MIAMI BEACH — Though the grounded Costa Concordia sat half submerged off the coast of a small Italian island half a world away, its shadow hung over the Miami Beach Convention Center here as a battered cruise industry this week gathered for Cruise Shipping Miami, its annual conference.
Relentless media coverage of the Concordia’s Jan. 13 grounding, which caused the deaths of at least 25 people and is the focus of a criminal investigation in Italy, prompted Costa Cruises’ corporate leaders to forgo the conference altogether.
By doing so, they avoided what one Costa insider suggested could have turned into a “spectacle” in Miami, given that some 220 U.S. and international reporters, about 10% more than in previous years, were in attendance.
Better that Costa’s chairman, Pier Luigi Foschi, and its president, Gianni Onorato, should stay in Genoa this year, the company decided.
The Costa executives’ absence did not indicate any lack of support on behalf of its parent, Carnival Corp.
On the contrary, in his keynote speech at the start of the State of the Industry panel on March 13, Howard Frank, vice chairman of Carnival Corp., complimented the actions of the Costa executives.
“I’ve been in Italy several times in the last two months,” he said. “They’ve done a superb job” since the Concordia disaster.
“The crew of Concordia are the true heroes of this tragedy, and as time unfolds, some of these stories will be told,” he added. “Costa will come back stronger than ever before.”
Longtime delegates to Cruise Shipping Miami (formerly known as Seatrade) described this year’s event, which ran from March 12 to 15, as subdued, at times bordering on somber, and they likened the atmosphere to Seatrade 2009, when the grip of the recession was tightening its chokehold on the flat-lining U.S. economy.
The Concordia accident, or “the incident,” as cruise industry officials are calling it, has had and continues to have serious impacts on business.
Industrywide effects
Carnival Corp., the market-share leader, with 10 cruise brands, posted a first-quarter net loss of $139 million, down from a $152 million net profit a year earlier.
It also reduced its guidance for full-year 2012 earnings per share by about 50% from its pre-Concordia guidance to investors. Costa’s bookings plunged by 80% in the days following the grounding.
The brands of Royal Caribbean Cruises Ltd. and other cruise companies saw double-digit drops in bookings immediately following the Concordia accident, but executives across the board say their lines have experienced a slow but steady rebound in sales levels since late January.
Cruise line executives participating in the conference’s signature event, the State of the Industry panel, declared that the bookings dip is temporary and that they are optimistic the industry will make a full recovery in due course.
But after taking considerable heat over the Concordia’s messy evacuation of passengers, their priority in Miami was to ensure that safety was the focal point of their “roundtable discussion,” with each of the six participating presidents explaining one aspect of shipboard security practices.
In what was clearly a tightly orchestrated discussion moderated by CLIA CEO Christine Duffy, the roundtable gave the industry a chance to indirectly defend its policies by providing an overview of existing safety basics. But it did little to advance the dialogue that industry observers have been hearing since Feb. 9, when CLIA announced its Operational Safety Review.
The review, which is looking at all shipboard safety practices, has so far led to one policy change, although others have been promised. That change consisted of a pledge by every CLIA member line that passenger muster drills will be held before departure from port. This exceeds international regulations, which require such drills within 24 hours of departure, and it has been hailed by CLIA as tangible proof of the cruise industry’s declaration that passenger safety is its top priority.
Adam Goldstein, CEO of Royal Caribbean International, explained “bridge management,” the working relationships between captains and officers that “confirm a collective understanding of what the ship should be doing at any given time.”
While the panel never directly referenced the Concordia grounding, this explanation was a backdoor acknowledgement of the probe by Italian authorities into the actions of Concordia Captain Francesco Schettino on the night of the accident, when he is alleged to have ventured off course and too close to Giglio.
Schettino remains under house arrest in Italy, expecting to stand trial for manslaughter, among other charges.
The role of a ship’s captain was further addressed by Kevin Sheehan, CEO of Norwegian Cruise Line.
“The thing about what it takes to be a captain is important,” Sheehan said. “At Norwegian, we have an average of 33 years our captains have been at sea. It takes over 10 years [to become a captain], working his way up the totem pole from second officer to first officer to chief officer to captain.”
Pierfrancesco Vago, CEO of MSC Cruises, talked about how the lines ease language barriers onboard ships that routinely carry passengers of many nationalities. He noted, for example, that safety videos play in passenger cabins in at least a half-dozen languages.
Training and testing
Gerry Cahill, Carnival Cruise Lines CEO, addressed crew training.
“A lot has been said about [how] maybe the crew aren’t trained. Not true,” he said in what was an obvious response to widespread criticism of the Concordia’s evacuation. “On the first day [after joining a ship] you go through what your safety responsibilities are. There’s training and testing. There are drills every week.”
Turning to Stein Kruse, CEO of Holland America Line, Duffy appeared to try to satisfy the concerns of those who, in light of Concordia, claim the industry is self-regulated and unaccountable.
She asked: “How do we ensure that regulations are enforced?”
Kruse responded: “The international framework that shipping operates under is a very wide and very specific set of conventions and rules that came about from Titanic. Safety of Life at Sea, or Solas, has been repeatedly amended. That framework guides everything we do. In the U.S., the Coast Guard is designated to inspect our ships. We are a highly regulated industry.”
Passenger security also extends to health concerns. Celebrity Cruises CEO Dan Hanrahan tackled the norovirus controversy, saying, “Public health is something the entire industry takes very seriously. We have regular inspections, onboard hospitals, doctors and nurses. We work with the [U.S. Department of Health].”
Hanrahan recalled hearing a media report about “a whole school being shut down” due to norovirus. There were 1,300 kids out on the same day. We [the cruise industry] have never had anything like that.”
While the Concordia disaster shined an unwanted spotlight on the industry’s vulnerability, at the same time it appears to have highlighted the value of travel agents. They were, in the days and weeks after the shipwreck, the industry’s first line of defense.
Noting that travel agents “have fielded calls and answered safety-related questions from clients,” Duffy asked the panel, “What role will they play in the next three to five years and beyond?”
Cahill responded: “In the last couple of months, agents have demonstrated their value to the industry. They’ve been great advocates, and it’s great to have a third party speaking on your behalf. Our industry was founded on the backs of agents, and I don’t see any way that will change. They will continue to be the main distribution channel.”
Sheehan called agents the “lifeblood of the industry” and predicted they would remain so for many years.
Hanrahan added: “Their passion for selling our products is second to none.”
The comments were welcomed by Vicky Garcia, executive vice president of Cruise Planners, who said she could not recall cruise line executives specifically voicing gratitude or offering praise to frontline retailers at previous State of the Industry sessions.
