New Ships - Enough is Enough?

Yes, stuff always happens. If we experienced a planet-wide alien invasion, World War III, the return of the Black Plague, or a total meltdown of the world's economy, the major cruise lines would probably be in trouble. But in those cases, nobody would care anyway.

 

Barring those catastrophic events, I can safely predict that the world's major cruise lines will continue to successfully build and operate more and bigger cruise ships for a very long time, when you and I are long gone and forgotten

WOW! That's a BOLD prediction. I was in the investment industry for 30 years as an analyst and portfolio manager. Your prediction sounds a whole lot like many others I’ve heard over the years from sell-side analysts and pundits - “this stock will grow forever”, “nothing can derail this stock/industry”, 'Oil will never go below $75 again", "there's no issue with sub-prime mortages". I learned early on to take such predictions with a huge grain of salt. That served me and my clients well over the past 30 years. We have a famous disclaimer in our business. "Past performance is no guarantee of future results." That goes for the performance of portfolio managers and it applies to other industries as well.

I will leave you with a quote from Ben Graham, a very famous value investor and author of the Intelligent Investor;

"The Intellident investor is a realist who sells to optimists and buys from pessimists."

If you have a retirement account stuffed with cruise line stocks you might want to consider the positive attributes of diversification.

Another speed bump in the path of progress for the cruise industry is the IMO's decision to reduce the worldwide fuel sulfur content from 3.5% to 0.5%. Since many cruise ships still do not have exhaust gas scrubbers installed, and it is taking more than a year to install, calibrate and get certification for the ones being installed, it is quite certain that many cruise ships will face the 1 Jan 2020 deadline without scrubbers. Unlike many maritime regulations, which typically don't apply to older ships, this one does, and will affect the price and type of fuel being used on those ships without scrubbers, with the inherent impact on either revenue or profit.

And remember, the cost of marine fuels has very little resemblance to the price of crude oil, or the price of gasoline at the pump.

Even the newer ships that are ballyhooing LNG fuel, this is an untried fuel source for ships the size and complexity of a cruise ship, class societies have very definitive rules about LNG safety, and this will significantly impact cruise ship machinery design, and the cruise lines are hoping that by building ships that can use LNG, that the necessary infrastructure to supply LNG to the ships will be forthcoming.

Here is a relatively up to date summary describing the growth of the cruise industry worldwide:

http://www.repositioncruises.com/cruise-industry/

Since we spend 4 months a year cruising, it is obvious that new ships with new features will continue to offer us travel opportunities.

cruise industry statistics show this vacation type has achieved more than 2,100% growth since 1970

However anyone who believes that this growth rate will continue at that rate needs to check the math.

 

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Their financial connections to RCI, Hyatt Hotels, and Seagrams make them nearly invulnerable.

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Barring those catastrophic events, I can safely predict that the world's major cruise lines will continue to successfully build and operate more and bigger cruise ships for a very long time, when you and I are long gone and forgotten

Wow - a review of Carnival Corp.'s 10 K, while optimistic, shows that corporate management is nowhere near as certain- recognizing, as it does, the risks of circumstances beyond their control -and (perhaps most significant) the risk of building capacity which exceeds demand.

I would never be foolish enough to buy cruise line stocks.

 

My retirement accounts are stuffed with a few million dollars and euros that I earned managing cruise ships.

I am sitting on my own private "cruise vessel", a 27 meter sailboat that I paid cash for. I still plan to manage those cruise ships for another decade or so, which should net me another million or so to pay for my retirement.

What's in your wallet?

Nice screen name, by the way.

Impressive claims of personal success - similar in a way to pronouncements re: invulnerability of the cruise industry.

I would never be foolish enough to buy cruise line stocks.

 

My retirement accounts are stuffed with a few million dollars and euros that I earned managing cruise ships.

I am sitting on my own private "cruise vessel", a 27 meter sailboat that I paid cash for. I still plan to manage those cruise ships for another decade or so, which should net me another million or so to pay for my retirement.

What's in your wallet?

Nice screen name, by the way.

I offered my opinion and advice based on a long career in the investment industry. I apologise if the way I communicated them upset you. I respect your professional opinion based on your many years in your industry. I happen to not agree with your conclusion and prediction based on my experience with multiple industries like your own. Which opinion is correct? Only time will tell.

