October 22, 2014

Cruise Ships: Berth Mark

The trend: Bigger boats, more bells and whistles

Mike Vogel | 12/1/2007

Rendering of Royal Caribbean’s Genesis ship. Port Everglades is negotiating with Royal to homeport the ship, but the port would need to expand its facilities.

Less than two years from now, Royal Caribbean will beat its own record for the largest cruise ship by launching a $1.2-billion, 220,000-ton, 5,400-passenger giant. The “Genesis Project” ship — two are under construction in Finland — are a third bigger than Royal’s Freedom class ships, the current record holders at 160,000 tons and 3,634 passengers.

The move underscores an industry construction surge. Cruise industry analyst Tony Peisley forecasts worldwide capacity will increase by 75% by 2015. “The Genesis is really just the tip of it,” Peisley says.

Meanwhile, Miami-based Carnival has 18 ships coming through 2011, including its largest, the Carnival Dream and the Carnival Magic, at 130,000 tons. For its Cunard line, Carnival is putting the Queen Victoria into service this month, with a $702-million, 92,000-ton, 2,092-passenger vessel, the Queen Elizabeth, coming in 2010.

Why the building boom? Larger ships give the lines more flexibility in pricing service and amenities, allowing them to secure passengers with lower lead-in prices and then build profits with for-fee add-ons. Bragging rights to the “largest ship” also give Royal Caribbean a marketing edge over Carnival, its bigger rival.

Cruising in Florida
Royal Caribbean
Carnival
Biggest ship now 160,000 tons 110,000 tons
Biggest ship on order 220,000 tons 130,000 tons
New ships on order 7 18
2006 passengers 3.6 million 7 million

But all the construction has launched a wave of speculation about cruise line yields, the impact on profits and whether, in the Genesis Project, the public will accept a ship that has more than 10 times the tonnage and more than eight times the passenger capacity of the Princess ship used 30 years ago in “The Love Boat,” the show that popularized cruising. The rising cost of fuel, of course, will also have an impact.

Not to worry, says Peisley. He predicts yields will smooth out in a couple of years and revenue and profit will continue to grow.

Aside from costing $230,000 per bed to build, the Genesis ship is a bit of a mystery other than promising advances in energy efficiency and what Royal Caribbean calls “memorable new icons and amenities.” The line is keeping details under wraps, but groundbreaking bells and whistles like ice-skating rinks and surf simulators have marked each leap forward as Royal Caribbean builds ever-larger ships.

Says Peisley, “There’s bound to be one or two things that have never been on a ship before, and that’s good for them and the industry. People want more choice and variety. It’s what you would get at a land resort.”

Peisley sees a few clouds on the horizon. Thousands of passengers arriving the same day from multiple ships stress some destinations, which aren’t designed to handle all the traffic at once. Undercapitalized, smaller lines face difficulties. Nonetheless, he projects the industry will top 20 million passengers worldwide in 2011 and 25 million by 2015. The passenger count in 2006 was 12 million, according to the Cruise Lines International Association.

Tags: Dining & Travel, Miami-Dade, Around Florida

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