Port of Houston Loses Ships as Focus Turns to Asia

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Port of Houston Loses Ships as Focus Turns to Asia

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The Port of Houston is losing both of its home-ported ships next year, a victim of a growing focus by North American cruise lines on shifting deployments to Asia.

Both Norwegian Cruise Line and Princess Cruises have announced 2016 schedules that do not include a ship sailing from Houston, where western Caribbean itineraries are typically offered.
It is the most tangible fallout yet from the cruise industrys high interest in China, Australia and other Asian markets.

Brian OConnor, vice president of public relations at Princess Cruises, said the departure from Houston is the final domino in a chain that started when the line moved the Sapphire Princess from Australia to China. The China cruises were announced in 2013 and started in May 2014.
The redeployment of several ships ultimately led Princess to move the Caribbean Princess from Houston to Fort Lauderdale in late 2016, where it will still offer some western Caribbean routes.
But for Texas cruisers, the news means a reduced choice of cruise lines and homeports. Following the moves, instead of five lines sailing from the state, there will be three, and they will depart only from Galveston.

The change doesnt sit well with Vic Freeland, a retired firefighter who lives about 45 minutes from Austin and is a huge Norwegian Cruise Line supporter.

Certainly, were sad that theyre leaving, said Freeland, who has tried Carnival Cruise Line and Royal Caribbean International but has cruised much more with Norwegian.

Though Asia deployment is the first cause cited by Princess and others in accounting for the change, another factor could be the expiration next year of financial incentives offered by Houston to lure cruise lines to its Bayport Cruise Terminal.

And Carnival has made a strong push in the last several years in New Orleans and Galveston, raising the level of competition in the crowded western Caribbean.

Norwegian was the pioneer of what it dubbed Texaribbean cruising when in 1997 it launched weekly service with the old 848-passenger Norwegian Star. Since then, it has dropped the market and returned twice, first in 2007 and again in 2014.

Norwegian did not provide a direct rationale for the latest pullout. But in comments on a teleconference with Wall Street analysts, Frank Del Rio, CEO of the cruise lines parent, Norwegian Cruise Line Holdings, highlighted new Asian service as the cutting edge of its latest deployments

For the first time in recent memory, Norwegian is sending a ship, the 2,348-passenger Norwegian Star, on Asian and Australian itineraries next year. That will be independent of any decision to position a ship there for Asian-sourced passengers.

Without identifying it, Del Rio said the new deployment replaces our lowest-yielding seven-day product.

At the same time, the Norwegian Jade will move from Houston to Tampa, where it will continue to offer seven-night western Caribbean cruises but also mix in a few 10- and 11-night itineraries. The Jade replaces the Asia-bound Norwegian Star, which has been sailing from Tampa.
A somewhat similar game of musical chairs sent the Sapphire Princess to China from Singapore and the Diamond Princess to Singapore from Australia. The Emerald Princess, which had been sailing from Houston, was moved to Australia this year to cover the hole left by the Diamond Princess. Princess plugged the gap by moving the Caribbean Princess to Houston but concluded that wasnt a good long-term strategy.

It didnt make commercial sense for us to market and operate one ship from Houston, so we moved the Caribbean Princess to Fort Lauderdale, where we get economies of scale, OConnor said.

That will leave Houston with no cruise ships and a deserted 96,000-square-foot terminal after next spring.

Stan Swigart, port director of marketing and communications, confirmed the view that the ports misfortune arises from the ascendency of Asia.

The reasons were getting is that theyre redeploying vessels to the Asian and Australian markets, and Houston was just not in the mix, Swigart said.

Next year also marks the expiration of a reported $6.7 million in financial incentives extended to Princess and Norwegian in 2012 to induce them to sail from Houstons then-vacant terminal.
A drawback for Houston is the buildings interior location off the Houston Ship Channel some 30 miles from the Gulf of Mexico.

Galvestons closer to open water than we are. That may play into it, Swigart said. Cruise lines are really finicky. They shuffle the deck a lot, just to keep it fresh.

After Norwegians last departure, in 2007, the $81 million terminal saw no cruise passengers from 2008 to 2013. It was used as a lay-berth port and for ship repairs, Swigart said. At the moment, there are no cruise ships on the horizon that want to dock there, he said.

Thats not the case in Galveston, where Texas-based cruising will consolidate after next year. Carnival has bulked up its presence there, announcing that it will move its newest ship, the Carnival Breeze, to Galveston in 2016 to join the Carnival Liberty and the Carnival Freedom. It also reached a marketing partnership with the Dallas Cowboys and took other steps to attract business.

Galveston is also home to a Disney Cruise Line ship, the Disney Wonder, and to a Royal Caribbean International ship, the Navigator of the Seas.

In November, Royal plans to replace the 3,276-passenger Navigator with the 4,000-passenger Liberty of the Seas. A 60,000-square-foot expansion of the terminal that Royal uses in Galveston was to have been completed by then, but a redesign has pushed back the opening until the spring, port spokeswoman Cristina Galego said.

The expanded terminal will seat an additional 2,000 passengers. Galego said Royal Caribbean has asked the port to provide an air-conditioned tent as a passenger waiting area until the terminal work can be completed.

Source: Tom Stieghorst (Travel Weekly, August 23, 2015, “Cruise Lines Leaving Houston High and Dry as Attention Turns to Asia”)

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