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Smooth ride for cruise biz
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May 14, 1997: 9:11 p.m. ET
Aggressive ship-building and changing market strategy create hot sector
From Correspondent Jody Davis
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NEW YORK (CNNfn) - Cruises at sea used to be thought of as the domain of honeymooners, retirement couples and the very wealthy.
Now, Royal Caribbean Cruise Line is trying to shake off the industry's old reputation and compete for landlocked tourist dollars.
The company is currently showing off its latest vessel, "Rhapsody of the Seas", a 75,000-ton ship that is part of a $3-billion spending spree by Royal Caribbean.
"What we're offering is a variety of choice," said Royal Caribbean's Chairman and CEO, Richard Fain, "...and we're offering that for any number of things to do on board, any number of different styles of where to eat, of where to play, of where to be entertained .... It's something that the larger ships have allowed us to do."
With 2,000 berths, seven restaurants, casinos, live theater, dance clubs, workout programs and child care center, the new ship is enormous.(QuickTime Movie 894K)
Two ships the same size of the "Rhapsody" come into service within the next 12 months, and Royal Caribbean has three bigger ships on order, each 130,000 tons carrying 3,100 passengers.
Royal Caribbean is not alone.
Carnival Cruise Lines is in the midst of its own growth spurt, with eight passenger liners under construction.(QuickTime Movie 930K)
Critics say the industry is growing too fast for its own good, but at least one analyst disagrees.
"They can, in fact, expand the industry as they bring on new capacity. And that's partially a function of the miniscule penetration rate so far in the North American travel or tourist market," said shipping analyst James Winchester of Lazard Freres.
Only seven percent of North Americans have taken a cruise, leading many investors to sign on with the two industry leaders.
Since the beginning of the year, shares of Royal Caribbean have risen nearly 50 percent, while Carnival shares are up 25 percent.
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