Ernie

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Insights into the Question, “Will Royal Caribbean Ever Build Smaller Ships?”

A frequently asked question: Will Royal Caribbean ever build smaller ships? A few considerations:

First, even as the average cruise ship size increases over time, it is in our interest to have a balanced and flexible fleet profile. There are both physical parameters (e.g., Panama Canal) and market parameters (e.g., starting up in Dubai) that dictate a mix of smaller ships as well as Oasis-class ships. We are very fortunate to have the 1,800 guest Legend of the Seas and Splendour of the Seas in our fleet to spearhead our global expansion.

Second, we are able to utilize larger ships on routes that we would not have believed possible even ten years ago. The fact that we will have a Freedom-class ship and three Voyager-class ships in Europe in 2010 is remarkable in comparison to our thinking in the late 1990’s that we would have a maximum of one or two Voyager-class ships and they would always be Caribbean-based. Now our view is we will use any of our ships anywhere in the world where it makes economic and logistical sense.

Third, the preference of the clear majority of our guests for more features and options is clear. There is simply more demand for larger ships than for smaller ships. This is especially true of families but applies to couples and singles as well. I know from personal interaction with cruisers that many don’t accept this to be true. But this is our experience in our call centers and through our automated reservations every day.

Fourth, while economies of scale are not the controlling variable in the cruise equation, there are scale benefits that contribute to our brand’s preference for larger ships. The simplest example: whether the ship holds 1,000 or 3,000 guests, it has one Captain.

Fifth, there is an undeniable nostalgia amongst some cruisers for ships under 1,000 guests that provide an extraordinarily high level of customer service. Although the Royal Caribbean brand is not going to encompass such ships in the future, our company certainly does in the present with our two 700 guest ships in Azamara Cruises not to mention the 100 guest Celebrity Xpedition. Our company across its six brands has a significantly more diverse fleet profile than the Royal Caribbean International brand has on its own and this will continue to be the case.

So will Royal Caribbean ever build small ships? It is unlikely for the brand Royal Caribbean International. But not out of the question for the company Royal Caribbean Cruises Ltd. through one of our other brands.

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Originally posted by dmwnc1:
[...]I just wish (nostalgia?) that ships the size of the Nordic Empress and Horizon didn't get the boot every time another 150,000 ton monster gets christened.

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Originally posted by Ernst:
Hey, they are still around - it's not that they have been scrapped.

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Originally posted by dmwnc1:

But also no longer in the American market. All of us can't afford to fly to another continent to frequent the small and aging hand me downs of the cruise line giants. To me personally the Sun-class over to the Rotterdam VI are just about perfect. Anything larger than a Vista or Eclipse is out of the question.

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click here

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Originally posted by DOWNDIE:
Hi Ernst:
I couldn't agree with you more. Most Americans only think of their own American based ships as being worthy of sailing on, when there are many other options. Your link shows an excellent example, the Pacific Dream (ex-Horizon) currently sailing in the Caribbean out of Santo Domingo. Sure, a little knowledge of Spanish might help, but it's not absolutely necessary, and the fact that it is all-inclusive doesn;t hurt either. This line can be booked in the American market, the country's largest internet cruise agency markets it.
As someone who has already sailed Pullmantur's Holiday Dream (ex-Europa), I say take that chance.

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Any interesting small ships sailing up there on Lake Okanagan?

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Originally posted by Waynaro:
While Adam Goldstein said in the last paragraph that it is unlikely Royal Caribbean will build small ships, it does not rule out the possibility that they will ships smaller than OASIS/ALLURE. Eventually the early Vision-class ships will go, along with the MAJESTY and MONARCH of the SEAS. Perhaps they will build ships in the 110-125k range.

I don't see any advantages in terms of deployment if one day the RCI fleet is primarily made up of VOYAGER/FREEDOM-class ships, OASIS-class(?), and jumbo OASIS.

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I agree. We will see RCI build "smaller" ships, in comparison to Oasis, but not "small" ships.

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Originally posted by Cam J:
I think RCI has for too long been focused on having the biggest and/or the most that they have lost the focus of a cruise to an extent.

Cam J

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Originally posted by Malcolm @ cruisepage:

RCI's focus is not selling ships and cruises, they are selling floating mega-resort experiences. They see their competitors as not just being other cruise lines, but Disneyland and Las Vegas.

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Malcolm,
You get it! Some people still seem to think that RCI is in some sort of pissing contest with Carnival. This is not the case, as RCI pretty much blew Carnival away 10 years ago with VOYAGER OF THE SEAS and never looked back. RCI did not build OASIS to one-up Carnival. As I just pointed out, they didn't need to as VOYAGER already did this many years ago.

OASIS was built with much larger ambitions, and is an evolution of the Royal Caribbean experience already found on the Voyager and Freedom Class ships. RCI obviously wants it's niche to be the line known for the most innovative ships, and they are achieving that. Sure it's not everyone's cup of tea, but it will appeal to a very large market demographic.

