Passenger cruise lines steer toward brighter times.

After rough period, they foresee some improvement

The passenger cruise business in Los Angeles should remain flat in 1994 following fairly significant declines in both passenger and ship volume last year, according to Port of Los Angeles officials.

Meanwhile, officials at cruise lines are slightly more upbeat, predicting some improvement in passenger volume and ticket revenue.

"There's no question that the past year or two have been difficult ones in the California market. But some positive signs are starting to appear," said Rod McLeod, executive vice president of sales and marketing for Royal Caribbean Cruises Ltd., which is based in Miami.

"Los Angeles is an extremely important part of our business and we fully expect that it will remain that way," he said.

Royal Caribbean is a primary user of Worldport LA, which is the name of the cruise facility at the Port of Los Angeles. Other big users of the passenger facilities are Norwegian Cruise Lines, based in Miami; Princess Cruises, based in Century City; and Carnival Cruise Lines, headquartered in Miami.

Several other cruise lines make less frequent stops at the port, usually just three or four times a year. The more frequent users may stop at Los Angeles as often as twice a week and may originate cruises at the port. Frequent users of the port usually originate cruises to Mexico from Los Angeles.

Last year cruise passenger traffic at the port fell just over 9 percent from 1992 - to 878,900. Traffic is defined as a combination of passenger boardings and disembarkations.

Cruise ship stops, or "calls" as they are named in the industry, also declined at the port last year. Calls declined from 438 in 1992 to 414 last year.

Passenger volume and ship stops declined in 1993 after many years of steady growth in the port's cruise business, said Jeff Leong, a spokesman for the port.

"Up until last year, we had been growing just about every year. Passenger volume went down from 1989 to 1990 but that is the only year that I can think of where it declined before last year," he said.

Cruise ships first started regular stops in Los Angeles in the early 1960s. Los Angeles is now the largest passenger port on the West Coast and the third largest in the country behind Miami and Fort Lauderdale in Florida.

In 1990, passenger traffic at Worldport LA was 620,557 and in 1991 it grew to 682,071. Ship stops at the port in 1990 totaled 381 and 384 in 1991.

Leong said the port does not foresee any strong growth in passenger volume or ship stops at the port this year compared to 1993.

"We're predicting a flat year and don't really see improvement until the economy comes back and more people have more discretionary income," he said. Leong said he didn't know when people would start spending more money on cruises.

Despite the less than rosy predictions by port officials, Leong said he didn't know of plans by cruise lines to cut back on calls at the port, which is used by many ships as a stop on "repositioning" cruises. Repositioning occurs when ships change seasonal itineraries. For instance, cruise destinations may switch from the Caribbean to Alaska between the winter and summer seasons.

Ships that use the Port of Los Angeles on a regular basis, like the Viking Serenade of the Royal Caribbean line, usually offer itineraries to Mexico. "Mexico is our most popular destination," said Leong.

David Brown, vice president of maritime affairs at Princess Cruises, said the port is a significant part of the line's overall operations. "We have been operating out of Los Angeles for 30 years and so I think that shows how important it is to us," he said.

Port and cruise line officials noted that the California market has become particularly price sensitive because of the state's economic downturn. They said occupancy rates have held fairly steady but the economy has forced ship lines to hold down price increases or, in a few cases, reduce rates.

In the meantime, costs have risen, making the Los Angeles market an expensive and less attractive place in which to operate, said port and cruise line officials.

"We have been running load factors above 90 percent but we're disappointed in the rates we can charge. The market has been a little thin," said McLeod.

He noted, however, that as far as Royal Caribbean is concerned, the Los Angeles cruise market is showing signs of improvement that could bode well for cruise lines.

In addition, cruise line officials said the industry in general is growing by about 10 percent a year with a huge untapped market of people who say they want to take a cruise. Industry experts have predicted that by the end of the decade about 8 million Americans a year will take cruises. Right now about 4 million Americans take cruises every year.

Most major cruise lines, including Princess, Carnival and Royal Caribbean, have ordered or are building new ships. Cruise ships range in size from a few hundred passengers to more than 2,000.

In a report by the accounting firm of Price Waterhouse a year ago, the Port of Los Angeles was said to generate 7,200 full-time jobs. By 1996, the local cruise business is expected to create another 2,150 jobs.