When Italian shipbuilder Fincantieri
disclosed its plan to acquire a 21% stake in German shipyard Lloyd
Werft last May, its intentions were clear.
Lloyd Werft is a
world leader in ship repairs and conversions, making it a perfect
fit with Fincantieri's prediction of an average 12% annual growth
rate in the demand for drydocking services between 2006 and
2013.
Throughout the
cruise sector, this is the age of the makeover.
Last May, Celebrity
Cruises spent $55 million upgrading the decade-old Century, its
most expensive refurbishment to date. Crystal Cruises' Symphony
emerged in November from a $23 million, two-week drydock, the
line's biggest. The Disney Wonder was out for a two-week,
multimillion-dollar upgrade this fall, and Windstar Cruises has
begun the yearlong process of taking each of its three ships out of
service for five-week stretches. Holland America Line recently
completed its $225 million Signature of Excellence upgrade to its
fleet after 200 combined days of drydock.
Extensive
renovations put the Carnival Fascination out of service for a month
in September, and the Imagination and the Inspiration will follow
this year. Next week, Royal Caribbean's Majesty of the Seas goes
into drydock from Jan. 12 to Feb. 9, for an extensive renovation
extending to every area of the ship, as part of what Royal
Caribbean President Adam Goldstein called "an aggressive program of
ship revitalization."
Several factors
have contributed to this race to renovate. One is simply the aging
of the world cruise fleet at the same time that demand for
innovation is increasing. Another is a backlog for new-builds at
the European shipyards; the major cruise lines are engaged in
multimillion-dollar ship construction, and the wait for a slot at a
shipyard could be five years.
Additionally, the
strength of the euro vs. the dollar has made the cost of building
new vessels much more expensive than in years past. The Queen Mary
2 was ordered in 2000 at a cost of $800 million; in euros today, it
would cost over a billion dollars.
And finally, as
cruise markets expand worldwide, ships are going under the knife to
be tailored to the tastes of different cultures and changing
customer expectations. This year alone, three of the former
Renaissance R-ships are moving from European brands to premium
North American ones and will be tailored to their new
clientele.
A LONG ECONOMIC LIFE
"It's an attractive
option, because you can't get new-build slots until 2010 or 2011,"
said Jim Dolphin, managing director of American Marine Advisors, a
merchant-banking firm focused on the transportation industry. "So
to the extent you need new capacity or to do something interesting
for your passengers, refurbishment becomes a real
option."
Dolphin said that
this, coupled with the dollar's sinking value against the euro, are
the primary drivers of the refurbishment boom. 
"New-building
prices are high," said Tassos Perakis, associate professor of naval
architecture and marine engineering at the University of Michigan.
"Cruise ships have a long economic life. These are profitable
decisions."
Perakis said that
cargo ships and tankers, which suffer more abuse than cruise ships,
are cheaper to build and not always worth the cost of major
renovations to extend their lives.
Cruise ships are
more expensive, take longer to construct and have complex onboard
amenities. They also have long life spans; many are still viable
after 30 years. Investment in their upkeep extends the return on
that initial investment.
Aker Yards'
Lifecycle Services (LCS) division opened in 2003 in response to
what the Norway-based shipyard believed would be a double-digit
growth in demand for upgrade, retrofit, conversion and support
services over the next few years.
"LCS is one of the
key growth areas for the passenger vessel industry," said Vesa
Marttinen, vice president of the division.
He said the
increase was based on growth in worldwide capacity and that many of
the ships would soon have 10 years in service, about the amount of
duty time when refurbishment is likely.
"When new product
comes out, the existing product needs to match the new features,"
Marttinen said.
LCS currently
represents less than 10% of Aker's cruise and ferry operations. The
largest project LCS has undertaken is the lengthening of Royal
Caribbean's Enchantment of the Seas in 2005, which added 15%
capacity to the ship and 50% more deck space during a two-month
project.
Given the cruise
lines' increasing braggadocio over which one has the youngest and
most innovative fleet, cigar bars circa 1995 just don't deliver a
wow factor to compete with bowling alleys and surfing
machines.
