BON VOYAGE; DISNEY SETS A COURSE FOR THE ADVENTUROUS WORLD OF OCEAN CRUISES AND EXOTIC ISLAND DESTINATIONS.

Byline: Dave McNary Daily News Staff Writer

Now it's The Walt Disney Co.'s turn to ride the ``Titanic'' gravy train.

The entertainment giant will launch into the glitzy world of ocean cruises July 30 when its $350 million Disney Magic departs from Port Canaveral, Fla., for the first time. It has promised a combination of luxury-laden grandeur and the feel-good zing of its theme parks to what is essentially a floating hotel.

Unfortunately for Disney, its carefully crafted image as the world's most customer-friendly concern has already taken a one-two punch from having twice delayed the inaugural cruise. That resulted in thousands of ruined vacation plans and countless public-relations headaches.

But Disney trackers believe the foray into the cruise business remains a great idea and expect Disney's latest product to generate tens of millions of dollars annually while drawing more customers to its flagship amusement parks.

For starters, Disney's launch comes amid an explosion in the cruise business. It's been fueled partly by a solid domestic economy, partly by aging baby boomers looking for a new style of vacation and partly by the overwhelming success of a Paramount-20th Century Fox film that won 11 Academy Awards, even if that legendary ship sank in the icy north Atlantic Ocean.

``Cruises have been a very solid growth business, and if you look at all the things Disney already does, it makes a lot of sense for them to be in it,'' said Stewart Halpern, an entertainment analyst at Furman Selz Inc. ``It's about accommodations for people and feeding and entertaining them, which are areas in which they already have a lot of experience.''

Analysts have already estimated Disney can generate $50 million annually in profits from this vessel and another to be launched next year because of its unique ability to attract families with children.

``There's no question family appeal is already a lot of what differentiates Disney,'' Halpern said, noting that the early bookings for the line showed that more than half had never been on a cruise before. ``That's a huge indicator that they're being attracted because it's Disney and packaged with a stay at the parks.''

All of which isn't to say the new venture will be a slam-dunk success, but Disney didn't become a company with $25 billion in annual revenues by being cautious. It is no doubt painfully aware that any mistake will give it another black eye, following the fiasco of delaying its inaugural cruise twice.

The delays were not a complete surprise, given the construction crunch at the four European shipyards capable of building massive new cruise liners. Eric Mintz, a researcher with the Raymond James brokerage, said, ``My impression has been that a lot of people who book on initial cruises know that delays have become a lot more common.''

Disney spokeswoman Darlene Papalini said the majority of affected customers rebooked rather than asking for a refund and added that advance bookings have been ``extremely strong.''

The delays stemmed not just from rising demand for more ships but for vessels with never-before-seen features. Major lines like Carnival and Royal Caribbean now demand such amenities as basketball courts, rock-climbing walls, in-line skating tracks, indoor atriums and ice-skating rinks.

For example, the $450 million Grand Princess assumed the title of world's biggest cruise ship in May with 109,000 tons - over twice the size of Titanic. It has 18 decks, 1,300 cabins, the largest casino afloat, room for 2,600 passengers, and its milestones include the first shipboard wedding chapel, virtual reality arcade and swim-against-the-current pool.

Amid all this razzle-dazzle, some industry trackers have started to worry that the industry may scuttle its success by overbuilding since capacity gains - more than 11 percent this year and again in 1999 - will outstrip rises in passengers. After all, North American passengership has been growing by 7 percent annually.

But by and large, optimism prevails. ``The timing on Disney's entry into the market is pretty good since Royal Caribbean and Carnival are experiencing exceptional fundamental results,'' Mintz said. ``The number that everyone cites is that less than 8 percent of the U.S. population has ever taken a cruise so there's enormous market potential.''

In other words, Disney's entrance into the market can be a win-win for the industry because it will bring in customers who otherwise would not consider going on a cruise. And as for Disney charging a 30 percent premium, Mintz sees no problem.

``My impression is that there's tremendous demand even at that price, because people have a tremendous amount of expectations,'' he said. ``And it can benefit Carnival and Royal in that they offer a low-cost alternative.''

