Silversea's future and Luxury end Cruise stats and new builds. (Discussion)

[Jaffa]

I have decided to start this thread as a follow on from the thread "SINGLES" here on the Silversea board, which l have already contributed to. I could have attached this as a reply point to that thread, but felt it is probably better as a stand alone one as l am not sure which direction the replys may take it. I am mainly concerned with Silversea though, but would assume that other board members in the luxury end (Seabourn, Crystal, Regent) will probably add some comments as well. I hope they feel welcome to contribute.

 

I feel that this is a timely thread with what is happening at the top end "luxury" segment of cruising of which is the only way l personally cruise (all inclusive).

 

I have taken the liberty of putting together the stats of new build berths against existing berths to try and get my head around exactly where the top end is heading and what it may mean for pricing and service provisions.

 

Whilst l think the info l have put together here is accurate (as much as public info is known) it may not be the definitive, so anyone who has updated info, please feel free to correct me.

 

This thread is posted as a discussion point, to see if we can "nut out" what the future holds.

 

From what l have been told (By a Silversea VP) the luxury end cruise lines base rate average per passenger for a 7 night cruise is $1000 (USD). Yes l know there are cheaper (discount) lux cruises and more expensive suites but this rate is there starting/budgeting point for a balcony beth.

 

PRESENT BERTHS FUTURE BERTHS INCREASE PER%

 

Silversea

 

Wind 296

Cloud 296

Whisper 382

Shadow 382

Total (1356)

Dawn 137

Un-named 540

Un-named 540

Total (1217)

1217 +90%

Present 1356 multiply by $1000 = $1'356'000 per night

Future 2573 " " " $1000 = $2'573'000 " "

 

If all the new builds go ahead and Silversea keeps it's present fleet online Silversea will almost double its availability.

According to Silversea Australasia (Syd media conference) worldwide they are averaging 75% occupancy with 60% of overall business being repeat passengers.

Silversea has also announced it has begun a series of deals to purchase land based resorts/accommodation/locations? to diversify and add to its cruise options. Silversea has also announced its intension to enter the expedition cruise market.

 

SEABOURN

 

Pride 208

Legend 208

Spirit 208

Total 624

Odyssey 450

Un-named 450

Un-named 450

Total 1350

1350 220%

 

Present 624 multiply by $1000 = $624'000 per night

Future 1974 " " " $1000 = $1'974'000 " "

 

If Seabourn goes ahead with all new builds and maintains it present fleet on line Seabourn will triple its availability.

Seabourn reports 88% occupancy.

I have not been able to find out Seabourn's level of repeat business?

 

REGENT SEVEN SEA'S CRUISES

 

Mariner 700

Voyager 700

Navigator 490

PG 330

Explorer 2 394

Total (2614)

 

At this time there has been No formal announcement of Regent entering into contract for a new build but, the new venture/equity capitalist owners have indicated they intend one new build similar to the Mariner/Voyager.

 

This would indicate a new 700 berth ship. There has also been talk of Regent

retiring the PG.

So if this did happen Regent would grow by 8 %

As Regent charges a different pricing level across its fleet l have not totaled a per night revenue base.

 

CRYSTAL

 

Symphony 940

Serenity 1080

Total (2020)

 

I have been able to find out very little about Crystal's future plans. I am not aware of any plans for new builds?

 

2020 multiply by $1000 = $2'020'000 per night.

 

Cont:

[Jaffa]

So the total berths presently available (excluding Cunard QG) is

6614 per night.

 

The future increases will take that to

 

9884 per night.

 

which equates to about a 40% increase in berths across the top end (luxury)

 

This is a massive growth! which should be completed by 2012/13 if all new builds are complete on time and all contracts are filled in full.

 

The present per night revenue estimate is $4'000'000 per night and this is without the Regent no's.

 

The future revenue estimate after the completion of all new builds would be approx

$6'567'000 without the Regent no's

 

This would see an increase in revenue of 55% approx if all berths were filled.

 

If the luxury end can achieve this it would be quite extraordinary. I do not think they can.

With the world economy heading in its present direction, and the US economy heading into recession with international financial experts predicting this to last for at least 3 to 5 years. I think we will see the new builds coming online before the economy has sorted itself out into positive territory again.

 

In my opinion this will result in lower prices due to over capacity and perhaps more "specials" for past passengers and solo passengers as The luxury lines try to hold their customer loyalty through the onslaught of all the extra berths.

