A few weeks ago Norwegian Cruise Lines (NCL) announced poor quarterly results and blamed Hawaii operations for much of the red ink. The head of NCL and Hawaii swore up and down that the company was here to stay. Clearly, they've sunk a boatload of cash into getting their intra-island cruise operations up and running with three ships, Pride of Aloha, Pride of Hawaii and Pride of America and have a lot to lose by pulling out. But I'm less than sanguine about the future of cruising in Hawaii unless NCL is allowed to employ the same non-US employees at the same low, low rates paid on cruise ships outside of Hawaii.

Part of the agreement on getting NCL into Hawaii -- which was partly brokered and shephered by the powerful senior U.S. Senator Daniel Inouye -- was that the boats would employ U.S. citizens and provide U.S. benefits. This is expensive in Florida compared to the normal labor costs. In Hawaii, where the unemployment rate is running at 2% and fast food joints are offering $200 recruiting bonuses for any referrals that stay more than 90 days, the cost of running witih all U.S. citizens is astronomical.

There is also the difficulty in recruiting locals that perform up to snuff in terms of cruise ship service levels. This is the one of Hawaii's little secrets. Service in the islands is not all that good (with a few exceptions at extremely high end hotels) but visitors don't really care because, hey, its Hawaii and everyone smiles, says "aloha" and is a little bit nicer than counterparts in other places around the world. When you are locked on a boat then aloha can wear thin far more quickly.

Hawaii as a state has always had a great ambivalence towards the big boats. Business leaders love having them sail into town. Residents try to steer clear of the thundering hordes coming down the gangplanks. Environmentalists fear the damage wrought by dumping of waste and other things. Molokai has basically told the boats to go away while Hilo only wishes a lot more of them would show up. So its pretty diverse.

Personally, I do not think the cruise industry in Hawaii is sustainable and, in fact, it goes against the grain of what Hawaii needs to become -- an elite destination. Because you are competing so directly with other cruises to other destinations, its a race to the bottom. And while the impact on the state's infrastructure is not as much as building another hotel (cruise ships don't require sewers or power, among other things), packing people in more tightly is something Hawaii needs to think about really hard considering the already crowded nature of too many beaches, roads and other parts of the islands.

—Alex, 03/19/07