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The closing of American Family Cruises is providing other operators a lesson on how not to run a family-oriented cruise line.

In July the line announced that after the American Adventure's Sept. 3 sailing from Miami, the ship will return to Italy and be repositioned as a midprice vessel, renamed the CostaRiviera.

Since December, advertising positioned the line as a kid's dream at sea, with activities, computers and educational programs.

The line used mostly print, with ads placed in family and women's magazines and Northeast newspapers. The campaign was handled in-house, using the theme "The great American family vacation."

What was missing, industry followers now say, was something for the rest of the family, and cruise patrons without kids.

"There was no one area on the ship where the parents could sit quietly away from the children," said Bill Panoff, an industry watcher and publisher of PortHole, a trade magazine.

Another problem was that children traveled free with paid parents. Thus, passengers in roughly half the ship's 1,500 berths weren't paying, Mr. Panoff said.

"The economics didn't work out and the revenues just weren't there to support the product," he said.

Other shortcomings also helped ground the ship, said Gary Sain, senior VP-sales and marketing with Premier Cruise Line, Port Canaveral, Fla. Since 1990 Premier has positioned its three ships to families as the Big Red Boat.

Ironically, the co-founder of Premier in 1984 was Bruce Nierenberg, the founder, president-CEO of American Family Cruises. Mr. Nierenberg stepped down following the decision to close.

The line's seven-day shipboard itinerary was long for families more accustomed to three- to four-day vacations, Mr. Sain said. By comparison, Premier offers three days in central Florida theme parks, and three or four days at sea, he said. Last year Premier signed a deal with Warner Bros. to bring Looney Tunes characters onboard.

Disagreements between Mr. Nierenberg and Costa Crociere, parent of Costa Cruises and owner and primary financier of American Family, ultimately scuttled Costa's interest, Mr. Sain said. The line didn't spend enough time pitching the line to travel agents, who handle the majority of cruise bookings, he said.

Mr. Nierenberg said there were problems with pricing and American Family's low recognition. But he disagreed the itinerary was too long or the line made a mistake in catering to children. He noted major lines now run extensive advertising pushing family-oriented products, and many families enjoyed the lengthy stay at sea.

Mr. Nierenberg owns the American Family concept, and said he has secured financing for a future family-oriented line.

The family market is a "hot prospect," according to an industry study by the Cruise Lines International Association released in January. While singles outpaced married travelers from 1988-92, families intending to cruise with kids in 1993-1994 was 68% compared to 53% from 1988-92.

Carnival Cruise Lines and Royal Caribbean Cruise Line each run onboard programs for children, though their itineraries are more for adults.

"Everybody recognizes the growth in the family market and the younger age groups that are starting to look at cruising," said Arthur Rodney, president of Disney's Cruise Vacation, slated for a 1998 launch.

Mr. Rodney said Walt Disney Co. has learned from American Family's problems. Kids and parents will have ample on-board activities, as will newlyweds, seniors and other passengers.

Seven-day packages will tie Disney theme parks with cruises. Onboard entertainment will include Disney movies, characters and live productions, with space for parents and other travelers to get away, drink, sunbathe and possibly gamble.

American Family "didn't really care too much about the adults and they figured mom and dad will be happy if the kids are happy," Mr. Rodney said. "It doesn't work that way."

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