Why Isn't HAL Adding New Ships to Their Fleet

[Mary229]

28 minutes ago, Sir PMP said:

I missed 'pay'. Why does Viking doing so well and building more 900pax ships without a casino?

We will see what happens to Viking's model once they go public and have Wall Street bankers to please

[TRLD]

31 minutes ago, Sir PMP said:

I missed 'pay'. Why does Viking doing so well and building more 900pax ships without a casino?

With a  fare of around $500 per person per day for Vikings cheapest cabin quite a bit difference in fare structures. 

[terrydtx]

1 hour ago, Sir PMP said:

I missed 'pay'. Why does Viking doing so well and building more 900pax ships without a casino?

And they do not allow any passengers under 18 years old.

[Heidi13]

9 minutes ago, Sir PMP said:

I missed 'pay'. Why does Viking doing so well and building more 900pax ships without a casino?

 

The primary reason is that ship building and operating is way more complex than just newer and bigger is cheaper.

 

When considering crew costs, the economy of scale achieved by increasing pax counts only applies to the mandatory positions required for marine operations - Master, Chief Engineer, watchkeeping officers/ratings, doctor and a couple of the hotel management positions. When ships increased from 750 pax (350 crew) the percentage of the mandatory crew was much higher than on a 3,000 pax (1,100 crew). When ships increase from 3,000 pax, the percentage of crew savings from economy of scale become less, as the mandatory fixed positions are a significantly smaller percentage of the total crew. 

 

As ships increase in size, in addition to the mandatory watchkeeping officers they must add additional maintenance and safety, security, medical and environmental officers, in addition to the hotel and deck/engineering ratings. The Viking ships are of a size that requires only a few extra higher cost positions over the mandatory watchkeepers. Since Viking also use the older pax/crew ratio of 1:2 rather than the more common 1:3 of mainline cruise lines, their crew costs are already higher per pax.

 

Shipbuilding costs are also a significant variable. All Viking ships are virtually identical, noting the newer hydrogen powered vessels required an increase in both length and beam, but otherwise the designs are identical. If memory is correct, Viking's latest orders now have 20 confirmed ships, with 2 or 4 additional options. They also build 1 or 2 per year, so the shipyard costs are less.

 

Since the shipyard order books are a little on the light side at present, Viking recently brought forward some newbuilds, receiving improved pricing. Carnival isn't building much at present, so their slots in the future will be at higher cost.

 

Don't believe Carnival has purchased 20 ships of any class across their brands, so they incur additional design costs for each new class of vessel. Even when sharing a design across multiple brands, the interiors are changed to meet the requirements of that brand. This incurs additional costs over the Viking model.

 

Crew training - Viking trains crews on 1 class of vessel, so all crew can move freely between all vessels. On the Princess ships and I expect the same with HAL, the ship's Bridge is similar on all vessels, but when moving between different classes, some familiarisation time is required. This adds additional crew costs and make crew utilisation less efficient. Even when our son was a junior officer with Princess, on sailing on a new class of vessel, he received at least 2 - 3 days famil time before assuming his responsibilities.

 

The first Viking ship entered service in 2015, so the entire fleet is less than 10 yrs old, having the latest in technology. They have a highly efficient propulsion system, but in my experience, are significantly underpowered and have limited manoeuvring capabilities in stronger winds. Therefore, they will experience additional weather related cancellations over ships that have higher cost and more capable propulsion/manoeuvring systems.

 

Another significant cost saving for Viking is their shore based management structure. When starting ocean cruising, they did not have the shore based technical experience. Rather than recruiting those requirements inhouse, they sub-contracted the ship management to Wilhelmsen Ship Management. They provide all the required technical services including Masters and Officers. This allows Viking to focus on their core business - the hotel operation and sales.  

 

Similar to HAL, Viking have a specific market they target, which at present is very successful.

 

 

[aliaschief]

Sailing Azamara has been like sailing Prisendam on steroids. Seven Hundred capacity and no casino. Smartest move we have done is branching out and trying new lines.

We loved our 500 days on Holland America and will probably cruise again. 

 

[cruiser man 60]

MSC who are privately owned are building a new cruise ship every year, we’ve just been on the World Europa c6000 passengers but it is a huge ship. They seem to fill every ship they launch with correct offerings and prices. The Yacht club is absolutely fantastic and probably the best premium offering amongst the standard lines and far superior to Haven on NCL.

They also have the largest cargo fleet worldwide and own many ports in Europe so obviously very successful.

[CruiserBruce]

15 hours ago, Wayward Son said:

 

Yes, and I believe many will. That's kinda the point. Smaller ships, at a profitable price point. I believe the super-duper-mega ships are going to find themselves in a position that they almost have to give away their cabins -- at a loss.

