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Cruise Line spending slows on fewer ships, report says

NEW YORK (Bloomberg) ? Spending related to cruises run by Carnival Corp., Royal Caribbean Cruises Ltd. and other lines grew at the slowest pace in at least six years as fewer new ships were launched.

Cruise ships travelling to and from US ports and their passengers pumped $32.4 billion into the US economy, a 7.9 percent increase, the International Council of Cruise Lines said in a report released last week.

Passengers travelling from US ports rose 6.3 percent to 8.6 million, less than half the rate of growth in 2004.

More than 80 cruises were cancelled last year as Hurricanes Katrina, Rita and Wilma pummelled Florida and the Gulf Coast, closing the port in New Orleans and damaging docks in Cozumel, Mexico. Both Carnival and Royal Caribbean have cut profit forecasts due to higher fuel prices and weaker demand for trips in the Caribbean.

?In 2006, increasing fuel costs are a factor but that?s being offset in that we are having a very quiet hurricane season that hasn?t disrupted operations,? ICCL President Michael Crye said in an interview.

Four new cruise ships were introduced last year and four were taken out of service, leaving the North American fleet unchanged at 192 ships, the trade association said. Six new ships are scheduled to launch in 2006, ICCL said.

Katrina, which hit the Gulf Coast a year ago, was the worst natural disaster in US history, causing more than $81 billion in damage, killing more than 1,800 people and displacing hundreds of thousands of others. No hurricanes have hit the US yet during the Atlantic Ocean season, which runs June 1 to November 30.

Tropical Storm Ernesto, the fifth-named storm of the season, came ashore in Florida last week.

The September 11, 2001, terrorist attacks caused disruptions in the travel industry that limited the number of new ships delivered last year, Crye said today from Arlington, Virginia. The number of beds increased by 2.2 percent, the smallest percentage since 1994, as the new ships introduced were bigger.

Higher average ticket prices and higher passenger spending on board caused growth, said Crye. Global spending on a per-passenger basis increased 7.3 percent to $1,667 in 2005 from $1,553 in 2004.

The spending growth by cruise lines and their passengers is the slowest since 1999-2000, ICCL said based on their data. Of the $32.4 billion, $16.2 billion was direct spending by cruise lines and passengers, including on-board food and beverages and advertising expenses.

This created 142,700 jobs and $5.2 billion in wages and salaries, ICCL said.

The remaining amount came in indirect spending from companies that supply goods and services to passengers and crew.

About 75 percent of cruise passengers left from US ports in 2005, ICCL said. Fifty-six percent of all US embarkations were in Florida. The three biggest US ports, Miami, Port Everglades and Port Canaveral, are in the state, followed by Los Angeles and Galveston, Texas.