Corpus Christi Caller Times Caller.com - Cruise lines feel big shift

Marketplace \| Services \| Contact Us \| Community \| Arts & Entertainment \| Local Guides

Published by the Corpus Christi Caller-Times. CLICK FOR NEWSPAPER DELIVERY

Sunday, November 4, 2001
Cruise lines feel big shift
Recent attacks have increased potential for added tourism
By Laura Elder
Caller-Times

George Gongora/Caller-Times

Port of Corpus Christi marketing director Lillian Riojas (left) and her boss, Jake Jacobi, are on the Storm Pavilion at the Solomon Ortiz Center, where cruise ships would dock if Corpus Christi becomes a destination for them.

Some observers say it's too early to gauge the long-term effect of Sept. 11 on the cruise industry, but the events already have made serious waves in the Texas market.
   Last week, Miami-based Royal Caribbean International announced its ship Rhapsody of the Seas would begin sailing out of Galveston to the Western Caribbean in April. The cruise line had planned on shipping off to Europe.
   "Because of the attacks and because of the resulting military action, the demand for cruises would be far greater here in North America," said Michael Sheehan, a Royal Caribbean spokesman.
   Such shakeups could also have an effect on Corpus Christi, which for four years has tried to establish itself as a destination in the cruise business.
   While Corpus Christi is a port of call for some small theme cruises, it's working to become a homeport, or a port from which a cruise ship loads passengers and begins its itinerary, and which it returns to conclude its voyage.
   Mike Driscoll, editor of the industry publication Cruise Week, said Corpus Christi's position as a potential cruise port has improved dramatically since the attacks changed tourist habits.
   "If Corpus Christi doesn't attract a cruise line in the next year or two, they're never going to attract one," Driscoll said.
   Fewer flying, more driving
   Many cruise lines depend on airlines to deliver their passengers to port. But many consumers, still fearful of flying after the hijackings, are canceling cruise vacations, according to reports.

Caller-Times file photo

The German cruise ship Berlin docked at Cargo Dock 1 under the Harbor Bridge in 1991. The 457-foot ship is the type of vessel local tourism officials would like to see visiting the harbor.

