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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?

  • Will these ships do 7-day or shorter itineraries?
  • Will they replace the older ships, such as the Fantasy class?
  • Will they sail out of Florida, or be deployed more widely?
  • The goal is to save fuel, so what itineraries do you predict they will use?
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    Comments

    Comment from Kenneth Eden
    Time January 30, 2011 at 6:37 am

    I can not for the life of me see me on any of these new ships. Way too many passengers, fewer crew members, paying for this that and everything else extra. No, not me.

    During my last Caribbean cruise, some islands had as many as 14 ships in, the beaches were a mess, the dining at the beaches was horrid, as the once leisurely restaurants were busy beyond capacity, inside and out, to cater to the demands of thousands of passengers at once.

    Interestingly, shops were empty, price of gold very high. As for the islands, the more crowded they become, the less I want to go ashore, and seek alternate itineraries. How many remember when you had a day in St. Thomas and the ship you were sailing was the only one in? I do. Bliss!

    During the last recession, although it was not called a recession as such, latish 1980′s, cruise ships actually canceled cruises, and placed passengers on other ships within their cruise line, to fill the ships, and not run nearly empty ones. It never happened to me, but it was a common practice for a few years. Cruise lines also gave a line of credit to qualified passengers, whereby a prospective passenger could “lay away” a cruise, and sail when it was paid off. We called it K-Mart cruising back then. I never partook of that. I wonder how well that went, as I don’t see that feature in any brochures or cruise line web sites.

    This gotta have newer and bigger ships is purely expressing the same old, same old, “keeping up with the Jonses”. Thankfully, there are cruise lines with ships that are not going gaga crazy with size, and offering inferiority for a price.

    Comment from John Bailey
    Time January 31, 2011 at 10:27 am

    Several different things to think about and discuss here. One thing that Royal Caribbean may be picking up on is people are avoiding flying more and more. Costs are going up, it is a hassle, and not a pleasurable experience. Carnival has realized that you can place smaller older ships in new markets (Norfolk, Charleston, Mobile, Baltimore) and actually charge more than South Florida (Ft Lauderdale or Miami). The reason you can charge a little more is because people can drive to these locations and save on the airfare. Also, Carnival does not have competition in these cities.

    Royal Caribbean does not have many smaller vessels to place in these markets. If you are going to market to the masses you have to make your product more accessible. To do that you need more ships in more places, and lets be honest you can’t put a Freedom or Oasis class ship in just any US port.

    RC has placed ships all over the world, but in general Carnival keeps ship in the US and Europe. RC is winning the marketing glitz war, but Carnival is winning the average mass market person because in general they are cheaper, have more ships in the US, and have those ships closer to more of the US population. My 2 cents and I prefer RC over Carnival.

    Comment from Paul Motter
    Time February 1, 2011 at 10:54 am

    Thanks for comments…

    I am interested in hearing what other ramifications cruisers think these new ships will bring.

    I am thinking they may specialize in short, party-style cruises. There will be very activity oriented with the idea of keeping people onboard with a “ship as destination” ambiance.

    Will they replace some of the Fantasy-class ships? for example?

    Comment from Kenneth Eden
    Time February 1, 2011 at 11:01 am

    Years ago, mi-1980′s, NCL proposed to build “The Phoenix”, a ship of 250,000 grt’s, complete woth a surfing ramp, sound familiar, and even a sandy beach by a pool. Well, nothing came of it, but, time has caught up with the plan, as the new ships are being built larger and larger each year. I am waiting for the “SEA MONSTER”. (not to sail, perish the thought).

    Comment from Kenneth Eden
    Time February 5, 2011 at 6:21 am

    Let this pass as a watch what you wish for comment………………………..

    I shudder when I see cruise port linked to Norfolk. Norfolk went out on a limb and built a 25$million state of the art cruise terminal 5 years ago, all on the assumption that Holland America would homeport the Maasdam in the city. Lots of fanfare and publicity to be sure, when the announcement was made. Holland America was the darling of Hampton Roads. Concerts, Christmas soiress, even the Boston Pops were sponsored by HAL, it was all so wonderful.

    Prior to the terminal completion, a “tent”, the kind used for covering tennis fields, the blow up kind, was used as a terminal. Passengers trod uneven, broken cement walkways. Traffic was a mess. BUT – people came and cruised the Maasdam. What a sight she was sitting in the Elizabeth River, seemingly taller than any building on Norfolks lacking skyline.

    The cruises were touted for several reasons. The most advantageous was the ability for one third of passenger access could drive to Norfolk in a day, same with half of Canada, Ottowa eastward. And drive they did.

    The cruises were wonderful, afterall the Maasdam was and is of a coveted ship class. The cruises were 10 and 11 days, winter Caribbean cruises. I took five of them, and loved every one of them.

