Cruise Industry Financial InformationA reporter for the Marketplace interviewed me yesterday regarding the state of the cruise industry.

I explained that compared to a year or two ago, the general perception of cruise lines is up. More than 23,000,000 passengers will cruise this year. Bigger and bigger cruise ships are being constructed. Travel agents seem more energized than before and appear to have lost their funk brought about by the Costa Concordia and Triumph "poop cruise" disasters.

Industry leader Carnival Corporation, with over 100 cruise ships in its multi-brand fleet, is reaping the rewards of hiring Arnold Donald with his dynamic and charismatic style of leadership.    

Cruise fares are up, prices for excursions and alcohol are up while the cruise CEO’s are driving costs down.  

On the other side of the coin, critics say that the same-old-problems remain in the industry. Last week the Freedom of the Sea erupted in flames and literally burned from bottom of the ship to deck 15. Royal Caribbean tried to down-play the fire, but YouTube videos and photos posted on Facebook and Twitter showed that the fire was indeed dangerous and that the cruise lines still suffer from a lack of transparency that has tarnished the industry for years. Our friend and former Royal Caribbean cook Kevin Chamber’s video of the ship on fire has been viewed well over a million times.  

Crew members and passengers tell me that contractors aboard the Freedom of the Seas were installing a scrubber system when the fire erupted. The captain of the ship says that the cruise line will disclose why the fire broke out, which the suits at Royal Caribbean’s headquarters in Miami will never do. Its been over two years since the Grandeur of the Seas ignited near the Bahamas and the cruise line still refuses to tell the public what happened. The Freedom of the Seas fire will become just another mystery where the cruise line will keep its customers in the dark.

Just a couple of days ago, the Safari Voyager also erupted in flames in Seattle, due to welding operations. Welding at sea rather than in dry-dock is one of the risks of cruising and only one of many dangers that the cruise industry won’t tell you.

Today, the Professional Mariner published an article titled "U.S. Coast Guard cites loose bolts, escape-route issues in fatal fire" about a Coast Guard marine safety alert regarding the deadly fire aboard the Oceania Insignia where three crew members perished when the cruise ship ignited in port at St. Lucia last December.       

This week two crew members were seriously injured when a rescue boat was being lowered from the NCL Pride of America in Hawaii when the cables broke. 

In just the last couple of months, passengers and crew members disappeared from Celebrity, Royal Caribbean, Costa, MSC, NCL and HAL cruise ships. Yet, the industry as a whole still refuses to invest in automatic man overboard technology.

Sexual assaults at sea still occur with alarming frequency. In the last month, the news mentioned a passenger and a crew member assaulting women on Celebrity cruise ships in separate incidents. A sexual predator employed by Disney Cruises was recently sentenced to  over 5 years after pleading guilty to molesting a 13 year old passenger on the Disney Dream.   

Four months ago, twenty-two cruise passengers from Costa and MSC cruise ship were murdered by terrorists in Tunis, after these cruise lines sailed them into danger without a single warning.  The specter of ISIS terror remains a dark cloud over cruise ships which risk proceeding along itineraries across North Africa.  

Cruise Ship Fire - Royal CaribbeanBut the 40 billion-dollar-a-year cruise industry is rich and powerful. As a result of incorporating its businesses in place like Liberia or Panama and registering its ships in third world countries like the Bahamas, cruise lines avoid U.S. taxes and can pay their crew members peanuts. The industry has a huge advantage over U.S. resorts and hotels. It’s cheaper to sail on a Carnival cruise out of Galveston than it is to stay in a Motel 6. 

That’s why Royal Caribbean’s stock price was largely unaffected after the Freedom of the Seas burned last week. CNBC’s Simon Hobbs reported that as long as propulsion is not lost and passengers are not stranded at sea, a cruise ship fire is "not material for investors."  Mr. Hobbs is right about that, it seems. That’s probably why the cruise executives decided not to comply with the International Maritime Organization’s recommended Safety of Life at Sea regulations, which require a post-fire investigation and survey, but instead chose to keep the cruise ship sailing on to the Caymans and Mexico. 

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