Both Carnival Cruise Lines and Royal Caribbean International introduced new ships this past fall. Carnival introduced the newest generation of what started as its Destiny class, built by Fincantieri in 1996, going from 101,000 to 102,000, 110,000 and now 130,000 tons and raising the passenger capacity along the way from 2,600 to 3,650.

Royal Caribbean, meanwhile, has taken a quantum leap out of the box with the 225,000-ton, 5,600-passenger Oasis of the Seas built by STX Finland. While the ship shares many features with the previous Freedom class, which was an evolution of the 1999-introduced Voyager class, the Oasis is much larger and amazing in all its creativity and all it has to offer.  It is closer to being a floating resort than any other ship we have sailed on.

Both Carnival and Royal Caribbean are very successful cruise brands. Yet their strategies are very different.

Carnival, which has been known for its creative and sometimes eclectic interior designs, suddenly seems almost conservative, careful and measured, not taking any chances on what may be new and unknown.

Royal Caribbean is letting creativity rule, and not only in the visible design, but also in the arrangement of the vessel, in the activities and in the services, going far beyond appearances. While we found the Dream comfortable, familiar and almost a little dull, we found the Oasis exciting, but also a little overwhelming, and do not like to plan our vacation as much as the Oasis seems to require for dining and entertainment.

Of course, we also had reservations before sailing on the other big Royal Caribbean ships and on Carnival, but found that we enjoyed them all. So both formulas are likely to work.  Carnival is targeting Middle America, while Royal Caribbean expects half of its passengers to come from foreign markets. Carnival’s investment in hardware is less.  Royal Caribbean has higher capital costs, along with higher operating costs and most likely higher sales and marketing costs as well, as it depends more on foreign markets. So Royal Caribbean has to charge more for its cruises.

Carnival executives tell us that once you are charging more, you are also reducing your market accordingly. Royal Caribbean executives tell us that by offering more, people are willing to pay more.
Clearly there are very smart people at both companies who have figured all this out. Regardless, the proof will come in future earnings calls.

We are also waiting to see how the Norwegian Epic will compare to the Dream and the Oasis.  The Epic, which will enter service in the summer, is intended to take Norwegian Cruise Line’s Freestyle concept to the next level.

We look forward to watching and commenting as the industry continues to evolve, and more new ship concepts and designs will undoubtedly be introduced, taking the industry to the next level, and then to the next level after that – surprising us all.

Angela Reale Mathisen & Oivind Mathsien
Publishers

Excerpt from Cruise Industry News Quarterly Magazine: Winter 2009/2010