during 2010. These reductions have been driven by a new cruise ship head tax introduced in Alaska, and by falling demand in the US for Alaska cruises. These cut backs could lead to higher pricing for Alaska cruises if demand returns to more reasonable levels.

Home porting: We saw an increase in the number of ships with home ports in the United States last year that people can drive to and that sail to closer-to-home destinations like the Caribbean, Mexico, Alaska, Bermuda, the Pacific Coast, and New England/Canada. This trend had been driven by economic factors, but this year concerns about terrorism and/or airport security hassles could make it even more pronounced.

More choice in nautical noshing: The trend towards giving passengers greater flexibility in their dining options that began several years ago with NCL will continue across the industry in 2010 as more ships move to “anytime dining” formats, expand their range of menu items, and add additional dining venues. In fact, almost all mainstream cruise lines will be offering some form of “anytime dining” option by the end of 2010.

That’s it for my forecast in 2010. If more than 75% turns out to be accurate, I may include picks for the stock market and horse races next year.

Last Saturday’s attack by pirates on a cruise ship sailing off the coast of Somalia made headlines around the world.

The unsuccessful assault on the 1,500-passenger MSC Melody was newsworthy for a number of reasons. First, it happened some two weeks after the American Captain of a container ship was dramatically rescued from pirates in the same region by the U.S. Navy.  And second, it involved an armed response by a cruise ship.

In several previous assaults on cruise ships in the region, the liners simply outran the pirates. This time, however, Israeli security personnel on the ship returned fire from the pirates. And in a bizarre Captain Jack Sparrow-like moment, some passengers joined the fracas by tossing tables and chairs overboard at their assailants who were trying to climb up ropes to board the ship. Apparently, the pirates fled before passengers could re-arm themselves with folded napkins and carved fruit.

But kidding aside, the publicity surrounding the assault and the growing ability of the pirates to attack ships further offshore, have raised questions about the safety of cruising and whether the Melody’s response was an appropriate way to handle the situation. So let’s look at the facts.

Over the past 10 years, there have been just a handful of attempted assaults by pirates on cruise ships like the Oceania and Seabourn Spirit. None have been successful, and all have occurred off the coast of Somalia near the Gulf of Aden. Since this region is not a popular cruising area, the risk of pirate attacks on cruise ships remains extremely low. In other words, stay away from the waters off the east coast of Africa and the only pirates you’ll see will be at Blackjack tables in the ship’s casino.

In addition, modern cruise ships are now equipped with state-of-art security features that include advanced radar, water cannons, loudspeakers that can emit eardrum shattering sounds, armed security personnel and engines that can generate reasonably high speeds. Furthermore, cruise ships are much harder to board from the open water because their first open deck is so much higher than on a container ship. So when it comes to safety, cruise ships are still one of the safest forms of travel in the world.

Of course, even the best safety measures in the world can’t overcome bad decisions like letting passengers get involved in fighting off a pirate attack. In my view, what happened on the MSC Melody was not only dumb, it was dangerous and could have resulted in passengers getting wounded or killed.  

The ship and its security personnel were more than capable of dealing with the pirates, and the Captain should have ensured that all passengers were confined to a safe area of the vessel for the duration of the assault. The fact that even some passengers aboard the Melody were involved in fending off pirates warrants a full review by the cruise line of its policies and this itinerary.

In any event, until NATO or one of the world’s major powers decide to forcefully bring piracy to an end off the coast of Somalia, cruise ships should simply avoid the region. But if ships insist on sailing in these pirate-infested waters, they should take stronger measures including the use of armed escort vessels. Doing less could leave passengers at risk, and cause some people to believe that the problem is much bigger than it actually is.

The cruise industry took swift action this week in response to U.S. and Canadian governments advising against non-essential travel to Mexico due to the outbreak of the swine flu.  

Starting this week, most major cruise lines cancelled calls at Mexican ports for at least the next two weeks, and some (led by Carnival) offered passengers the option of sailing to alternate ports of call on their cruise or a full credit towards a future cruise. In addition, the major lines calling at Mexican ports – which include Carnival, Celebrity, Princess, Holland America, NCL, and Royal Caribbean – promised to keep passengers updated about the situation and to avoid the area until they felt it was safe for passengers to go ashore.