Enjoy your boat and all the best in the future.

BTW, my advice about diversification stands.

Impressive claims of personal success - similar in a way to pronouncements re: invulnerability of the cruise industry.

LOL !! Thank you.

I have been cruising for many years and have never repeated a port of call, and there are still hundreds I haven't been to yet. If you are tired of the same ports, just cruise a different area. It's your choice, and there are many out there. If someone is bored with the same ports, they have only themselves to blame.

While that is true if you don't mind flying everywhere, many people choose a port close to home so they don't have to add airfare to the cost of the cruise. When you cruise from the same port, you go to the same places (Florida is an exception). With my family of 5, flying often isn't an option. We are going to San Juan for our next departure and airfare was around $600 PER PERSON. $3000 just to get TO the cruise. This is a special cruise, so we are going elsewhere. But if there are just 2 of you, it changes things.

One crisis away from changing travel patterns??

 

We are seeing some bigger ships with absolutely terrible Norovirus Outbreaks. Hundreds of people sick, and the problem repeating for multiple cruises on certain vessels. But bookings even on the affected vessels do not drop.

 

When the Achille Lauro was hijacked in the Med, I was working on a ship that was also sailing in the Med. Our bookings did not change. We remained full.

 

When 9/11 happened I was sailing the new Norwegian Sun between Germany and New York City. NCL introduced "Homeland Cruising" the following week, and our bookings and profits increased to a new high for the company.

 

When the economy tanked in 2008, I was sailing on Princess ships. Our revenues fell a bit, but bookings remained steady with full ships for the 5 years we waited for the economy to recover. The company remained quite profitable the entire time.

 

When the Costa Concordia sank, I was sailing on a Princess ship in the same area. My ship remained full and profitable for the entire season, and was even busier the following season. Many passengers wanted the Captain to sail close to the wreck so they could see it. The Captain refused for obvious reasons.

 

Costa Cruises, despite all the negative publicity, is now more profitable than they were before the Concordia problems.

 

When a Seabourn ship was attacked by Pirates in the Middle East, the ship was hit by gunfire and a rocket-propelled grenade. Seabourn's bookings and profits increased after that.

 

I'm now sailing on a ship in Asia. The North Koreans keep launching missiles that are splashing down near where we often sail. Bookings, revenues, and fares remain very strong. The ship is full.

 

 

So what kind of crisis are you expecting to negatively impact the cruise industry? Alien abduction, perhaps?

Don't forget the fire on CCL Triumph, leaving people at sea without bathroom facilities.

It almost seems as if the mega ships are designed to attract people who don't like to cruise. If you want to go to a resort, you can always go to a resort. Not that there is anything innately wrong with having lots of amenities, but to a real cruiser, the main point in the ports that you visit. For those of use that appreciate the ports, there are plenty of smaller ships, and you will note that most of our cruising is on Oceania. Ships don't have to be that small to go to just about any port, but some of the mega ships do get restricted a bit. I have some friends who love the mega ships, and they only talk about this and that on the ship, they never talk about the ports. Other posters are right, it is supply and demand, and the supply will be built to meet the specific demand. If the demand is ships with tons of amenities, then they will build them to get the passengers. To each his or her own. As for me, I served on an aircraft carrier, and I prefer my cruise ships a good bit smaller!

but to a real cruiser, the main point in the ports that you visit.

I disagree - I think for a real cruiser, the main point is being at sea in comfort; the ports are superfluous. Cities (ports) and countries can be visited in many different ways, but to be on a comfortable ship in the middle of the ocean watching the waves go by....well, that's what only cruising can offer.

Different strokes........

I disagree - I think for a real cruiser, the main point is being at sea in comfort; the ports are superfluous. Cities (ports) and countries can be visited in many different ways, but to be on a comfortable ship in the middle of the ocean watching the waves go by....well, that's what only cruising can offer.

Exactly! That the majority of ports can be visited by land and/or air pretty much nullifies that idea that the main point of cruising is the ports that are visited. Cruising is about being on the ocean and the journey to the ports, not the other way around. Other wise, it's just transportation, not a cruise.

I disagree - I think for a real cruiser, the main point is being at sea in comfort; the ports are superfluous. Cities (ports) and countries can be visited in many different ways, but to be on a comfortable ship in the middle of the ocean watching the waves go by....well, that's what only cruising can offer.

