Q – I greatly appreciate the tone of this site but my question is a bit more broad-based than many you deal with. I am involved in the investment market in England and was wondering how your team might respond to an inquiry regarding the growth potential of the cruise market (worldwide). Will new ships continue to be built and will they be profitable? Wondering what the cost of an average berth is, for instance, on a Carnival ship versus the new Ritz Carlton ships? Would appreciate any information you care to share in written form.
A – The first part of your question is a bit beyond our expertise. Despite that, we would be willing to fake it and prepare a lovely written report for you for a substantial consulting fee.
As to the remainder of your inquiry: We know, for an absolute fact, that the cruise industry will be growing to the tune of more than $50 billion in new ship orders taking us through 2025. Seatrade UMB in the UK is currently forecasting the construction of 84 new ships under contract with many more to come. Carnival’s per berth construction cost is estimated at between $200 and $225 thousand dollars per bed. The Ritz Carlton new ships will carry 298 guests at an estimated per berth cost of $705,000.Carnival’s new ship scheduled for delivery in 2020 is slated to accommodate 5,200 guests. This gives you a sense of the economies of scale within the industry achieved by more tonnage and more berths generating income. If these construction costs sound high, remember that they are “per berth” or per lower bed passenger so you have to double the figure to get the cost to construct each cabin. All other shipbuilding costs including public space is included when computing the per berth cost. Cruise ships of any size are an expensive risk investment and one of the key components is the ability of the product to generate on-board purchases that equal or exceed the actual cost to book a cruise. The all-inclusive, smaller ship luxury lines do not have that cost offset with few “extras” available for purchase on-board. Hope this little bit is helpful. In the years to come, we will be trying to incorporate more of the financial side of the industry into our coverage as it seems to be a topic of broad interest.