Posted: June 11, 2010

By Danielle Walker

danielle.walker@insidebiz.com

After a record low year of ship traffic in 2009, which recorded the fewest sailings since 2001, with only 17 cruises, Norfolk has been faced with another industry blow - Royal Caribbean's decision to pull the Royal Enchantment of the Seas from the Half Moone Cruise and Celebration Center port.

Royal Caribbean will still sail the two cruises scheduled for this summer, but the line will not return to Norfolk for the 2011 cruise season.

"The industry is in a challenging time right now," said Stephen Kirkland, the assistant executive director of Nauticus, who also oversees the Half Moone Cruise and Celebration Center port. "The cruise industry is not impervious to the economy, because they are dealing with people's discretionary dollars. That's the case in Miami, and that's the case in Norfolk."

Kirkland said new ships are still being built but that cruise lines are becoming "more conservative" to create a padding for low yields that could result from the come-and-go nature of the industry.

"We're still talking very closely with Royal about bringing another ship in [for 2012]," Kirkland said. "That's the thing about the industry, they can bring the ships in and also move them."

The Royal Caribbean ship, with a capacity of 2,446 passengers, that will be absent in 2011 was one that split the season with Baltimore. Now the vessel will sail exclusively to Baltimore, a port that has a larger population for cruise travel.

Kirkland said that the passenger count for this year in Norfolk is expected to reach 61,000 travelers by the end of October, which is 10,000 passengers short of earlier expectations reported at the end of 2009. He believes the dip is due to ships that have changed their itineraries and to a lack of stopover calls. For next year, Kirkland said the expectation is 40,000 passengers.

Cruise Lines International Association, a nonprofit cruise industry organization, reported that the South Atlantic and Pacific regions account for the largest source of passengers within the U.S. Virginia, along with several other states, namely Maryland and Florida, make up the South Atlantic sector reported on in the 2008 study. From 1990 through 2008, the study showed that the South Atlantic region was among the top passenger contributors, and by 2008 was responsible for 34.43 percent of all U.S. cruise passengers.

As Norfolk navigates through a lagging year, the hope is that the city can create a market that will improve ship and passenger traffic.

Some promising news for the port is that Carnival, the other big- name line that stops in Norfolk, is still committed for 2011. The line will also be sailing to Bermuda for the first time in six years, which Kirkland believes will bring more bookings and traveler interest.

In addition, the $36 million dollar Cruise and Celebration Center, which has been in operation since 2007, has developed as a revenue source for the city due to events and meeting held at the venue, but the tourism sector still accounts for the majority of revenue.

While cruise ship passengers generated approximately $649,000 in direct revenues for Norfolk, event revenues brought in around $255,000 for 2009. Overall spending in the city that year (restaurants, hotels, etc) as a result of cruise passengers, was nearly $6 million.

Another goal is that the center will lock in consistent tourist flow by booking more expos and exhibits at the port venue. The Commercial Marine Expo has already booked Half Moone for its 2011 event. The center averages more than 150 events a year.