Assessing the State of the Cruise Business

Having spent much time in downtown Norfolk with the Virginia Port Authority, and then nearly a decade with the world’s second-largest cruise port, I have a few observations about the state of the cruise business in Norfolk.

First, the cruise business is fluid and not for the faint-hearted. The only constant is its propensity to change without notice. Baltimore loses a homeported ship, Mobile loses a homeported ship, Norfolk loses several ship calls.

No port is immune from deployment decisions. Port Canaveral has twice lost homeported vessels, of the same cruise line, no less, only to gain them back as economic circumstances shifted.

No port is immune from challenges. Both Jacksonville and Tampa have a bridge that limits the sizes of ships that can call on their ports, a critical issue as cruise ships grow increasingly larger. Charleston has issues with some in its community seeking to protect its heritage from the masses of cruise ship passengers. Mobile has a beautiful, vacant cruise facility.

And as of last week, Norfolk’s Half Moone Cruise and Celebration Center has no cruise ship based there.

It’s like a game of musical chairs: One port gains; another, somewhere, loses. It is really not a game, though, but a reality in which many port/cruise line contracts do not exceed two years.

Second, while it is easy to fantasize about the cruise business, remember that Charleston has just one homeported vessel, and Baltimore’s success is relatively recent, based on two vessels, one of which has been in jeopardy.

Norfolk’s competitors should be applauded for their success, but keep success in perspective.

Here is how I see the industry:

– The European economy will eventually improve enough so that ships that abandoned that market for the bread-and-butter U.S.-Caribbean market will return to Europe. (High airfares to Europe have put a damper on European cruising by Americans. It is difficult to foresee how that problem is remedied.)

– Asian markets will continue to emerge, and the opening of the expanded Panama Canal will facilitate the movement of larger cruise ships to those markets.

– The Emissions Control Area issue is being resolved, and ships will return to the Mid-Atlantic. (Remember that Norfolk’s losses pale in comparison to those of Baltimore, which has had a weekly ship at risk.)

– Cruise lines will continue to build larger ships for their larger markets. This may provide older, smaller but refurbished vessels for smaller ports.

What does this mean for Norfolk?

First, there will be a premium on creative, out-of-the-box marketing to make Norfolk a more attractive choice for the cruise lines.

Houston built a cruise facility that reportedly cost $90 million, had no ships for years, yet has now found some success.

Second, do not discount the economic impact of “port-of-call” or “transit” ships. Their passengers can contribute mightily to the regional economy. This is a market worth pursuing in its own right.

Third, do not overlook the niche market. It may not generate the passenger volumes, but it will stimulate economic activity and fortify Norfolk’s reputation as a player in the cruise market.

Fourth and finally, do not give up on the vision that is the foundation for this facility. It took a great deal of courage and vision to move Hampton Roads’ cruise business from its original home on a cargo terminal years ago to downtown Norfolk, and while that investment may have been based on projections that no longer have support in the cruise marketplace, Norfolk is not the only port suffering from an optimism overtaken by circumstances. That is the fluid nature of the cruise business.

Simply define success differently and take pride in a wonderful facility that is a pillar for the second re-birth of downtown Norfolk and its waterfront.

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