Economics and small ship cruising

Last month it was announced that Princess Cruises was selling Ocean Princess to Oceania Cruises. Ocean Princess is a small ship by today's standards, coming in at just over 32,000 gross tons.

Originally, this ship was the R4 of Renaissance Cruises. She was one of eight nearly identical ships. When Renaissance went out of business, the eight ships were scattered and ended up in the fleets of Azamara, Oceania, Princess and P&O Cruises. Interestingly, although the eight ships have different they are still nearly identical.

Azamara and Oceania sell cruises on their ships as luxury crusing. Princess and P&O Cruises characterize their ships as offering the same main stream cruise experience as the rest of the ships in their fleet.

The sale of Ocean Princess is not surprising. It is difficult for a main stream cruise line to offer a small ship experience. The cost per passenger of running a small ship is greater than the cost per passenger of running a large ship because of the economies of scale. It thus follows that if you are charging the same or similar fares as you do for a large ship, you are not going to make as much money. (Bear in mind that the cruise lines are businesses with fiduciary responsibilities to their investors).

A luxury cruise line is able to charge more per ticket. Thus, the additional cost of providing a small ship experience is not as significant an issue.

People often ask me why isn't anyone building small cruise ships anymore? In fact, there are small cruise ships being built. To illustrate, Regent Seven Seas has one on order now and Viking Cruises is building a series of ocean going small cruise ships. Seabourn and other luxury brands have also added new small ships to their fleets in recent years.

The question then becomes why aren't the major cruise lines building any small cruise ships? The answer lies in the same econimcs discussed above. Looked at on a per passenger basis, small ships cost more to build and more to operate because they lack economies of scale. Thus, if you can only charge the same price for a cruise on a small ship as you can for a cruise on a large ship, it does not make sense to invest in building a small ship.

This week on Beyondships, we return to Princess Cays, Princess Cruises' private resort in the Bahamas. Our section on Princess Cays has been re-done http://beyondships.com/Princess-PrincessCays.html and a new video of Princess Cays has been added. http://www.beyondships3.com/princess-cays-6.html

Looking at Princess Cays and Great Stirrup Cay

            This week, we take a new look at two cruise line private islands - - Princess Cays and Great Stirrup Cay.   Private islands are ports of call that are owned and operated by a cruise line and only that cruise line’s ships (and those of affiliated companies) can call there.  Essentially, they are beach resorts where passengers can relax in the sun or participate in the water sports and activities available on the island.  Both Princess Cays and Great Stirrup Cay are located in the Bahamas.  

            Princess Cays is Princess Cruises’ private island although ships from some of Princess’ affiliates such as Cunard also occasionally call there.

            Ships calling at Princess Cays anchor offshore and usually use their lifeboats to ferry guests to the island.  You arrive at a dedicated marina that serves also to divide the resort complex in two.  There are more facilities north of the marina but the south side is rather pretty with its palms and carpet of sand.

            The island itself is long and narrow.   All of the beaches are on the western side of the island and all of the facilities face the beaches.  On the other side of the island is Paradise Lagoon, which has been left in its natural state.

            The complex reflects its owner’s style.  It is sophisticated but at the same time relaxed.  Princess Cays is big enough to accommodate everyone but not so big as to be overwhelming.

            Princess Cays continues to quietly evolve.  In the last few years, they have added a Sanctuary area.  As on the Princess ships, this area is adults-only and designed for pampering.  Also, the southern beach area has grown since the last time I was there.

            Beyondships new and expanded photo tour of Princess Cays begins at http://beyondships.com/Princess-PrincessCays.html      

            Like seemingly everything else at Norwegian Cruise Line, Great Stirrup Cay (GSC) is on the move.  The island is being transformed by a $25 million improvement project that began in 2010.

            It used to be that GSC was a quaint beachcomber-type of experience.  You were tendered ashore on former landing craft which would run up onto the beach, drop their front gate and you walked out onto the island’s one and only beach.  While this meant that you were close to the beach from the moment you landed, it also meant that part of the beach was the exclusive province of the tenders and off limits for recreational purposes.  In addition, the few buildings on the island - - bars and dining facilities - - were rather flimsy looking wooden structures that were not very impressive.

            Still, it made for a fun day at the beach.  The lack of sophistication helped to underscore that you were hundreds of miles from civilization with its work days and petty annoyances.

            While still an escape from the everyday, GSC is an altogether different experience today.  It is truly a private beach resort.  The tenders now arrive in their own marina.  You enter through a gate into the resort complex.  On the way to the beaches, you pass a new Bahamian market.  On the hill, there are the new dining facilities consisting of the kitchen/serving building and covered dining pavilions.  Like the rest of the new buildings at GSC, these are substantial concrete structures.

            The main beach is now dedicated to recreation, which means much more room.   In addition, there is now a second beach that rises up from the water to a ridge where luxury cabanas are under construction.

            Norwegian has also spread tons of sand throughout the complex.  In the old days, it was mostly rock away from the beach.  Now there is seemingly sand everywhere, which with the giant palm trees makes for a much more picturesque scene.

            But there is more to come.  Norwegian is busy building more facilities on the other side of the island.  These are to include an aqua park and a sting ray experience.

            Beyondships’ photo tour of Great Stirrup Cay is at http://www.beyondships.com/NCL-GreatStirrupCay.html    

Princess Cays

Last month, I visited Princess Cays during a cruise on QUEEN MARY 2. Princess Cays is a private resort in the Bahamas developed by Princess Cruises. Today, it is a stop on the itineraries of ships from Princess and other related companies such as Cunard.

A number of the cruise lines have developed their own private resorts. It is easy to see why. On a typical Caribbean cruise, most of the passengers exit the ship when it arrives in a port and head out to a beach or to a resort. By developing their own resorts, the cruise lines play to the demand for this type of vacation experience and obtain some of the revenue that would otherwise be spent at some place not affiliated with the line. In addition, it adds another port to the ships’ itineraries. Since many passengers, particularly first time cruisers, want as many ports as possible crammed into the cruise, it also helps to attract customers.

These private resorts have several pluses for the passengers. First, there is no concern about obtaining transportation to the beach or resort or of not being able to find transport in time to make it back to the ship before it sails. Second, the cruise line provides security for the area. Third, the passenger knows who he or she is dealing with and the cruise lines have an incentive to provide a good quality product. Since cruise passengers are frequently repeat customers, the line does not want to spoil its reputation and the chance that the passenger will book cruises in the future by having a sub-standard resort.

Eleuthera, the island where Princess Cays is located, is a long, thin island. Princess Cays is situated on the shore in a remote, undeveloped section. The beach area is surrounded by foliage and there are palm trees shading the resort itself. It has a nice sandy beach that is lapped by clear water. At either end of the beach area is a rocky shore and there are rocks protruding from the sand in various areas.

There is just about everything that one could want for a day by the beach. In addition to deck chairs, cabanas, and bungalows, there are basketball and volleyball courts and facilities for renting sailboats, scuba and snorkeling equipment, kayaks, paddle boats, aqua bikes, and floats. Several small shops sell island souvenirs.

For refreshment, there are also three bars with live music. Also, there are pavilions where the chefs from the ships prepare beach barbeque buffets.
My photos and commentary about Princess Cays are posted at: http://beyondships.com/Princess-PrincessCays.html