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A bunch of writers, and poets have stated that: "It's not about the destination, but the journey."

I agree totally but someone previously stated that they never repeat ports so some obviously take the ship to get somewhere.

We have visited over 200 ports by ship, loved the shipboard life, the wonderful people we met along the way, but truly treasure the places that we have visited.

Cruising offers both options.

As we abhor flying, the opportunity to enjoy life at sea on a number of new ships, no matter how large, seems to offer more and more choice.

Exactly! That the majority of ports can be visited by land and/or air pretty much nullifies that idea that the main point of cruising is the ports that are visited. Cruising is about being on the ocean and the journey to the ports, not the other way around. Other wise, it's just transportation, not a cruise.

Precisely - if you are really interested in seeing a place, you will go there and see it; taking the time to get to really experience it - and not compete with several thousand other people trying to see it during the same few hour port call.

Sure - getting off the ship, checking out a new town, maybe hitting a beach or a museum is great - but the point of the exercise is the ocean and the ocean journey to the ports.

I'm not sure who among us is qualified to judge what a "real" cruiser looks for in a cruise. :rolleyes:

As someone who's been cruising since childhood in the 1970s and with many years (hopefully) of cruising left in front of me, I am one who definitely cruises for the ports.....AND for the experience of being on the sea in between. But if I had to pick which was a more deciding factor, it'd be the former, not the latter.

I've had many meaningful port visits from a cruise ship in addition to land trips. There are some areas where a cruise just makes sense as a way to get from place to place easily and pleasantly. (The Greek Isles spring to mind....)

I'd never book a cruise just for the cruise.

For my money the definition of a real cruiser is someone who plunks down the fare and grabs a berth.

Don't see how you can differentiate between those who like sea days and those who like sea days. We have done many cruises. We like port days, we have used a cruise as transportation. We love the ocean but two days is enough, after three we are ready to jump.

Anyway, why on earth does it matter who is a so called 'real' cruiser.

This, except it won't affect how often we cruise. We'll be on our first mega ship this fall, that is it's our "first" if a mega ship is more than 4500 passengers. Vista had over 4000. I prefer the smaller ships, but it seems there are fewer of them out there. The older ones are being replaced by the gigantic ones.

Fortunately, not all cruise lines are joining in the mega ship movement. Although still large, Celebrity is building four new ships, all with just under 3,000 passengers - about the same amount as their last five ships, the last of which went into service five years ago. I am sure the temptation to build ships with 4,000, 5,000 or even more passengers was there. But fortunately they resisted the temptation and settled for four new ships half the size of true mega ships. Celebrity's four oldest ships hold about 2,200 passengers each. There are rumors floating around that these will be sold off when the new ships enter service, but there are just as many rumors stating the exact opposite. We will see!

Although still large, Celebrity is building four new ships, all with just under 3,000 passengers

To me, that's still huge - and at least twice as many as I want in my cruise vacation.

For my money the definition of a real cruiser is someone who plunks down the fare and grabs a berth.

 

Don't see how you can differentiate between those who like sea days and those who like sea days. We have done many cruises. We like port days, we have used a cruise as transportation. We love the ocean but two days is enough, after three we are ready to jump.

 

Anyway, why on earth does it matter who is a so called 'real' cruiser.

Good point. From our side, we are all cruise passengers without exception. We all have our own reasons and motivations, and the insinuation that one's own proclivities are somehow more worthy than that of others is a nonsensical conceit.

This message may have been entered using voice recognition. Please excuse any typos.

By how much do you think the number of new births coming will exceed the number of new berths coming?

I wonder how many of those new births can be attributed to the new berths?? :D:D

We have not sailed on the 4000 plus ships. Nor have we sailed on ships that have ships within a ship.

But we are not about to knock or criticize them until we have tried them. And even then they may be just right...but not for us or our preferences. We really do not know.

These new builds and new concept ships are terrific IMHO. They continue to meet changing demands and demographics.

It would be oh so boring if every ship was the same size with the same amenities, decor, and experiences. We give huge kudos to RCI. Celebrity have been developing new ships from the ground up. This compares to Carnival Corp. whose basic Spirit class ship can be found in many of their subsidiary fleets. From our perspective Solstice ships are such a huge step up from that tired Spirit class. RCI branded ships have become extremely innovative and are changing the industry.