Quotes of the Day
The old queen reigned for 31 years, crossing the Atlantic 1,001 times, three of them carrying Winston Churchill. During World War II, she gave up her old rich crowd to carry servicemen and their families. She was much beloved. So last week, when Queen Elizabeth II stood in blustery winds on a pier in Southampton, England, and released a bottle of champagne against the bow of the dowager's heir to christen her the Queen Mary 2, the new vessel, the largest cruise ship ever built, had a huge legacy to live up to.
She's certainly big enough for the job. Taller than Notre Dame cathedral and designed to cruise the North Atlantic at a zippy 30 m.p.h., the 151,400 gross-ton ship cost $800 million and will tower over every port where it docks. But as more than 2,600 paying passengers, served by almost half as many crew members, sail to Florida for more celebrations this week, one question was going through many minds: Is this a ship of fools?
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The cruise business has been experiencing choppy waters over the past few years. U.S. cruise lines have launched 50 new ships since 2000, with 12 more scheduled to be completed this year. The resulting glut in a time of recession has forced operators to slash prices to fill berths. Add in the facts that the QM2 is making her maiden voyage at a time when terrorists can punch a hole in a U.S. destroyer with a rubber raft full of explosives (as they did to the U.S.S. Cole in 2000), Americans are still skittish about foreign travel, and a traveler can fly between London and New York City in six hours for $300--one has to wonder if there will be enough customers to make the same journey in six days, at prices starting at $1,499 and heading north of $25,000.
Micky Arison thinks so. Arison is CEO of Carnival Corp., the cruise-industry behemoth that bought the venerable but floundering Cunard Line, which operates the QM2. "The concept of the Queen Mary was the reason for the acquisition," Arison says. Plans to build the big liner were announced within months of Carnival's 1998 takeover of Cunard, and Arison believes he can make $120 million from the QM2 "in a good year."
Cunard's famous flagship, the QE2, had a steady business crossing the Atlantic but has aged, as have its passengers. Carnival, on the other hand, made its reputation (and Arison a fortune estimated at $4.4 billion by Forbes magazine) by attracting younger passengers onto modern, glitzy ships, where the casinos start at 8 a.m., the discos are hopping until the wee hours, but the library opens for only an hour a day. Arison is hoping that Carnival's mass-market formula can be adapted from short cruises in warm climates to the sterner waters of the North Atlantic without destroying the romantic aura of transatlantic crossings.
According to Cunard officials, 70% of the QM2's berths have been booked through the end of 2004, and 60% of the passengers have never traveled on a Cunard ship before. The trick will be to keep up this momentum. Last week the company tried to extract every ounce of buzz it could from the naming ceremony, drawing thousands of veteran cruisers, journalists and European travel agents to tour the ship. The general verdict was highly positive, even if the ship's decor and amenities seemed to be straining to appeal to customers in different age and income groups. After his tour, Mike Driscoll, editor of Cruise Week, an industry newsletter, said, "They're not going after 65-year-olds who care about the weight of the silverware. There aren't enough of them anymore. They're going after the guy who drives his Porsche to Taco Bell."
The original Queen Mary, 113 ft. shorter than QM2, is now a floating hotel in Long Beach, Calif. The QM2 has some of the old ship's glamour — and, with a nod to nostalgia, one of its whistles. But the focus is catering to modern taste: the QM2 offers the only planetarium at sea, the largest dance floor afloat, education-lite courses by Oxford professors and a luxurious 20,000-sq.-ft. spa run by the upscale Canyon Ranch chain. Cabins are comparatively roomy, and three-quarters of them have balconies. Some observers on the preliminary tour complained that the furniture in some of the lounges looked cheap and that deck chairs for the lowest-priced cabins were white plastic instead of the traditional teak. Victoria Mather, travel editor of the British magazine the Tatler, dismissed the pervasive Art Deco look as "Las Vegas"--kitschy instead of tasteful. Note to travel snobs: those kitschy Las Vegas casinos make serious money.
Cruise operators are optimistic that they will too. New berths will rise only slightly in 2005 and 2006, and the demand for cruising, which slumped after Sept. 11, has bounced back, growing at an estimated 8.6% in 2003. "I would challenge any other segment of the tourism industry to show rebounding at our pace," says Cruise Lines International Association executive director Bob Sharak.
Ship owners have learned to protect profits even with soft demand. Ships have become bigger, and "economies of scale really work" on cruises, says John Maxwell, a leisure-industry analyst at Merrill Lynch in New York City. Ways of extracting extra money from passengers have become more sophisticated, like TV sets that allow gambling from one's stateroom and premium restaurants that charge a supplement. Driscoll estimates that Carnival makes 20% of its revenues from onboard charges.
Also, in a time when fear of terrorism is widespread, ships — unlike hotels — can take advantage of their mobility, shifting routes away from geopolitical hot spots. Since Sept. 11, cruises through the Suez Canal or to countries like Indonesia have been replaced by trips to Alaska, the Caribbean and South America. There is also an increase in "home porting," which means cruise ships stop at smaller U.S. ports to pick up passengers who can drive there instead of taking a flight. Some 30 U.S. cities now operate as cruise-ship gateways, including Baltimore, Md.; Galveston, Texas; and Mobile, Ala.--roughly double the number in 2000. This year the falling dollar is expected to discourage Americans from taking European vacations and to prod Europeans to consider U.S.-based cruises. And with 85% of Americans and 90% of Europeans yet to try a cruise, it is no surprise that analysts have been upgrading their estimates of Carnival's stock price — and of the industry's prospects generally.
The wave of publicity the QM2 is generating can only help. But Cunard's latest icon will require delicate navigation. In November, when a gangplank collapsed at QM2's French shipyard, killing 15 people, headlines proclaimed a "jinxed" ship. A shipboard virus on the high-profile QM2 or a fine for polluting the sea would be certain to be heard around the world. Not to mention the ultimate nightmare — a terrorist attack. But as police boats patrolled in Southampton last week and Gurkhas formerly from the British army provided security on board, private boats charged to take gawkers as near the QM2 as security would allow, and families were stopping their cars at a nearby point just to gaze at her. If public affection is any measure, the world's largest cruise liner looks well set for a long and happy life.
- J.F.O. McAllister/Southampton