NCL new builds. Oceania also???

[Paulchili]

I think I understand this fairly well but I am not sure that you understand the full process. I do not claim to be an expert in this field but here are my thoughts on the subject.

Sure, a corporation like NCL can get the loan and build a new ship without any problem - that's the easy part. However, to make that new ship profitable enough to make money AND pay back the loan with interest, is a different proposition.

Granted, if - and that is a very big if - they could fill all of their ships (including the potential new 1200+ passenger one) to or near capacity ALL of the time, then they would make a nice profit and pay the loan back without any trouble. How do you know that they can actually do that? I don't know that as I am not privy to that sort of information - are you? If you are, please provide those numbers to us.

I am guessing - this is just a guess - that they are pretty much in a sweet spot now where they can fill their existing ships fairly easily most of the time. I am also guessing that if their figures showed that the demand is so large that they have to turn people away in droves for lack of capacity to accommodate them, they would be the first to happily announce the building of a new ship.

That is just my guess.

Also, let's not forget that the financial situation can change fairly quickly. We've had a fairly long bull market - are we due for a bear market soon? Then what do you do with a new ship when demand drops off drastically. The expenses of running it and paying back the loan are still there.

Remember what happened the Renaissance line that overextended itself at the wrong time? Yes, I know, there were other factors, among them 9/11 (as well as some others). However, they were the only one going bankrupt after 9/11 while every other major cruise line survived this.

Their expansion timing was unfortunately at a wrong time, which nobody could have foreseen - just back luck.

As far as paying the same price after the potential new build -as you mention - I don't know about you but I am pretty sure I paid more for my O cruises after the Marina/Riviera came onboard then before.

PS I usually do think before my posts - unlike some I can think of.

Edited February 19, 2017 by Paulchili

[RJB]

I think I understand this fairly well but I am not sure that you understand the full process. I do not claim to be an expert in this field but here are my thoughts on the subject.

Sure, a corporation like NCL can get the loan and build a new ship without any problem - that's the easy part. However, to make that new ship profitable enough to make money AND pay back the loan with interest, is a different proposition.

Granted, if - and that is a very big if - they could fill all of their ships (including the potential new 1200+ passenger one) to or near capacity ALL of the time, then they would make a nice profit and pay the loan back without any trouble. How do you know that they can actually do that? I don't know that as I am not privy to that sort of information - are you? If you are, please provide those numbers to us.

I am guessing - this is just a guess - that they are pretty much in a sweet spot now where they can fill their existing ships fairly easily most of the time. I am also guessing that if their figures showed that the demand is so large that they have to turn people away in droves for lack of capacity to accommodate them, they would be the first to happily announce the building of a new ship.

That is just my guess.

Also, let's not forget that the financial situation can change fairly quickly. We've had a fairly long bull market - are we due for a bear market soon? Then what do you do with a new ship when demand drops off drastically. The expenses of running it and paying back the loan are still there.

Remember what happened the Renaissance line that overextended itself at the wrong time? Yes, I know, there were other factors, among them 9/11 (as well as some others). However, they were the only one going bankrupt after 9/11 while every other major cruise line survived this.

Their expansion timing was unfortunately at a wrong time, which nobody could have foreseen - just back luck.

As far as paying the same price after the potential new build -as you mention - I don't know about you but I am pretty sure I paid more for my O cruises after the Marina/Riviera came onboard then before.

PS I usually do think before my posts - unlike some I can think of.

I understand your point of view, but if all companies thought that way nothing new would ever get built. They would never build another Wal Mart, another Target, another new office building in any city for fear that they could not fill them up. Every company needs to borrow money to expand. The old saying, if you are not going forward than you are going backwards. They seem to be willing to do this with NCL, building 4 ships with options for 2 more. Does not seem to equate with your above post. Same company. Still I think most of us would like to see a new build or 2 for Oceania. Maybe we could meet on it and continue this discussion. Happy cruising. :):)

[StanandJim]

I understand your point of view, but if all companies thought that way nothing new would ever get built. They would never build another Wal Mart, another Target, another new office building in any city for fear that they could not fill them up. Every company needs to borrow money to expand. The old saying, if you are not going forward than you are going backwards. They seem to be willing to do this with NCL, building 4 ships with options for 2 more. Does not seem to equate with your above post. Same company. Still I think most of us would like to see a new build or 2 for Oceania. Maybe we could meet on it and continue this discussion. Happy cruising. :):)

 

Yet Azamara soldiers on with those same two ships, year after year after year after year, and all that anyone can talk about is how their staff are encouraged to french kiss each passenger, five times during each voyage-

Everybody has different priorities, and not all of them cost three hundred million dollars.