The Disney Cruise package will combine three or four days at Walt Disney World with a three- or four-day cruise, including a visit to Disney's own island, Castaway Cay. For a family of four, the cost for the week will come in at around $6,000.

Disney Magic will hold 2,400 passengers with several key design components:

It has been built to accommodate two key demographic groups: couples without children and families with them. As a result, there are separate pool, dining and deck facilities for each.

Eight hundred seventy-three cabins, most with two bathroom areas rather than the usual one.

Figures of Mickey Mouse and other Disney characters adorn walls and railings.

Smokestacks with the Mickey Mouse silhouette and lifeboats in Mickey's colors - red, black and yellow. Disney had to obtain a special exemption from international rules that lifeboats be orange.

Three restaurants, including the Animator's Palate, Lumiere's and Palo (exclusively for adults); an ESPN Skybox; a Broadway-style theater; three nightclubs; a spa and a 15,000-square-foot playroom for children.

Cabins that are not called cabins. Disney has renamed them staterooms on the theory that they have an average of 25 percent more space than rivals. Nearly three-quarters have ocean views, and 43 percent have private verandas.

All of which will probably help customers forget Disney's delays, analysts and travel agents believe.

``Disney has a unique product, and they're spending a lot of money on it, so I anticipate that it's going to be well-received,'' said Don Steinman at Braemar World Travel in Woodland Hills. ``The fact that they own all those hotels at Walt Disney World makes it possible for them to offer a more complete package than other lines.''

For Disney, the incursion into the cruise business is part of Chairman Michael Eisner's two-pronged strategy: To launch extensions of Disney's heavyweight brand names that keep Disney as the premium name in family entertainment; and to expand theme parks, the company's most profitable sector.

With a surging economy giving Americans plenty of spare cash, Disney's theme park operations posted impressive operating margins of 22.7 percent last year, compared with 16.8 percent for filmed entertainment and 19.8 percent for broadcasting.

Wall Streeters believe the $350 million Disney has paid for having its own ship - nearly equal to the company's entire operating profit for the January-March quarter - is simply the price it must pay to stay ahead of rivals.

Its Florida complex will face formidable competition next year from the $2.7 billion expansion of Universal Studios, so the cruise line represents a sensible way for Disney to set itself apart in the mind of the consumer.

Halpern believes that with Disney building a second theme park in Anaheim, the company might eventually start up a West Coast cruise line. That could mean two days at Disneyland and the California Adventure park, a cruise to Ensenada and a stopover at ``Mickey's Cove'' somewhere in between.

``The cruise business certainly isn't restricted to Florida and the Caribbean,'' Halpern said. ``It can work anywhere there's water.''

MORE DISNEY

The Walt Disney Co. has launched an aggressive expansion of its theme-park business since early last year.

February 1997: First Club Disney opens in Thousand Oaks.

November 1997 - Second Club Disney opens in West Covina.

April 1998 - Animal Kingdom opens at Walt Disney World in Florida at a cost of $1 billion, representing Disney's first new major theme park in nine years.

May 1998 - Tomorrowland revamp, costing more than $100 million, opens at Disneyland.

June 1998 - First DisneyQuest interactive theme park opens at Walt Disney World.

July 1998 - First ESPN Zone opens in Baltimore.

July 1998 - Disney Cruise Line launched with Disney Magic after two delays.

Spring 1999 - Second ship, Disney Wonder, to go into service.

2001 - California Adventure theme park, with estimated cost of $1.4 billion, due to open on what was the Disneyland parking lot.

CAPTION(S):

2 Photos, Chart, Box

PHOTO (1--2--Color) no caption (Cruise ship and island scenery)

Courtesy Walt Disney Co.

CHART: CRUISING SOARS

North American cruise line capacity has increased by an annual average of 6.9 percent from 1981 to 1996 and is projected to rise 7.5 percent annually through 201.

SOURCE: Cruise Lines International Association

BOX: MORE DISNEY (see text)