Royal Caribbean Orders 'Ultra' Cruise Ship

Theresa Norton Masek Capitalizing on the popularity of its 138,000-ton Voyager-class vessels, Royal Caribbean Cruises Ltd. has ordered an even bigger version that will become the world’s largest cruise ship. The 160,000-ton Ultra-Voyager, to be delivered in May 2006 for the Royal Caribbean International

By: Theresa Norton Masek

Capitalizing on the popularity of its 138,000-ton Voyager-class vessels, Royal Caribbean Cruises Ltd. has ordered an even bigger version that will become the world’s largest cruise ship.

The 160,000-ton Ultra-Voyager, to be delivered in May 2006 for the Royal Caribbean International brand, will eclipse even the 150,000-ton Queen Mary 2, scheduled for a December delivery.

“The Voyager-class ships clearly changed the face of cruising,” RCCL Chairman Richard Fain said in announcing the company’s $720 million order with Kvaerner Masa-Yards in Finland to build the 3,600-passenger vessel.

“The Ultra-Voyager will extend that success and, with a lower cost per berth capital and operating costs, provides even better economies of scale,” he said. RCCL also said it has an option on a second Ultra-Voyager ship for delivery in 2007.

The cruise line’s expansion announcement came the same day Norwegian Cruise Line announced it also is ordering two new ships, and marked the first new ship orders in months for the cruise industry.

Industry analysts, however, said they don’t expect the announcements to signal a return of the cruise industry to the building frenzy of the late 1990s.

In recent months, cruise lines have slowed expansion to let demand catch up with capacity. Most recently, Carnival, which had considered building a 170,000-ton ship, said it had decided against it.

Still, Robin Farley of UBS Investment Research said in a Sept. 19 research note that “While too much capacity growth may be a concern for the industry, the Ultra-Voyager delivery takes place between 2005 and 2007, which is a period of more controlled, below-average growth for the industry.”

Tim Condor of A.G. Edwards also recently noted that Royal Caribbean’s Voyager-class ships pull in higher ticket prices.

Vacationers apparently are attracted to and don’t mind spending to sail on the super-size ships, which broke the more traditional cruise ship mold in November 1999 with features like a rock-climbing wall, ice-skating rink, in-line skating track and staterooms that overlook an indoor promenade.

“Over the last two months, our survey indicates that RCCL’s pricing has continued to outperform Carnival Corp.’s, primarily due to the Voyager-class product,” Condor wrote in a Sept. 17, 2003 pricing report.

The Ultra-Voyager will be about 15 percent bigger than the Voyager vessels. The first of that class, Voyager of the Seas, was followed by three more of the same model over the next three years. The fifth and final Voyager-class ship, Mariner of the Seas, is due out in early November.

The Ultra-Voyager will use the Voyager-class for its base design, saving money in development time and cost usually involved with a new class, Condor said in reviewing the new ship order.

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