STAR-BULLETIN / JUNE 2006 NCL's Pride of Hawaii, which arrived in Honolulu in June, will leave in February. CLICK FOR LARGE

Pride of Hawaii leaving

Norwegian Cruise Line says the move will bolster prices

» Hawaii visitor industry workers reel from NCL's announcement

Norwegian Cruise Line, which last February blamed its Hawaii operations for widening corporate losses, has chosen to stem the financial bleeding by sending Pride of Hawaii, its largest and newest U.S.-flagged ship, to Europe.

The move, which the company said is temporary, will take effect next February.

Robert Kritzman, executive vice president and managing director for NCL America, said the change is meant to bolster pricing in the Hawaii market, which saw dramatic downturns after Pride of Hawaii joined the fleet last summer.

Kritzman said increased competition from foreign-flagged ships entering the Hawaii market from the West Coast has contributed to the company's struggle in Hawaii.

"Obviously, reducing the supply by one ship will have a very positive effect on the pricing," Kritzman said, adding that the company still expects to bring 250,000 visitors to Hawaii in 2008 despite the one-third reduction to its fleet.

Pride of Hawaii, which holds about 2,400 passengers and employs 965 workers, will not return to Hawaii until NCL America achieves profitability, said Colin Veitch, the company's president and chief executive officer.

"We take this action with regret, but sure in the knowledge that a temporary retrenchment is the right thing to do for the good of the business and the good of Hawaii in the long run," Veitch said.

NCL employees who will be displaced by the changes will be offered new positions within the company, Kritzman said. Guests booked on the Pride of Hawaii for February 2008 and beyond will be offered a $50 credit per stateroom if they rebook by May 1 on another Hawaii ship. Guests choosing to cancel will receive full refunds, he said.

Ship's absence will hit tourism

Members of Hawaii's visitor industry, from farmers and laundry suppliers to tour operators and hotel chains, are reeling from an announcement yesterday that Norwegian Cruise Line's U.S. unit plans to temporarily cut its Hawaii fleet by one-third next year.

"NCL America is not just your typical visitor industry business. It impacts all facets of our economy, whether it be the cleaning services that it utilizes, the agricultural products that they buy from our local distributors or the blocks of seats that they buy each week from our activities and attractions," said State Tourism Liaison Marsha Wienert.

The company has been credited with keeping many of the isle visitor industry's small businesses afloat and creating expansion opportunities for others, Wienert said.

"They offer guaranteed business," she said.

From the start, NCL's expansion into Hawaii has faced choppy seas, prompting many in the maritime industry to bring up the ghosts of other ill-fated U.S.-flagged operations like American Classic Voyages Inc., which ended up in bankruptcy.

For NCL there came bad weather, then costly production delays, and then a barrage of consumer complaints documented on cruising blogs and Web sites .

NCL worked to improve its image so successfully that Pride of Hawaii's arrival last summer seemed to have bypassed the difficulties surrounding the debuts of the company's other two Hawaii-ported ships.

But while the arrival of Pride of Hawaii did not generate the negative publicity of the other ships, the arrival had an almost immediate negative impact on the company's bottom line. And competitors had by then begun modifying their own itineraries to include stops in Hawaii.

NCL lowered its prices after Pride of Hawaii arrived in 2006, said Danny Ching, owner of Non Stop Travel, NCL's largest cruise agent in Hawaii, in an interview earlier this year.

"Basically, demand hasn't quite caught up to the inventory, but I don't expect this condition to last," Ching said. "NCL America's prices will rise as word continues to get out about the value of their product."

U.S. Sen. Dan Inouye, who championed the company's entry into the islands, expressed disappointment in NCL's decision to cut back Hawaii operations and that he looks forward "to the day that we will be able to welcome the Pride of Hawaii back to Hawaii's shores, hopefully in the not-too-distant future."

NCL America's entrance into Hawaii's market has been good for the state, which has seen cruise capacity quadruple since the company's 2004 entry, Inouye said.

"I am proud of the great strides made, through the robust growth of a cruise ship sector, to further diversify Hawaii's tourism industry, making our island state the fastest growing domestic cruise destination in America," he said.