Wall Street Concerns Aren’t Keeping Cruise Lines From Ordering More Ships

[Jason 413]

For the last few months, the chatter among cruise investors has been tinged with worry that operators are building ships faster than demand for them is growing.

Shares of the three largest cruise companies — Carnival Corp., Royal Caribbean Cruises, and Norwegian Cruise Line Holdings — are down between 8.5 and 11.5 percent since the beginning of the year.

But executives have proclaimed their confidence in the face of those concerns, citing bookings for 2019 and even beyond, opportunities in emerging markets, evolving consumer trends that they believe work in their favor, and demographic shifts.

“Today, we want to confidently tell you that we do not see any evidence of recessionary pressures on demand or on pricing as a result of global or domestic macroeconomic conditions, or that the increase in supply growth coming online over the next few years is causing any disruption in the marketplace,” Norwegian Cruise Line Holdings CEO Frank Del Rio said during an earnings call in May.

Thursday, Del Rio backed up that optimism with a bet on long-term growth: The company has ordered two more ships due in 2026 and 2027 for its Norwegian Cruise Line brand, adding to five already on order or under construction.

The new vessels, which will be built by Italian shipyard Fincantieri, will be siblings to four already ordered last year. At the time, the company said it had the option to order two more ships in what is being called the “Leonardo Class.” Unlike the most recent Norwegian builds, which can carry about 4,000 passengers at double occupancy, the upcoming ships will have capacity for 3,300 passengers.

That’s significantly smaller than the megaships operated by Royal Caribbean, which hold more than 5,400 passengers. Ships coming from Carnival Cruise Line and MSC Cruises are also expected to top 5,000 passengers.

In its announcement, Norwegian said the ship’s size would allow for more energy efficiency and open up more potential destinations. Specifics on those destinations won’t be revealed until closer to each ship’s delivery, but the company has been clear that it wants more flexibility.

“These orders extend our disciplined and measured newbuild program and strong growth trajectory well into the future and will further drive long-term returns for our shareholders,” Del Rio said in a statement. “Our six-ship Leonardo Class fleet will allow us to broaden our deployment into strong performing and mature unserved and underserved markets and offer new experiences to our guests.”

By Hannah Sampson, Skift
Re-posted on CruiseCrazies.com - Cruise News, Articles, Forums, Packing List, Ship Tracker, and more
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