New Shipyards Entering Cruise Business Face Uphill Challenge

Two new shipyards have entered the cruise ship building business recently, while an additional yard with a surprise cruise order has some passenger vessel history, but all will be facing a set of staggering challenges when it comes to building customized ships for picky clients and pulling off a flawless hotel build.

The major players in the cruise-ship building business have been going at it for decades, and most specialize in passenger vessels.

Meanwhile, major cargo-ship building yards in South Korea have tried again and again to land orders without success.

In Japan, Mitsubishi has built for local companies along with Princess Cruises and AIDA Cruises, but late deliveries and cost overruns on the recent AIDA ships have not helped the cause.

Kleven

New Hurtigruten Ship Rendering

The last time a cruise ship was built in Norway, the shipyard went bankrupt. That was just over a decade ago with the ship being The World and the shipyard Fosen Mekaniske Verksted against a backdrop of an extremely expensive labor environment.

Earlier this year, Kleven entered into a contract with Hurtigruten to build a set of expedition cruise ships earlier this year, with an option for two more. The ship’s are being built on a Rolls-Royce technical platform.

Shipyard executives declined to speak on the record, but the yard’s website said Kleven was a family-owned operation dating back many decades.

The yard’s recent deliveries show no shortage of supply and platform vessels for the offshore industry, in addition to Coast Guard ships.

A log of ship deliveries back to 1961 shows everything from fish vessels to tug boats, with the last passenger vessel being the Finnmarken, which was built in 2002 for coastal service. The yard has only built three (coastal) passenger ships.

Uljanik Group

Scenic Elipse

In Croatia, Uljanik Group will build its first cruise ship for a new entry to the cruise ship market in Scenic.

The agreement calls for a five-star level expedition ship to be delivered in August of 2018, with an option for a second vessel. The ship is 16,500 tons with capacity for 228 guests.

In 2015 the yard delivered a 3,311-ton ro/ro ferry, the second in a two-ship order. However, the yard mainly builds barges and other supply vessels, but did deliver a series of car carriers as recently as 2008.

The Croatian builder can trade its history back to 1856, when it started out building ships for the Austro-Hungarian Navy.

In 2013, the yard added another facility and building site, 3.Maj, to its portfolio, which has upped its capacity.

The group also owns an engine factory, ULJANIK Diesel Engines Factory Ltd, and has recently delivered a number of large tanker vessels.

Brodosplit

New Star Clippers vessel

Another Croatian yard, Brodosplit, landed an order from Star Clippers for a sailing ship, and is believed to be working toward a separate order for smaller niche vessels.

Of note, the yard has built new motor vessel ships for Grand Circle Cruise Line over the years.

The shipyard is located in Split, Croatia, and was formed when several smaller ship repair facilities combined forces in 1922. The yard builds various types of ships including commercial, container and passenger vessels.

The new Royal Flyer for Star Clippers will be 162 meters long and 18.5 meters wide, and feature five masts and sails.

While it is a sailing ship, the vessel will have two fully independent electric propulsion engines and be compliant with Safe Return to Port rules with two engine rooms.

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Carnival Corp ups full year revenue forecast on back of higher prices

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Carnival Corporation’s cumulative bookings for the next three quarters are at higher prices than last year and concentrated in the core cruise markets in North America and Europe.

Adjusted net profits for the last quarter edged up by $8 million year-on-year to $370 million as revenues grew from $3.7 billion to $3.9 billion on the back of a 4% increase in capacity.

The figures for the three months to May 31 were boosted by a 5% improvement in overall cruise ticket prices for the parent company of brands such as P&O Cruises, Cunard and Princess Cruises.

The improved rates affirmed efforts to increase demand “by building positive word of mouth through the delivery of exceptional guest experiences as well as our innovative marketing and public relations programmes,” said president and chief executive Arnold Donald.

The company expects full year 2017 net revenue yields in constant currency to be up approximately 3.5%, better than guidance given in March of up by around 3%.

Chief finance officer David Bernstein said: “Since the end of February, booking volumes for the next three quarters have been running in line with the prior year at nicely higher prices.

“At this point in time, cumulative bookings for the next three quarters are ahead of the prior year, again, at nicely higher prices.”

Looking forward, Donald said: “We are realising sustained strength in booking trends across all core products.

