Malta is doing well in the cruise liner industry and was recently aptly described as the cruise destination of the year, said José Campos, president of Medcruise, while addressing executives attending the Seatrade Cruise Shipping convention in Miami last week. Medcruise is the Association of Mediterranean Cruise Ports.

Carlo Micallef, managing marketing of the Malta Tourism Authority, said that the Authority took part in the conference in collaboration with Viset, the Malta Maritime Authority and the Malta International Airport. The Malta stand was promoting the facilities that Malta offers as a cruise liner destination as well as a fly-cruise hub in the Mediterranean.

He said the Authority would soon announce its marketing incentives to promote extensively a three-night "cruise and stay" programme.

Mr Micallef remarked that the feedback from one-to-one meetings with various foreign participants at the stand "registered positive results".

Maltese agents in Miami discussed the possibility of enticing more cruise companies to add Malta to their itineraries.

Executives at the convention said yearly cruise penetration, even in significant markets such as Britain and Germany, was much lower than the 3.5 per cent penetration in North America.

But, according to Reuters, despite the onboard party atmosphere and the postcard image of luxury liner passengers waving to ferry commuters from ship rails, the world's cruise industry is sailing through rough financial seas as the global downturn bites into tourism.

Cruise operators are desperately trying to attract passengers for this year, slashing prices, offering last-minute deals, two-for-one pricing, shorter cruises, family packages in which children sail free, and home port cruising which avoids the cost of an airfare to reach an exotic departure port.

Norwegian Cruise Line last month announced "BookSafe" which will give passengers a full cash reimbursement if they cancel their cruise because of job loss. US cruise retailers CruiseOne and Cruises Inc. have introduced CruiseAssurance to cover passengers in the event of them being sacked.

So far bookings for this year are holding, but Cruise Critic warns some cruise operators may gain 90 per cent occupancy rates this year but still lose money due to cheaper pricing and conservative spending by passengers.

Royal Caribbean Cruises Ltd, the world's second largest cruise operator, has already reported a profit collapse in the fourth quarter of last year and expects this year's revenue to be weak as it offers discounts to lure passengers.

Royal Caribbean in January reported fourth quarter profit of €1 million, down sharply from €51 million in the same quarter the year before.

Carnival Corp., the world's largest cruise ship operator, managed to beat expectations in posting a 3.6 per cent rise in net income in the fourth quarter last year, based on higher room rates, cost cutting and offsetting fuel costs.

The company said its net income in the quarter was €271 million compared with $358 million a year earlier. But the fourth quarter profit included €22 million on the sale of the Queen Elizabeth 2 and a rapid decline in fuel costs.

The cruise industry has seen unprecedented growth in recent decades thanks to soaring popularity in North America and Europe, the two main markets, and emerging cruise ship markets in Asia and Latin America.

Since 1980 the average annualised growth of North America has been 7.4 per cent and annual passenger volume has risen 79 per cent in the past eight years. An estimated 13.2 million people took a North American cruise last year.

The Cruise Lines International Association, North America's largest cruise industry body, estimates this year will see only a five per cent rise in passengers to about 13.35 million.

Cheaper prices and incentives have seen some cruise operators post record bookings so far this year, he said. Carnival recorded the highest weekly bookings in its history in the first week of this month and net bookings since January are up 10 per cent compared with the same period last year.

Carnival said in December that bookings for 2009 were running behind the prior year. It said it expects net revenue yields to fall six per cent to 10 per cent this year. The top end of the market, the world and luxury cruises, is feeling the economic pinch the most.

Back in July 2007, Carnival's luxury €183 million Seabourn Odyssey which will make its maiden voyage in June was charging to be on its wait list.

Credit Suisse upgraded Carnival Corp. and Royal Caribbean Cruises to "outperform" from "neutral" last month, saying the companies will outperform helped by solid demand in the North American and European markets.

The North American market is reaching maturity, but cruise operators still see growth in "home port cruising" this year, which first became popular after 9/11 when people did not want to fly.

Meanwhile, smaller, newer markets in the UK and Ireland, Europe, Asia and the Middle East are also offering prospects for growth during tough economic times.

Europe today looks as the American market looked 15 years ago in terms of cruise interest and potential.

There could be an additional two million cruise passengers a year in the UK and Germany if penetration rates rose.

A 2008 survey by CLIA found 34 million Americans plan to take a cruise in the next three years.

The CLIA fleet, which consists of 14 new ships at a cost of €3.5 billion, ranging in carrying capacity from 82 to 5,400 passengers, sets sail this year to meet this expected growth in demand.

A further 21 new cruise ships, at a cost of €10.2 billion, are scheduled to enter the North American market between 2010 and 2012.