(FORTUNE Magazine) – An escalating battle between cruise lines and resorts, as well as the growing popularity of time- share properties, is making vacationers forget about high-priced Europe this summer.

Like pirates plying the Caribbean, cruise lines such as Carnival have plundered land-based resorts by offering value-conscious consumers fixed-price, all-inclusive vacations. Now the Caribbean resorts are firing back some all-inclusive broadsides of their own. Says lodging analyst Lisa Leavitt of Paine Webber: "The all-inclusive concept speaks to today's thrifty consumers who want to stick to their budgets and have worry-free vacations."

Business is booming at Allegro Resorts, a fast-growing chain of 19 all-in retreats in Mexico and the Caribbean. Here's why: For about $1,000, a vacationer can spend seven days in a charming hotel on the beach, drink and eat without limit, and play a variety of water sports. The hotel also kicks in nightly stage shows, airport transfers, taxes and gratuities, plus all-day supervised child care. Allegro, based in the Dominican Republic, uses the brand names Diamond Resorts and Caribbean Villages. Formed two years ago by two resort companies, Allegro boasts occupancy rates above 80%, of which nearly 40% are repeat guests-the cruise industry average is 50%. Sales jumped 70%, to $84 million, in 1994.

Cash-rich, mass-market cruise lines like Carnival and Royal Caribbean-the Pritzker family controls 40% of the stock-are not about to let rivals shanghai their clientele. Gleaming new liners with jaw-dropping features and pricetags-they average $300 million a pop-are being launched like Victory ships. Royal Caribbean's new 70,950-ton Legend of the Seas megaship, the first of six to be delivered by 1998, features an 18-hole miniature golf course and a seven-deck atrium. Although the warm winter watered down the first quarter, analyst Paul Mackey of Dean Witter expects the cruise market to grow at a 10% annual clip until the end of the decade.

Travelers are also clamoring for another fixed-price concept, time-share vacations. "Major hotel chains like Marriott, Hilton, and Disney are making an incredible amount of money on time-shares," says Coopers & Lybrand analyst Bjorn Hanson. Buyers of time-shares are making out too. For $10,000 to $20,000, plus an annual maintenance fee that averages $400, a family can buy a one-week vacation spot for at least 30 years. Paine Webber's Leavitt figures that a family of four could save $30,000 over 25 years by investing in a peak-season time-share instead of booking hotels.

-- FAYE RICE