Changes in Caribbean Cruise Capacity

How cruise lines and travel agents are handling fluctuating cruise capacity and prices in the Caribbean

Next year, Royal Caribbean will increase capacity in the region. // © 2014 Royal Caribbean

Next year, Royal Caribbean will increase capacity in the region.

// © 2014 Royal Caribbean

The Caribbean remains the top cruise destination for North Americans — it is the closest warm-weather getaway for many U.S. travelers, and it is associated with fun in the sun, a dash of culture and a hefty dose of shopping. The region has also become a bargain hunter’s paradise, with fares down much further than the cruise lines would prefer.

The cruise industry attributes fare declines to a recent 12 percent increase in capacity, plus negative publicity that has mostly affected first-time cruisers and impacted three- and four-day cruises. The Feb. 12 edition of Bloomberg Businessweek published a story titled, “A Caribbean Crowded With Ships Means Discounts for Cruise-Goers,” describing the plight of the cruise lines with “a flood of new cabins to sell.”

Caribbean capacity will fall next year, although not to the degree that cruise lines had hoped. Robin Farley, an analyst with financial firm UBS, said that a 1 percent rise in capacity during the first quarter will be counteracted by a 3 percent drop the following three quarters.

Changes contributing to the fluctuation in stateroom totals include a lull in Norwegian Cruise Line’s aggressive newbuild program. The company will not have a delivery for 18-plus months between last February’s launch of Getaway and the debut of Escape, set for October 2015. Addtionally, Royal Caribbean International’s 5,400-passenger Allure, the largest cruise ship in the world, will leave the Caribbean next year to sail from May to October out of Barcelona, Spain. MSC Cruises has also rethought the announced year-round deployment of the 3,502-passenger Divina out of Miami. Instead, the ship will spend part of next year in Europe.

Royal Caribbean will see the highest overall capacity increase in 2015 at 7 percent and the highest Caribbean increase at 1.7 percent. The Caribbean growth comes from the 4,180-passenger Quantum of the Seas, which has special features that analysts believe will allow it to maintain premium pricing. The ship will sail in the region from November to May only, and this short stint is expected to keep prices up.

Cruise industry veteran Bob Dickinson, leaving his consultancy for Carnival Corporation in May, has for decades said that demand must grow in order for prices to grow, and that the first-time cruiser is of the highest importance. For some travel agents, low pricing has been a boon for bringing in first-timer cruisers and for up-selling onboard accommodations.

Lindsey Kunzer, team leader for Liberty Travel in Los Angeles, noted that promotions and deep discounts have helped make this booking season a good one.

“Though there may be less commission made per booking, there were more bookings brought in by these promotions,” Kunzer said.

Mark and Jason Jacobs, respectively CEO and president of TA4Life in North Potomac, Md., and Orange County, Calif., see that low rates and inexpensive airfare are helping expand the cruise market. The pair report that their agency is making a lot more revenue — though pricing is down, many clients are choosing higher categories of accommodations.

“The Caribbean was neglected for a while, as cruise lines pulled out and went elsewhere — mainly Europe — for higher per diems and pricing in euros,” Mark Jacobs said. “Now that airfares are prohibitive in Europe and cruise fares are lower, we’re seeing a real resurgence [in the Caribbean].”

Some agents have looked outside cruising for higher commissions in recent years. The Jacobs brothers began selling all-inclusive land-based vacations a few years ago, in addition to cruises.

“All-inclusives are skyrocketing, and we are getting commissions on air,” Jason Jacobs said. “We did see some loosening up on cruise line non-commissionables at the Vacation.com conference, and some indications that there may be more commissioning on shore excursions and air from the cruise lines.”

The brothers are also looking more to river cruising, where commissions are bigger.

If pricing slowly strengthens, agents and cruise lines will see whether or not the new cruisers attracted to discounted rates stick with cruising as a Caribbean vacation, as well as how the Caribbean stands up to competing cruise destinations.

Royal’s preview of Quantum draws praise

By Tom Stieghorst
Quantum of the SeasPAPENBURG, Germany — A little more than two months from completion, the Quantum of the Seas looms large over the flat north German countryside at the Meyer Werft shipyard here.

The powder-blue-and-white ship now has its basic structure but awaits all of its interior appointments plus a few special features such as the North Star observation arm, which has yet to be installed.

But the ship was complete enough last week for Royal Caribbean International to open it to a small group of reporters and about 50 travel agents for a sneak peek at the next big thing to sail the high seas.

Royal officials are increasingly confident that in the Quantum, they have a ship that will give the groundbreaking Oasis-class vessels, which the line introduced in 2009, a run for their money.

“I think you’re going to have two reactions,” Royal Caribbean Cruises Ltd. Chairman and CEO Richard Fain told agents a day before the three-hour tour of the 167,800-ton work in progress. “You’re going to think the ship is magnificent, and you’re going to say, ‘It will never be done on time.'”

