Significant opportunities for third-party shipmanagers stem from the many small, independent companies and start-ups that are building cruiseships, say experts.
This newbuilding spree is happening in the traditionally strong markets, notably the US and Europe, but also in Asia and South America.
“It is really global growth,” says V.Ships Leisure director Per Bjornsen, who has a long history in the industry, including 21 years with his current employer.
Jim Barreiro de Leon, chief executive and president of Miami-based Cruise Management International, says more than 30 of the 110 cruiseships on order are for the small-ship market, including polar vessels.
“We haven’t even touched the surface when it comes to expedition cruises,” he adds.
Warm-water demand
Barreiro says there is plenty of demand, including also for warm-water itineraries, as the market develops.
“Things have a long way before we reach a peak,” he says. The market in China is starting to “explode”.
Among those creating opportunities for third-party managers in the fast-growing luxury cruise market is Ritz-Carlton. It entered the sector last year with orders at Spanish shipyard Barreras for three 190-metre yacht-style vessels.
The first 149-suite ship has been launched for delivery next year with potentially eight eventually being built. Third-party managers have been competing following the issuing of a tender.
Meanwhile, Viking Ocean Cruises has signed a letter of intent for two “special” cruiseships at Vard in Norway, with other luxury vessels ordered by Regent Seven Seas Cruises, Ponant and Hapag-Lloyd.
MSC Cruises has entered the top-end of the market recently with a four-ship order at Fincantieri, and Silversea Cruises, now part of Royal Caribbean, has booked three vessels at Meyer Werft in Germany.
But the larger industry players typically handle shipmanagement in-house. Silversea, for example, took back management of its fleet last year, albeit keeping the same V.Ships Leisure team, and this is likely to remain the case now as it forms part of Royal Caribbean.
New clients
Growth of the Chinese market has recently seen V.Ships Leisure secure technical and hotel management contracts for the 69,800-gt Oriana (built 1995) when it is handed over to new owner Twinkle Travel Cruise International — the fledgling joint venture between China International Travel Service Hong Kong and Cosco.
Bjornsen says the Chinese market has been dominated by international operators but going forward he expects to see the emergence of more indigenous players. Start-ups offer a “huge opportunity” for managers because there is a lack of local cruiseship operational knowledge.
However, he says he is “pretty realistic” about the likelihood long term that Chinese owners, as they scale up and gain knowledge, may adopt a different model and handle more management in-house.
But typically, if a vessel leaves third-party management a number of “know-how” services are retained such as crewing, e-learning, travel and various marine activities.
Each project has its life cycle, says Bjornsen. “This is the fact of being a third-party manager and how it works.”
V.Ships Leisure will now establish both technical and hotel management operations for Twinkle Travel.
For many years, the company has provided Chinese crews for expedition vessels it manages, as well as recruiting Chinese hotel staff for one of the large international cruiseship groups.
“We are pleased to be at the forefront of a growing number of third-party management companies making headway in the cruise management sector in China,” writes Bjornsen in a letter to TradeWinds.