    After two short seasons, something changed. The Norfolk Port Authority has still not made any comment, nor has Holland America, as to why they pulled the ship out of Norfolk. I have my guesses.

    One, not enough hotel rooms to accommodate passenger, pre/post cruise, not enough flights to Norfolk Int’l Airport, massive tieups in the tunnels Norfolk that lead into the city. Long term parking may have been affected as well. Whatever, the ship left. Other cruise lines have made a few calls, bu they too, do not return.

    There is another side to homeporting a ship in a small city, and that is vendoring. Accounts of local businesses, from ice suppliers, to all manner of food and beverage provisioners, beefed up their supplies and expanded their companies to attend to the needs of the ship. This was common knowledge, accounts were made publicly, in the media here.

    Then, poof! The ship left, never to return. The crew certainly had no idea why, I asked on my last cruise from Norfolk, nobody had a clue.

    What went wrong? Nobody here will say, not even the Norfolk Port Authority. Perhaps nobody is at fault. I applaud Holland America for taking the initiative for bringing the Maasdam here in the first place. For all who enjoyed the ship here, memories remain.

    As for the new terminal, Half Moone, is the name, it sees weddings and banquets, and an occational 2 or 5 day cruise. Thats it.

    Comment from Kenneth Eden
    Time February 5, 2011 at 7:46 am

    PS to above……….

    Both Baltimore and Philadelphia have lost their cruise businesses as of this winter, with RCI and Celebrity pulling out.

    Comment from Paul Motter
    Time February 5, 2011 at 8:25 am

    Along the same lines – California is really hurting foor ships now, but look at the things they have done to the industry, proposing new regulations for fuel, introducing state bills asking for sea marshalls (defeated), etc.

    If you want the cruise lines you have to work with them – not against them. look how fast Mazatlan was able to turn their situation around.

    Meanwhile, of all places Galveston is becoming incredibly popular. And yes, you can be sure that with most “regfional” home ports most of the cruising is done by locals.

    They don’t talk about it much, and it seems counter-intuitive, but much of the cruise market is sourced from Southerners in the U.S. all the way from the Carolinas through Texas.

    The east coast contributes a lot, but I heard California is just not sustaining its ships, and furthermore, the states bordering Calisfornia are REALLY not sustaining the west coast.

    The cruise lines need too develop Arizona, Utah, Oregon, Colorado, etc as source markets. There is a lot of potential there.

    BTW: RCL does have almost as many small ships as Carnival does, from Splendor to Majesty, etc. But they have not done all the upgrades that Carnival has done.

    also BTW: Philly was a GREAT cruise port and thhey really tried. It seem too odd the Baltimore would trump them.

    Comment from Kenneth Eden
    Time February 6, 2011 at 6:22 am

    Paul,

    Here are some OLD facts, that are sort of everything comes around again. It is something to ponder, as to what succeeded then may not succeed or is failing today. Cruise line management, most probably.

    During the 1970′s and 1980′s Sun Line sailed the lovely Stella Solaris from Galveston every winter, to the Mayan coast of Mexico, as well as Caribbean ports, they helped pioneer the Orinoco and Amazon cruises. Of course, there is no Sun LIne today. And that is a damned shame. They offered excellence in every way.

    On the West Coast, Sitmar based their two old ships during the winter, sailing the Mexican West coast Riviera, with sailings through the Panama canal. Princess cruises cut its teeth with similar cruises. Sitmar was absorbed into Princess Cruises, and the rest is, well, memories.

    Royal Viking Line made cruises from the West Coast as well.

    There is some small light at the end of the tunnel for the West Coast. Cunard has cruises from LAX for 2012, hopefully after a success in 2011.

    Comment from Kenneth Eden
    Time February 15, 2011 at 4:55 am

    Seems theres trouble in paradise.

    Nearly everyday I read someplace that NCL and RCI are building new ships, one, two new “classes” each line, some only one class per line.

    I read 2500 pax, 5000 pax, them boom, smaller ships, then, back up to larger ones.
    I found a posting with one line contemplating 8000 pax ship. Are these rumors, urban legends, just plain wishfull thinking, or pure garbage, or is there some fact of truth?

    There are many places to find facts as noted above on the net. The only true source is the cruise line itself. Trust the cruise lines press releases for content.

    This site has always subscribed to the press releases. That is what makes it a reliable source.

    Comment from ralphj
    Time March 8, 2011 at 12:36 pm

    Royal Caribbean issued a press release
    on Feb. 11 confirming an order for a
    158,000 ton ship for delivery from Meyer
    Werft in Fall of 2014, with an option for
    a sister ship in Spring 2015. It’s available
    on their website

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