 

 

That's what many people say...talk is cheap. The people who have to balance the cruise line checkbook say differently. 

[CruiserBruce]

1 hour ago, cruiser man 60 said:

MSC who are privately owned are building a new cruise ship every year, we’ve just been on the World Europa c6000 passengers but it is a huge ship. They seem to fill every ship they launch with correct offerings and prices. The Yacht club is absolutely fantastic and probably the best premium offering amongst the standard lines and far superior to Haven on NCL.

They also have the largest cargo fleet worldwide and own many ports in Europe so obviously very successful.

The cargo operation kept them financially stable during Covid. CCL and HAL didn't have that benefit. 

[TRLD]

Went through and looked up some ship construction costs per 2 berth passenger capacity going from largest to smallest

 

Wonder of the Seas   235,000

Carnival Celebration 174,000

MSC World Europa   238,000

Celebrity Beyond   273,000

Norwegian Prima 274,000

Oceania Allure  550,000

Viking (2nd build group) 430,000

Regent 7 Seas Splendor 800,000

 

Certainly a jump between the 3000 and larger vs the much smaller premium ships.  There is some differences in build dates which impact the number to some degree but it does give a good representation in the capital costs per berth.

 

Viking has been able to build at a better cost profile then its premium competition, for reasons mentioned above.  Using the same design, ordering in large batches.  Though its 2nd group cost per berth was quite a bit higher then its pre covid price for its first batch.  Though Viking has not released its exact numbers prior to its IPO.  The first group was estimated to be in the mid 350,000 range.

 

 

 

[TRLD]

44 minutes ago, TRLD said:

Went through and looked up some ship construction costs per 2 berth passenger capacity going from largest to smallest

 

Wonder of the Seas   235,000

Carnival Celebration 174,000

MSC World Europa   238,000

Celebrity Beyond   273,000

Norwegian Prima 274,000

Oceania Allure  550,000

Viking (2nd build group) 430,000

Regent 7 Seas Splendor 800,000

 

Certainly a jump between the 3000 and larger vs the much smaller premium ships.  There is some differences in build dates which impact the number to some degree but it does give a good representation in the capital costs per berth.

 

Viking has been able to build at a better cost profile then its premium competition, for reasons mentioned above.  Using the same design, ordering in large batches.  Though its 2nd group cost per berth was quite a bit higher then its pre covid price for its first batch.  Though Viking has not released its exact numbers prior to its IPO.  The first group was estimated to be in the mid 350,000 range.

 

 

 

From what I can find HAL built the Rotterdam for a very good price of 180,000 per passenger at a 2 berth per cabin rate (480 million for the 2680 capacity) 

 

The older Eurodam at its 2100 capacity cost about 214,000 per passenger at 2 berths per cabin, even though it was built several years earlier.

[Wayward Son]

5 hours ago, CruiserBruce said:

That's what many people say...talk is cheap. The people who have to balance the cruise line checkbook say differently. 

 

You may have missed that I said "at a profitable price point".  Smaller ships have less cabins to sell to make that happen. The checkbook will balance just fine. The big ships have far more cabins to sell to turn a profit and will have a more difficult time.

 

Regardless, any speculation on the issue will resolve itself. Sooner rather than later, I expect. As new cruisers become seasoned cruisers, ports start rejecting the monstrosity ships, and the price for a family gets too high (so they choose land over sea), the smaller ships will win in the end.

 

[ontheweb]

20 minutes ago, Wayward Son said:

 

You may have missed that I said "at a profitable price point".  Smaller ships have less cabins to sell to make that happen. The checkbook will balance just fine. The big ships have far more cabins to sell to turn a profit and will have a more difficult time.

 

Regardless, any speculation on the issue will resolve itself. Sooner rather than later, I expect. As new cruisers become seasoned cruisers, ports start rejecting the monstrosity ships, and the price for a family gets too high (so they choose land over sea), the smaller ships will win in the end.

 

Let us hope so, but at the moment the trend is the other way.

[TRLD]

1 hour ago, Wayward Son said:

 

You may have missed that I said "at a profitable price point".  Smaller ships have less cabins to sell to make that happen. The checkbook will balance just fine. The big ships have far more cabins to sell to turn a profit and will have a more difficult time.

 

Regardless, any speculation on the issue will resolve itself. Sooner rather than later, I expect. As new cruisers become seasoned cruisers, ports start rejecting the monstrosity ships, and the price for a family gets too high (so they choose land over sea), the smaller ships will win in the end.

