Managing Director of Tudor Rose and the well-known trade publication, International Cruise & Ferry Review, Jon Ingleton shares his thoughts and reflections after a visit to Seatrade Cruise Global. The opportunity is in refurbishment.
The dust is settling after the biggest bash in the cruise industry, it is now time to reflect on another almighty week at Seatrade Cruise Global (SCG). My professional interests extend beyond cruise ship interior design and refurbishment but thankfully the brief for this post does not, for to summarise the dawn till dusk meetings and occasional madness would overfill a much bigger and somewhat redacted post.
Amidst the trumpeting of an industry flying high there was great knowledge and wisdom to be found among the many luminaries of the design business in attendance in Fort Lauderdale. The two predominant topics at SCG this year were technology innovation and itinerary planning. Interior design has a big play in both of these themes.
Technology innovation delivers big data sets of knowledge about passenger flow and habits which will greatly aid designers in their work but much of this information will be generated post-build through wearable technologies such as WOWband (RFID), MSC for Me (Near Field Communications) and Ocean Medallion (NFC and Bluetooth Low Energy). The data collected through wearable technology will be happily scrutinized by the designers responsible for the refurbishment of Quantum of the Seas, MSC Meraviglia and Regal Princess when these first ships to use the technology enter dry dock in five or six years. With factual information about passenger habits and room usage at every time of day, space planning will be significantly more effective. Furthermore, the choice of interior materials will be able to consider actual foot-fall – taking some of the guesswork out of product selection to ensure materials can withstand the real rigors of every room.
Visual technology (digital way-finding, entertainment screens, Li-Fi etc) will provide both challenges and opportunities, both of which relate to how cruise ship design better enables guests to truly connect with on board spaces. For many classically designed ships technology hardware is not a natural fit – the familiar grandeur of a Cunard interior will be threatened by the intrusion of big screens and digital signs. While their demographic have adopted FaceTime to talk to grandchildren and iPads to update Facebook (now old-fashioned for my kids!), they are not yet sufficiently pro-tech to welcome the best of the Consumer Electronics Show into their vacation surroundings. Carnival Cruise Line aficionados will have a different view and so it will take great skill to deliver the right balance for each audience.
The opportunity provided by the cruise industry is massive. Everyone is talking about the record order-book and designers, outfitters and suppliers are fighting it out to win a piece of this prestigious business. There are almost 90 ships on order, beating the previous record of 68 set in 2000. It’s a tempting gamble to put all of your sales resources into getting your products on board new cruise ships. But the real opportunity for designers and suppliers is not the headline hitting new-build work.
The smart money should be on the cruise ship refurbishment market. In 2016 US$1.5 billion was spent on refurbishments. And that number will grow as cruise lines seek to achieve a consistent standard across their fleet set by the new ships coming online. Cunard splashed out a mouth-watering US$132m on the recent refurbishment of Queen Mary 2 at Blohm & Voss last year.
By 2026 there will be almost 400 cruise ships at sea and with an average refurbishment cycle of six and a half years, that’s 66 refurbishment projects every year (compared to a current average of 10 new ships a year). There are only fifteen yards competing for this work (with Grand Bahama Shipyard currently winning the majority – 21 of 66 refurbishment projects in 2016). Of the 60-odd active interior design companies in the cruise industry, only a third are winning multiple refurbishment contracts. So it’s any easy pitch list to get to know. And the beauty of this approach is in the contract revenue. The four main new-build yards are notoriously tight with budgets as they battle to stay on price – interior spend is the last phase of outlay for new-build projects that are often running close to their MOU total. Budget holders for refurbishment projects tend to place far greater US$ emphasis on the interior outfit, knowing full well that repeat passengers (that regularly number well over 50%) will be anxiously awaiting their opportunity to inspect how their favourite lady (yes, including wife and daughter) has been treated. Plus, it’s much easier to compete against an installed product that may not have lived up to its billing.
With this post the word is out. Of course the cruise lines will win with this greater focus. Having a competitive pool of designers, outfitters and suppliers vying for work will keep standards high and prices low(er). So grab the refurbishment opportunity now because it won’t take long for others to catch on.
Jon, you are absolutely right about the refurbishment opportunity. Forbo spotted this in the Rail Sector and responded with new products over a period of years. The same applies here in the marine sector. There is now a brand new IMO rated Carpet Tile from Forbo which is very suitable for the Marine refurbishment opportunity you identified. I’m looking forward to the coming few years in this business,
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