Cruising With Colin

The CEO of Norwegian Cruise Lines has big plans for the Islands. Can he pull

December, 2003

Colin Veitch may be the CEO and president of Norwegian Cruise Line Group but he’s never on cruise control. Veitch joined NCL in February 2000 and masterminded its “freestyle cruising,” a move to turn cruising into a less structured affair with “no dress codes and no assigned seating with strangers.” After the Sept. 11 attacks, he engineered a move that brought all of NCL’s fleet back for routes close to U.S. waters.

Now Veitch, an affable Scotsman with a dry sense of humor, razor-sharp business acumen and a Harvard MBA, has made a big bet on the Islands and plans to navigate NCL to sustained profits here. NCL will up the number of ships it runs in Hawaii from one to three by the end of 2005, with a fourth on the horizon after that.

If Veitch’s plan proves successful, NCL could provide the largest single-source boost to Hawaii’s visitor industry in decades. According to an NCL-funded PriceWaterhouseCoopers report, NCL’s move to three boats could provide 10,200 jobs in Hawaii, collectively paying $270.6 million in annual wages and contributing $355.5 million in passenger spending to the Islands’ economy. With three 2,000-passenger ships running year-round cruises, NCL would bring 400,000 visitors to Hawaii each year, according to Veitch.

Still, the bankruptcy and shutdown of American Classic Voyages underscored the difficulty of running a U.S.-flagged, U.S.-crewed cruise operation in the Hawaiian Islands. Federal law proscribes shipboard casinos on U.S.-flagged vessels in Hawaii. Maintaining U.S.-national crews also costs several times more than employing foreign nationals. On routes around the Hawaiian Islands, NCL ships make port calls daily – meaning less sea time for onboard bar tabs and spa treatments.

Veitch believes NCL will make up some of the difference by taking a commission on shore activities it books for cruise passengers. Lower fuel costs, too, help the bottom line. All told, Veitch thinks NCL will post smaller profit margins in Hawaii than on other routes, but that the boats will be solidly profitable. “You only have to look at the published accounts of the three major cruise lines to see we don’t operate on thin margins. We’ve already built a good business in Hawaii on Norwegian Star,” says Veitch.

So far, Veitch has gotten a largely positive response from the local business community. “He’s hit the town as a whirlwind and shown they are dedicated towards making a presence here,” says Frank Haas, vice president of marketing for the Hawaii Tourism Authority. For his part, Veitch finds business norms in the Islands a refreshing change. “It’s a very tight community and people are considerate of each other and they recognize they will be running into each other often. So there is a focus on getting things done in a manner that is more cut and dried,” says Veitch.

Not that it’s all clear sailing. Environmentalists want stricter laws regulating the cruise industry in Hawaii. They say the current handshake deal between the cruise industry and the state – a so-called “memorandum of understanding” – has no teeth. “As much as we would like to trust the industry to police themselves, we haven’t seen them do that elsewhere,” says Jeff Mikulina, executive director of the Sierra Club’s Hawaii chapter. Veitch says that the cruise industry learned its lesson in the 1990s and has upped its environmental standards considerably.

Hoteliers worry that the cruising visitors will soak up much needed airlift and leave empty beds ashore. Veitch contends that NCL, with its predictable passenger bookings and mass markets, will actually bring more airlift to the Islands. United’s nonstop route from Honolulu to Denver, bringing 2,000 visitors per week, resulted at least in part from NCL’s discussions with the airline, says Veitch. NCL incorporates extended hotel stays into many of its packages, with passengers cruising for four days and staying on land for three more.

To Veitch, it’s all about blending into the local community and playing nice with hoteliers and environmentalists alike. He says: “We see the only viable way to have a business here is to become local.”

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