Let’s travel together.

This cruise company just ordered 8 new ships

8


Despite a recent surge in cruise popularity, the number of new cruise ships under construction is set to taper off after 2024. However, one company plans to keep building them and has indicated lines will likely follow suit.

Norwegian Cruise Line Holdings — which operates Norwegian Cruise Line, Regent Seven Seas Cruises and Oceania Cruises — has placed an order for eight new vessels across its three brands, all scheduled to begin sailing between 2026 and 2036. The ships will be part of brand-new ship classes for each of their respective lines. The ships will be built by the Fincantieri shipyard in Monfalcone, Italy.

For more cruise guides, news and tips, sign up for TPG’s cruise newsletter.

A competitive advantage

ERICA SILVERSTEIN/THE POINTS GUY

During a special call to announce the new ships, NCLH executives said they placed the orders early because it gives them plenty of time to plan and because they believe other cruise companies are also considering new ships.

“We see the future, we think this is the right strategic direction to go in, the spots are available, and obviously, we want to secure them before the competition does,” Harry Sommer, president and CEO of NCLH, said during the call. “We certainly believe that the competitive set will be ordering ships as well.”

“Our friends at the other four companies that are regularly ordering ships, they are, to the best of our knowledge, all in advanced talks with shipyards to get ships,” Sommer said.

He expressed the importance of being at “the front of the line” to provide the advantage of more time to design a quality product for cruise guests.

“There are only four shipyards in the world that can build ships of any consequential size,” Mark Kempa, NCLH’s executive vice president and chief financial officer, said. “As the industry continues to build, we have to be more strategic in nature and make sure we have the opportunity to build. It also gives us the time and ability to really design something that is new and innovative for the brand.”

Larger ships mean larger profits — and more expenses

ASHLEY KOSCIOLEK/THE POINTS GUY

Norwegian Cruise Line will see four new ships, set to debut in 2030, 2032, 2034 and 2036. Each will carry about 5,000 passengers, making them the largest vessels in the line’s fleet by nearly 20%. Details about onboard features have not yet been released. However, Sommer said the vessels will combine the best offerings from the line’s Breakaway and Prima Class ships.

Daily Newsletter

Reward your inbox with the TPG Daily newsletter

Join over 700,000 readers for breaking news, in-depth guides and exclusive deals from TPG’s experts

Ship sizes will also increase for upscale lines Regent and Oceania, which will see two new ships each. Regent will welcome two 850-passenger vessels in 2026 and 2029. Oceania will add two ships that can carry around 1,450 cruisers in 2027 and 2029. Oceania will continue to focus on serving excellent food, while Regent will focus on a higher level of luxury and even more onboard space per passenger.

The reason for NCLH’s increase in ship sizes is simple: The larger the ship, the more cabin types it can offer and the more revenue it will generate.

“New ships always garner a premium,” Kempa said. “A lot of it is dependent upon … the premium cabin mix. As the ships get larger and technology improves, we are able to have a better overall cabin mix on each of the new vessels.”

With larger ships also come larger costs, especially with the increase in the price of raw materials. Executives aren’t worried, though; they cited being operationally strategic and optimistic that cruisers will continue to shell out for extras when they sail.

“It’s not just about the cost of the ship; it’s also about how we’re operating it,” Kempa said. “Yes, the cost of steel is more, but we can build the ship at a better cost in terms of value engineering, not necessarily having everything as fancy as maybe it needs to be but putting the value into the ship where it matters — where the customer is willing to pay and what the customer values.”

Sommer shared the company’s positivity about American consumers. “They value what we offer,” Sommer said. “Our product is made to suit their needs and tastes, and they spend a lot of money on board the ships.”

Norwegian Cruise Line’s next decade in ships

NORWEGIAN CRUISE LINE

Presently, Norwegian Cruise Line sails 19 ships. Nearly half of them — Norwegian Pearl, Norwegian Jade, Norwegian Jewel, Pride of America, Norwegian Dawn, Norwegian Star, Norwegian Sun, Norwegian Sky and Norwegian Spirit — will reach their 30th year in service within the decade it will take to debut the four newly ordered NCL vessels.

It may be easy to assume NCLH is simply looking ahead to what it might need in 10 years when several of its current vessels will be what is considered old for cruise ships. However, the company’s executives said there are no current plans for vessels to leave the fleet. In fact, Kempa noted that they expect their vessels to have an operating life of up to 40 years.

“We’re fortunate in the fact that we have a very young fleet, especially for the Norwegian brand,” Kempa said. “As our fleets continue to age, we invest in them in a rational, disciplined manner to make sure that they stay relevant. As they age down the road, we will look at opportunities for redeploying those vessels to either other markets or other alternative players throughout the globe, but we have no near-term plans for any sort of disposals or any sort of retirements on that front.”

Sommer shared his optimism about the path ahead. “We believe we are very well poised for continued growth in the next decade and beyond,” he said.

Private island plans

XABITOVAR/GETTY IMAGES

In addition to building new ships, NCLH announced a $150 million plan to add a two-ship pier at Great Stirrup Cay, one of two private island destinations it operates. Construction is slated to begin this summer, with an estimated completion date of late 2025. The new facility would accommodate ships as large as NCL’s aforementioned 5,000-passenger vessels.

Because the port doesn’t currently have a pier, passengers must ferry ashore via tender boats. As such, calls on Great Stirrup Cay are often weather-dependent, and they’re subject to cancellation if the wind is too strong or the waves too rough.

“We already have quite a bit built out — zip lines, cabanas, spa, private beach, all types of water sport activities … people really enjoy that,” Sommer shared. “I think when they have the confidence that we’re going to go there 100% of the time, we will see a further improvement in the incremental yields that we get today.”

Sommer said there are no immediate plans to add amenities to Great Stirrup Cay. Instead, the focus is on building the docking facilities, which are expected to increase the number of visitors to the island by 50% in the first year (from 400,000 passengers annually to 600,000). However, when additions are made, they will likely be amenities or experiences that will cost visitors extra.

“I don’t think we’re looking at substantial investments over the next few years,” Sommer said. “I think there are things we can do that are very cost-effective and would be supported by guests paying additional money for them.”

Have cruise questions? TPG has answers:



Source link

Leave A Reply

Your email address will not be published.