Queen of the Sea

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According to Cunard officials, 70% of the QM2's berths have been booked through the end of 2004, and 60% of the passengers have never traveled on a Cunard ship before. The trick will be to keep up this momentum. Last week the company tried to extract every ounce of buzz it could from the naming ceremony, drawing thousands of veteran cruisers, journalists and European travel agents to tour the ship. The general verdict was highly positive, even if the ship's decor and amenities seemed to be straining to appeal to customers in different age and income groups. After his tour, Mike Driscoll, editor of Cruise Week, an industry newsletter, said, "They're not going after 65-year-olds who care about the weight of the silverware. There aren't enough of them anymore. They're going after the guy who drives his Porsche to Taco Bell."

The original Queen Mary, 113 ft. shorter than QM2, is now a floating hotel in Long Beach, Calif. The QM2 has some of the old ship's glamour--and, with a nod to nostalgia, one of its whistles. But the focus is catering to modern taste: the QM2 offers the only planetarium at sea, the largest dance floor afloat, education-lite courses by Oxford professors and a luxurious 20,000-sq.-ft. spa run by the upscale Canyon Ranch chain. Cabins are comparatively roomy, and three-quarters of them have balconies. Some observers on the preliminary tour complained that the furniture in some of the lounges looked cheap and that deck chairs for the lowest-priced cabins were white plastic instead of the traditional teak. Victoria Mather, travel editor of the British magazine the Tatler, dismissed the pervasive Art Deco look as "Las Vegas"--kitschy instead of tasteful. Note to travel snobs: those kitschy Las Vegas casinos make serious money.

Cruise operators are optimistic that they will too. New berths will rise only slightly in 2005 and 2006, and the demand for cruising, which slumped after Sept. 11, has bounced back, growing at an estimated 8.6% in 2003. "I would challenge any other segment of the tourism industry to show rebounding at our pace," says Cruise Lines International Association executive director Bob Sharak.

Ship owners have learned to protect profits even with soft demand. Ships have become bigger, and "economies of scale really work" on cruises, says John Maxwell, a leisure-industry analyst at Merrill Lynch in New York City. Ways of extracting extra money from passengers have become more sophisticated, like TV sets that allow gambling from one's stateroom and premium restaurants that charge a supplement. Driscoll estimates that Carnival makes 20% of its revenues from onboard charges.