I ran across this article published July 25, 1987 in the New York Times.

"Overcapacity Also Feared. Of more concern to many analysts is that the optimism expressed by Mr. Arison and some competitors may open the industry to overcapacity. According to the Cruise Line Industry Association, new ship construction by its members will result in the addition of an estimated 15,000 berths - a 26 percent increase - by 1990.

That fear may already be represented in the market performance of the other publicly traded cruise lines. Regency was offered at $1.50 a share... American Cruise Lines has fallen from $3.125 at the end of 1986, to $2.25 in O-T-C trading yesterday, and Bermuda Star Line, offered at $6 a share, closed yesterday at $4.875 on the American Stock Exchange."

Fast forward 20 years later to November 13, 2008 in Business Week.

"With customers galore a few years ago, the industry ordered an armada of bigger, fancier vessels. Because they take so long to construct, the new ships are now just hitting the water. Royal Caribbean will add six ships by 2012 at a cost of $6 billion. Rival Carnival Cruise Lines (CUK) estimates the industry will launch 38 ships in North America and Europe over the next three years, adding 28% to capacity."

To quote Yogi Bera "It's deja vu all over again."

While Regency, American and Bermuda Star are gone, the point is history and human behavior teaches us lessons.  For one, we typically overreact, particularly if it is the tone of a media headline looking to drive readership.  The second is, despite perceived overcapacity in 1987, the industry performed amazingly well over the subsequent two decades.

I anticipate the next two decades will be equally as fruitful.  According to the Allied Academics International Conference the cruise industry holds only two percent of the market share in the total vacation industry. Only 45% of the target North American market has EVER cruised – and there is no reason over time this can’t rise to 70%-80%.  A tailwind to this growth will be a better educated, higher income population "on the threshold of a boom" as a 2005 report by the U.S. Census Bureau described the aging population.  The first baby boomers turn 65 in 2011.