DISNEY GLIDES INTO CRUISES

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A sign above Walt Disney World's It's a Small World amusement ride reads "Welcome to the happiest cruise that ever sailed." It's soon to be the second happiest.

Lake Buena Vista, Fla.-based Disney Cruise Lines recently announced it had signed an agreement to build two cruise ships, at a combined cost of roughly $700 million. The news positions Walt Disney Co. for entry into the increasingly competitive family cruise market by January 1998, with the second ship scheduled to sail by that November.

"You can't deny that Disney's really a powerhouse," said Sherri Spear, analyst with Lehman Bros., New York. "The market really wants to know what they're going to do."

Here's the float plan: Disney will offer a variety of "seamless" seven-day, cruise-and-theme park packages that will split vacationers' stays between sea and the company's Orlando area attractions.

Each ship will have three pools, and a number of Disney-theme events. The line is negotiating to buy its own island in the Bahamas as a stopover point.

Though Disney has yet to name a home port, it will likely be either Port Canaveral on Florida's Atlantic coast or the Port of Tampa on the Gulf coast.

Each ship, from Italian shipbuilder Fincantieri of Trieste, will weigh 85,000 tons and accommodate 2,400 passengers.

Though industry insiders had expected such an announcement from Disney, the news nonetheless buoyed cruise executives as a possible new way to lure untapped markets. Ocean-based trips amount to about 2% of total travel in the U.S. annually, and a mere 5% to 7% of Americans have ever cruised, said Michael London, president of San Diego travel retailer Cruise Holidays International. The Disney name could do much to boost cruising's public appeal, he said.

Though no agency has been named to handle Disney Cruise Lines, Young & Rubicam, New York, recently completed a four-month project researching the line's market position. Arthur Rodney, Disney Cruise Line president, said there's no word on an account review.

"We feel we can appeal to families and non-families," said Mr. Rodney, who was recruited from luxury line Crystal Cruises last July. "We think it's going to redefine cruising and bring it to a different level."

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