In my view, the cruise industry has put the safety of passengers first by taking quick and decisive action. And they’ve done this despite already having some of the best health practices in the travel world such as hand-sanitizer dispensers throughout their ships, in-house doctors, and quarantine procedures for seriously ill passengers.

In contrast, there are still major airlines offering flights to and from Mexico City, although some like Air Canada have cancelled flights to vacation destinations in Mexico. And screening procedures on planes and in airports for people returning from Mexico are currently weak or non-existent. I know where I’d feel safer.

But while the cruise industry is putting the interests of travelers first, it hasn’t come without a cost. According to a recent report from UBS Securities, the two cruise lines with the most exposure to Mexico – Carnival and Royal Caribbean – could have as much as 17% of their ship deployments impacted by the swine flu issue. In financial terms, the investment bank estimates that a prolonged Mexican outbreak of swine flu could result in a 1% decline in full-year yields for both cruise lines.

Despite the hit to their bottom lines, most of the major cruise lines are doing the right thing from both a public relations and customer service perspective. And their promise to keep an eye on future developments and update their policies accordingly can only be seen as a source of comfort for anyone already booked on or contemplating a cruise to ports in both the east and west coasts of Mexico.

Ironically, just like after 9/11 and SARS, the swine flu issue could be a boon to travelers who don’t panic and keep an eye on developments. If history repeats itself, there could soon be a raft of fantastic deals on cruises to the Mexican Riviera even when the health advisory is lifted and things return to normal in Mexico. So savvy travelers would be well advised to keep an eye on these itineraries as the health situation changes.

But at the end of the day, my guess is that the cruise industry overall and the Mexican cruise itineraries in particular will be stronger in future as a result of the consumer-friendly policies implemented this week by most major cruise lines. While they may be taking some short-term pain, theyare adding to their long-term bank of trust and goodwill that can only drive more cruise sales in future.

There are lots of other industries out there that could learn from this example.

When it comes to cruising, I guess the Beatles were right – there really are eight days a week.  At least, that’s the impression some cruise lines are giving when they exaggerate the length of a vacation at sea.

What I’m referring to is the practice of including the check-in and check-out dates as full days in calculating the length of a cruise. For example, if you sail on a one-week cruise from one Saturday to the next, is that a seven or eight-day cruise? 

While a one-week cruise provides seven nights of accommodation, your holiday actually spans eight days. That’s because you check in during the afternoon of Day 1, and depart on the morning of Day 8. But while technically correct, is it fair to promote a one-week voyage as an eight-day cruise?

In my opinion it’s not only unfair, it’s misleading.

After all, passengers can’t board their ship until well after noon on the first day of their cruise, and then they must get off the vessel before 10:00 am on the last day. So while a one-week cruise may span eight days, passengers are actually getting just seven full days of vacation time or less on the ship. The so-called “eighth” day is spent getting to and from the pier. The same principle applies to any length of voyage, whether it’s one or 101 nights – getting to and from the ship is not part of the cruise vacation.

If cruise lines could actually provide passengers with an eight-day voyage each week, there would have to 35 days in a month, and something like 420 days in a calendar year. Unless the cruise lines are using a different type of calendar than the rest of us, eight-day weeks are just not possible.

So why do some cruise lines insist on exaggerating the length of voyages in their brochures and web sites? And what should you do about it?

I suspect one reason for this deception is that it’s an easy way to make some cruises look like an even better deal than they already are. For example, Costa recently promoted a series of week-long cruises in the Med starting at only $549 or what they hailed as costing just over $68 per day. But that per diem is misleading because it’s based on an eight- day week instead of seven.

Another reason some cruise lines exaggerate the length of a cruise is that it makes direct comparisons with competitors more confusing and time-consuming. For example, if I want to compare that 15-day South American cruise with a comparably priced14-day voyage, I may have to look at both itineraries and actually count the number of nights they offer to ensure I’m comparing apples to apples. Busy people might just assume the 15-day voyage is the better value when they could both be the same length –14 nights.

