New orders for cruise ships could be on hold for some time
It's official: The cruise ship ordering boom is on hold -- perhaps for some time.
Citing the ongoing impact of the coronavirus crisis, the leaders of the world's four big cruise companies on Tuesday said they had no plans to order new vessels anytime soon.
"I don't think anybody should be concerned about (orders for) new ships being placed," MSC Cruises executive chairman Pierfrancesco Vago said at the keynote opening session of Seatrade Cruise Virtual, an online version of the cruise industry's annual meetup. "We have enough already on order that must be delivered."
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Vago noted that MSC Cruises already had 11 vessels on order for delivery. The company announced a trio of shipyard deals for six new ships in January, just weeks before the cruise industry began shutting down due to the coronavirus outbreak.
Vago's comments came just moments after Norwegian Cruise Line Holdings president and CEO Frank Del Rio suggested the company wouldn't be ordering new ships until 2022 at the earliest. The company already has nine vessels on order for its three brands: Norwegian Cruise Line, Oceania Cruises and Regent Seven Seas Cruises.
"I think I'll take delivery of at least one vessel for those brands before I start thinking about additional orders," Del Rio said.
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None of the nine vessels that the three Norwegian Cruise Line Holdings brands have on order are due for delivery until 2022.
Royal Caribbean Group chairman and CEO Richard Fain and Carnival Corporation president and CEO Arnold Donald also suggested they wouldn't be ordering vessels for some time.
Royal Caribbean Group is the parent company of Royal Caribbean, Celebrity Cruises, Azamara and Silversea. Carnival Corporation is the parent company of Carnival Cruise Line, Princess Cruises, Holland America, Seabourn and five overseas brands.
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Cruise ships can take years to build, forcing cruise executives to forecast demand far in the future when ordering vessels. In the past few years, with the future of cruising looking bright, there was a frenzy of orders such as the one placed in January by MSC Cruises.
Now some of those ships may not be needed -- at least in the near term.
Still, Fain noted that none of the cruise companies had canceled any of the orders -- a sign they see demand for cruises rebounding relatively quickly after the COVID crisis has passed.
Fain noted that COVID-related disruptions at shipyards and their suppliers would result in delivery delays for vessels already on order, leaving less need for lines to order now for far-off years.
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"I think it's a little early for us to start speculating on what happens (with orders) given the ships that we have on order are already going to take longer to deliver," he said.
Longer-term, Fain made clear that he expected demand for cruising to grow strongly, resulting in a need for more ships.
"This is not (a situation where) the industry is going to tail off," Fain said. "I think what you're going to see is the industry will continue to grow. Once we're past this crisis, people will see the value of cruising."
Donald said something similar, noting that only 30 million people in the world take a cruise each year -- a small fraction of the 500 million people he said took some sort of vacation annually.
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"There are plenty of new ships on order, but to be honest with you, they are going to be needed," Donald said. "There will be demand. There will be need for capacity. Shipbuilding will stay robust in terms of bringing new ships into the global fleets."
In one more little tidbit of news that came out of the discussion, Del Rio suggested that the next ship order from his company would be for the Regent brand. He noted the company only had one vessel on order for the brand, a sister ship to the recently unveiled Seven Seas Splendor that's due in 2023.
There currently are six ships on order for the Norwegian brand for delivery between 2022 and 2027. There are two vessels on order for the Oceania brand for delivery in 2022 and 2025.
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