 

To make a profit each cabin has to be sold at a much higher price. For example the lowest price cabin on HAL  can be gotten in the $100 per person per day. The lowest price cabin on Oceania is around $250 per person per day, with the new simply more fare actually more than $300 per person per day.  With their smaller ship size they need a substantially higher average fare structure than HAL or even larger ship lines. Though some of those differences are due to more inclusions.

 

You are also missing that on the really large ships are all on family focused lines that also have more room for 3/4 person occupancy before the ship reaches max compared to 2 per cabin normal capacity. Such ships often sail as 110% and higher occupancy compared to the 2 berth capacity. 

 

Adult focused lines such as HAL sail at a lower percentage.

 

There is also a reason the large ship lines are investing in private ports. The ship is the destination.

[TRLD]

1 hour ago, ontheweb said:

Let us hope so, but at the moment the trend is the other way.

Small ship prices continue to increase.

 

Large ships keep prices lower, but are more focused on shorter itineraries with a cruise being as much that the ship is the destination 

 

HAL is fitting somewhat in the middle with less than 3000 ship sizes and longer itineraries, with relatively low fares.  Economics would not support building sub 2000 size ships without a change in fair structure  Even now HAL needs the Caribbean, European  and Alaska cruises were it directly competes with larger ships to introduce more people to the line.

 

Pretty much everyone would like to sail on a 700 person ship for a 5000 ship fare. Too bad it is not going to happen.

Edited June 4 by TRLD

[Wayward Son]

2 hours ago, ontheweb said:

Let us hope so, but at the moment the trend is the other way.

 

Correct. The point being, "at the moment".

 

 

1 hour ago, TRLD said:

 

You are also missing that on the really large ships are all on family focused lines that also have more room for 3/4 person occupancy before the ship reaches max compared to 2 per cabin normal capacity. Such ships often sail as 110% and higher occupancy compared to the 2 berth capacity. 

 

I'm not missing that at all. But there is a reason NCL is building new 3500 passenger ships, while still actively soliciting families -- all the cool stuff the kids want is an upcharge.

 

NCL is also pushing The Haven, at a substantial premium, and are the king of courting solo cruisers, with private lounges and prices less than the standard double-occupancy rate (although still at a significant premium). 

 

That is the future, in my very not-a-professional opinion.

 

 

1 hour ago, TRLD said:

Large ships keep prices lower,

 

 

Have you priced Royal's super-duper-mega ships lately? Outrageous. It can't last forever. And once they start dropping prices, they also start losing profit.

 

 

[TRLD]

2 hours ago, Wayward Son said:

 

Correct. The point being, "at the moment".

 

 

 

I'm not missing that at all. But there is a reason NCL is building new 3500 passenger ships, while still actively soliciting families -- all the cool stuff the kids want is an upcharge.

 

NCL is also pushing The Haven, at a substantial premium, and are the king of courting solo cruisers, with private lounges and prices less than the standard double-occupancy rate (although still at a significant premium). 

 

That is the future, in my very not-a-professional opinion.

 

 

 

Have you priced Royal's super-duper-mega ships lately? Outrageous. It can't last forever. And once they start dropping prices, they also start losing profit.

 

 

While they did that with the Prima class  NCL latest orders are for 5000 passenger ships.

 

RCL prices that high because they can. Which means that there is a lot of demand in the NA family facing market for those ships and the ship is the destination cruise vacation.

 

 The large size and the pricing means pretty good profits with the flexibility to lower price if they need to and still be profitable.

[Heidi13]

15 hours ago, Wayward Son said:

 

You may have missed that I said "at a profitable price point".  Smaller ships have less cabins to sell to make that happen. The checkbook will balance just fine. The big ships have far more cabins to sell to turn a profit and will have a more difficult time.

 

Regardless, any speculation on the issue will resolve itself. Sooner rather than later, I expect. As new cruisers become seasoned cruisers, ports start rejecting the monstrosity ships, and the price for a family gets too high (so they choose land over sea), the smaller ships will win in the end.

 

 

The cruise industry has evolved significantly in the 50 years since I went to sea, and I expect it will continue to evolve. Provided the market is available, and I don't see it disappearing in the short/medium term, mega ships will continue to evolve. 

 

I anticipate mega ships will continue as destination resorts, visiting only 1 or 2 ports on a 7-day cruise, with the cruise line private islands/ports being one of them. Standards will be further eroded to maintain a price point.

 

Smaller ships will continue to evolve, providing more traditional cruising, visiting multiple ports and more remote regions of the World.

