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Seatrade 2007: Luxury Cruising Rocks!

Catch all the dispatches from Seatrade 2007!

This year, more than any since we've been covering Seatrade, the focus has been on cruising's luxury lines. And despite the dismissive sneers that small-ship, upscale lines don't make money -- echoed by all of the panelists at Tuesday's big State of the Industry discussion -- luxury is hot.

And it's been cold for a long time.

Perhaps the style of cruising that most suffered from the events of September 11, 2001, luxury lines remained moribund even with the big ship companies ordering ship after ship after ship. No new ship orders (the last "new" vessel was Crystal Serenity in 2003). No dramatically sexy refurbishments like those we've seen on Royal Caribbean and Celebrity. No real ... nothin' in terms of innovation.

And truth be told, the upscale ships (with some exceptions) aren't keeping up with the Joneses, so to speak, or the Smiths or the Browns.

Then, late last year, Seabourn announced plans to build new ships. Finally, some movement. The line must have kick-started a trend because the biggest news to come out of Seatrade this week, as we've already reported, has been ship orders by Silversea and Oceania. Only Crystal and Regent Seven Seas have been quiet....

Why now?

This year's State of the Upscale Cruise Market panel at Seatrade definitely crackled. Participants included Hapag-Lloyd's Sebastian Ahrens, whose Europa is one of cruising's best kept luxury secrets, and who plans to move his German-dominated vessel decisively into the North American market. There was Cunard's Pam Conover; Regent Seven Seas Cruises' Mark Conroy; Oceania's Frank Del Rio; Crystal's Gregg Michel; Pearl Seas Cruises' Charles Robertson (Pearl Seas is a new, U.S.-based line that's building two ships in Canada); and Amerigo Perasso, Silversea's new president.

The biggest topic of discussion: How will baby boomers (those folks born roughly between 1946 and 1965 and the wealthiest generation in history) transform the concept of luxury cruising? "Their parents -- the Great Generation -- are passing on," says Regent Seven Seas' Mark Conroy. "They are passing on their estates. As well, baby boomers' peak earning period occurred during the largest bull market in history."

The "affluent" traveler earns a minimum of $256,000 or more (in addition to a net wealth in the millions). There are 3,000,000 of 'em out there, at least in the U.S., according to Ron Kurtz, also a panelist, who works for the American Affluence Research Center. And at least 15 percent say, via surveys, that they intend to cruise in the next year or so.

There may well be a problem, then. Several executives from major North American luxury lines told Cruise Critic there's literally no room at the inn, especially if you're booking at the relative last minute. And it's not hot air because we checked out both Oceania and Seabourn -- and their assessment was dead on.

So the creation of new ships is critical to meet a demand that's clearly increasing.

What else do you need to know about the baby boomer impact?

They are global citizens on vacation. On a recent cruise on Seabourn Legend, half the fun was meeting fellow passengers from Germany, Guatemala, England and Scotland. Europeans and Asians, the Japanese in particular, are increasingly trying out American upscale lines. Americans have been slightly slower to drift over to European cruise companies (Hapag-Lloyd's Europa, for instance, and Fred. Olsen, a small-ship U.K. operator, report that they have less than 10 percent North American passengers -- but would like to appeal to more).

They refuse to compromise their lifestyle. Remember that old adage about cruise cabins: they're so small you have to go outside to change your mind? Won't work with these folks. Regent Seven Seas was an early pioneer with its all-suite Seven Seas Voyager and Seven Seas Mariner; Oceania, in its new design plans, is placing huge emphasis on offering bigger suites -- and it's not stinting on bathrooms, either.

Financially speaking, these travelers are more resilient to market downturns. So whereas high fuel costs and a waning housing market really are impacting folks more likely to afford mass-market cruising, RSSC's Conroy says that "world events are kind of frightening at times -- we're in the midst of a hot war -- and yet we're still sailing the Red Sea."

Luxury cruising is appealing to boomers around the world -- Russia, Japan, Europe, Australia -- almost everywhere but China, in fact. Why is China excluded? This market, which bedevils all cruise line operators (big, small and in between), is a tough nut to crack -- and it's not necessarily the cost of travel. The Chinese don't like to take vacations.

Ships in the luxury segment are clearly inching up in size but they'll always remain, says Oceania's Frank Del Rio, "human-sized; these passengers want personalized experiences." Presumably even if they must eschew a rock climbing wall, bowling alley and boxing ring to enjoy such experiences.

These folks -- and if you're one of them you'll likely agree -- demand value for their money. But they're willing to spend it....

--by Carolyn Spencer Brown

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