   And because of its potential as a drive-in market, the Port of Corpus Christi may be in a stronger position to attract a cruise line, say some industry watchers.
   If anyone is paying attention to the Texas cruise news, it's Lillian Riojas and Jake Jacobi.
   Riojas is marketing manager for the port. Jacobi is deputy director. Both have been working for four years to attract a cruise line to Corpus Christi.
   Riojas said she thought the sudden shift in the industry could benefit Corpus Christi, but so could the maturing Texas cruise market.
   More than a year ago, the port unveiled its $5.8 million Congressman Solomon P. Ortiz International Center, which doubles as a cruise terminal and a conference facility. The conference side has gone well, and is self-sustaining. If the port never attracts a cruise, the conference facility would still have been a good investment, officials say.
   Two years out
   But some port commissioners say they don't want anyone to forget about the cruise side.
   At the port authority's last meeting, staff updated commissioners about the status of the Ortiz center.
   Port Commissioner Bill Dodge said he was happy with the progress the port had made attracting conferences and meetings.
   "But it was more of a gentle reminder that the primary reason we built the facility was to put us in the market to be a cruise port," Dodge said.
   Port officials also knew that just building a cruise terminal wouldn't immediately earn it a cruise line. Cruise lines plan their itineraries two years in advance.
   Sea of red ink
   With the attacks, the cruise industry as a whole has hit some rough waters. Major lines reported millions of dollars in losses because of cancellations.
   Renaissance and American Classic Voyages ceased most or all operations. Last month, American Classic filed for Chapter 11 bankruptcy protection and shut down four of its five Delta Queen vessels. American Classic is the largest U.S.-flagged cruise company.
   "The tragic events of Sept. 11 dealt a devastating blow to our business that has made it impossible to continue our full operations," Phil Calianchief executive officer of Miami-based American Classic, said last month. The company reduced its scale to focus on Mississippi River cruises.
   Up until the terrorist attacks, the conference center was on target to meet its $850,000 gross revenue budget, but came in about $50,000 short because of attack-related cancellations. Next year, the facility should exceed its goal of more than $1 million, say officials.
   But attracting a cruise line is a slow process in a fast-changing industry.
   Serious interest
   The port has a nibble from a cruise line toying with an itinerary that would include Corpus Christi, Veracruz and Tampico. For competitive reasons, Riojas and Jacobi won't name the company or give details.
   Port Commissioner Tony Pletcher said those negotiations are serious and the port's trade mission with Mexico is helping, as is the post-Sept. 11 cruise itinerary shift.
   "Nothing has been firmed, but I think we are as attractive as we have ever been," Pletcher said.
   Riojas and Jacobi hope that Houston and Galveston's success in the cruise business could buoy Corpus Christi's position.
   But the ups and downs in the Texas cruise industry can make a person seasick. Much has changed since the Ortiz Center was unveiled.
   Pulling out of port
   In January, Norwegian Cruise Line took its Norwegian Sea to Miami, where the company hoped it would make a heftier profit than it did in Houston. In September last year, creditors seized Premier Cruise Lines' ships, including one that called at the Houston port. Just like that, Houston was out of the cruise business.
   As Houston was losing its cruise line partners, Galveston gained two, with Royal Caribbean's initial plan to bring the Rhapsody as part of its plan to test Gulf ports. Carnival Cruise Lines began sailing its Celebration last September.
   But last month, Houston got back in the game when Royal Olympic Cruises announced plans to base its 836-passenger Olympia Voyager at the Port of Houston year-round beginning early next year.
   Local officials view Galveston and Houston as port competitors. Still, those cities are bringing attention to Texas ports overall, said Port Chairwoman Yolanda Olivarez.
   "Any port is a competitor," Olivarez said. "In a sense, what they've done is put us in the market. They (cruise lines) are looking at the whole market and anytime they're successful, we're going to benefit."
   Cruise line criteria
   Bob Sharak, vice president of marketing and business development for New York-based Cruise Lines International Association, said Corpus Christi still must meet cruise line criteria, even if the market seems favorable now.
   Cruise lines look at demographics, airlift capabilities and terminal capacity.
   The Corpus Christi International Airport is not a hub, but has ample flights to accommodate an 800-passenger cruise ship, which is what the port is seeking. The size of Harbor Bridge would keep larger ships from cruising here. From their research, port officials estimate that on any given cruise, about 200 would drive here, and 400 would fly here.
   When the port decided it wanted to be a serious contender for cruise lines four years ago, it commissioned a $15,000 market demand study and survey from the University of Texas-San Antonio's Tourism Research Center.
   The nationwide mail survey, which excluded South Texas and the Texas Gulf Coast, had a 23.5 percent response rate with a sampling error of plus or minus 5.3 percent.
   Surveyors found that 61 percent of respondents thinking of a cruise in the next two years are interested in Corpus Christi cruise services. Corpus Christi would focus on cruises to Gulf of Mexico ports and the Western Caribbean.
   Big potential
   The research center also found that the cruise potential within the 500-mile radius totals about 2.6 million, and the Winter Texan market potential in the Rio Grande Valley is 21,350.
   The national market potential for cruise services from Corpus Christi numbers 24.1 million.
   People surveyed indicated a strong interest in pre-or-post-cruise packages. Corpus Christi is joining marketing forces with San Antonio to promote a regional destination.
   Even before Sept. 11, cruise lines were branching out to new ports such as New Orleans, Charleston, S.C., and Newport News, Va. That bodes well for Corpus Christi.
   "Carnival has for several years focused strongly on diversifying the scope of homeports from which we operate," said Carnival spokeswoman Jennifer de la Cruz. "We've been placing a great emphasis on drive markets and reaching out to regional populations for some time now."
   Good strategy
   Because of the strategy, Carnival has not had to re-route ships since Sept. 11, and is in a much better position than it competitors, de la Cruz said.
   "Interest in those (overseas) cruises has really nose-dived, and it may be at that point that people who are finding themselves with a ship they need to place in the North American market are looking around at their options, such as Corpus Christi," de la Cruz said.
   Up until the terrorist attacks, the cruise industry was constantly expanding, growing an average of 8 percent a year since 1980 in terms of passengers. Last year, just less than 7 million passengers boarded cruise ships, Sharak said.
   "The industry is probably accepting 85 percent to 90 percent of the daily business it was processing before the incident occurred," Sharak said. "But they're doing better every day."
   Corpus Christi is relatively new attracting cruise lines. For comparison, it took The Port of Galveston 10 years to attract cruise business.
   "What most ports told us is it takes a good 10 years to develop cruise business," Olivarez said.
   Maybe even longer
   It took Houston longer. Jacobi also expects the process to be slow. He went to work for Charleston's port in 1972. At that time Charleston was attempting to attract cruise business, but didn't get it until about four years ago.
   "Charleston had a lot of tourism, but the terminal sat idle for years," Jacobi said. "They stored plywood in it."
   Corpus Christi is a port of call to the RiverBarge excursions, which brings 800 passengers at a time to the city. The passengers stay for one or two days here, and move on to the next port on the route.
   But Jacobi and Riojas know the payoff from landing a cruise line is big.
   Price Waterhouse for the International Council of Cruise Lines calculates the direct impact alone from Galveston's 2001 trips by Royal Caribbean is about $1.8 million. Cruise lines buy supplies locally and passengers spend money in port towns before and after trips.
   Port officials continue to go to trade events, and drum up business.
   "Being in the port business takes time and you need to have patience," Riojas said. "If you believe in the project, and stay the course, things will happen."


Contact Laura Elder at 886-3678 or elderl@caller.com

[ Printer-friendly version ]
[ Subscribe to newspaper ]

SEND THIS PAGE TO A FRIEND