"Titanic Blunder for RCL"

[Coco Creek]

Or. says the title of the linked article from MSN Money. It discusses the problems RCL is having financing Oasis and Allure of the Seas, the two Royal Caribbean mega-ships.

 

http://news.moneycentral.msn.com/ticker/article.aspx?Feed=MY&Date=20090227&ID=9652517&Symbol=RCL

 

Is the financing for the 4th and 5th Solstice Class ships intact? Time will tell.

[BroncosFan2010]

Interesitng article. I think the author just likes to read his own writing though... What use of adjectives!

I personally hope that the cruise lines stop making oober-large ships. I prefer the smaller atmosphere with less passengers. Newer Radiance Class (RCL) or Millenium Class ships would be appreciated with more destinations and longer itineraries!

[woodofpine]

I've no opinion on Oasis per se ("Central Park" - cool; not for me - but cool) but its no mere coincidence that mega-ship contruction (financing) coincided with the explosion of credit default swaps and the derivatives that fueled the real estate bubble. They're not limited to real estate mortgages.

[BroncosFan2010]

I've no opinion on Oasis per se ("Central Park" - cool; not for me - but cool) but its no mere coincidence that mega-ship contruction (financing) coincided with the explosion of credit default swaps and the derivatives that fueled the real estate bubble. They're not limited to real estate mortgages.

 

 

Good point about the financing problems.

 

Oasis is not my cup of tea. I think the design is very cool, and I am constantly amazed at the engineering that is possible these days. However, other than to tour the ship, you could not get me to sail on her for all the money in the world. That just sounds like WAY too many people to be an enjoyable vacation. I like a ship to take me to exotic (and decent) destinations, not be a destination in and of itself. Plus, the ports visited by the Oasis are poor, at best.

[Denny01]

Host Andy posted info on the S-Class 4th build that the loan had been finalized. Here is the press info:

 

Royal Caribbean Cruises Ltd. finalized an earlier agreement with Germany’s KfW IPEX-Bank for an unsecured loan of up to €440m for Celebrity Cruises’ fourth Solstice-class newbuild. The 12-year loan is at a fixed interest rate of 5.82% and in certain circumstances may be converted to a floating interest rate of LIBOR plus the then applicable margin.

The fourth Solstice ship is scheduled for delivery from Meyer Werft in the third quarter of 2011.

 

 

Denny

[Cruisenouvelle]

Good point about the financing problems.

 

Oasis is not my cup of tea. I think the design is very cool, and I am constantly amazed at the engineering that is possible these days. However, other than to tour the ship, you could not get me to sail on her for all the money in the world. That just sounds like WAY too many people to be an enjoyable vacation. I like a ship to take me to exotic (and decent) destinations, not be a destination in and of itself. Plus, the ports visited by the Oasis are poor, at best.

Amen.

[Schplinky]

I don't think this is unique to RCL. There are new hotels that have stopped building in Las Vegas half-way through. I think that getting funding for luxury projects in this economy must be like selling air conditioners in Alaska. I truly commend X for getting the financing in place for Solstice IV. Quite the accomplishment.

[florisdekort]

Calling this a "Titanic Blunder" suggests RCI should have foreseen this unprecedented economic meltdown. Obviously they didn't and couldn't. Any person that did would be very rich by now.

 

The 4th Solstice class ship has been financed.

 

Regards,

Floris

[Lsimon]

Calling this a "Titanic Blunder" suggests RCI should have foreseen this unprecedented economic meltdown. Obviously they didn't and couldn't. Any person that did would be very rich by now....

 

A good observation. I sure wish I'd had the ability to foresee this economic downturn!

[sandravb79]

Good point about the financing problems.

 

Oasis is not my cup of tea. I think the design is very cool, and I am constantly amazed at the engineering that is possible these days. However, other than to tour the ship, you could not get me to sail on her for all the money in the world. That just sounds like WAY too many people to be an enjoyable vacation. I like a ship to take me to exotic (and decent) destinations, not be a destination in and of itself. Plus, the ports visited by the Oasis are poor, at best.

 

 

I would also like to visit those super-uber-fantastic-great ships because they must look fantastic, but don't really feel like cruising on them.

For me, a cruise is somewhat like a floating hotel that brings me to the different destinations. Yes, I like it to be nice, but that's the only thing I will use it for: sleep, clean up, eat and relax at the pool (ok, add some shopping and drinking too, lol)

I don't ice skate, I don't climb walls, I don't even go all that much to the golf club I am a member of, so I can't really see myself doing all that on a ship. Also, all those extras come at an extra cost (often included in the total cruise price) and then you either have to stay onboard to profit from that, or you pay for all that and don't use it because you are on land.

If it is to stay always on board to use all those extras, you could just as well take a land vacation (and not risk getting seasick, lol)

 

Of course, this is just me. This is based on my view of cruising, and on my financial status (I'm not poor, but I don't have loads of money to spend, so I have to spend it wisely in order to get the "most vacation" out of it)

However, for those that don't have to look at a $ more or less it might be fun.

[woodofpine]

Calling this a "Titanic Blunder" suggests RCI should have foreseen this unprecedented economic meltdown. Obviously they didn't and couldn't. Any person that did would be very rich by now.

 

The 4th Solstice class ship has been financed.

 

Regards,

Floris

 

I don't make it a point of analizing debt load at the cruiselines, but comments have led me to believe that RCI is more burdened than Carnival. The magnitude of the downturn was not foreseeable. But now that it is here... and likely to remain for a long time (compared to typical 'recession' and worse) the 'blunder' might be to proceed with expansive construction plans as if nothing has changed and 'all is well'. I think 'the downturn' is just beginning to be felt at the cruiselines.

 

There were a lot of people betting against the health of the mortgage market; they're the ones collecting AIG's bailout money. Even from where I sat 'on main street' it was apparent mortgage lending had run amok 2003-2006. Those in the know (collecting today) were down the hall from those managing the loan officers qualifying garbage as gold (often in the same company) then selling bets that their product stunk. As a taxpayor, I'm not happy about the lack of accountability. In China, when industry managers let things go this bad for fundamentally bad reasons the bailout includes hot lead in the head. If the west doesn't consider similar deterance then Mao's old maxim may prove correct, "The East wind will prevail over the West wind."

 

Keel haul that man...

[hcat]

The finacial meltdown affects everything & everyone--all a matter of degree..

 

Seems to be alot more advertising for cruises these days--

 

On the plus side: Fewer of these large monsters increases chances of having a nice day in port! I would not mind them for those who want them, if they just stayed at sea!

[GXmanDC]

It is unfortunate that the author of the article on MSN did not quote more from the Bloomberg story.

 

The head of investor relations said, " [Royal Caribbean] is comfortable we’re going to be able to get this financing done..."

 

The Finnish Government agreed to guarantee 80% of the cost way back when the deal was signed. (prior to the start construction) They're open to guarantee more but it would be unusual. Of course, the global credit meltdown is also unusual. The RCI executive also said that the company usually puts the financing together about six months prior to delivery and noted that the fact they are already in discussions with the financiers shows they are ahead of schedule. The Bloomberg article also quoted the head of STX Europe saying they were not worried about the financing.

 

See the entire Bloomberg article here:

http://www.bloomberg.com/apps/news?pid=20601087&sid=a5SrbcYwFi_4&refer=home

[Happy Cruiser 6143]

I don't much care one way or the other. I would never sail on a ship that large. I don't care how much space there is on the ship, everyone still has to get on and off in the ports. M class is the largest I will go with. And I prefer smaller.