Just saying.

[RJB]

Yet Azamara soldiers on with those same two ships, year after year after year after year, and all that anyone can talk about is how their staff are encouraged to french kiss each passenger, five times during each voyage-

Everybody has different priorities, and not all of them cost three hundred million dollars.

Just saying.

Cute, Cute, Cute. Have not been on Azamara, but after reading this I would be afraid to take my BW on there. She might stay. But you are right. Everyone has their priorities and I am not going to change them. Just saying......

[PaulMCO]

My knee jerk reaction is to agree, Paul-

I'm sure you remember that almost 7 years ago, FDR sponsored a "Create an Itinerary" Contest, here on the Oceania Board.

 

First Prize was a free cruise on the Itinerary chosen as "Best", and I remember it very well because my best cruise buddy, the late Don Horner (Hondorner on these boards) won for his brilliant Exotic Alaska Cruise.

These are the 5 finalist itineraries from that Contest in 2009, do any of them still appeal?:.

 

Iceland and Greenland

Reykjavik - Akureyri - Isafjordur - Cape Farewell Passage - Qaqortoq - Iluissat - Disko Bay - Nuuk - Cobh - Plymouth - Dover

 

Iberia, Africa and the Riviera

Lisbon - Maderia - Casablanca - Tangier - Gibraltar - Marbella - Palma de Mallorca - St Tropez - Antibes - San Remo - Cinque Terre - Florence - Rome

 

Exotic Alaska

San Francisco - Eureka - Vancouver - Juneau - Hoonah - Yakatut - Anchorage - Kodiak - Dutch Harbor - Homer - Hubbard Glacier - Sitka - Prince Rupert - San Francisco

 

Western Africa and the Canaries

Barcelona - Gibraltar - Tangier - Casablanca - Marrakech - Dakhla - Las Palmas - Arecife - Lisbon

 

South America, Africa and Arabia

Buenos Aires - Punte del Este - Walvis Bay - Capetown - East London - Durban - Richard's Bay - Maputo - Nosy Be - Mahe - Salalah - Muscat - Fujarah - Dubai

 

Would add a real West Africa -- Capetown Namibia, Angola, Sao Tome, Congo, Cameroon, Ghana, Senegal then adding Tangier...to Lisbon -- doing same on Silversea. This is one of SS most popular Explorer cruises -- has been sold out for 18 months.

[RJB]

Would add a real West Africa -- Capetown Namibia, Angola, Sao Tome, Congo, Cameroon, Ghana, Senegal then adding Tangier...to Lisbon -- doing same on Silversea. This is one of SS most popular Explorer cruises -- has been sold out for 18 months.

Could add a lot with a new ship. Just saying....

[robbie21]

Another viewpoint: Do you really want Oceania to get bigger? Bigger is definitely not always better!

 

One of the often observed complaints about the larger lines is that service and quality of food (in particular) decline over time. In my experience as a executive and business consultant as an organization grows layers of management and bureaucracy increase. One of the simplest ways for middle level bureaucrats to justify their positions is to propose "cost saving" initiatives. I believe Holland America is an excellent example of the pitfalls of this situation. Enough said.

 

I think Oceania is at the present time "right sized". They are large enough to achieve some economies of scale and have the corporate systems of NCL as support for more complex issues. At the same time they are small enough for leaders to maintain contact with day to day operations and to effect needed changes reasonably quickly.

 

By the way, I fully support the desire for more varied itineraries. We have pretty well exhausted the current itineraries in the Baltic, the Med, the Pacific Islands and the Caribbean. We are sailing in less than 2 weeks on the Australian circumnavigation which came up just as we were about to book a similar cruise on Holland America. Thank you, Oceania!

 

Robbie

[Classiccruiser777]

Another viewpoint: Do you really want Oceania to get bigger? Bigger is definitely not always better!

 

I agree and same with ship size. What first attracted me to Holland America were the smaller ships in the age of mega-ships. Then my wife discovered O and their outstanding food, beds and R-class ships. O is now our favorite line, so much so that I bought NCLH stock.

 

For itineraries try South America. Going around the Horn can be a heck of an experience.

[RJB]

I agree and same with ship size. What first attracted me to Holland America were the smaller ships in the age of mega-ships. Then my wife discovered O and their outstanding food, beds and R-class ships. O is now our favorite line, so much so that I bought NCLH stock.

