The concept of family cruising may be winning friends, but the fleet of ships devoted to the market is shrinking fast.
In the past month, the two cruise lines devoted to family cruising have both acknowledged setbacks:
American Family Cruises is shutting down this month, after operating its single ship for just eight months.
Premier Cruise Lines will lease the Majestic, one of its three ships, to a British company, starting in February.
These decisions come as Walt Disney Co. charges ahead with a plan to spend $800 million to enter the family cruise business in 1998. The powerful family entertainment company is betting its well-known name and new ships can overcome the problems that slowed or sank the family market’s pioneers.
But there are skeptics.
“The fact that American Family did not survive and that Premier is not performing well do not bode well for Disney,” said Micky Arison, president of Carnival Cruise Lines.
“While the family segment is important, you have to appeal to a broader base to be successful. Carnival carries more families than any other cruise line, but they’re part of a broad passenger mix.”
A recent Royal Caribbean Cruise Line ad in the trade magazines proclaimed: “Cruises designed for the whole family. Not just the kids.” It makes the point that the big new ships have attractions for parents, too.
Rod McLeod, Royal Caribbean’s executive vice president, said the ad was meant to protect the line from the American Family fallout.
American Family was “a bad idea, poorly executed,” he said, while Premier has suffered because it’s too small to compete.
Not surprisingly, Premier and American Family are a lot more optimistic.
Gary Sain, Premier’s senior vice president of sales and marketing, said the company is looking for a bigger ship than the 760-berth Majestic. He denied reports that its other two ships are for sale.
“We are very secure over here,” Sain said. “We will continue to grow. When Disney comes into the market in four years; it will create demand for our product, as well.”
Bruce Nierenberg, founder of both Premier and American Family, said the lines have problems, but not because of the concept.
Premier has faced competition since Carnival entered the Port Canaveral market in 1990, while American Family, owned by Italian cruise company Costa Crocieri, did not have its owner’s full support, Nierenberg said.
“The family vacation market is the biggest market there is,” Nierenberg said. “Right now, its relationship to cruising is small, so there isn’t enough of a case history to judge whether they can merge. But Disney will execute correctly.”
Art Rodney, president of Disney’s cruise operation, said he is “committed to delivering the best cruise product for every part of the family,” not just for kids. He even expects the Disney reputation to draw newlyweds and senior citizens.
“There won’t be screaming kids all over our ships,” Rodney said. “We will have a huge amount of separate space for kids, and if parents want to, they can just deposit the kids and enjoy the sunshine and all the pools.”
Disney’s cruise line will start with staterooms of about 220 square feet, larger than Carnival’s standard outside cabin size of 185 square feet or Royal Caribbean’s standard outside cabin size of 122 square feet. Each of Disney’s two ships will have 860 staterooms.
“Disney has a very good chance of creating positive publicity and interest in cruising and in moving a lot of passengers, but they will have a difficult time making money,” Carnival’s Arison said.
He said Disney’s costs will exceed Carnival’s because of high start-up costs, its unfamiliarity with the cruise business and the need to rely largely on the family market.
But Rodney said Disney’s advantages will let it charge passengers about 20 percent more than they pay on Carnival. One advantage, he said, will be the ability to offer a seven-day vacation, combining Disney World and a cruise, with just one check-in for the hotel, the bus and the ship.
The cruise ships will provide incremental revenue to Disney, after passengers already have spent money visiting the company’s theme park, eating at its restaurants and staying in its hotels.
But Royal Caribbean’s McLeod said he anticipates a strong performance by Disney:
“Will they see challenges as they come into the cruise market? Certainly they will. We plan on being one of them. But we don’t underestimate their capabilities as a marketing operator or as a resort operator, and I don’t think they underestimate us, either.”