As a result, the best way to determine the length of a cruise is to look at the number of nights it offers rather than days. It’s the same principle used in the hotel industry – they calculate the length of your stay based on nights, not days.

Of course, this task would be a lot easier if the cruise industry adopted a common standard and made it mandatory for members to list the length of voyages using the same criteria. Until that happens, however, the difference between some cruises will continue to be night and day.

Smart cruise lines reward passengers who book early by giving them a price protection guarantee. The way the protection works is that if cruise fares subsequently go down after passengers have booked their cruise, the lower price is passed along to those who booked at the higher rate.

It’s a smart way of encouraging people to make their cruise bookings early, which works well for both passengers and the cruise line. By booking early, passengers get the best choice of cabin categories and sailing dates, and the cruise line gets advance deposit money in the bank, and more time to plan the yield management of each sailing. And a bond of trust and loyalty is created and cultivated between passenger and cruise line.

In good times, price protection is a much easier benefit to provide because most ships sell a lot of cabins well in advance of departure and last-minute discounting isn’t as necessary. But when times get tough, cruise berths become more difficult to sell and there’s a greater need for wide-ranging price reductions as sailing dates get closer. In fact, this is exactly what’s been happening according to a recent report on the cruise industry from UBS Securities.

Giving up revenue by reducing cruise fares for passengers already booked at higher rates is an expensive policy, especially when prices drop by significant amounts. Let me give you a personal example. Last November I booked my family of 4 on an 11-day Mediterranean cruise this summer aboard the Celebrity Solstice. Since booking, we’ve received two price reductions totaling $580 per person, and 4 cabin category upgrades.  

But this kind of price protection is not necessarily automatic. In some cases, it’s up to passenger to keep any eye on cruise fares and advise the cruise line or their travel agent that fares on their cruise have been reduced and that they want a reduction. This is much easier to negotiate before final payment has been made as the passenger can simply cancel his/her cruise, get a 100% refund, and then book the same cruise at the lower rate. However, after final payment is made and cancellation penalties kick in, the passenger is at the mercy of the cruise line and its policies.

That’s why it’s important to understand what a cruise line’s price protection policy is before booking a voyage 90 days or more in advance of departure (the typical period at which final payment is due and cancellation fees begin kicking in).  A number of cruise lines, particularly the ultra-deluxe brands like Crystal, Silversea, Regent and Seabourn, provide the highest level of price protection for their clients.

While some of the premium and economy brands are holding the line, others have instituted policies that greatly restrict the level of price protection available to their passengers. For example, Carnival offers price protection as part of a program that only applies to a limited number of sailings, and I’ve heard from some people who have been adversely impacted by it.

At the end of the day, it’s important to realize that you have full price protection on most cruises until you make final payment and their cancellation policies kick in. But if you want a greater level of protection for that final 90 day period when many discounts are offered, you have two choices.

The first is to always book your voyage with a cruise line that offers full price protection right up until the day of embarkation. If the cruise line values your patronage and wants your continued loyalty, they should give it gladly. The second choice is to wait until the last minute, take your chances, and grab the best available deal. Smart cruise lines will do their best to ensure you make the first choice.  

When Royal Caribbean’s Oasis of the Seas makes its maiden voyage in December of this year, it will set a new benchmark for the size of a cruise ship. At a massive 220,000 tons, this behemoth will stand 213-feet (65m) above sea level, stretch 1,181-feet (360m) long, measure 154- feet (47m) wide, carry 5,400 passengers, and become the largest passenger vessel to ever sail.

To put that in perspective, the Oasis will be nearly 50% bigger than the Independence of the Seas, which currently holds the size record at 154,000 tons. And she’ll be more than twice as big as the 101,000-ton Carnival Destiny, which in 1996 became the largest ship ever built since the 83,000-ton Queen Elizabeth was launched in 1938.

The Oasis will have a total capacity of more than 8,500 people (passengers and crew), which is almost as much as the population of the South Pacific nation of Tuvalu. And it will generate annual revenues in excess of the Gross Domestic Product of several lesser developed countries.

