Cruise CEOs say ship renovations key to maximizing revenue

Cruise CEOs say ship renovations key to maximizing revenue

FORT LAUDERDALE — The cruise industry will
increasingly emphasize growth in revenue yields rather than the number of
cabins and ships it is adding, according to the CEOs of its top companies.

Four chief executives spoke together on a panel at the
annual Seatrade Cruise Global convention, held for the first time this year at
the Broward County Convention Center. 

“You’re going to see a more balanced approach to
building new ships,” said Frank Del Rio, CEO of Norwegian Cruise Line Holdings.
More dollars will flow toward maintaining the existing fleet at the highest
level so that higher prices can be supported fleetwide, he said.

“We have no choice,”
chimed in Arnold Donald, CEO of Carnival Corp. “The fastest we can grow is at about
6% a year, even with the largest ships. And there’s only so many
shipyards.”  

Donald said investors in any of the companies
represented on the panel would not be satisfied with a 6% return on investment.
So attention is turning to investing more in existing ships to bring up yields and
to introduce innovations that customers will pay extra for.

In sheer numbers,
Carnival’s fleet has already plateaued. Since mid-2011, Carnival Corp. has added
only one net ship to its 101-ship fleet, according to a presentation by Giora
Israel, Carnival’s senior vice president of global port and destination
development. But in that timeframe, it
has added 32,000 berths because bigger new ships are taking the place of
smaller old ones. 

Arnold pointed out that new ships on order are
increasingly split between China and other markets, which means growth from
North America could only be 2-3% a year if it had to depend solely on new
capacity.

On another topic, the CEO
panel agreed that cruises to Cuba, while of high interest, await approvals from
the Cuban government.  And they said the
infrastructure to support cruise tourism is lacking for anything larger than
mid-sized ships.

MSC Cruises, which is privately owned and
headquartered in Geneva, is currently the only major cruise company sailing in
Cuba. Pierfrancesco Vago, executive chairman of MSC Cruises, said that when its
2,150-passenger MSC Opera ship docks in Havana, the 275-meter ship (about 902
feet) overhangs the end of the pier by about 80 meters (about 262 feet).

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