 

I also believe that we will see the major luxury lines attempt to reinvent themselves for the new market plans.

 

All of the new builds are bigger than there predisesors which flys in the face of there present draw card of "small ships can go more places than big ships"

This would see a reduction of available small ports which the Luxury lines have done very well out of, and seems to be the choice of luxury travelers/passengers.

 

The industry must believe that these plans have an excellent chance of succeeding for them all to sign these new build contracts.

But l have some serious reservations.

 

If it does not work they way they have planned something will have to give.

Sure price will be the obvious, but what will happen to service and itin's.

 

I think the "all inclusive" will remain but there may be more that we will be able to purchase as an add on to heighten our experience even more as passengers.

 

I think l will miss all the small tucked away ports that l love so much.

[Jaffa]

I wonder wether Silversea would consider changing their pricing from USD to the EUR as a result of the downward spiral of the dollar.

 

With China and India emerging as the "new money" to fund world growth it seems that the USA is at serious risk of losing its world economic leader status.

 

I wonder wether this would see a change in demographic of the type of passenger that we would see on the luxury cruise brands from there present make up?

[unfathomable]

A very interesting thread.

...If all the new builds go ahead and Silversea keeps it's present fleet online Silversea will almost double its availability....

Isn't this the big issue? Perhaps the most likely option for Silversea and the others will be to pass on the older, harder-to-maintain, possibly less popular ships to other lines, to keep their growth rate under control? There is an increasing number of small, specialist "explorer" lines such as Noble Caledonia, the revived Swan Hellenic and even Saga (and that's just the UK market) who might snap up a Silver Cloud or Wind.

[unfathomable]

...All of the new builds are bigger than there predisesors which flys in the face of there present draw card of "small ships can go more places than big ships"... I think l will miss all the small tucked away ports that l love so much.

I may be wrong, but with so much port construction in evidence everywhere you go these days, I wonder whether this is a diminishing problem for the lux lines. And there are always the tenders....

[unfathomable]

I wonder wether Silversea would consider changing their pricing from USD to the EUR as a result of the downward spiral of the dollar.

I think most of Silversea's costs -- pay especially -- are in dollars, so their management would have to be brave to switch to any other currency.

[meow!]

Would you kindly explain what "base rate average per passenger" means. It is probably not the usual "per diem", as $1,000 per week will be below $150 per diem, and Silversea's average per diem is far higher. One famous (cannot be named) travel agency calculated it at $400+. Now, even if you take in the 75% average occupancy factor, the $1,000 per week will only become $1,333 per week (less than $200 per day) for only the occupied cabins, still a lot lower than $400, even if you add on all TA commissions, etc.

 

Businessmen are usually over-optimistic, and that is often why they go into business in the first place. I agree with you that over-optimistic over expansion will lead to disaster, and it is not prudent. However, I wonder how much of it is the cruise line's own desires, and how much is it due to pressure from the ship builders. The ship builders need to build ships to sustain themselves, and once the ships are sold, whether the cruise line goes under or not is somebody else's problem. I wonder how easy/difficult is it for the cruise lines to resist such pressure. I have no information on this, does anybody know? Thank you.

[Jaffa]

Meow,

I was informed it is $1000 USD Per night, Per person. He said the figure is averaged over the financial year. That is the budget point that they aim for.

So therefore a 7 night cruise for one suite dual occupancy would be $14000.

Now they do play with these numbers a bit, some examples would be The Caribean and Northern Europe where the pricing difference can be substantial.

But the average budgeted figure is as I've repeated above. Wether they achieve this per night per person is another thing, aiming for something and achieving it is a totally different thing

 

The conversation came up when l was discussing the super cheap prices for the 2 years after 9/11 and Sars.

Many may not be aware but we almost lost Silversea at that time. They only just held their head above water.

He said for those 2 years Silversea barley made $500 per night per person and they were operating at annual average of 45% occupancy.

 

The owners kept things afloat by constantly injecting funds. There were no profits.

I think thats why we are seeing super tough pricing and high Solo and past passenger fares without discount now across all the Luxury brands as they try to claw back lost revenue.

 

Your un-named TA cannot be right with there estimate of $400 USD per night as that would see a 7 night cruise for 1 person @ $2800. That figure is way under their cost base let alone drawing a profit.

 

Mind you the figures that l was quoted above are for a balcony.

And of course we all know how they can discount and price gouge when they want to.

