Big-Ship Squeeze: Who Wins? Who Loses?

March 16, 2006
In "Patterns of Deployment," a Seatrade panel discussion that attempted to focus on the question of where will ships be sailing five years from now, another message came across much stronger: What happens when a 6,000-passenger ship docks in port? That's a question the panelists, who represented lines such as Princess, Holland America, Oceania, Royal Caribbean and Fred Olsen, wrestled with in front of a full house.

And it's a question they don't have five years to answer as Royal Caribbean's revolutionary plan to build a Genesis series of ships -- 220,000 tons, 6,000 passengers -- will no doubt impact the way itineraries are designed before that. Beyond Genesis, everybody is building bigger -- maybe not so big as Genesis, but still bigger.

Royal Caribbean's John Tercek, whose title is the somewhat vague "vice president of commercial development," presented a fascinating and articulate view of a future that was not just limited to his own cruise line. In 2015, he predicts, there will be four categories of ships: Very Big (4,000-plus passengers), Medium (2,000 - 4,000 and what we consider these days to be "very big"), Small (1,000 - 2,000) and Very Small (under 1,000).

The impact of these larger ships on the same ports of call that can barely handle high season rush hour at this point, is going to affect the way we all cruise, he noted. "This [larger and larger ships] has big implications," says Tercek. "Who wants to be in a port with a 6,000 passenger ship?"

Tercek discussed the concept of displacement cycles -- a strategy whose time has already come, and one we will only see more in the future. It's a way to describe the "trickle down" effect that the big ships have on the rest of them. For instance, when Freedom of the Seas launches in May, it will head to Miami to replace the ever-so-slightly smaller Explorer of the Seas. That ship will move to Europe -- the first Voyager-class ship ever to sail a regular season from Barcelona. In doing so, it will bump the still-smaller Splendour of the Seas out its regular summer home to Venice, where it will sail Eastern Mediterranean voyages. And on and on.

We'll see it with other lines, too. Holland America's Simon Douwes says that the line, which is beginning to emphasize exotic trips even more than it has in the past, will soon begin replacing smaller, older ships in these markets with Vista-class vessels; one noted example was Australia/New Zealand. While the middle-aged Statendam will return there next winter, look for 2008 to feature a bigger Holland America ship. Where Statendam goes? Nobody knows (or simply Douwes may not be telling) but we can bet it'll be even more exotic than Australia and New Zealand.

The bottom line? As ships get bigger they'll pretty much be limited to marquee ports, which Tercek lists as Nassau, St. Maarten, Barbados, San Juan, St. Thomas, Ocho Rios and Grand Cayman. The big ships need infrastructure and an inherent efficiency in these ports. As big ships dominate these places, expect smaller vessels (ranging from mid-size to boutique) to avoid them whenever possible by heading instead for ports such as -- and we'll continue the Caribbean analogy -- Tortola, St. Barth's, the Grenadines, and the U.S.V.I.'s St. John.

Other cruise lines will have to devise more clever strategies to differentiate themselves. The benefit, ultimately, is that there will be enough ships and enough people to fill them to sail to just about anywhere in the world.

Other points of interest in the discussion:

Congestion in ports is becoming a major problem for cruise lines, not to mention passengers. Grand Cayman in particular became a focal point of the discussion. Years ago, the Western Caribbean island maintained quality control by limiting calls to no more than three per day. After a hurricane that put a number of its resorts out of business seriously impacted tourist revenue, the tourism ministry opened the floodgates, so to speak, and retracted the minimum. Fred Olsen's Nigel Lingard admitted that he recently sailed on a Princess ship in the Western Caribbean and noted that his day in Grand Cayman "was an absolute nightmare. There were seven ships with about 15,000 passengers there and it was not a holiday experience." Indeed, other panelists agreed that there's a conundrum in places like this -- as well as St. Maarten, Cozumel (pre-hurricane) and St. Thomas. Passengers want to go to them, but complain afterward about congestion.

Overall trends in ship itineraries -- and Cruise Critic's 2006 predictions pretty much nailed this -- indicate that cruisers, particularly veterans, are looking for options beyond North America. Europe remains hot, and South America is growing in popularity as a warm winter destination. Central America is beginning to gain momentum as is the Australia/New Zealand region.

Smaller lines are looking to compete for attention not by ramping up their onboard offerings (it's a bit tough to fit in a rock climbing wall and an outdoor movie screen on ships that carry just 500 - 700 people) but by creating distinctive itineraries. Folks willing to shell out luxury fares -- and they tend to be more well-traveled and a bit more sophisticated than the norm -- want to experience a place in a unique manner rather than via a typical tourist outing. Indeed, Robin Lindsay, who oversees vessel operations at Oceania, says his goal is a three-pillar strategy that emphasizes: as much time in port as possible; overnight experiences in port (as many as three nights in a place like St. Petersburg, for instance), and memorable on-shore outings, whether pre- or post-cruise or during the voyage itself.

For Fred Olsen's Lingard, Tercek's displacement cycle means his cruise line, which sails small, destination-oriented voyages around the world, must balance visits to marquee ports with out of the way places most folks have never heard of much less been to. "We're always searching for new places at which to call," he says, "but we can't drop existing main ports that attract first time cruisers." It's an interesting dance, in effect, but this summer's Baltic itineraries, for instance, will include the usual suspects such as Stockholm, Amsterdam and St. Petersburg but also offer visits to those that are anything but common. These include Kemi, Finland; Visby, Sweden, and Travemunde, Germany.

Ultimately, the panel seemed to concur that the impact of the big ships was such that "small and mid-sized ships will need to be more creative in developing itineraries." Also look for a more regional approach rather than a wide swath of greatest hits calls. In Europe for instance, some of the lines are already bypassing the standard Venice, Naples, Rome, Livorno (Florence) itineraries for themed voyages such as Mediterranean islands cruises that focus on Sicily, Corsica and Capri, among other ports. In the Baltic, the Bay of Bothnia (the sea between Sweden and Finland) is heralded as an up-and-comer. And coastal Spain -- typically a Barcelona to Lisbon trip -- is another that will focus more narrowly on a destination.