[Heidi13]

12 hours ago, Wayward Son said:

 

I'm not missing that at all. But there is a reason NCL is building new 3500 passenger ships, while still actively soliciting families -- all the cool stuff the kids want is an upcharge.

 

 

 

Last I read is once they complete the current class of about 3,500 pax vessels in 2027/28, Norwegian has orders for 5,000 pax vessels starting about 2030

[chengkp75]

I've found this whole thread amusing.  First, everyone complains about the cutbacks that HAL has made in order to repay the debt load incurred by covid, but then folks ask why HAL won't invest hundreds of millions of dollars in a new ship.  That level of investment puts even more stress on their profit margin, at a time when they can't afford it.

[Wayward Son]

12 hours ago, TRLD said:

While they did that with the Prima class  NCL latest orders are for 5000 passenger ships.

 

2 hours ago, Heidi13 said:

Last I read is once they complete the current class of about 3,500 pax vessels in 2027/28, Norwegian has orders for 5,000 pax vessels starting about 2030

 

*sigh*  One more reason to move on from NCL. If HAL goes in that direction as well, then I better start seriously saving my pennies. It will be Oceania for us.

 

[jlawrence01]

2 hours ago, chengkp75 said:

I've found this whole thread amusing.  First, everyone complains about the cutbacks that HAL has made in order to repay the debt load incurred by covid, but then folks ask why HAL won't invest hundreds of millions of dollars in a new ship.  That level of investment puts even more stress on their profit margin, at a time when they can't afford it.

 

What no one wants to talk about these days is that we are on the brink of an economic recession that will rival 1981, 1991 and 2008.  People are stretched with just meeting their monthly obligations much less having a lot of discretionary income 

 

In the past month, I have seen Celebrity drop the rate on my 7 day Alaskan cruise from $1300 to $600 just a few days after the final payments were due.  They probably had more cancellations than expected.

 

Also in the past month, the price of an inside cabin on the Icon of the Seas for a December 8 7 day sailing out of Miami has dropped from $2900 to $1650.

 

I do not think that this is a great time to bring on a lot of new ships.

[ontheweb]

1 hour ago, jlawrence01 said:

 

What no one wants to talk about these days is that we are on the brink of an economic recession that will rival 1981, 1991 and 2008.  People are stretched with just meeting their monthly obligations much less having a lot of discretionary income 

 

In the past month, I have seen Celebrity drop the rate on my 7 day Alaskan cruise from $1300 to $600 just a few days after the final payments were due.  They probably had more cancellations than expected.

 

Also in the past month, the price of an inside cabin on the Icon of the Seas for a December 8 7 day sailing out of Miami has dropped from $2900 to $1650.

 

I do not think that this is a great time to bring on a lot of new ships.

"We are on the brink of an economic recession"---I think I have been hearing that for at least the last 3 years, and it still has not happened.

[TRLD]

1 hour ago, jlawrence01 said:

 

What no one wants to talk about these days is that we are on the brink of an economic recession that will rival 1981, 1991 and 2008.  People are stretched with just meeting their monthly obligations much less having a lot of discretionary income 

 

In the past month, I have seen Celebrity drop the rate on my 7 day Alaskan cruise from $1300 to $600 just a few days after the final payments were due.  They probably had more cancellations than expected.

 

Also in the past month, the price of an inside cabin on the Icon of the Seas for a December 8 7 day sailing out of Miami has dropped from $2900 to $1650.

 

I do not think that this is a great time to bring on a lot of new ships.

A recession probably, all business cycles go through that. Though employment is still near record highs, incomes are also near record highs, though their are some signs that consumers are getting stretched.

 

In this case not that much building going on compared to pre covid. Mostly previous orders that were made before Covid getting completed.  CCL owned lines have not really placed any new orders as they are paying down debt.

 

NCL has placed some new orders pending financing mostly to hold slots.

 

Expect CCL to start placing orders in 2026 if current trends continue. 

 

Note CCL has just announced that they are shutting down P&O Australia in 2025 in order to roll the ships in Carnival due to high demand for Carnival.

 

Still expecting them to shift a ship or 2 from Aida to HAL. If not then based upon past trends, order history, and age of fleet a new ship order for HAL should be in 2025 or 2026.

[esimon]

New ships cost money. I don’t wanna pay more for my cruises. I don’t want bigger ships. New ships mean bigger. I am quite happy with Holland just the way it is. But thanks for asking.

[Gail & Marty sailing away]

18 minutes ago, esimon said:

New ships cost money. I don’t wanna pay more for my cruises. I don’t want bigger ships. New ships mean bigger. I am quite happy with Holland just the way it is. But thanks for asking.

I am happy with Holland American as well.