Cruise accident may leave lasting wake

Scott Tong Jan 17, 2012

Kai Ryssdal: Five more bodies were pulled from the Costa Concordia today off the coast of Italy. That makes 11 confirmed fatalities with 29 passengers and crew still missing.

It is a rare and deadly tragedy for the cruise industry, which had been growing at an astonishing 7 percent a year. So what happens now? Marketplace’s Scott Tong reports.

Scott Tong: Cruise passengers have doubled every decade since the ’70s, in part because the industry had widely been considered safe.

Ross Klein: The cruise industry is generally pretty good at keeping their dirty linen under the radar.

Ross Klein watches the sector from St. John’s College in Canada. He says as tragic as the Costa Concordia shipwreck is, they got lucky — the water was shallow, and the medium-size ship carried only 4,200 people.

Klein: In this case, they had some time for the evacuation. The ship didn’t sink. But if it was in deeper water, it could have been much more disastrous in terms of loss of life.

What is bad is the timing. January’s a critical month for families to book trips for the summer.

And for now, Jaime Katz at Morningstar thinks some wills care off.

Jaime Katz: The most kind of pertinent fallout that you’re going to see is in cruise bookings. They are going to have to discount pretty significantly to get people on ships.

Most analysts bet on a short-term impact in a high-growth industry. Boats are getting bigger, and they register in countries exempt from U.S. wage and tax laws.

But hold on, says consultant Mark Murphy at Travelliance. He thinks this disaster could effect a key demographic: Cruise virgins.

Mark Murphy: About 80 percent of the U.S. population has never taken a cruise. And events like these really deter people who may have been considering taking a cruise.

So far, the industry has managed to build more and more ships, and fill ’em with affordable getaways for $60, $70 a night.

All that depends on enticing new passengers.

In Washington, I’m Scott Tong for Marketplace.

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