 

For itineraries try South America. Going around the Horn can be a heck of an experience.

I am not saying that I want bigger ships. One or two the size of the O ships would be perfect. Think we need a few more of them.

[robbie21]

I am not saying that I want bigger ships. One or two the size of the O ships would be perfect. Think we need a few more of them.

 

You missed my point. If there were more ships - bigger, smaller or the same size - you might not like the "Oceania Experience" as much. A larger organization changes things, usually not for the better. Again, we liked Holland America in the 90's. Then they built a bunch of new ships and the overall experience declined. There were lots of factors including the economy that impacted them but I don't think they handled it well partly because their corporate organization was not very nimble.

 

"If it works, don't fix it."

 

Robbie

[RJB]

You missed my point. If there were more ships - bigger, smaller or the same size - you might not like the "Oceania Experience" as much. A larger organization changes things, usually not for the better. Again, we liked Holland America in the 90's. Then they built a bunch of new ships and the overall experience declined. There were lots of factors including the economy that impacted them but I don't think they handled it well partly because their corporate organization was not very nimble.

 

"If it works, don't fix it."

 

Robbie

I get your point. When they first built Marina I was not very happy. Took a lot of crew from the R ships (only 3 at that time) who we knew and liked and moved them to the new ship. But then we got to know the new people and it was O.K. It is up to the company to make these things work. I think NCL with FDR inn charge can make these things go well.

[robbie21]

I get your point. When they first built Marina I was not very happy. Took a lot of crew from the R ships (only 3 at that time) who we knew and liked and moved them to the new ship. But then we got to know the new people and it was O.K. It is up to the company to make these things work. I think NCL with FDR inn charge can make these things go well.

 

 

You kind of make my point with your example of the introduction of Marina to the fleet. It took a couple of years for service quality to return to standards. That is not a definition of good management of growth.

 

It is certainly possible for any company to manage growth effectively and I agree that overall Oceania has a good management team. But, management of growth is one of the major issues in organizational studies. When I was in MBA school a large proportion of the case studies were about failure to manage growth. As a consultant it was my bread and butter. It can be done but the odds are against it succeeding without substantial pain.

 

Consider some of the complains we see here on this board about Oceania. A common concern is lack of communication to passengers about itinerary changes both before and during cruises. Also, there seems to be a problem in communication when Noro virus is aboard. These communication issues are common symptoms of corporate arteriosclerosis. Local shipboard staff can't get permission to level with the passengers. On the other hand the Oceania staff at all levels was quite nimble when there was that fire on Insignia - to their credit. How would a larger, more bureaucratic organization have responded so quickly. Check out Carnival's disaster responses.

 

Of course, it's not up to us :D. FDR and staff will do what they wish.

[Paulchili]

Agree with your post above and the ones before.

In the end it will be the "numbers crunchers" that will make recommendations to the Board of NCL based on their analysis and the Board will then decide what is best for the company (and the share holders).

I am happy with the size of Oceania as it is. If I want to sail on an O clas ship I can choose between Marina and Riviera. A third or fourth ship of same design would not make it any better. 6 ships can do many different itineraries; to add new itineraries you don't need more ships - just redirect the existing fleet to new destinations.

JMO.

[Mura]

My knee jerk reaction is to agree, Paul-

I'm sure you remember that almost 7 years ago, FDR sponsored a "Create an Itinerary" Contest, here on the Oceania Board.

 

First Prize was a free cruise on the Itinerary chosen as "Best", and I remember it very well because my best cruise buddy, the late Don Horner (Hondorner on these boards) won for his brilliant Exotic Alaska Cruise.

These are the 5 finalist itineraries from that Contest in 2009, do any of them still appeal?:.

 

Iceland and Greenland

Reykjavik - Akureyri - Isafjordur - Cape Farewell Passage - Qaqortoq - Iluissat - Disko Bay - Nuuk - Cobh - Plymouth - Dover

 

Iberia, Africa and the Riviera

Lisbon - Maderia - Casablanca - Tangier - Gibraltar - Marbella - Palma de Mallorca - St Tropez - Antibes - San Remo - Cinque Terre - Florence - Rome

 

Exotic Alaska

San Francisco - Eureka - Vancouver - Juneau - Hoonah - Yakatut - Anchorage - Kodiak - Dutch Harbor - Homer - Hubbard Glacier - Sitka - Prince Rupert - San Francisco

 

Western Africa and the Canaries

Barcelona - Gibraltar - Tangier - Casablanca - Marrakech - Dakhla - Las Palmas - Arecife - Lisbon

 

South America, Africa and Arabia

Buenos Aires - Punte del Este - Walvis Bay - Capetown - East London - Durban - Richard's Bay - Maputo - Nosy Be - Mahe - Salalah - Muscat - Fujarah - Dubai

 

I'm late but I like #1 and #5, since Don's was already chosen ...

