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Friday, September 5, 2003



art
NORWEGIAN CRUISE LINE
London-based graphic designer Keith Allan created the hull art for Norwegian Cruise Line's Pride of America, due to cruise Hawaii beginning next year.



Cruising into business

Norwegian's plan to out-source
formerly ship-board tasks stands
to benefit local firms


Norwegian Cruise Line is confident it will make money in Hawaii after it shifts next year to an American-flagged operation with American wages, according to Colin Veitch, NCL president and chief executive officer.

One way to do that will be by getting local contractors to do some of the work now done on ships, such as laundry services, Veitch told the annual Hawaii Business magazine Top 250 luncheon yesterday at the Waikiki Beach Marriott Resort.

Labor costs will be more than double those of the foreign-registered, foreign-crewed vessels NCL has been using, Veitch said. "We believe we can cope with that by innovative re-engineering" of the way ships operate, he said.

For example, he said, at low wages it makes sense to clean the sheets, table cloths, towels and other items aboard ship. It would not make as much sense under the high wages and good benefits NCL promises to pay its thousands of American crew members, he said. Farming that work out to island businesses would cost less, Veitch said.

That would bring the equivalent of several hotels worth of work into the local market.

"We're certainly glad to hear that they are considering that," said Vicky Cayetano, president of United Laundry Services. "We would certainly be interested. It could be big business."

Some janitorial work and other tasks now done by crew members also will be handled by outside businesses while the ships are in port, Veitch said.

NCL will spend $1.2 billion over the next few years on new ships and equipment for Hawaii cruises, he said. "If we didn't think we were going to make our money back again, we wouldn't do it."

The main thrust in making money will be in selling land and sea packages and continuing to build the business in Hawaii, he said. That will be achieved by promoting Hawaii as a new destination and by taking business away from other destinations, Veitch said.

Hawaii, once dependent on ocean liners for its tourist trade, is currently under-served by vessels, he said. NCL's Norwegian Star is the one new vessel in the Hawaii cruise business year-round. Alaska is served by 24 new vessels, he said.

"We want to be the Hawaii specialist. For us, this is going to be our Alaska," Veitch said.

In 2000, Hawaii was 2 percent of NCL's business. This year, with the Norwegian Star working year-round and the business the Norwegian Wind produced here in the spring, Hawaii will represent 17 percent of NCL's total business.

"Hawaii is less than 3 percent of the total (world) cruise market. The initiative that we're taking will double that," Veitch said.

In 2005 -- the first full year of operation of both the new Pride of America and the smaller Pride of Aloha, renamed and reflagged from the former Norwegian Sky, as well as with plans for the Norwegian Wind to operate year-round -- Hawaii will be 27 percent of NCL's business. With another U.S.-flagged ship to be added later, that will rise to more than 30 percent, Veitch said.

NCL expects to board 190,000 passengers in Hawaii next year, nearly 400,000 in 2005, and in 2007 as many as 650,000.

The big success levels will come from being able to make seven-day cruises entirely in Hawaiian waters, without the long run out to Fanning Island in the Republic of Kiribati that was needed while the ships were foreign-flagged, Veitch said.

NCL will still go to Fanning because it has developed a market there, but most of its business will be in Hawaiian waters. By not having to go to Fanning on all its voyages, NCL will save $7 million a year in fuel costs, he said.

The Pride of America was designed for 1,900 passengers when it was started in an American shipyard by the now bankrupt American Classic Voyages. Since NCL bought it and had it towed to Germany to be finished, it has been cut in half and a new midsection is being added, bringing the passenger capacity to about 2,200. The vessel is due in Hawaii in July and will sail under a U.S. flag with a U.S. crew, running seven-day cruises around the islands.

The 1,750-passenger Norwegian Wind, coming back in May, will be Honolulu-based year-round, keep its foreign registry and make longer cruises of 10 and 11 days, including the stop at Fanning.

The Pride of Aloha, with about 2,000 passengers, will start in October 2004, doing the shorter cruises.



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