OASIS will offer an unmatched cruise experience, and one that can effectively compete with a large Vegas land based resort. I just returned from Vegas a couple weeks ago. I stayed at Encore at the Wynn. It was wonderful. I was in a Tower Suite which was like a "hotel within a hotel". Something we are seeing on cruise ships. In addition there was something like 20 restaurants, just as many bars, I think eight pools, two giant spas, two huge shopping areas, two massive nightclubs, the casinos, the Lake of Dreams (gimmick attraction), and two huge show rooms (one showing Le Reve which was amazing). Anyway, the amount of choices were really something, and everything was done to a very high standard and with quality. The staff, which is in the thousands was superb. It proved to me you don't have to be a small property to provide truly excellent service. This is exactly the type of mega-resort that RCI is competing with. People that are used to vacationing in places like Vegas at resorts like Wynn/Encore expect to be WOW'ed, and I think OASIS will deliver that WOW and even entice many to take a cruise that never considered it before.

So gone are the days of one-upmanship between Carnival and RCI. I think that may have existed many years ago (Fain & Arison both have egos), but today RCI is only raising the bar against it's own standard and that of large resorts. Carnival has taken a much more conservative and traditional approach, and that in fine. It's working well for them. All these choices and cruising styles are a wonderful thing for the industry. Even if a certain cruising style is not for you, hopefully you can at least appreciate it and be thankful we still have so many options in the cruise industry. I know I do.

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Originally posted by eroller:

y RCI is only raising the bar against it's own standard and that of large resorts. Carnival has taken a much more conservative and traditional approach, and that in fine. It's working well for them. All these choices and cruising styles are a wonderful thing for the industry. Even if a certain cruising style is not for you, hopefully you can at least appreciate it and be thankful we still have so many options in the cruise industry. I know I do.

Ernie

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Ernie, do you think that passengers who experience Royal Caribbean's Oasis after Carnival's mediocre Destiny class return to Carnival?

Look at the GM. The Germans and Japanese raised the bar for themselves while GM offered the Olds Acheiva, Pontiac Aztek and other God-awful cars. Once people experienced a better euro-Asian car they never went back to Detroit iron.

Sure enough they are in bankruptcy.

Are Carnival's brands diverse enough. How different is the HAL, Princess, and Costa format?

Is Carnival's business plan sustainable for the future?

[ 10-15-2009: Message edited by: desirod7 ]

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Originally posted by desirod7:
[...]

Are Carnival's brands diverse enough. How different is the HAL, Princess, and Costa format?
[...]

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so Ernie if i read you right, what your saying is that royal caribbean is more of a resort experience,
(come see oasis of the seas)
with being at sea, and stopping at islands being a secondary thing

whereas carnival is concentrating more on being cruise line
(carnival newest ship the dream, visiting saint thomas, saint martin, san juan)

interisting it sounds almost like we may see a complete reversal here, with carnival being the brand for ship and island enthousiasts (ie the caribbean cruise line)

and the "fun ships" of rccl "ships" being the destinations themself
you don' book rccl for the sea, or the islands, you book rccl for the flow rider, the ice rink, the roller coaster

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Originally posted by NAL:
dmwnc1... Rotterdam VI is as big as I go.

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NAL, do not eliminate the Celebrity Mercury or Century. Although they weigh in at 77k tons, the layout is spacious yet it is easy to traverse the ship quickly and lines are not too much of a problem. Mille class's excellent layout and reasonable passenger density makes them very liveable ships.

Yet it is that people kvetch and moan about the very existence of those ships that is annoying. It continues to seem like some kind of misplaced bitterness over the reality that the industry did not remain a vision of the past.

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Originally posted by dmwnc1:
And not everyone wants to 'experience' the Oasis of the Seas. I don't. Everbody acts like the Oasis walks on water compared the rest of the industry.

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I don't think anyone is saying that OASIS is for everyone. It's not, just like QM2, Silversea, or the Carnival HOLIDAY is not for everyone. There is a specific market that OASIS will appeal to.

As for OASIS walking on water, well you have to admit the ship is pretty amazing and there is nothing else like her out there. OASIS is the most innovative ship introduced since VOYAGER OF THE SEAS and QM2 IMO. She is ground breaking, and that is what makes her special. Lets face it, another Vista clone getting introduced, or another Conquest / Grand Class is not exactly ground breaking. There are a few "first in class" ships that when introduced, I consider truly ground breaking. Ships that can actually change the direction of the cruise industry. I think OASIS is one of those ships.

So I think it's perfectly acceptable if you feel OASIS is not for you. Hopefully though you can understand the significance of such a trend setting vessel being introduced into the cruise industry. I think it will be many, many years before we see another ship which is as dramatically ground breaking as OASIS.

Ernie

[ 10-15-2009: Message edited by: eroller ]