EXECUTIVE SUMMARY

The cruise industry is the most exciting growth category in the entire leisure market. Since 1980, the industry has had an average annual passenger growth rate of 8.1% per annum.

The cruise industry is young. Since 1980, nearly 100 million passengers have taken a deep-water cruise (2+ days). Of this number, 61% of the total passengers have been generated in the past 10 years. Thirty seven percent of total passengers have been generated in the past five years alone.

The cruise market potential is strong. Over the next three years, over 48 million North Americans indicate an intent to cruise. To date, approximately 16% of the U.S. population target market have ever cruised. By maintaining historical occupancy levels, the cruise industry could welcome over 10 million guests in 2004.

The cruise product is incredibly diversified with literally a cruise vacation for everyone. Over the past 10 years, the industry has responded to extensive market and consumer research: research that has guided the addition of new destinations, new ship design concepts, new on-board/onshore activities, new themes and new cruise lengths to reflect the changing vacation patterns of today’s market.

The cruise industry’s product delivers unparalleled customer satisfaction. Whether a frequent or first-time cruiser, the cruise experience consistently exceeds expectations on a wide range of important vacation attributes. On a comparative basis versus other vacation categories, cruising consistently receives top marks. The on-going challenge for our industry is to convert cruise prospects into new cruisers.

Cruising is an important vehicle for sampling destination areas to which passengers may return. Over 85% of cruise passengers agree with this statement. Nearly 50% fully expect to return to the same geographical area/destination for another type of vacation. Cruisers are not exclusively cruisers; rather they are frequent vacationers who cruise as part of their vacation mix.

The North American cruise market is strong across all 50 states and Canada. Today’s array of airlift options and streamlined port processing have opened up cruising as a vacation alternative to more and more individuals. The addition of new North American embarkation ports provides cruise vacationers more options and opportunities to drive versus fly.

CLIA Member Lines capacity utilization/deployment. From a capacity standpoint, utilization is consistently over 90%. The Caribbean represents the number one destination with almost 46% of capacity development. Europe, the Mediterranean, Alaska, Mexico, Trans-Canal, Hawaii and South America follow the Caribbean in popularity.

CLIA has become one of the largest and most influential travel industry associations. Today, it has 19 member lines and over 16,000 travel agency members. It’s the largest association in terms of North American travel agency members representation.

The cruise industry has a very close working relationship with the travel agency community. Almost all passengers (est. 90+%) are booking through travel agents. Cruises are profitable to sell and generate a high repeat rate. The most successful and productive agencies are those that place a premium on selling cruises and training their personnel.

NOTE: In this report, North American market designates only U.S. and Canada.