The State of the Industry panel brought together the CEOs of RCI, NCL, HAL, Carnival and MSC for the annual discussion of where we are, and where we're going.

Yes, there are good reasons to be optimistic about cruising as an industry, as the panelists reiterated:

• The value proposition of a cruise is outstanding. (MSC's Rick Sasso even quipped that he "was mentioning value for the third time in three minutes." Yes, we get it. International crew, a bundled product, and a low tax base are a beautiful thing.)
• Costs have eased, both of fuel and Euro-based costs
• Cruise ships can alter deployments to seek out more popular areas, more affluent economies, in ways that hotels can only dream of. Indeed, Australia has become so popular as both a domestic and international destination that Sydney has become a very tight port - Adam Goldstein noted that for the first time in RCI history, at Sydney recently they actually had to turn around a ship while at anchor!
• Land based operators are in disarray, as a result of the US government's dislike for conference

Then again, there are also reasons for concern:

• Global economic recession. Obviously.
• Expanding capacity. CLIA may be delighted about 14 new ships coming online in 2009, in addition to seven in 2008, but while this will raise volumes, we at CruiseSavvy believe it is almost certain to depress yields. The industry has always taken it as gospel that growth is good, and of course ships coming online now were ordered in much better times. However, basic economics tells us that price is set where supply meets demand. With demand slipping and supply expanding, we at CruiseSavvy expect lower prices for some time to come.

The CEOs talked about measures each had taken to address the current market:

• Discounting, of course. "We are filling our ships, albeit at historic low prices," was the refrain of more than one CEO. Celebrity's Dan Hanrahan tried to argue that they "won't take business if the price is so low that it'll hurt us" but both Carnival and HAL disagreed. As Stein put it bluntly: "Our business model is simple, we fill our ships."
• Redeployment and international sales. Carnival just this summer pulled out of Europe and back to US home ports, which are far easier for consumers who may be wary to spend on flights in addition to cruise fare. RCI noted that as an international organization they are able to source from far afield, though Adam Goldstein also noted that "there is no country that is immune to the market conditions."
• Marketing. Carnival, NCL and RCI all spoke about the importance of marketing even - perhaps especially - in a down economy.

Overall, the group was positive about the industry in the long run, while recognizing the challenges in the near term.

We at CruiseSavvy certainly agree in the long term, but are naturally sympathetic to those companies already burdened with heavy debts, and who perhaps may be less well-equipped to handle extended lean times. MSC is sitting smug -- "we have plenty of money" - said Sasso. Carnival Corp brands Carnival and HAL are still sitting on an excellent credit rating as well as a modest amount of debt and newbuild debt-to-be.

Perhaps our favorite roundup was from Stein Kruse, whose closing comments channeled the film Apollo 13: The ground crew were anxious and fretting as the distressed space ship spent far too long in atmosphere upon re-entry. Anxiety built upon anxiety, and despite extensive training and exceptional equipment the ground crew began to panic. Then Ed Harris stood up, straightened his tie, and reminded the room: "Ladies and gentlemen, this will be our finest hour." Calmed, the crew are able to bring the ship safely home.

All would agree that great challenges are now upon our industry. We have no doubt that there will be changes, and some practices and parties may not endure. But with strong execution and wise leadership, the industry overall has a bright future ahead.