Carnival Corporation Extends Ship Orders to 2022


Carnival Corporation, the largest owner and operator of cruise ships, recently announced three new deliveries. The ships will be part of the Carnival and P&O groups, with two for the former and one for the latter, and will represent the largest ships ever for the brands. The 180,000 ton ships will be delivered in 2020 and 2022 and carry 5,200 passengers. The ships will also be powered by Liquefied Natural Gas, which the company says is more environmentally friendly than existing fuels.

Carnival Corp has yet to announce the destinations or itineraries for the ships.

Carnival Juggles Orders

No, not that kind of Carnival;                                                                                                  Photo credit: Creative Commons

With so many new ships coming into the fleet, something had to break. In this case, it was orders for AIDA and Costa that had previously been scheduled for 2020. The two will now receive their deliveries sometime in 2021. The deferrals also smooth out capacity growth at the beginning of the next decade.

Bigger Is Better?

Photo credit: Creative Commons

If there’s one trend that cruise lines have been emphasizing, it’s size. 15 years ago, the thought of 5,000+ passengers on a cruise ship would have been laughable. Now, many consumers are requesting them. A ship that is the size of a small town offers more in terms of amenities, entertainment and dining. The midnight buffet is so 1980 when you have double-decker water slides or bumper cars on ships. What the cruise lines, particularly Royal Caribbean, have been able to accomplish in terms of onboard activities is simply remarkable. Don’t worry, there will still be plenty of small ships for those of you who don’t want to sail with 5,000 of your closest friends.

Cruise lines don’t build these ships because they are magnanimous, though. The past several years have seen ships turn from almost completely “all-inclusive” to shopping malls, with several revenue generators onboard. You’ll have shopping, specialty restaurants, activities, etc. that all charge an incremental fee. These activities can generate 25% or more of the revenue on a sailing and are very high margin. Large ships also minimize costs, which are measured on a “per berth day” basis. Larger ships are more expensive to purchase and operate on an absolute basis, but the fixed-cost nature of the business means that they are more profitable.

It works out nicely for everyone. These ships have been enormously popular, particularly among families, and the trend is toward bigger, not smaller. Can’t wait to see my first Major League baseball game while floating in the Caribbean.

Photo credit: Carnival Corporation

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