Ship loss to cut visitor spending by $220M
The Pride of Hawaii pullout will challenge the businesses that NCL contracts with
Norwegian Cruise Line's decision to pull Pride of Hawaii from the islands and send it to Europe is expected to cost the state some $220 million in visitor spending, state data indicates.
NCL America, the line's Hawaii operating arm, is expected to bring about 250,000 visitors to the state in 2008. Pride of Hawaii could have brought that count up by 94,544 passengers.
For the time being, NCL America's downsizing will make berthing at crowded Hawaii harbors easier for Celebrity Cruises and Royal Caribbean. However, it's too soon for either company to take greater advantage of the change, they said.
In the meantime, the departure of Pride of Hawaii will challenge some of the 200 or so activities and attractions that NCL America does business with as well as the company's food and service suppliers.
The decision by Norwegian Cruise Line to pull Pride of Hawaii from the islands in 2008 could cost Hawaii up to $220 million in visitor spending, according to the state Department of Business, Economic Development & Tourism.
The 2,400-passenger Pride of Hawaii is slated to leave the islands on Feb. 15 of next year to join NCL's newest Jewel-class ships in Europe, the company said yesterday. The ship, which will be renamed Norwegian Jade, will get new hull art and a casino in the refitting.
The repositioning is in response to increased consumer demand for European cruises as well as a need to bolster pricing in Hawaii, which saw dramatic downturns after Pride of Hawaii joined the fleet last summer, said NCL America, which operates the line's Hawaii-ported fleet.
The ship's European deployment will cause the state to lose about 94,544 out-of-state visitors, provided that no other cruise line takes the berths left open by the Pride of Hawaii's departure. While the company said it will offer employment opportunities to all 965 workers who were employed on the ship, many will be displaced.
"Our calculation shows that the relocation of the Pride of Hawaii will result in a maximum loss of $220 million in direct sales to the 94,544 out-of-state visitors to the State for 2008," said Cy Feng, DBEDT economist.
The departure of Pride of Hawaii will challenge some of the 200 or so activities and attractions that NCL America does business with as well as the company's food and service suppliers.
But despite the one-third reduction in its fleet, NCL America will bring more than 250,000 visitors to Hawaii in 2008, said Robert Kritzman, executive vice president and managing director for NCL America. That's more than half of the total cruise passengers in Hawaii, said state Tourism Liaison Marsha Wienert, who estimates that the cruise industry will bring 400,000 visitors to Hawaii next year.
"The impact is quite small when you compare it to the whole visitor industry" said State Economist Pearl Imada Iboshi.
Still, it's pervasive. The impacts will be felt across all islands, Wienert said.
Increased competition from foreign-flagged cruise lines, which have expanded their port stops to include more time in Hawaii, has severely constrained financial performance for NCL America.
In February, NCL and its parent company, Hong Kong-based Star Cruises Ltd., blamed the Hawaii operations for widening corporate losses
"We were surprised by the growth in the foreign competition and the long cruises from the West Coast," Kritzman said. "We've had a lot of growth in a short period of time and this is a readjustment of the supply.
While Celebrity Cruises has extended the 2008 itineraries of its 14-day Hawaii cruises to 15 days to give passengers more time in the islands, its too early to speculate about the how the company will respond to NCL America's downsizing, said Tavia Robb, a spokeswoman for the company.
Royal Caribbean, whose 2008 itineraries offer many Hawaii options, has not changed its sailing schedule, either, said Tracy Quan, a spokeswoman for Royal Caribbean.
"Royal Caribbean hasn't made any adjustments because of NCL's change," Quan said. "They offer a very different product from what we do. It doesn't really effect how we plan our schedule at all, but it makes berthing a bit easier."
In 2007, Hawaii slipped in cruise booking rankings from fourth to fifth most popular destination, according to a study released yesterday by Cruise Holidays, a unit of Carlson Travel Network Associates Inc. The Caribbean, Alaska, Mexico and Europe were the most preferred destinations, the study said.
Pride of Hawaii will continue her seven-day roundtrip Honolulu cruises through Jan. 28. After a series of repositioning cruises, the ship will arrive in Barcelona for her first 12-day cruise beginning on March 30, 2008.
The vessel will not return to Hawaii until NCL America achieves profitability, said Colin Veitch, NCL's president and chief executive officer.