Archive for March, 2002

Posted on March 2, 2002 - by Ralph Grizzle

Will Disney Deliver New Ships?

As early as 1995, executives at the nascent Disney Cruise Line announced that two ships, the DISNEY MAGIC and the DISNEY WONDER, were already on the drawing board and would enter service in 1998 and 1999, respectively. Cheerfully optimistic, Disney execs projected back then that there could be four, possibly even six, Disney Cruise Line ships within 10 years. The company that developed “It’s a small world after all” along with theme parks to reflect that utopian philosophy at home and abroad even talked ambitiously of some day having a ship serving every continent.

Today, more than halfway through that proposed timeline, Disney officials no longer talk about expanding the fleet – at least publicly. “Our only expansion plans at this time are the DISNEY MAGIC’s new seven-day western Caribbean itineraries,” says Mark Jaronski, manager of public relations for Lake Buena Vista, Florida-based Disney Cruise Line.

The DISNEY MAGIC, which has operated seven-day Eastern Caribbean itineraries since August 2000, begins sailing May 11, 2002, to a tropical trio of ports – Key West, Grand Cayman and Cozumel – interspersed by days at sea and a day at Disney’s private island, Castaway Cay. DISNEY MAGIC will alternate each week between its new western Caribbean itinerary and its current, and popular, Eastern Caribbean route.

Thus, it appears that rather than relying on fleet expansion to grow, or perhaps maintain, its market share, Disney Cruise Line is putting emphasis on itinerary variety. The logic: Create a variety of cruise products to give die-hard Disney fans reason to cruise time and again. Currently, the seven-day Eastern Caribbean cruises draws more than 25 percent return cruisers. The company is hoping to increase that percentage, cheered on by the fact that Walt Disney World has a 75 percent repeat visitation rate.

Still, the prospect of a new Disney ship, or ships, is an idea that Disney discussed as recently as last year. In July, Disney Cruise Line President Matt Ouimet told Travel Agent magazine that the company had formed a new-build design team. “So we are working with the yards in Europe to start designing fleet expansion for our cruise line,” Ouimet said. “I can’t detail the specifics or timing, but I can tell you that we’re actively in those discussions right now. We’re dealing with all the major European yards in Finland, Germany, Italy and France. They’ve been very interested in helping us think about our new product.”

Ouimet conceded that determining where to position the proposed ships was a “complicated decision-making process” and that while the Caribbean had been “very successful” for Disney Cruise Line, West Coast cruises from California represented a new market. “And so that’s what we have to balance as we start thinking about this,” Ouimet said.

A month later, Ouimet told industry trade Travel Weekly he expected to formalize new ship orders within a year, with delivery slated for 2005. He declined to say how many ships were planned but noted the ships would be about 10 percent to 20 percent larger than the 83,000-ton DISNEY MAGIC and WONDER but below 100,000 tons.

Then September 11 came. The attacks on America came at a time when parent company Walt Disney Company was already performing poorly on the balance sheets: 2001 net revenues for the Walt Disney Company resulted in a loss of US$158 million on revenues of US$25.3 billion, according to The Economist magazine. This, despite Disney’s financial year ending shortly after the attacks on New York and Washington, when the after-shocks of the terrorists attacks were only starting to be felt.

Those after-shocks sent theme park attendance tumbling and, presumably, challenged Disney Cruise Line. To run full occupancies on its two ships, the company must fill 8,700 berths weekly: 2,900 berths each week on the DISNEY MAGIC’s seven-day cruises and 5,800 berths on the DISNEY WONDER’s twice weekly cruises.

Disney’s challenges were exacerbated by its presumably heavy reliance on families who traveled when the kids were out of school – summers and holidays. Some observers questioned whether Disney could keep even those two ships sailing full year-round. The Walt Disney Company does not release separate statistics for Disney Cruise Line, but apparently there were some berths going empty for the first few years. That, or Disney found someplace to stow additional passengers. Through the six first months of 2001 the number of guests departing on Disney Cruise Line ships from Port Canaveral, Florida, showed increases over previous years.

U.S. Customs and Immigration at that port say Disney departures outpaced larger rivals Carnival Cruise Lines and Royal Caribbean International through the first six months of last year. Departures showed a 17 percent increase in passengers over the previous year for Disney Cruise Line’s three- and four-day cruises, and an 8 percent increase for its seven-day cruises. Carnival showed a modest increase in passengers, while Royal Caribbean International showed a modest decline.

The company’s proud showing should come as no surprise, as the product is extremely well received. “Pricing is high, but that’s Disney,” says Don Payne, of Cruise Holidays of Pasadena, California. “It’s a quality product with a price that reflects it. They have perfected the vacation experience into a truly seamless venture. From the time you arrive at the airport until you depart, everything is well taken care of: transfer of bags, hotel, admission tickets to park, transfers to ship and return.

“The clients that I have had on Disney Cruise Line have loved the cruise, the ship and the crew,” Payne adds. “The dining experience is something that is always talked about with the rotation from one dining room to another – while keeping the same table number and waiter. The children’s programs are second to none. Every client has returned and raved about the cabin. The two-bathroom setup is not only unique, but for a quad family cabin it can be a godsend.” One of Disney’s big pre-inaugural announcements was that the DISNEY MAGIC’s staterooms would feature a bath-and-a-half for traveling families.

Initially hampered by its pricey cruises – making its 1998 debut charging 25 percent more than the industry average – Disney’s prices since have edged downward. Seven-night cruise and seven-night land/sea vacations recently were advertised at $799 per person and an additional $399 for each child ages 3 to 12. That amounts to less than $2,500 for a family of four sharing a stateroom, considerably less than the $5,200 price tag execs had floated during Disney’s inaugural year.

But even the reduced fares are a bit much for some would-be cruisers. “I could sell more Disney if the prices were lower, so that my clients who cruise Carnival or Royal Caribbean first would then step up to Disney,” says Christopher Tichy, of Cruise & Vacation Center in Monroe, Connecticut. “But Disney has no competition in that they are the only cruise line to do what they do as well as they do. My clients who sail Disney don’t do so for the itinerary; they sail for the experience, and most who have cruised on Disney return to tell us that it was the experience of a lifetime.”

Whether such praise can parlay into sufficient market demand for a third, fourth, fifth or even sixth ship remains to be seen. Disney Cruise Line may well meet its early projections of becoming a multi-ship fleet, but only time will tell if the entertainment giant will be able to conquer a world that just may be not so small after all.

technorati tags:Disney, Cruise