Royal Caribbean to Build More Ships???
Written by: Paul Motter
Royal Caribbean said in its latest conference call that they are currently designing a new project ship that they will announce — when it is ready. Is this really news?
Not really. Richard Fain was just repeating what the line has been saying for two years now and the fact that he said it in his earnings conference call yesterday is called “leading the analysts.”
In any case – Richard Fain had this to say about new Royal Caribbean ships this week…
“Although we don’t usually comment about new ship orders until we have made a firm commitment to build them (by placing an order with the shipyard), we feel the time is right to start a new series of ships.”
He said that the new ships will be designed with the best of what Royal Caribbean has learned about “guest amenities,” and said the ships will embody an “innovative spirit in an efficient package.”
He said that the line has been working on the design for quite awhile now, and that he feels they are close but not quite there yet. “We won’t act [place the order] until we have the model in place, but we feel we are close to an acceptable outcome.”
Not exactly big news in itself, but it does raise some questions about how this next generation of cruise ships will look, and where they will take the cruise industry.
So, what is he indicating about the new ships?
The rest of statement, in close proximity to this, dealt with fuel efficiency and cost per passenger. The bottom line is that here is what you can expect from future cruise ships – as already indicated by those already on order for Princess and NCL.
The next generation of cruise ships will pack more passengers into ships of slightly larger than the average size now – roughly in the 135,000 to 145,000 tonnage range. A good model for this next generation of cruising already exists, Carnival Dream and its soon to arrive sister, Carnival Magic (coming in May, 2011). The Royal Caribbean Voyager class is right sized, but at 3100 berths doesn’t carry enough passengers for the next generation. The target is 4000.
Carnival Dream is 130,000 tons with 3650 berths but with the ability to carry more than 4000 passengers easily. This gives you a passenger/space ratio of 32 (square meters per guest). This is very similar to the new Princess ships that are scheduled to appear in 2013 and 2014, which will be 141,000-tons and have 3600 berths. NCL also has a new class of ships of 143,000-tons scheduled to debut in 2013 and 2014 that will have 4000 berths. When you add an approximate 20% for third and fourth passengers (kids in cabins, etc) the total capacity of these ships will go up to close to 4400-5000 people per cruise.
This is how the cruise lines plan to increase fuel efficiency.
Now, granted, this is not a bad idea when it comes to making money, which is what cruise lines should do, but here is the wrinkle in the plan; we are just now wrapping up three years of introducing beautiful and spacious ships that were designed before the economy belly-flopped and fuel prices spiked.
The next generation of ships will be competing with ships like Oasis of the Seas and Allure, not to mention the five ships of the Celebrity Solstice class which at 122,000-tons for 2850 passengers are among the most beautiful and spacious ships ever built. In fact, the last two ships in the Solstice class will be 126,000-tons and have 3030 berths so you see the trend towards more density already.
What does this mean for pricing? You may be surprised.
Right now Oasis and Allure command a premium in pricing because they are so unique, but the Solstice class has not really captured this premium price essence (although they deserve it) and cruises are priced ridiculously low for the quality of the ship. Why? Because they have five of these ships.
When you have to option of sailing on Solstice or Holland America Eurodam, why would anyone book a cruise on a ship with 5000 people in 143,000-tons? The only reason will be price. These new ships represent true “mass market” cruising. That’s right, as much as the “contemporary” cruise lines; Carnival, Royal Caribbean and NCL, fight labels like “mainstream” and the dreaded “mass market” to describe their products, they are planning to build mass market ships for the future.
But what kind of pricing will they be able to command? Unless the economy picks up drastically in the next two years we may be seeing very cheap cruises again. Now, I realize someone says this every time a new generation of ships is announced. But this time it is different, these new ships are coming into – and already desogned for a slumped economy. The represent a deliberate move towards commoditizing the cruise product, unlike the last generation which was far more focused on improving the cruise experience.
What will these new ships look like? The will be boxy, without a doubt, because they need to pack as much space as possible into the hull. They will be crowded – it is inevitable with that passenger/space ratio. They will be packed with features, most likely expanded kid’s areas to keep them more highly concentrated and out of the way of adults.
There will be tiers of deck space, a trend that started as far back as the Carnival Destiny class in 1996. This is because pool time appeals to the mass market and is a good opportunity to sell drinks during the day. They will have “Serenity Spaces” for adults only, because such crowded ships present a good opportunity to sell exclusivity.
I’m going to open this up for discussion, because what I have said is speculative. What do YOU see happening on these ships, and to the industry as a result of their introduction?
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Posted: January 28th, 2011 under Paul Motter.