* Cruise mogul finally apologizes for "difficult conditions"
* Industry's inexpensive cruises seen as "bullet-proof"
By Tom Brown
MIAMI, Feb 15 Global cruise giant Carnival Corp
found itself in deep doo-doo this week, due to alarming
reports about an engine room fire that left one of its
jam-packed U.S. passenger ships adrift and awash in raw sewage
in the Gulf of Mexico.
The saga involving the ill-fated Carnival Triumph cruise
ship, which received extensive coverage on U.S. cable news
stations, was a second public relations nightmare for Carnival
in as many years.
It came as the Miami-based company was recovering from last
year's disaster, when its Costa Concordia luxury liner ran
aground off the coast of Italy, killing 32 people.
But the lure of inexpensive vacations at sea is likely to
keep the booming worldwide cruise industry on course toward
strong profits this year, despite the befouled five-day ordeal
endured by more than 4,200 passengers and crew aboard the
Triumph, industry analysts said on Friday.
"They have done a much better job communicating this time
than they did with the Costa Concordia," said Evan Nierman, a
South Florida-based public relations crisis management expert.
But he would have liked to see Carnivals' billionaire
Chairman and Chief Executive Micky Arison take a more prominent
role in the company's response.
Arison finally offered up his first public apology for the
troubles aboard the Triumph in two postings on Twitter on
Friday. "We are very sorry for the difficult conditions
experienced by our guests on #Carnival Triumph," Arison wrote.
"But glad that all guests are off safe & sound. I want to
thank all the @CarnivalCruise team members for their tireless
efforts," he wrote in a second Tweet.
The accident could add to concerns about safety in the
industry, where towering ships the size of floating cities have
become the norm. But maritime attorney Michael Winkleman said
calls for higher safety standards, more oversight and other
regulatory changes that might affect cruise lines have fallen on
deaf ears in Washington for decades.
"The cruise lines as a whole are spending a tremendous
amount of money on lobbyists and doing a very effective job of
it," Winkleman said.
"I don't lose sleep over this," said David Crooks, a
Boston-based executive with World Travel Holdings, which owns
huge travel cruise agencies including CruisesOnly, Cruise Inc
When asked about the possible impact on consumer demand
after the problems of the Triumph drew media scrutiny, he said:
"If the price is right, people will travel."
The worldwide cruise industry took a hit last year, due to
the Costa Concordia and European debt crisis. But Crooks said
the industry was essentially "bullet-proof" to something as
relatively minor as the Triumph, which late-night comic Jon
Steward described on Thursday as the "Ship of Stools."
Stewart was referring to a virtual feeding-frenzy in the
U.S. media after it was first reported that Triumph passengers
had been told to use red "biohazard" bags as toilets when backed
up toilets and plumbing overflowed.
"Those clients that actually cruise quite often can
recognize the value in situations like this," Crooks added,
referring to likely discounting and consumer incentives to
counter any short-term drop in demand.
Carnival, which operates 100 ships worldwide in a stable of
brands that includes flagship Carnival Cruise Lines and Holland
America Lines, Britain's Cunard Line and Italy's Costa Cruises,
declined to comment on the possible impact on bookings due to
all the unsavory publicity it received over the Triumph.
The company has said passengers will receive full credit for
the cruise plus transportation expenses, a future cruise credit
equal to the amount paid for the ruined voyage, plus a payment
of $500 per person.
It warned earlier this week, before the Triumph was towed
into port in Mobile, Alabama late on Thursday, that voyage
disruptions and repair costs due to the engine room fire could
cut up to $0.10 per share off its first-half earnings.
Carnival closed at $36.92 on the New York Stock Exchange on
Friday, well off its 52-week high of $39.95 after a 4 percent
drop on Wednesday.
ABSORBED BY INSURERS?
But Linda Kornfeld, an insurance recovery lawyer
representing policy holders with Jenner & Block in Los Angeles,
said most other costs could be absorbed by Carnival's insurers,
depending on the policies it holds.
Insurance could cover everything from the cost of the sewage
clean-up to compensation packages offered to passengers,
Kornfeld said. "There certainly are arguments that have been
made in the past that might be helpful to Carnival here in a
mitigation-type approach," she said.
Jaime Katz, an analyst at Morningstar, said the Triumph's
troubles were disconcerting because they came at the height of
the "wave season," the busiest time of year for the cruise
The Costa Concordia disaster unleashed a flood of lawsuits
against Carnival and its Italian subsidiary. And the first of
many expected suits over the Triumph breakdown at sea was filed
in federal court in Miami on Friday.
But Jim Perry, a Miami-based maritime lawyer, said his law
firm had no plans to get involved in litigation over the Triumph
mess. "No one suffered enough individual damage that would make
it worth hiring a lawyer to sue the cruise line," Perry said.
"You know, shit happens. It's not worth the trouble. Most
people are going to say 'I had a really crappy vacation and I'm
really upset, but I'm not hiring a lawyer to sue Carnival.' The
individual claims will be too small," he said.