Preparing for new ships at Royal Caribbean Cruises Ltd.

The cruise corporation is enjoying a year of expansion. President and COO Adam Goldstein talks to Susan Parker

Preparing for new ships at Royal Caribbean Cruises Ltd.

This article was first published in Spring/Summer 2018 issue of the International Cruise & Ferry Review. All information was correct at the time of printing, but may since have changed.

Symphony of the Seas, Celebrity Edge and Azamara Pursuit are all being delivered this year. Each ship has, in its own way, special significance for the Royal Caribbean Cruises Ltd. (RCL) brand it will join.

For Azamara Club Cruises, the entry into service of Azamara Pursuit (formerly P&O Cruises’ Adonia) is a major step, representing a 50% expansion of its destination portfolio. For Celebrity Cruises, Celebrity Edge will mark the first newbuild in six years and also the first in the Edge-class when she is delivered in November. For Royal Caribbean International, Symphony of the Seas’ April delivery marked the launch of the largest cruise ship in the world.

“It is a big year for our brands and each of the ships is exciting in its own terms,” comments Goldstein. “Delivering them well, getting them into service seamlessly, having them be everything that we believe they are is our challenge/opportunity.”

When Goldstein joined the industry in 1988, three million people took a cruise annually, but thanks to huge growth in the past three decades, this year the number is expected to be nearer 26 million.

“Based on the number of ships, most likely the market will hit 40 million or so in 2027,” Goldstein says. “With the types and numbers cruising, it becomes more and more of a mainstream vacation. To achieve what we want to, we need to add approximately 18 million cruisers 10 years from now, which means continued penetration of the US and other markets and emerging source markets including China.”

Goldstein adds: “The past few years have shown we can achieve this, but it is nothing to be over-confident about. Mostly what people know about is land-based [holidays], we are still somewhat of an outlier. To overcome this, we need to generate fantastic products, increase guest satisfaction, provide extraordinary safety and be environmentally responsible. I think if we do all of those things we will get there.”

In terms of RCL, Goldstein says all the brands were “incredibly rewarded by travel agents throughout 2017”. Although vitally important, it’s by no means taken for granted. “One of the things we have to do is continue our fabulous relationship with travel agents,” he comments. “We need to keep it. We need to earn it. We have to work at it.”

The US, UK and Germany are still the largest target markets, but RCL is increasingly moving into other countries. “We have been very ambitious as long as I remember,” remarks Goldstein. “We are just going to continue to be aggressive. We have not found a nationality that doesn’t like cruising once they have tried it.”

When it comes to Asia, Goldstein says: “China/Asia is in its infancy. It is very exciting and we need to keep it going. Last year was another year of growth in the China market, but it was influenced negatively by the restriction the Chinese government put on cruise companies and others taking cruise passengers to South Korea, which began in March [and is still ongoing]. This was a very disappointing decision.”

Infrastructure in the region is key to increasing capacity. While Baoshan and Shanghai in China are working on increasing the number of terminals and berths and Japan is doing more, the Australian city of Sydney is making disappointing progress. “Right now, the Australians are the most frequent cruising citizens of any country, but what is missing is an infrastructure solution, either in Sydney Harbour or outside it,” Goldstein explains. “So far there have not been any opportunities that have come to fruition. We remain stuck.”

While growth of the India market has been relatively small for RCL compared to China, the size of the wealthier part of the population means that it is a source market in the group’s sights. “It has not emerged, but it can in the future,” Goldstein comments.

Since the early days, RCL has been a pioneer in terms of newbuilds – for example it introduced gas turbines to new ships in 2000. Following its innovative spirit, the company held a major event in November 2017 to launch Sea Beyond (named Excalibur in-house), which encompasses both the digital passenger experience and ship technology. The goal is for the former to be rolled out on 50% of the fleet by the end of this year, and to 100% by 2019. “We will be adding capabilities as we go forward,” says Goldstein. “The new ships will feature everything Excalibur has to offer at the time they come out.”

In terms of ship technology, fuel cells and LNG are in the spotlight. “We have been working very hard to use as little energy as possible,” notes Goldstein. “Our 2020 goal is to use 35% less energy per person per night to move people around the ocean than in 2005. LNG [with the Icon-class] and fuel cells are a tantalising possibility.”

Looking to the future, Goldstein says: “I think our biggest challenge, as we have seen in the recent years, is the unpredictability of events and trying to be ready for what might happen, not knowing what that might be. Whether events are geopolitical, natural or whatever, that is probably the thing that typically causes the most nervousness in our country. However, I think we are a resilient industry.”

The recent devastation to a number of Caribbean islands caused by the autumn 2017 hurricanes and the industry’s involvement in helping to restore operations has demonstrated an ability to meet such challenges. “For the destinations that were impacted by the storm it was very, very difficult and in the residential areas of some of the islands it still is,” explains Goldstein. “The Florida-Caribbean Cruise Association has really been stressing that the Caribbean is open for business generally, not just for cruise. Our ships have now returned to St Maarten, St Thomas and San Juan in Puerto Rico successfully.” A major positive to arise from the extreme difficulties was the cooperation of the cruise industry and the destinations. Goldstein says: “One outcome is that the strength of our relationships with those destinations has never been better. It was a real coming together.”

 

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Susan Parker
By Susan Parker
Monday, July 9, 2018