Build It & If They Don’t Come, Move It

Cruise Week

A slew of new and redone ships are launching this spring and, unlike recent years, most of them are primarily for the North American market.

Holland America’s 1st new ship in almost 6 years sets sail from Italy this week.

Koningsdam will be the brand’s 1st addition since Nieuw Amsterdam back in July of 2010. And, within a month, Carnival will launch Vista, its 1st new ship since Breeze in July of 2012.
   
What’s happening this spring is quite different from earlier multi-ship launch seasons. A significant difference between now and years past is the mentality. Cruise lines used to believe ‘Build it and they will come’ but, now they are building with a more realistic philosophy of, ‘If they don’t come, we will quickly move assets to an emerging market.’

Princess has offset its new additions in North America by moving capacity to China, Japan and elsewhere. Holland America moved 2 of its oldest ships to the P&O Australia fleet and Carnival says it will be moving Miracle to China in 2018.

 Back in 2006 when all of the main North American brands for Carnival Corp. launched ships one on top of the other, there had yet to be surges in capacity in Australia/New Zealand, Latin America or Asia.
   
When it comes to the North American market, there has also been a greater spread between newbuilds for Royal Caribbean. Harmony of the Seas will be christened in Southampton next month. When Harmony moves to homeport at Ft. Lauderdale in November, it will become the 1
st new ship to be home ported in south Florida for Royal Caribbean since Allure was launched in 2010.
    
Harmony becomes the biggest addition to North American-sourced Caribbean market cruising in years. Not surprisingly retailers report that Bayonne continues source primarily from the East Coast &Midwest.

The lag between newbuilds has caused greater anticipation for them than a decade ago when they were coming out like clockwork. With multi-market sourcing, cruise lines are once again building with confidence because they can spread out the growth in markets that are more established than they were a decade ago.

New ships have always attracted quite a price differential. But in the past their presence tended to ruin pricing overall for ships already in the market. This time that may not be the case to the extent it was in the past. Retailers report the 2nd half of ‘16 Caribbean is holding up OK even with the increased capacity.

What also stands out about the capacity increases for this year and beyond are changes by the players who are taking on the establishment. “The fact that MSC has 11 ships on order is truly amazing,” observes Emerson Hankamer, Vacations To Go, as one example. “It says a lot about the positive long-term outlook for the industry.”
   
MSC has confidence to match its deep pockets, creating a stir with orders stretching out to 2026. Given that it is a Europe-based company, continuing to order ships at this time is impressive. In that vein, it announced the most recent order at a lavish event in the Palace of Versailles with French President Hollande in attendance.
   
Intended or not, this was a very public display of a determination being seen throughout the business. MSC is putting dollars behind the mantra of `We won’t let terrorists determine how we live our lives.’
   
Viking Ocean Cruises officially ushers in its 2
nd ocean ship Viking Sea with a christening in England May 5th. Not only have Viking’s 1st two ocean projects been well received by consumer media and travel agents, but also at least 4 more ocean newbuilds are on the way. All that for a line that launched just 1 year ago to some skepticism from within the business.

The follow up to Viking Sea is the announcement that Viking is building more ships and will have a fleet of 6 ocean vessels by the end of 2020. “So operationally, it's humming," says Viking’s Senior V.P. of Markeeting, Richard Marnell. he says of Viking Ocean Cruises. "As with any European operator right now, we are having our sales headwinds, but business is doing quite well.”

Like the established players, even with challenges, the newcomers are extremely confident in the new model of expansion paying off in a cruising world that is significantly more complex than it was a decade ago.

 





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