Happy cruising ahead for 2006 and 2007

Cruising is looking good for 2006 and 2007. The cruise industry appears set to boom over the next two years, due to continuing economic prosperity worldwide; the aging of the world population and the resultant disposable income and time, and the creativity of the cruise lines in developing new, attractive ships and shipboard attractions.

I will discuss this topic by forecasting shipbuilding for the next two years, then describing the really fun stuff: the new attractions that are coming on line in the cruise fleet.

Shipbuilding forecast

Positive demographics and economics mean more shipbuilding, and the shipyards are working overtime to fill the demand. After a slow year in 2005, when only three new ships with a total of 274,000 gross tons entered cruise service, 2006 will see six ships enter the market with a combined 656,000 gross tons. In 2007, eight ships totaling 856,000 tons are scheduled to enter service. Thus, new “product” will almost triple in three years.

The latest anticipated ship construction schedule is shown in the chart.

The biggest cruise ship in the world today is Cunard’s luxurious, billion-dollar Queen Mary 2 at 150,000 tons. But the Queen will have to give up her crown in May 2006 when Royal Caribbean Lines’ enormous, 160,000-ton Freedom of the Seas takes to the waves.

Many analysts expected Carnival Cruise Lines (which owns Cunard) to continue the “space race” competition and try to top Royal Caribbean’s ship by building an even larger one. But apparently the poor dollar-to-euro exchange rate means that the ever-cost-conscious Carnival will not contract for any more huge vessels to be built in Europe until the exchange rate is more favorable.

Cruise ship building continues to be dominated by four countries and companies: Italy’s Fincantieri, with 34% market share; Finland’s Kvaerner Masa, with 20%, and Germany’s Meyer Werft and France’s Atlantic Container, each with 15%.

Japan made a bid to change that when in 2004 Mitsubishi Heavy Industries delivered the Diamond Princess and Sapphire Princess to Princess Cruises. Both ships were quite large, at 116,000 tons each, and reportedly both are high-quality, well-received vessels. Japan had tried unsuccessfully in the early 1990s to enter the market and is now trying again. It is unclear, however, if Japan will be able to break the dominance of the top market leaders in construction.

Another potential entrant in cruise ship construction is South Korea. Samsung Heavy Industries, Hyundai Heavy Industries and Daewoo Shipbuilding & Marine Engineering are preparing to battle the incumbent European shipyards. The attractions are clear: constructing an oil tanker yields the builder only about $800 per ton, while a complex, 110,000-ton cruise ship brings the builder more than $4,000 per ton, or about $450 million (!) as the total payment for the ship. But the risks are high and could include massive debt burdens, cost overruns and subsequent loss of shareholder value.

Attractions for passengers

Cruise lines have been competing against each other technologically to attract passengers since Samuel Cunard installed the first toilets at sea in 1870. Recent innovations which will likely spread through the industry over time include the following:

• The first and only planetarium at sea, available now on the Queen Mary 2.

• Tie-ins with shoreside circuses. For example, Celebrity Cruises will feature shows in their ships’ theaters put on by Cirque du Soleil, the famous French-Canadian circus troupe.

• 100% bow-to-stern WiFi Internet access, now on Carnival Valor and Carnival Liberty.

• Acupuncture at sea, available on five ships of Celebrity Cruises

• Cruise line proprietary wine labels, now available only with luxurious Crystal Cruises.

• Prereserving shore excursions via website up to a year in advance, now available also with Crystal Cruises.

• Providing kids on board with a reduced-scale replica of the ship’s bridge for them to play in, now available on Disney Magic. This replica has LCD screen “windows” which allow the children to see exactly what the captain of the ship sees.

• Private islands owned by the cruise lines and used as a one-day beach destination. These are now available on several lines. At Disney’s Castaway Cay, a 40,000-square-foot saltwater natural pool is available for swimming and snorkeling with stingrays.

• Unusual shore excursions and attractions. For example, on Norwegian Coastal Voyages, a dogsledding expedition for passengers across the frozen tundra ends with refreshments in a Lapp tent and inspecting a herd of reindeer.

• Tie-ins with famous chefs ashore. Perhaps the biggest name was landed by Oceania Cruises, which snagged renowned master chef Jacques Pepin (chef to three French heads of state) as Executive Culinary Director. Pepin oversees all cruise line menus and will sail aboard Oceania’s Regatta to Scandinavia and Russia in July 2006.

• Newspaper direct service, which provides guests with the daily versions of their favorite foreign newspaper directly via satellite each day, replacing the short printed summaries handed out by most lines. This service is now available with Radisson Seven Seas Cruises.

• Bungee trampolines, which send guests soaring into the air, now available on Royal Caribbean’s Enchantment of the Seas. Also rock climbing walls and ice skating rinks, available on many Royal Caribbean vessels.

• The Flow Rider, a wave-making machine that allows passengers to surfboard or bodyboard on a platform perched high over the stern. This system is now available on the largest class of ships operated by Royal Caribbean International.

• Open bars including wine, spirits and French champagne, with no tipping ever, now with ultraluxurious Seabourn Cruises for guests who sign up for a special package called “Signature Delights.”

• Butler service provided by butlers certified by the Guild of Professional English Butlers, the organization which trains butlers for the British royals. This service is now available with Silversea Cruises.

Happy cruising!

—The Cruising World is written by Lew Toulmin.