"As we grow the
fleet, we need to make sure the existing vessels keep up," said Jim
Miorelli, senior naval architect in the new-build and refurbishment
group for Celebrity Cruises. "Not many people say, 'I'd rather sail
on an older ship that looks rather worn as opposed to a newer ship
that looks quite nice.' "
As project manager
for the Century revitalization, it was Miorelli's job to make sure
that when guests walked onto the Century, they didn't feel like
they were on a decade-old vessel.
"What we're trying
to achieve is to take the older vessels and improve the interior
and the overall feel so that you don't feel like you're on a
10-year-old vessel that may be secondary to a new one," Miorelli
said.
BIG BUCKS FOR BALCONIES
The impetus for the
Century's refurbishment was balconies, or lack of them.
Before the Century
went into dry-dock, it offered a mere 49 verandas. Today, it has
363.
Celebrity President
Dan Hanrahan said that the difference in ticket price between a
cabin with a balcony and a cabin without one was significant.
Celebrity is already seeing a return on its refurbishment
investment, Hanrahan said.
People want
private, outdoor space, he said.
"Most demand is for
balcony cabins," Hanrahan said during the Century's two-day cruise
from Miami in November to introduce the travel agent community to
the ship's new features. "That's the future trend. The design of
the ship flows from that."
Companies not able
or ready to order new ships use refurbishments to install new ideas
and features.
Crystal put an
advanced lighting system on the Symphony to maintain a continuity
of mood throughout the ship, so that a passenger doesn't walk from
one room to another and feel the atmosphere has changed. The
lighting changes through the day depending on the time and events
in various rooms, even in elevators.
KARAOKE AND COGNAC
When Carnival Corp.
sent a first cruise ship to mainland China this year, it chose
Costa Cruises' Costa Allegra. After a $14.3 million restyling, the
Italian ship arrived tailored to Chinese tastes. That meant a
bigger casino, a larger wellness center and offerings such as
karaoke as well as cognac instead of wine with dinner.
As cruise lines
increasingly look to globalize their source markets and move their
ships accordingly, in some cases it means extensive remodeling to
accommodate the new market.
"When the product
enters a new market with new passengers, they need to fine-tune the
product to meet the expectations of the new market," said Aker's
Marttinen.
Celebrity Cruises
recently said it would acquire two former R-ships from its sister
company, Pullmantur Cruises, one in a swap for the Celebrity
Zenith. All three ships will undergo extensive drydock
refurbishments to adapt to their new markets.
Celebrity said the
Zenith, which will serve the Spanish market, would be "customized
for its Spanish guests," but the line declined to describe just
what that meant.
Pullmantur's Blue
Dream and Blue Moon will be renamed the Celebrity Journey and the
Celebrity Quest, respectively, and will be tailored to Celebrity
clients, who are mostly American.
There are many
challenges to producing a successful refurbishment, the most
important being completing the work in its drydock time
slot.
"Our main worry is
always, 'Can we do the amount of jobs we need to do in the allotted
time,' " said Frank de Heer, Disney's vice president of marine
operations.
To ensure this,
refurbishments such as the Disney Wonder's are sometimes planned as
much as two years in advance.
Another concern is
that new, modern amenities added to the ship will make the older
areas seem dilapidated.
"We paid attention
to that, so you don't feel you've gone from an old room to a new
one, which draws more attention to the area that isn't done," said
Thomas Mazloum, senior vice president of hotel operations for
Crystal Cruises.
Parts of the
Symphony were also renovated two years ago, he said, so no areas
look old.
Travel agents seem
to agree that when a ship is successfully refurbished, it offers
their clients a tremendous deal.
"If you take the
value proposition into consideration, a refurbished ship is good,"
said Mike Drever, president and CEO of Vancouver-based Cruise Ship
Centers International, who attended the Century's inaugural cruise.
"You get the Celebrity dining, the service, the software, but on a
refurbished ship your per diem is much lower than on the new
ships."
Drever praised the
vessel's balconies as "possibly the largest at sea." He called the
Murano restaurant "one of the best dining experiences
afloat."
And the suites, in
his estimation are "some of the nicest I've seen on a
ship."
"In some places I
felt like I was on a new ship, and other places I felt like I was
on a refurbished ship, but I never felt like I was on an old ship,"
Drever said.
To
contact reporter Johanna Jainchill, send e-mail to [email protected].