[wripro]

Although this is very interesting from an academic point of view I have to say when considering a luxury cruise I want to anticipate it with fun and excitement instead of facts and figures. I appreciate these statistics but imo I get enough of those in other areas of my life. When I think about Seabourn or Silversea I prefer to concentrate on how much I will love my time aboard.

 

The economy may well dictate what the future holds for the luxury lines but even with all the new builds this is a small segment of the overall cruising market and there are lots of people not affected by fluctuations of the economy, and all these lines are marketing across the world now, enlarging their base.

 

The other thing to consider is that with the weakness of the dollar luxury cruising remains a very viable alternative to land travel since is it so inclusive and you know upfront pretty much what it will cost. I personally find this a very attractive benefit. I am glad there will be more ships from which to choose. The only caveat, and this has already been mentioned, is that they continue to uphold the current levels of service. I think they are aware of this need and are doing everything they can to ensure no one is disappointed.

[lord of the seas]

Well said wripro,

You must remind me to view the guest list at a hosted table.

[Travelcat2]

Although service, food and enjoyment rank top, it is always interesting to read facts and statistics. Have a slight correction to make on the Regent ships -- they do not own the PG (leased through 1/2010 from Grand Circle Travel. GCT was recently sold so the future is questionable) or the Explorer (leased for specific cruises).

 

The stability of the world may dictate the future of cruises. . . just my opinion. Again, really thought the statistics were worth reading,

[A Tucson Guy]

Jaffa,

Thank you for posting this information. Although some folks are not interested in this info, some of us are. It will be interesting to see what happens in the luxury segment of the market in the next couple of years. Although the US may be going into a recession, there are still a lot of people that are not affected. One of our homes is in Kapalua, Maui and we rent it when we are not here. We have more bookings than we can handle for this year and our home rents for $3500 to $5000 per night. I can not even imagine paying that much, but a lot of people can and do. I don't think the luxury cruise segment will be affected as much as the mainstream cruise lines.

Al

[meow!]

Again, really thought the statistics were worth reading,

Agreed, by another feline .. meow!

[smb]

We just got off the Whisper cruise, NZ and Australia. It was about 75% full

but interestingly the lower dollar must be impacting. Only about 100 of the

passengers were from the US. It was a bargain for all the others who paid

in euro's or pounds.

[lord of the seas]

I think that you will find that the Australia/N.Z. cruises are always low on people from the USA, probably due to the location and the ammount of flying hours.

[meow!]

Back to the topic of the newbuild. It has been eleven months since Silversea's original announcement, promising details "in the next few weeks", but nothing has been forthcoming for nearly a year. The shipyard has claimed that steel has been cut, but nothing from the cruise line itself.

 

If the newbuild is to start service in the Autumn of 2009 as scheduled, then there is only a year and a half left. I kind of remember that more than a year and a half before the Shadow started to carry passengers, Silversea was crowing on the details of that ship, and how they incorporated the suggestions of the customers, improving upon the Cloud/Wind. Why are they so quiet this time?

 

From what we can tell, other than the need for an additional passenger elevator at the front of the ship, the design of the Shadow/Whisper is close to being ideal. We cannot imagine how an enlarged newbuild can be better. (We believe that most existing Silversea cruisers will agree with this opinion and making the newbuild larger will not be according to the customers' suggestions!) Looking at the deck plans of the RSSC Voyageur on their website, we find it more cumbersome and less desirable than the Shadow/Whisper (though we have not been on an RSSC ship to experience it first hand). Any comments, especially from those who have sailed on the Voyageur? Thank you.

[lord of the seas]

Meow,What is your view on the Seabourn Odyssey layout ?

[Jaffa]

The new Seabourn ship cabin layout seems to me to be similar to the Whisper/Shadow but with another deck level. The cabin interior renderings look to be modern and contemporary, which l like.

 

I like the external look of the new ship. It looks very attractive.

 

I worry that Seabourn will have the same problem that the 4Silversea ships have with there senior suites located all the way forward due to noise and movement as well as the angle of the forward bulkheads.

 

I would have liked to see some 2 level senior suites mid ship.

 

Seabourn seems to have picked up on the success of the Silversea silver suites and have planned on having plenty of them which is a smart move.

 

I think which ever way you look at it the 2 products are going to be very similar with some variations.

 

It will be whether both lines can maintain there present service levels. To me thats going to be the big question.

I think Silversea might just be a step ahead here due to there experience with the Whisper/Shadow size.

