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Cruise line chief: We're in a better place

By A. Pawlowski, CNN
Royal Caribbean's newest ship, the Allure of the Seas, sails toward its home port in Florida.
Royal Caribbean's newest ship, the Allure of the Seas, sails toward its home port in Florida.
  • Cruise industry is seeing "slow, steady recovery," Royal Caribbean CEO says
  • Cruise line prepares for the arrival of the Allure of the Seas in Florida
  • "Brotherly squabble" breaks out over whether it's the largest cruise ship in the world
  • Goldstein: No plans to go bigger in the near future

(CNN) -- It's been a good month for Royal Caribbean.

The world's second largest cruise line recently reported strong third quarter earnings and it is preparing to introduce the world to the Allure of the Seas, the gleaming, brand-new sister ship of the Oasis of the Seas.

The pair are the largest cruise ships in the world.

Allure is sailing across the Atlantic Ocean toward its home port in Fort Lauderdale, Florida, where it is scheduled to arrive Thursday.

The ship will sail on its inaugural cruise in early December, starting service in a better economic climate than the one that greeted the launch of the Oasis of the Seas last fall.

"The industry conditions can be described as slow, steady recovery," said Adam Goldstein, president and CEO of Royal Caribbean International.

"We're clearly in a better place than we were a year ago."

Goldstein recently talked with about the state of the cruise industry, the arrival of the Allure and an unusual debate over which really is the largest cruise ship. The following is an edited version of that interview.

CNN: Why do you think people are willing to spend money on cruises right now?

Goldstein: In terms of the Royal Caribbean International brand, there is enormous excitement that is being generated by these new ships.

Much more general for the cruise industry is the value proposition. The industry as a whole has worked hard and I think has been reasonably successful in communicating the value of all that you get for your cruise ticket. That the array of entertainment, activities, culinary experiences, destination experiences, retail and other experiences and the service that you receive makes for a special combination.

It's not anything that you can replicate on the land and so people have continued to respond to that even in the present conditions.

CNN: Last year, there were lots of deals to be had. Do you think people can still get deals this year?

Goldstein: There will always be some percentage of the business that comes in the form of discount. It's the nature of the business that there will be some of that, but I think it's fair to say that while there still are attractive offers and discounts available on the marketplace today, they're not as broad or as deep as what we were doing in the midst of the recession or in the deepest part of the recession.

CNN: reports that there's going to be a huge capacity of ships in the Caribbean this winter: The Oasis twin ships, the Norwegian Epic and the Carnival Dream. What's your take on that?

Goldstein: We feel like we have a great lineup of ships and cruise lengths to compete in that market. The Caribbean is in our name, it's what we're associated with and even in an environment where there's growing capacity in the Caribbean, with ships like Oasis and Allure of the Seas, we're confident of our ability to compete.

CNN: There seems to be lots of buzz about the Starbucks on board the Allure of the Seas.

Goldstein: We feel like this is another example where we've been able to bring well known brands from the land-based environment into our environment.

Starbucks is an example of something that people, when they move from their daily world to the world of vacation, they don't necessarily want to leave that behind.

CNN: Does that mean there will be Starbucks on other Royal Caribbean ships?

Goldstein: We need to see what happens here because this is a test case.

We're focused on Allure of the Seas and then if it is a big success we'll look at other possibilities.

The publicity just for that one thing in the last week was impressive.

CNN: There's a funny controversy about the Allure of the Seas being a bit bigger than the Oasis of the Seas. Can you weigh in?

Goldstein: This is a brotherly squabble that has broken out between the two ship management teams.

Before the ship leaves the shipyard, the classification society -- which is one of the key groups that vets our ships and makes sure they're in perfect condition to sail from place to place -- takes laser-based measurements of the dimensions of the ship.

When they were doing the measurements for Allure of the Seas, they computed a length of 50 millimeters [almost 2 inches] greater than Oasis of the Seas.

So the Allure of the Seas executive committee felt that that obviously made them the biggest cruise ship in the world and the difference was tangible, measurable.

The Oasis of the Seas management team thinks that it's ridiculous that when you're talking about something that's 362 meters [about 1,187 feet] long, that a 50 millimeter differential could mean anything at all.

CNN: Do you take one side or the other?

Goldstein: No, that's like saying which of my children do I love the most.

CNN: Do you envision even bigger ships in the future?

Goldstein: In the near term, no. We don't have any current plans to go beyond Oasis class. In fact, we've said that we're not currently thinking of adding to Oasis class.

Although those ships are excellent performers, we need flexibility in our fleet profile. When you look at all the places where we cruise in the world, the different infrastructure that exists in different places, different guest tastes, and so forth, we need different ships for different purposes.

So our inclination at the moment is to look at other opportunities that are not replicating Oasis class and certainly not going beyond it in size.

Having said that, if you look in the long term and at the big picture, since the advent of passenger liner shipping approximately 160 years ago, the trend is very clear. Over time, the ships get larger.

I would expect in the long term that you will see ships larger than Oasis of the Seas, but I don't expect to see that very soon.

CNN: In a recent article about the Allure of the Seas, some of our readers left comments calling the ship "ugly," "obnoxious" and a "monstrosity." What's your reaction to that?

Goldstein: A year ago, when Oasis of the Seas was approaching Port Everglades, the questions I received were one of two types. The first type was: Isn't this ship too big? Won't you have trouble handling all those guests? Won't they feel crowded?

All of that has vanished. The experience on Oasis of the Seas is so universally positively received that nobody asks me questions like that anymore.

As far as the look of the ship, that's interesting because we really never hear stuff like that at Royal Caribbean. We put a lot of effort into the exterior profile of our ships, probably more than other people do in our category, and normally our ships are well regarded. Obviously, you can't please everyone, there's a lot of different opinions out there.

The other question I was asked all the time last year was, why are you bringing this ship out in the recession -- as if we had planned it that way.

It is now accepted that Oasis and Allure of the Seas command considerable premiums even in this relatively challenging macro economic environment -- people see great value in the ticket purchase even at a higher price point because of all the options and features that you can participate in when you're on board.

CNN: Is there any advice you can offer people who may be looking to get away this winter -- any destinations where your cruise ships go where they might find a good deal?

Goldstein: The Caribbean has the most volume and it's the easiest to access. So while we have cruises literally all over the world right now, for the U.S. market in particular I would say the main orientation would be to the Caribbean.

With the dollar now having weakened again against the euro and for Americans being able to price out the bulk of your European vacation opportunity in dollars, which you can do with our cruise products and services, it is one of the most economical ways to see Europe in a weak dollar environment.