In addition, the $1.2 billion-ship will be too wide (by 48 feet) to fit through the Panama Canal, too long to tie up at several docks, and too bottom heavy to enter some ports. As a result, several Caribbean countries are widening their piers or dredging their harbours to accommodate the Oasis, including Mexico, St. Maarten, the U.S. Virgin Islands and the Bahamas.

So when it comes to size, can a cruise ship be too big? And if so, what is the ideal size for a passenger vessel?

Let’s start with where we are today. Over the last 20 years, the major cruise lines have been building bigger and bigger ships. As a result, where it was once rare to see a cruise ship over 80,000 tons, it’s now common to see ships weighing well over 100,000 tons. In addition, while 1,800-passenger ships used to be considered large vessels, they are now considered medium-sized ships next to the mammoths that carry 3,000 or more people.  

So the yardstick has definitely changed, and with a number of benefits to the cruising public. For example, larger ships have meant more facilities, better entertainment, more activities, more dining choices, larger cabins, etc. And the public has responded by filling more sea berths than ever before – a record 12 million in 2007.

If you need any convincing about how far cruise ship design has come, just take a look at what Royal Caribbean is planning for the Oasis of the Seas. This maritime marvel will feature seven distinct themed areas including a Central Park, a Boardwalk with an Aqua Theater, a Royal Promenade, a Pool and Sports Zone, a Sea Spa and Fitness Centre, an Entertainment Place and a Youth Zone. It will also have the first zip line at sea stretching 82 feet and suspended across the Boardwalk, diving performances, and an Adventure Ocean Theater and carousel for kids.

But while the Oasis will offer more choice, and while it will represent an architectural marvel at sea that will dazzle the senses, will it be enough to compensate for the lack of a traditional cruise-ship atmosphere? Will it be enough to make up for the inevitable line-ups that will occur when getting on and off the ship, and waiting to get in to the most popular activities aboard the vessel? And will it be enough to compensate for the crowded feeling that will occur on the streets of some of the smaller ports of call, which already suffer from too many same-day passenger visits?

The answers to those questions will be known in a few years. If cruise passengers continue to flock to the Oasis, and eventually its sister ship the Allure of the Seas, we could see even bigger ships in future that could nudge the 250,000-ton range.  

However, if vacationers feel these two super-ships are nothing more than floating versions of a bad theme park, it won’t be long before they start sinking under the bloated weight of their own excess.  

Last week U.S. Congresswoman Doris Matsui and U.S. Senator John Kerry announced they are re-introducing the Cruise Vessel Security and Safety Act. The bill was first proposed in 2008 but was never passed despite several hearings in the House and Senate about crimes aboard cruise ships.

So what would the Act mandate, and is this legislation really necessary?

The Act would supposedly provide a higher level of security on cruise ships that call at American ports. It comes in the wake of a handful of high profile incidents that occurred at sea over the past five years including the disappearance of several passengers and a handful of sexual assault allegations against crew members.

The legislation would formally require cruise ships to do what most now do voluntarily - report all allegations of crime aboard their vessel to the FBI and U.S. Coast Guard. Ships would also have to be capable of performing a medical examination to determine if a passenger had been raped. In addition, the Act would require that:

- All cabin doors come equipped with peep holes, security latches and time-sensitive key technology;

- Guard rails on balconies be increased by about 10 inches to a minimum height of 54 inches;

- Ships install technology that can detect a passenger going overboard into the water;

- Cruise lines develop procedures that determine which crew members can have access to passenger cabins and during which time periods;

- Ships keep log books where all deaths, missing people, and alleged crimes including complaints about theft, sexual harassment and assault are recorded. These logs would have to be made available to the FBI and U.S. Coast Guard, and the related statistical data would be made available to the public.

Are these enhanced safety and security standards necessary?

Not really. Compared to crime levels in major cities, cruise ships are one of the safest places to vacation in the world. In fact, there have only been a handful of missing people or sexual assault cases reported on cruise ships over the past five years while nearly 50 million North Americans have cruised over the same period. While even one case of a serious crime is one too many, the proposed changes seem to be just one more case of misguided politicians using a sledge hammer to kill a fly.

