Seabourn’s New Ship – Some Postulating…and the New Spa Penthouses

The big news this week has been Seabourn’s announcement that over the next two years it is going to say goodbye to the three circa 1989-1990 triplets, the Seabourn Pride, Seabourn Spirit and Seabourn Legend.

Honestly, I find it most interesting that the big news isn’t Seabourn’s announcement that it is building a fourth Odyssey-class ship.  Possibly more accurately, that it is somehow bad news because of a totally false rumor started that Seabourn is not going to build that ship, but one that holds 600+ passengers (let’s leave out the word “guests”).

First, let’s address the rumor:  Seabourn is not – that is NOT – building a 600+ passenger ship.  So how did this rumor start?  Seabourn’s president, Rick Meadows, in a rather innocuous release said the following two sentences:

• “Seabourn is already in discussion with shipbuilders and an order is likely to be announced within the current fiscal year. The new ship will allow Seabourn to maintain much of its current guest capacity.”

• “We do not have final details at this time but the capacity of the newbuild will be near the capacity of Pride, Spirit and Legend (combined). It will be more or less. Stay tuned for more news later on this year.”

Now, consider this:  Seabourn has 1,974 berths and will retain that number until April 2014. When the Seabourn Pride leaves the fleet in April 2014, Seabourn will have 1,766 berths until the Spring of 2015 when the other two ships leave, resulting in a reduction from its currently existing berths of 624.

OK, so those creating the rumor say, “See, 624 berths.  That’s what the new ship is going to have!  Seabourn as a luxury cruise line is over. OMG!”  Hold on there, Halfpipe!  Take a breath and read further.

Before we get to the new ship, there is some pretty cool news that, for publicity reasons I don’t understand, has flown under the radar:  Seabourn is converting some of the truly underutilized Spa (which is by far the largest of any luxury line) into four Spa Penthouses.  These will be installed on the Seabourn Quest in its scheduled drydocking in June.  The four dramatic new suites will be located directly above the Spa and will be accessed by means of a spiral staircase in the lobby of the spa.  These suites will boast views over the ship’s wash (my favorite!), larger verandas, special Spa Showers, unlimited access to the spa’s Serene Area, as well as spa amenities in the suite itself and the services of a spa concierge during the voyage. These new Spa Penthouse suites will also be added to Seabourn Odyssey and Seabourn Sojourn during those ships’ next scheduled drydocks…and, obviously, will be installed on the new-build as well. So let’s see, that is 4 suites x  2 “guests” per suite x 4 ships = 32 newly created berths.

OK, now we just cut the 624 just sold berths down to 592.  And if Seabourn were to do nothing other than build an identical Odyssey-class ship there would be the addition of 450 new berths.  That brings the berth reduction down to 142…or slightly more than one half of one of the triplets…if nothing changes.

It is now time to actually read Rick’s words in both of the sentences above:  “much of its current capacity” and “near the capacity of” the triplets.  In other words, as plain as the nose on your face, there will be a slight reduction in capacity.

Before you go (again) OMG, let’s look at a bit of recent history.  The Seabourn sisters (now known as the Seabourn Odyssey, Seabourn Sojourn and Seabourn Quest) were announced in 2006 with a roaring stock market, a housing boom and a world flush with disposable cash.  When the Seabourn Odyssey was delivered in 2009 – despite being a true game-changer in the luxury market – the financial outlook also changed dramatically and the pricing and demand for luxury cruises (and cruises generally) softened.

But there is another part to the story of soft markets and financial challenges:  The Seabourn triplets were long ago destined to be eliminated from the Seabourn fleet.  They are old and their design and engineering limitations were becoming significant issues…which is why, in part, the Odyssey-class ships were created rather than the triplets simply mimicked.  The triplets have no true balconies, alternative dining options are limited, the suite layout has some design challenges and the marble bathrooms (though functional) are relatively small for a luxury ship.  What was sleek and state-of-the-art in 1987 (when they were designed) was two decades (yes, 20 years) later a bit long-in-the-tooth.  Oh, and they are relatively slow, burn a lot more fuel and more than a quarter-century old, need a good bit of maintenance, repair and replacements. 

The question was never “if” the Seabourn triplets would go, but “when”…And let’s face it with the new ships announced in 2006 (and known about in 2005) these wonderful yachts have stayed in the Seabourn fleet for another decade.  Think about that.  That is pretty darn remarkable. So for any of those that want to say, “I told you so.” I say, “If you wait long enough…like a decade…eventually you just might be right.”  (How about the predictions in 2006 that the stock market would reach 14,000.  True Genius??? Not with the terrible ride into 2013…but you were correct!)

Now let’s add another factor:  Shipyards are hurting.  Remember 5-10 years ago it seemed that the cruise lines were adding a new ship or ships every month.  And they were bigger and more expensive.  How many new ships have been built in the last three years?  Not many.  And with the sluggish economy (especially in Europe) there is not a huge prospect for a new boom in cruise ship building near term.  (And commercial shipbuilding is in even worse shape!)  So shipyards are – without exaggeration – desperate for new business.  And that means lower prices and better terms for the cruise lines.

It is now 2013, the American economy is starting to pick up, the European economy is in shambles, cruise shipyards are desperate and willing to make deals, the Seabourn triplets are in need of some serious upgrading to stay competitive in the luxury market (and will still lack true balconies, etc.) and Seabourn’s new management has a couple of years under their belt and far better understand the product and have the ordeal of putting its new systems in place pretty much behind them.

Now is the time to make a move!  But they need to offload the triplets in a way that it doesn’t create real competition for them.  Fortuitously for both, Windstar’s new owner is flush with cash and wants/needs to expand (you can read my recent article on this) and Windstar’s market is upscale, but not luxury…making the triplets an awesome addition in that market, but because the products are so different not a lot of competition for Seabourn.  It is a win win.

OK, now back to the new Seabourn ship.  If you have ever been on the Seabourn Odyssey-class ships you know that other than for about an hour or so on port days in the Colonnade or a few sailaways at the Sky Bar there are really no crowded areas on the ship.  In fact, there is a huge…and I mean huge…amount of space that is rarely used (such as Deck 11 where the putting green is located or overlooking the bow where the lounges are) just like on Deck 10 where the new Spa Penthouses will be located.  And where people do congregate it is almost always more than comfortably spacious.

So, what if Seabourn was to increase the capacity of the new ship by say a mere 10-15%?  That would add between 45 and 68 guests that would essentially not be felt anywhere on the ship even if all of the space on Deck 11 were eliminated. 

Now let’s get back to the math.  We are looking to get “near the capacity” of the triplets and have quickly reduced the lost berths to 142.  By adding a mere 10%, or 45 berths, we are now down only 97 berths…out of 1,974.  That would be 95% of the current capacity.  And to me that is most certainly “near the capacity” without being the same.

But there is one other factor you have not considered.  (I bet almost nobody reading this article has thought of this!) Seabourn has historically been able to earn more money (not just charge higher fares) on the Odyssey-class ships because they are new, state of the art, efficient ships.  So even with a 5% reduction in berths, Seabourn will be in a position to earn more money with slightly less inventory…and with the triplets regularly sailing at less than 100% capacity, the math becomes even more exciting…and at no real cost to the loyal Seabourn guest.

Can I, with authority, state that is what Seabourn has in mind?  No. But it makes a tremendous amount of sense to me.

Champagne and Caviar anyone?