SETTING SAIL; WORLD'S CRUISE LINES PREPARE FOR INFLUX OF PASSENGERS.

Byline: Cynthia Corzo Knight Ridder Newspapers

With eight new cruise ships coming on line this year - and even more in store for 2000 and beyond - cruise lines should be scratching their heads, figuring out how to fill all those extra beds.

But it's not happening; it's not even on the horizon.

Buoyed by a healthy economy, the world's cruise lines have some 35 vessels worth $10.5 billion due out by 2002, with an additional 25, worth nearly as much, in the pipeline for delivery during the next five years. The industry is expected to increase passenger capacity by 57 percent by 2002.

Spurred by an increasing number of passengers - in the first three months of the year, 1.4 million passengers sailed on cruises, 13.7 percent more than during the same period in 1998 - cruise lines are confident that their new ships will be easily filled.

``There's definitely a market for new ships, otherwise the industry would not be building them,'' said Vicki L. Freed, chairman of the Cruise Lines International Association, the marketing arm of the North American cruise industry. ``Cruises are getting roughly 2 percent of the entire vacation market - defined by stays three days or longer including one night in a hotel. People are taking 260 million vacation trips per year, so there's plenty of room to grow.''

The cruise industry is a $7 billion-a-year business. Cruising has been the fastest-growing segment of the vacation market for the past 10 years. It has beat land-based resorts, theme parks and excursions, according to the book ``Selling the Sea,'' written by Carnival President Bob Dickinson and industry expert Andy Vladimir.

According to industry figures, only about 11 percent of the U.S. population has ever been on a cruise. That leaves the cruise lines with a potential passenger base of nearly 90 percent of the population.

``And we don't have the capacity to book that 90 percent of the population,'' Freed said.

According to the 1998 market profile study sponsored by the Cruise Lines International Association, almost 75 million Americans have indicated a strong desire to take a cruise within the next five years. The cruise industry also knows that more than half the target market - nearly 69 million people - have never taken a cruise. And with the number of first-time cruisers inching up every year - industrywide the figure reached 44 percent in 1997 - the potential for growth is very strong.

Fears that massive shipbuilding would lead to saturation of the cruise market have generally been unfounded.

Rather than leading to overcapacity and forcing a reduction of cruise fares to fill beds, the new ships have led to higher than anticipated bookings. Analysts say that new ships drive passenger increases because they attract more attention, and consequently more bookings, to cruises.

In 1998, the three leading cruise lines - Carnival, Royal Caribbean and Princess - tightened their grip on the industry, extending their reach through acquisitions and shipbuilding. The No. 4 cruise line in the world, Norwegian Cruise Line, is bringing up the rear - with one new ship this year and three recently stretched ones - and is vying for a spot at the top three.

Bookings for the new ships are strong. During this year's ``wave month'' - the top cruise booking period, from early January to mid-February - bookings reached high levels industrywide.

Overall, the cruise industry is predicting an increase in passengers for 1999 of about 8 percent. During the past several years, the industry has experienced steady growth of 9 to 10 percent per year.

CAPTION(S):

Drawing, Box

DRAWING: (Color) no caption (Cruise ship)

Hiram Henriquez/Miami Herald

BOX: SHIPS AHOY 

Three companies are pulling ahead in the race to build a fleet of modern cruise ships. Here are the ships delivered or on order during the 1990s for major lines.

Knight-Ridder Tribune