The cruise industry is booming and has grown from a $25-billion annual business to an estimated $135 billion in the last decade. One of the biggest challenges is keeping afloat ships that have gone down for repairs or are being converted into floating casinos. How do they stay on top of their game?
The water pressure of the sea versus a ship’s mass creates buoyancy. Saltwater cannot become less spacious than air, which can be compressed and thus pushed around by an external force. Water has no inherent volume changes when compacted at any one point. Its molecules are securely bound together throughout all areas rather than floating freely between them like airborne particles that rely on exterior forces for their stability.
In 2009, Carnival Corporation reported record profits — over $1.2 billion. That was thanks to increased attendance at cruises — Carnival says sales were up 10 percent over 2008. Carnival sold more than 2 million tickets in 2010 alone. And while more people may take cruises, there aren’t necessarily any bigger ships.
In January 2011, Royal Caribbean unveiled what would become the world’s largest passenger ship when it debuted Oasis of the Seas. The vessel features six decks with room for 5,673 guests and offers high-end amenities such as two swimming pools, five dining venues, three whirlpools, and even onboard shopping. It can hold 985 cars on 15 acres of land.
That kind of growth requires big money, which means cruising isn’t cheap. According to Business Insider, a family of four could expect to spend about $20,000 per week aboard the most popular cruises. Even though prices have dropped overall, those who want to take advantage of deals like “value” packages often pay the total price anyway.
For instance, during the Memorial Day weekend in May 2012, American Airlines offered discounted fares to passengers willing to book flights directly through them rather than using travel agents. While this might seem advantageous to travelers, many airlines don’t offer good enough service to justify not having someone else handle your reservations.
If you’re looking to save money but still get all the perks of booking online, research each airline thoroughly before booking anything.
These steep costs mean cruise lines must keep revenue flowing to remain profitable and competitive. They’ve expanded beyond ocean liners and built smaller boats that dock along coastlines instead of traveling across oceans.
However, another challenge facing the industry today is managing aging vessels that require extensive maintenance work. Some businesses have found creative ways around this problem (see next section).
Cruise operators are eager to adopt one trend to turn their larger ships into hotel complexes. This allows them to expand services without needing to purchase new ships. The first step toward this goal began with Carnival Cruise Lines’ acquisition of World Portfolio Inc., owner of several luxury hotels in Florida.
In August 2007, Carnival purchased PGA National Resort & Spa in Palm Beach Gardens, Fla., adding 639 rooms to its fleet. Then in November 2008, Carnival acquired the 461-room Four Seasons Hotel Miami, which had opened just nine months earlier.
The company also owns the 400-room DoubleTree Guest Suites Bay Harbor Island in Sarasota, Fla. Both properties added 1,800 guestrooms to Carnival’s fleet.
This strategy has proven successful for other companies too. Holland America Line purchased the Ritz Carlton Residences Amsterdam in April 2005, converting part of its oldest cruise ship into a posh hotel. Since then, HAN has expanded its concept further, opening similar resorts onboard sister ships Azamara Journey, SeaDream II, and Nieuw Vergulde Zee.
These newer ships feature restaurants, spas, gyms, and fitness centers explicitly designed for tourists, plus dozens of spacious suites with balconies overlooking the sea. HAN built a special drydock equipped with hydraulic lifts capable of lifting massive pieces of steel off the hulls to accommodate these needs.
While turning large cruise ships into hotels seems appealing, critics point out that such conversions are expensive undertakings that only benefit the owners of the original vessels. They say that if a cruise line wants to compete effectively against competitors like Norwegian Cruise Lines and Cunard Line, whose ships boast better cabins and facilities, they must build more prominent, higher-quality vessels.
Moreover, critics believe that since ports are limited worldwide, putting additional capacity in port cities doesn’t help boost revenues elsewhere. As a result, many experts advise against buying a ship solely for conversion purposes. Instead, choose a boat based on where you plan to sail and buy a brand-new one if necessary.
But wait! What if you own a ship now but want to sell it later? Don’t worry; there’s still hope. Read on.