“We are delivering on our strategy to grow demand in excess of measured capacity growth while leveraging our industry-leading scale resulting in increased return on invested capital.”

The world’s largest cruise conglomerate saw the delivery of Princess Cruises’ Majestic Princess, the first ship tailored for Chinese passengers, as well as the addition of AIDAperla to German brand, AIDA Cruises.

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AIDAperla.

Two additional Princess Cruises ships, Caribbean Princess and Royal Princess, were fitted with the technical requirements to switch them early next year to the Ocean Platform featuring Ocean Medallion, the interactive technology for passengers which will debut on Regal Princess in November.

Donald told analysts in a conference call: “We have and we’ll continue to create carefully engineered high-quality destination experiences that are uniquely tailored to our guest references from our private islands like Princess Cays and Half Moon Cay to the planned expansion of our cruise terminal in Barcelona to our most recently completed port destination Amber Cove, in the Dominican Republic.

“We’re providing exceptional guest experiences that enable our brands to capture a price premium. We have many more innovations planned in port development that we expect to rollout in the coming years.”

He identified “new destination opportunities” in Cuba, the Bahamas and China.

The company expects to benefit from growing populations, increasing wealth and developing countries in addition to increased spending by consumers on “experience versus products”, all of which are contributing to 4% annual growth expected in travel globally.

The Shopping Mall and Its Premium Brands at Sea

The Shopping Mall and Its Premium Brands at Sea
PHOTO: Kate Spade onboard Royal Caribbean International’s Harmony of the Seas. (photo courtesy of Royal Caribbean International, Copyright, Simon Brooke-Webb Photography)

Gone are the days where the primary retail experience on a cruise ship consisted solely of logo items, sundries and a small collection of clothes and jewelry.

Now, cruise lines are ramping things up to the level of premium outlets and internationally-recognized brands.

One could argue that things really changed when Royal Caribbean International launched the Voyager of the Seas.

Photo Credit; Dave Jones. Independence of the Seas Royal Promenade.

As the first of its ships with a Royal Promenade, it effectively crafted a shopping mall at sea, one that stretched the better length of the vessel. At the time, the ship was like no other. It was wide enough that a voluminous space could exist between inside staterooms with such cabins now featuring a window that overlooked the internal activities.

The Royal Promenade connected the ship’s forward and aft atriums with lounges and bars, eateries and, most importantly for this discussion, boutiques. Royal Caribbean has only made this feature bigger on newer ships with the grandest example on the Harmony of the Seas.

Of course, corporate cousins, as well as competitors, have copied the model since.

As the current largest ship in the world, the Harmony has managed to attract retail brands like Kate Spade, Hublot, Cartier, Omega and Bulgari with shops onboard. Even Starbucks is a premium purveyor with its own storefront. Although aboard a different class of ship, Hublot and Bulgari have similarly set up shop on the Anthem of the Seas.

In some cases, the premium retail approach does not require scale but cachet.

Also in the Royal Caribbean family, Celebrity Cruises has partnered with Apple for the fleet’s iLounge venue as the first authorized Apple reseller at sea. Here, guests cannot only learn about the company’s digital products with dedicated courses but also buy them and take them home. The Solstice-class, in particular, does still have a bit of a mall atmosphere thanks to its sleek double-decker galleria of boutiques.

MSC Cruises is using technology to enhance the shopping experience in a different way.

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In collaboration with Samsung, its upcoming MSC Seaside will let guests try on clothes digitally with a virtual mirror. It will also recognize them upon entering the photo gallery to automatically display their images without the need to search for them.

Meanwhile, some lines do take it smaller with just a singular standout store.

Disney Cruise Line recently introduced an exclusive Tiffany & Co. luxury jewelry shop on the Disney Fantasy. The signature Tiffany T collection offers special diamond pieces to treat loved ones with an extra helping of pixie dust.

It’s true that diamonds never go out of fashion, and high-end retailers often extend to jewelry these days. International tastes are also headed that way with Norwegian Cruise Line’s new Norwegian Joy, which is dedicated to the Chinese market, being fuller of such vendors than even their North American equivalents. An immense amount of square footage is committed to brands such as Bulgari, Omega and Cartier again, as well as Gucci and even Godiva in the upscale chocolatier category.

Just as a number of the watch and jewelry brands have made inroads with more than one company, Godiva is additionally featured on Cunard Line as well.