For example, do legislators really believe that raising a ship’s railings by nearly a foot will prevent anyone from going overboard? As it is, the only way someone can get over the top of a railing is by being very drunk, very stupid or very unpopular.  I guess we should be grateful that no one has thought of putting barbed wire on the tops of railings, or requiring passengers to wear bicycle helmets when they walk on the open deck.  

That doesn’t mean the entire legislation is useless. Some of the provisions make good sense, and could be easily implemented without much additional cost. However, since the cruise industry has done a very good job of voluntarily improving security and making its ships extremely safe, why do we need politicians to get into the act? And if they succeed, who do you think will ultimately bear the cost of implementing all their “great” ideas.

I’m afraid the proposed Cruise Vessel Security and Safety Act of 2009 is simply a solution in search of a problem. And given the crime rate in our major cities (never mind the current economic crisis), it’s a piece of legislation that politicians should toss overboard so they can deal with more pressing matters.

Last week it was confirmed that a group of online posters and bloggers have been part of an organized viral campaign related to Royal Caribbean International (RCI) cruise line. The campaign, which has been in operation since 2007, was created by an online marketing firm to positively influence opinions about RCI.

Some 50 people were originally invited to join the group, which RCI dubbed the “Royal Champions.”  They were chosen to participate because they had frequently posted positive comments about RCI on various online travel boards in the past. The group’s members were told they would be rewarded for the quality and frequency of their online posts, and indeed various perks were handed out, including all expense paid trips to pre-inaugural sailings of selected Royal Caribbean ships.

The campaign was developed in tandem with Nielsen Buzz Metrics, who helped to identify online supporters of Royal Caribbean.  Using data mining software, they identified themes on blogs, travel forums, and online boards to gain a better understanding of how consumers discuss Royal Caribbean cruises. They then invited 50 people to be part of the group, some of whom had posted over 10,000 comments about Royal Caribbean on various message boards, primarily on Cruise Critic. Some had also posted comments on travel blogs and personal journals.

Since this practice was made public, it has received lots of criticism, especially from people it’s designed to influence – those who surf travel boards in search of genuine consumer opinions about cruise lines and their ships. But is the criticism warranted? How much influence did it really have on the purchasing decisions of consumers? And how much damage has it done to the credibility of both online travel boards and to RCI itself?

In my view, some of the criticism is warranted because RCI’s campaign was based on deception. While the “Royal Champions” were already big fans of RCI before being recruited and may still believe every positive word they’ve written, they and the cruise line never voluntarily disclosed the nature of their relationship in any of their comments. By not doing so, they misled consumers with respect to the independence of these comments. In addition, now that the true relationship is public, they have certainly cast a shadow over the integrity of those comments, and perhaps on any that appear in future.

Did these actions influence cruise purchasing? I doubt it. The comments came from people who were already singing the praises of RCI long before the campaign started. And just about every cruise line has fans who consistently post positive comments and stories, so the discussions tend to be very balanced.

But what about the impact to the credibility of online travel boards and RCI? Well, just about anyone who surfs online for travel recommendations looks at more than one or two comments before making a purchasing decision. And most people are quite good at sniffing out comments that appear too rosy and positive to be genuine. So I don’t think it would shock many people to know that some people use message boards to promote their own product.

The situation for RCI is different. This is a cruise line with a great product, competitive pricing, and hundreds of thousands of loyal fans. They didn’t need to engage in this kind of misleading viral marketing campaign to sell cruises. By doing so, all they’ve accomplished is to ensure everyone will be suspicious when reading positive comments about RCI in future on message boards or blogs.

While this situation is likely a temporary tempest in a teapot, I’m sure executives at RCI are still wondering how they could get caught up in such a negative story. The answer lies in the old PR rule which states, “If you’d feel embarrassed reading about your plans in tomorrow’s newspaper, it’s probably the wrong thing to do.”

Let’s hope RCI and others remember that rule.

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