Casinos On Wheels
After acquiring MGM Mirage in March 2006, Carnival set its sights on transforming its older ships into megaresorts filled with slot machines, poker tables, and bingo games. If you prefer gambling to sightseeing, cruise operators know you’ll flock to places where you can place your bets. So why stop at Atlantic City when you can put on designer duds, hop in a limo, and hit the Las Vegas Strip?
Since the 21st century, Carnival has turned 11 old cruise ships into Fun Ships floating casinos. Carnival transforms one of its former ocean liners each year into a giant casino complete with roulette wheels, blackjack dealers, craps tables, card tables, and numerous gaming areas.
Carnival partnered with Boyd Gaming Corp. to convert 14 of its newest ships into floating casinos. The partnership resulted in constructing of two mega-ships, Golden Princess and Liberty of the Seas, featuring state-of-the-art gaming options and entertainment venues. Both ships carry 3,400 guests and cost approximately $3.5 billion to construct.
Carnival wasn’t the only cruise operator interested in creating floating casinos. Regent Seven Seas Cruises introduced its Crown Jewel class in October 2004, followed by Celebrity Millennium in September 2006. Other significant players include Royal Caribbean, Seabourn, and Crystal.
Not content to rest on its laurels, Carnival plans on introducing yet another type of floating resort sometime soon.
Although the majority of casino operations occur onshore, there are exceptions. Take Belize, for example. Here, the government legalized offshore gambling in 1994 after realizing the economic benefits of tourism. Thousands of visitors gamble away millions of dollars yearly via cruise ships plying near the country’s Barrier Reef.
Most gamblers play cards, although slots have also gained popularity among locals. Many cruise lines in Belize advertise low taxes and easy access to duty-free goods.
Keeping Up With The Joneses
Another reason cruise lines struggle to maintain profitability is that they tend to lag behind competitors in technology. This is especially true when compared to U.S.-based carriers. When Carnival retired its last aircraft carrier in 2003, the company became the second U.S. shipping magnate to go completely jetless. Ironically, Carnival didn’t replace the planes with helicopters; it replaced them with small prop-driven planes.
Carnival decided to ditch air conditioning amid increasing competition from foreign carriers that use Boeing 787 Dreamliners and Airbus 380 jumbo jets. Today, long-distance routes between North America and Europe are dominated by nonstop, technologically advanced flying experiences.
Meanwhile, Carnival operates an antiquated system consisting of propellers, rudders, and sails that allow its ships to navigate rivers and lakes instead of oceans. Because of this outdated equipment, Carnival uses tugboats that tow its barges to the riverbank rather than tuggers that pull its sleek new cruise ships.
Even though Carnival has taken steps to improve efficiency, it faces stiff competition from European rivals who have adopted technological advances faster. For example, in June 2011, MSC launched M.S. Zenith, which boasts Wi-Fi connectivity throughout the cabin, power showers, flat-screen televisions in every stateroom, and a virtual reality theater.
Carnival’s Freedom-class ships boast individual climate control systems, water closets, showerheads, and video screens mounted beside toilets.
So what does the future look like for the cruise industry? We’d suggest sticking to well-maintained ships that come ready for action. Of course, you can always check out our article on the best timeshares available here on Earth!
You probably won’t find much chance to party aboard a modern-day cruise liner unless you encounter an extravaganza like the New Year’s Eve bash thrown onboard the 120,000-ton Song Dynasty in December 2011. Guests dressed as Santa Claus, elves, and snowmen paraded through the ship decked out in holiday finery. At midnight, fireworks erupted above the crowd, lighting the sky with fireballs and sparklers.
It turns out that boomeranging between destinations isn’t just fun for kids. Some industries see it as a viable option for boosting their bottom line. In April 2013, Carnival announced it would begin marketing cruises that loop back around the same coastline. Called Boomerangs, these trips are meant to attract vacationing retirees and baby boomers.
Why would Carnival want to promote something so traditionally marketed toward younger generations? According to Carnival CEO Gerry McCargo, “Retirees represent 40% of total consumers, yet there is no direct product targeting them.”