Wednesday, April 11, 2007

The Pride of Hawaii

Hawai'i's cruise industry suffered a major setback yesterday when NCL
Corp. said it would shift the largest of its three U.S.-flagged
Hawai'i ships to Europe.

The 2,466-passenger Pride of Hawai'i, which began cruising Hawaiian
waters in June, will leave in February 2008 to help stem the
company's losses here. Norwegian Cruise Line lost $116 million in the
fourth quarter and cited its Hawai'i operation as a key reason.

The growth in the cruise industry has been a bright spot for the
tourism industry, which recently saw a dip in arrivals and a decline
in hotel occupancy.

"There's no question it (losing the ship) is going to be a void,"
said state tourism liaison Marsha Wienert. "It will be an impact to
our economy and the industry as a whole."

Many local companies rely on the cruise ships for a steady stream of
business, from the folks who grow the produce passengers eat, to
those who run tours or sell souvenirs to the passengers when they
come ashore, Wienert said.

She said she was pleased the company gave plenty of advance notice,
which should help those affected. "It doesn't leave everyone high and
dry," she said.

The Miami-based cruise ship company said added competition in Hawai'i
had forced it to cut prices and made it difficult to earn a profit.

"Clearly, we are victims of our own success," said Colin Veitch,
NCL's president and CEO. "We have demonstrated that Hawai'i is a
highly attractive cruise destination and Hawai'i now has four times
as much capacity serving it in 2007 as it did in 2004 when we started
NCL America (its Hawai'i unit)."


Pride of Hawai'i is the newest and most luxurious of NCL America's
fleet, which includes the Pride of America and Pride of Aloha. The
Pride of Hawai'i's accommodations include 4,500-square-foot, three-
bedroom garden villas with private sundecks.

The cruise ship company said moving the Pride of Hawai'i to Europe
was a "temporary withdrawal," but it did not say when it would return.

Robert Kritzman, NCL America's executive vice president and managing
director of Hawai'i operations, said the company remains committed to
keeping the other two ships home-ported in Hawai'i.

"We take this action with regret, but sure in the knowledge that a
temporary retrenchment is the right thing to do for the good of the
business and the good of Hawai'i in the long run," Veitch said.

"We remain committed to building a strong U.S. flag cruise business
home-ported in Hawai'i, and we need to make sure that our other two
ships, Pride of Aloha and Pride of America, are able to achieve
acceptable profitability before we can confidently re-introduce Pride
of Hawai'i."

Kritzman said the combination of three U.S.-flagged NCL ships plus
competition from other cruise lines has pushed prices down too far.

"We're trying to right-size our capacity here and our fleet,"
Kritzman said. "We're still committed to Hawai'i; we've made a major
investment here."

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