 

Meow,

I have heard that Silversea is keeping tight lipped re the newbuilds due to a few surprises re the public spaces and cabin interiors. They are purposely letting Seabourn have the run of the marketing for there newbuild so the product loses a little of its freshness.

 

I think both products will be excellent.

But it will be a big ask to find and train all these new crews to meet, keep up with and exceed present levels.

[meow!]

Reading Seabourn's website and the deck plan of their newbuild, it looks like a modified-enlarged version of the Shadow/Whisper. While this one is simpler, less-cumbersome than the RSSC Voyageur, it looks not as nice as the existing ShadowWhisper:

 

The theatre appears to be single-storeyed, even if the seats are tiered (there is no explanation on their website for this). So it will not have the same "effect" and elegance as the Silversea ships.

 

The regular cabins are roughly the same size as the Shadow/Whisper, that is good, but not an improvement.

 

Their silver suite equivalent is smaller than the Shadow/Whisper, so those affluent paasengers are not going to appreciate that.

 

They have those water sport facilities which are Seabourn traits, I wonder whether Silversea is going to have that.

 

Usually, when a cruise line builds larger ships to have more customers to cut down costs (economy of scale), they usually compensate it with larger cabins and better facilities (as seen from Cloud/Wind to Shadow/Whisper). This time (if the Seabourn newbuild is an indication), there is just increased ship size and number of passengers, with no compensatory features. I hope Silversea can do better than that.

 

Also, it seems that the existing luxury ships are not always full as is, so why start expansion when the world economy is rupturing? I wonder whether the present round of expansionism is shipyard driven rather than initiated by the cruise lines. For the shipyards, get the contracts, and they don't care about the consequences afterwards. For the cruise lines, you have bought the ships, so you take care of the hot potato! Any comments?

[Signor John]

Also, it seems that the existing luxury ships are not always full as is, so why start expansion when the world economy is rupturing?

 

My guesses:

 

1) Lead times for new ships are long.

 

2) Some economies are prospering.

 

3) Rich people seem to be doing OK, and if they're feeling the pinch, a $20,000 cruise is a nice consolation prize for having to defer the purchase of a $12 million apartment on Central Park West.

 

4) Competition makes it imperative for Cruise Line A to keep up with (or stay ahead of) Cruise Line B.

[wripro]

The suites on the Odyssey will, in fact, be somewhat larger than the Shadow and Whisper, starting at around 298 sq. ft without balconies. To me the deck plans look excellent. I especially like the wind protected day beds at the bow of the ship. Being a frequent Seabourn and Silversea cruiser the only thing that is important, as previously stated, is that both lines maintain their levels of service. I am sure they are more aware of this need than we are. I know that Seabourn is doing aggressive training already for the staff of the Odyssey.

[meow!]

Signor John and Wripro: Both of you are probably right. We are happy and impressed with our only two voyages on the Shadow, and fellow passengers seemed likewise satisfied. So when things are good, why change it, but I guess the world is an ever changing place!

[flag fan]

This is an interesting discussion. I wondered about that $1,000 per passenger/per night figure so I picked a 7-night Caribbean cruise at random (Silver Cloud Bridgetown to Bridgetown, October 22, 2009) to check the fares; for a mid-veranda cabin the EBI rate is $5,036; the regular rate is $6,296--both below the $7,000 target.

 

I doubt that the line is charging so far below its profit target for all its verandas and hoping to make up the difference on the much fewer suites. Therefore, I suspect that the $1,000 per person/per night figure includes all revenue sources, not just the fare--shore excursions, casinos, internet charges, photos, extra-cost food and beverages (even in all-incluse Silver Sea, aren't some wines and alcoholic beverages extra cost?), etc. (I have sailed Crystal which does charge for wine and alcoholic beverages.)

 

I think the mainstream lines are relying more and more on these extra costs and my guess is that the luxury lines will move in that direction too to make up for revenue losses in other areas (such as higher vacancy rates if there is an overcapacity in the future, higher fuel costs, and currency fluxuations). One thing that I think is certain is that there will be changes--there always are. Hopefully, they will not be changes that disappoint current satisfied cruisers.

 

(For myself, I hope there is competition that results in lower solo fares; Crystal has very good rates; Silver Sea, not so good. But if I am right and the cruise lines are relying on non-fare revenue, solos will be discouraged--even a 100% solo supplement will not generate the non-fare income the line would be looking for.)