In fact, more than one agent agreed with Fain’s assertion. Michael Detrick, managing director for Adelman Travel in St. Louis, said he had expected interior work to be further advanced and the ship to look less like a construction site.

The guts of the Quantum at this point are still raw insulation, naked steel, unfinished carpet and open pipe and cable runs. But several areas were finished early, including a few cabins, to give visitors a sense of the final product.

Detrick said one of his favorite features on the ship are the interior cabins, which offer floor-to-ceiling electronic views of the ocean. “The virtual balcony cabins are phenomenal,” he said.

In an interview, Fain agreed, saying they were one of the innovations he’s most pleased with. (Read more with Fain, In the Hot Seat.)

“They just work,” he said.

Quantum of the Seas interior cabinAgents had mostly praise and only a few reservations after traipsing through the Quantum in hard hats and boots while Fain described some of the vessel’s signature elements to them.

“It was a very impressive reveal,” said John Lovell, president of Vacation.com. “I love all the technology. It’s really going to appeal to young people, especially the millennials that we’re all trying to attract.”

Atop the ship are two novelties that depend on view: the Ripcord by iFly skydiving machine and the North Star observation gondola. Sandwiched in between is the multipurpose SeaPlex, an indoor activities hub for everything from bumper cars to basketball.

“That’s going to be a home run,” Lovell predicted.

Others agreed.

“I see it as a space where parents and kids will come to play together,” said Alex Sharpe, president of Signature Travel Network and a father of three.

Sharpe said the Quantum will buttress Royal Caribbean’s reputation as the leader in innovation and deliver great value for the money.

“It’s clear why the big Royal ships get the premiums they do,” he said.

Sharpe said he’s concerned that some of the features will be so popular that Royal might not be able to handle all the demand. The SeaPlex, for instance, will be catnip for meetings and incentive groups, he predicted.

Fain said his team was confident that everyone who wants to try something will be able to do so over the course of a seven-night cruise, although it might be harder to squeeze everyone in on short introductory cruises.

In admissions to the North Star, for example, attendants will give first preference to those who haven’t done it, Fain said.

A significant change with the introduction of the Quantum will be the elimination of the main dining room in favor of four smaller, themed restaurants, each seating about 430 diners. A fifth complimentary restaurant with 128 seats will be reserved for suite guests.

RCCL Chairman and CEO Richard Fain“I’m very impressed with Dynamic Dining,” said Uf Tukel, co-president of WMPH Vacations in Delray Beach, Fla. “Having those different themed restaurants, those are going to be stunning to look at.”

Noting that dining at all five restaurants will be included in the cruise fare, he said, “Typically, they’re the kind of experience that might cost more.”

Although far from completed, the restaurants had certain features already in place, such as a striking pair of louvered lenticular screens that display photos of regional America in the American Icon Grill.

Food and beverage director Cornelius Gallagher also teased some of the more exotic dishes, including one at the experiential Wonderland restaurant that involves chocolate chili foam cold-fried in liquid nitrogen. When diners eat it, smoke comes out of their noses, Gallagher said.

The tour concluded with a preview of Two70, a three-story aft room that will showcase an innovative 3-D projection system and a sextet of 100-inch, robot-controlled video screens.

“The Two70 is just ridiculous — tech-wise, art-wise, functionality-wise,” said Andy Albright, president of National Agent’s Alliance in Burlington, N.C., a life insurer that buys a large volume of incentive cruises. “It’s unbelievable what they’re going to get out of that room.”

Paul Largay of Largay Travel in Waterbury, Conn., said the homeporting of the Quantum and its sister ship the Anthem of the Seas in New York, combined with some of the new check-in technology Royal has developed, will make them very convenient for his customers.

“That’s a huge attraction just because of the logistical considerations,” he said.

Largay said the various uses of technology on the ship were very impressive. “I think the general public is going to love that,” he said. “They’re going to wonder where it has been all their lives.”

Of the ship overall, Largay said, “I think it is going to be a new standard.”

Meyer Werft: steel cut for the third Quantum cruise ship “Ovation of the Seas”

Shortly before the completion of the new Quantum of the Seas today there are another milestone for Royal Caribbean International: the steel section and thus the start of construction of the third cruise ship the new Quantum-class. 

The Smartship named Ovation of the Seas. The completion at the Meyer Werft shipyard in Papenburg is planned for autumn 2016.

Photo: Royal Caribbean International

The ships of the new Quantum class perform other groundbreaking innovations at sea a (maiden voyage Quantum of the Seas November 2014 from Cape Liberty, New Jersey, maiden voyage Anthem of the Seas in April 2015 from Southampton). The Quantum class of ship boasts a number of new additions; skydiving simulator “Ripcord by iFly’, the 90-meter-high swinging arm” North Star “, the largest indoor sports and entertainment complex at sea” SeaPlex “with bumper cars, roller-skating and much more, as well as the biggest and most versatile cabins.

The cruise ships each include 18 decks and a tonnage of 168,666 GT. With 2,090 cabins they provide space for 4,180 guests at double occupancy.