 

Mura

[RJB]

I'm late but I like #1 and #5, since Don's was already chosen ...

 

Mura

Be nice to have another ship or 2 to do these destinations. The old one's seem to still be selling so there is no reason to cut them out. Up to NCL, not us.

[sailfar]

New itineraries are more important than new ships. Ships must be filled to make more money.

 

One variable that ought to be considered is new ports during the same seasonal time frames. People tend to have favorite vacation/cruise times.

 

Those of us loyal to Oceania love the O and R ships. Make us want to fill them!

[StanandJim]

New itineraries are more important than new ships. Ships must be filled to make more money.

 

One variable that ought to be considered is new ports during the same seasonal time frames. People tend to have favorite vacation/cruise times.

 

Those of us loyal to Oceania love the O and R ships. Make us want to fill them!

 

Sounds like a logical idea, doesn't it?

Why not, for example, have a festive holiday sailing, -round trip from Venice- around Christmastime?; nobody does anything similar at that time of year, it would expand the Market, right?

 

Wrong. It it is cold,dank and rainy in Venice in December and January.

For similar reasons, it is unappealing to sail in the Caribbean in high Summer (July and August) or to French Polynesia during their Hurricane Season (November thru March).

 

Ships do cruise in those localities during the months which I've mentioned, but usually at deeply discounted rates.....and you don't spend three hundred million with the intention of discounting.

[zoncom]

Did not Rennaisance Line go under because of over building?

[zoncom]

Did not the original Rennaisance Line go under due to over building?

[StanandJim]

Did not the original Rennaisance Line go under due to over building?

 

They went out because they were caught overbuilding when 9/11 severely curtailed American travel-

Which came first? The chicken or the egg?

[RJB]

They went out because they were caught overbuilding when 9/11 severely curtailed American travel-

Which came first? The chicken or the egg?

From what I hear d back then 9/11 was only part of it. They got rid of travel agents, stopped paying commissions and tried to book everything themselves. I think that T/A's are the lifeblood of the cruise industry, why I do not know, but they are.

[StanandJim]

From what I hear d back then 9/11 was only part of it. They got rid of travel agents, stopped paying commissions and tried to book everything themselves. I think that T/A's are the lifeblood of the cruise industry, why I do not know, but they are.

Ren did try to bypass the Agents, which turned out to be premature, but they were leveraged too tightly, regardless.

 

My field is maritime financing, so I know first hand how difficult it is for Cruise Lines to turn down offers of free money, particularly as the cost of a ship is 75% labor.

 

Ren was taking a huge risk, but if it HAD come off, they would have cornered the Luxury Market, Worldwide.

 

Even with hindsight as my Goal Tender, I'm not sure that I could have resisted that particular opportunity. :confused:

[DeanoNorthPerth]

They went out because they were caught overbuilding when 9/11 severely curtailed American travel-

Which came first? The chicken or the egg?

 

The egg.

 

 

 

 

Oh sorry. Was that rhetorical?

[RJB]

Ren did try to bypass the Agents, which turned out to be premature, but they were leveraged too tightly, regardless.

 

My field is maritime financing, so I know first hand how difficult it is for Cruise Lines to turn down offers of free money, particularly as the cost of a ship is 75% labor.

 

Ren was taking a huge risk, but if it HAD come off, they would have cornered the Luxury Market, Worldwide.

 

Even with hindsight as my Goal Tender, I'm not sure that I could have resisted that particular opportunity. :confused:

I am not sure that Ren was ever the luxury market anywhere. Not the US nor the rest of the world. In just about the same class as Oceania, nothing more.

[Mura]

Don't forget that Renaissance was to meet with the bankers on 9/12/01 ... the timing wasn't exactly great.

 

And I would never say that Ren was in the luxury market. We enjoyed our three cruises but luxury it was not. I would also say Oceania is superior. It seemed that no two couples ever paid the same for the same cruise... We learned how to fend off question about how much we had paid.

 

I always thought they built too many ships too fast, but what do I know about the maritime industry? I did work for maritime attorneys but the firm didn't deal with the cruise market!

 

Mura