On a typically warm South Florida March evening, the biggest cruise ship ever built, Royal Caribbean Cruise Lines’ “Wonder ofThe Seas” slipped out of Port Everglades (Fort Lauderdale’s home port) heading for Caribbean waters on her maiden voyage with paying customers. What do we mean by big? Really, really big − 1,188-feet-long − the length of three Canadian football fields, as wide as four tractor trailers and, with 18 passenger decks, as tall as a 16-storey building. If and when all 2,867 staterooms are filled, “Wonder” could accommodate 6,988 “guests” and 2,300 crew − that’s the total population of some of Canada’s smaller cities − Yarmouth, NS, for example, crammed into a space 210 feet wide. (As big as Wonder is, the space-to-passenger ratio is about equal to other large ships). So far, the 2022/23 cruise season restart has been cautiously encouraging.The launch of Wonder presages a continuing trend: as the police chief told the captain of the great white shark hunter in the movie Jaws—”We’re gonna need a bigger boat.” And there will be more big boats, because bigger boats generate more revenue per investment dollar, and that’s what cruise lines need to offset the catastrophic losses of the past two years and to navigate the growing headwinds caused by skyrocketing oil prices and curtailments of lucrative summer cruise traffic to northern European waters (including Baltic states and Russian ports) due to the Ukrainian invasion crisis. Despite these continuing barriers, passengers so far are opening their wallets and spending freely via every revenue stream: spas, gift shops, food and beverages, casinos, special goods and services. Says Jason Liberty, CEO of Royal Caribbean line: “The cruise companies, especially publicly traded companies, need to grow their quarterly earnings and one way to do that is to have more ships, meaning more capacity, more passengers, more revenue and thus, hopefully, increased net earnings.” RCL’s Wonder has 20 restaurants and 11 bars, ranging from taco or pasta stands to “formal” dining. And the more “formal” the venue, the greater the tab. That’s quite a revenue stream. To date, cruise vessels have been sailing at between 25 and 50 per cent capacity. That’s far from optimal. As Royal Caribbean’s Liberty has conceded: ships are “accretive to us at around that 35% to 50% mark… the newer, large ships are closer to 35 per cent…older, smaller ships are closer to…50 per cent.” For “accretive” read “profitable.” (Investors have remained cautious about reinvesting in the cruise industry. Share values for the big three − Carnival, Royal and Norwegian lines − have see-sawed day after day. Carnival still lingers at around $20 as of March 22 − down from a high of $52 per share in December 2019; NCL is around $20, down from $58; and even Royal − the strongest to date − is lingering at around $77, down from $135 in December 2019. They could all use some “accretion.”) As the relaunch of the world’s cruise fleet continues into 2022 and 2023, and the COVID restrictions lessen (though some have become permanent), what can you expect and prepare for should there be a cruise in your future? Cruise Ships Return to Sea: But wi l l they be the same? By Milan Korcok 20 | www.snowbirds.org Travel
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