Cruise execs talk Caribbean capacity issues at conference

MIAMI BEACH — Recent ship additions proposed for the
Caribbean raise the prospect of continued overcapacity and pricing pressure in
a region crucial to North American travel agents.

The deployments include a third Oasis-class ship from Royal
Caribbean International starting in 2016 and the arrival of the MSC Seaside in
late 2017 for year-round cruising from Miami.

At least one older Royal Caribbean ship is scheduled to exit
Caribbean service at the same time, but executives on a panel devoted to the
region at the Cruise Shipping Miami conference here agreed that the Caribbean
will likely remain the top geographic market by capacity.

“The Caribbean was, is and will always be the most important
destination, certainly for the North American market,” said panelist Michael
Bayley, president of Royal Caribbean International.

About 36% of the industry’s capacity will be in the
Caribbean this year, down slightly from 
37.3% in 2014 when a concentration of ships led to a slump in pricing
that hurt supplier profits and travel agent commissions.

Rick Sasso, president of MSC Cruises USA, said the mobility
of cruise ships proved a mixed blessing in 2014. “I think we’re a victim of our
own nimbleness,” Sasso said, pointing out that each line independently moved
ships to the Caribbean in late 2012, creating a collective traffic jam.

“We were surprised by everybody’s decision simultaneously to
try to fill a void,” Sasso said.  “We
have people moving ships to different parts of the world almost overnight.”

Although the year-over-year capacity increases are scheduled
to taper after the first quarter of 2015, the area remains thick with ships in
the fourth and first quarters into the future.

That puts the onus on cruise lines to get passengers excited
about the area, panelists said.

“We’ve got demand issues,” concluded Christine Duffy,
president of Carnival Cruise Line, who added that over the past two years
cruise lines have learned to be smarter and more creative when things change.

“I think we’re much more focused on how do we do the right
kind of target marketing,” Duffy said.