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Gaming Guru

Rod Smith
 

Cruise Lines Lure Would-Be Customers, But Las Vegas Casino Operators Unfazed

15 October 2003

LAS VEGAS -- Cruise lines are flexing their muscles with trade groups, saying the industry represents a major challenge to gaming operators.

Casino-hotel operators, however, see the burgeoning cruise business as their newest feeder market and are moving full-speed-ahead to develop partnerships rather than compete with the industry.

CruisesOnly, for example, a major cruise travel agency, recently said its customers are substituting cruise vacations for Las Vegas trips because of their "overall value."

Marketing Vice President Don Walker said the agency's customers understand that adding dining, entertainment and activities into the fare cuts the total cost of cruise vacations.

He also points out that most major cruise ships today offer casino gambling as amenities, adding to the competition with Las Vegas.

To illustrate, CruisesOnly compiled comparative prices for a seven-day Caribbean Cruise on Carnival's Glory to the Western Mediterranean and a seven-day vacation in Las Vegas at the MGM Grand between Oct. 25 and through Nov. 1, based on two adults traveling, excluding taxes and fees.

The Las Vegas vacation at the MGM totaled $3,115 for a deluxe room, airfare, a food allowance of $700 and an entertainment allowance of $300. The Carnival cruise vacation totaled $1,610, or about half the price of the Las Vegas vacation.

Gaming operators generally say the cruise business deserves to be taken seriously because of the numbers involved.

Growing at 20 percent a year, the cruise business is the fastest-growing segment of the international leisure industry, faster even than the gaming industry.

The number of cruise passengers, which totaled 9.4 million worldwide last year, should reach 10.5 million in 2003 and 13 million in 2004, projects G.P. Wild (International), a United Kingdom-based cruise business consulting firm.

And the U.S. cruise market, which generated 6.4 million passengers in 2001, should break 7 million next year and increase to 8 million in 2005.

MGM Mirage spokesman Alan Feldman, however, said that to the extent there are leisure travelers who go on cruises and gamble, there is an opportunity for the casino companies.

More important, Feldman was skeptical that many travelers see the two vacation options as trade-offs.

"I just don't see large numbers of people who see them as one or another choices," he said.

Harrah's Entertainment is taking a more aggressive position in light of the growing interest in cruise vacations.

"We actually view (the cruise business) as being an opportunity for our company to form strategic alliances with Royal Caribbean Cruises," spokesman David Strow said.

Royal Caribbean recently was added to Harrah's Total Rewards program and is featured in the company's collateral promotional material, he said.

"Also, we reward some of our higher-end players with VIP cruises on Royal Caribbean," Strow said.

And on some Royal Caribbean Cruises out of Los Angeles, Harrah's sponsors slot machine and blackjack tournaments, he said.

"Why? What we've noticed is that the demographics of a cruise customer is almost identical to the demographic of a valuable casino player," Strow said.

"Casino customers in the studies we've conducted have indicated being very interested in taking cruises and in visiting (land-based) casinos," he said.

At Park Place Entertainment Corp., Senior Vice President Steve Rosen said for the same reason his company has developed a strategic relationship with Crystal Cruises and operates Caesars at Sea casinos on each of its three ships.

"You can't fight it. They're not going to go away," Rosen said.

He said Park Place also offers cruise packages to high-end customers and cross promotes its casino properties with Crystal.

"You can look at them as adversaries or you can ask how we can work together to grow the customer base. That's the trend in both industries," Rosen said.