By David L. Brown
If there is any segment of the wounded economic world that stands out as primed for failure, it may be the cruise ship industry. There are dozens of floating pleasure palaces plying the oceans these days, many of them only partially occupied and with special “deals” offered by desperate operators that make it cheaper to stay on a cruise ship than to hole up at a Motel 6.
In the news today is the arrival in Florida of the latest cruise ship behemoth, the Oasis of the Seas, as pictured here:
This monstrous boat has 16 decks and 2700 cabins, with capacity for 6300 passengers and 2100 crew members. It is 40 percent larger than the next largest cruise ship, and five times the length of the Titanic.
There are literally hundreds of these things, ranging in size from specialized small ships but including dozens of large ocean-going ships. The Oasis of the Seas will bring to 22 the number of ships operated by Royal Caribbean Cruises. Carnival cruise lines has 23, and Princess, made famous by “The Love Boat” TV show, operates 15.
The trouble is that there is no future for the cruising business, and for a number of reasons:
• Fewer people can afford to take cruises, and especially if they are expected to pay full-fare. Many are taking advantage of blow-out pricing, but cruise lines cannot continue to operate ships forever at a loss. The present economic crisis has taken more than ten trillion dollars out of the net worth of Americans, and potential travelers around the world face similar conditions.
• Operating costs have risen substantially, primarily as a result of uncertainties and price spikes in the oil markets. That puts the operators in a serious bind, caught between low bookings and higher fuel costs. My guess is that most ships are losing money at unsustainable rates and that during the next year we will see a great many ships going into dry dock or being sent to the ship-breaking yards in Asia.
• Continual outbreaks of mysterious illnesses on board ships have plagued the industry, confounding public health experts and causing passengers to stay away in droves.
• Political instability in some areas is having an effect on cruise operators. For example, increasing numbers of Caribbean destinations are perceived as too dangerous for tourists. Dockage facilities at the remaining islands and coastal countries are too limited to take the huge numbers of ships that would like to make them ports of call.
• Pirates, bless their black little hearts, have also contributed to the uncertainty of cruise ship operations, particularly in the Indian Ocean but now spreading to other areas including reports of activity off the coast of South America.
Put it all together with many other factors plaguing the world economy, and it seems that cruise ship days are numbered. And dinosaurs such as the Oasis of the Seas, built at a cost of $1.5 billion, are doomed to extinction.
And finally, is it just me or is this latest seagoing dino just, well, ugly? It reminds me of a barge on steroids, with none of the graceful lines of a Queen Mary II or the late-great QE II, destined to become a permanent tourist attraction in Dubai — a place that is suffering the same kind of implosion now destroying the cruise lines … but that’s a story for another time.