Refits vs Newbuilds

Recalling how he approached work on the Oasis of the Seas – the world’s biggest cruise ship – Kevin Douglas, Royal Caribbean Cruise Lines’ (RCCL) vice-president of technical projects, newbuilds, calmly exclaims that: “Every big project is just a series of smaller projects.”

As part of his work on a cruise ship five times the size of the Titanic, and 40% bigger than any ship at sea today, Douglas and his team handled some of its more novel features such as Central Park. Unlike its New York namesake, the ship’s Central Park has a tropical garden featuring vines, banana trees and bamboo.

Does he know the number of plants used? “12,167 plants, trees and shrubs is the figure that comes to mind,” he says, “I always had a good memory for numbers. I’m great in pub quizzes.” Douglas spent the last three months of the two-and-a-half years it took to build the Oasis overseeing the final elements in Finland and in April he’ll be in a German shipyard for the more routine task of refurbishing a ship due its seven-to-eight year modernisation.

While his job title reflects the focus on newbuilds, or “revits” [revitalisations], as he calls them, Douglas also spends considerable time working on special projects, some of which are international joint ventures.

His involvement so late in the process on the Oasis wasn’t normal, he says. “Sometimes we take a project all the way from a blank sheet, other times we come in and do specific projects.”

On the Oasis, built by STX Europe, in Turku, Finland, he says there was a need to bring in extra hands. “There were so many new venues and opportunities arising too late to get the shipyard to do it, it would have been a distraction from building the ship,” he notes. For example, a planned hairdressers was dropped for a cupcake outlet. “It’s immensely popular, but could we have predicted it would have been popular three years ago? No.”

The Oasis was ordered in February 2006, before the cupcake craze swept the US. Douglas cites RCCL’s chairman Richard Fain, who said the company’s design goal with the Oasis was a ship that’s one-third familiar to customers, one-third evolutionary and one-third revolutionary.

For those working on it, that meant the Oasis built on incremental knowledge acquired as RCCL upgraded from earlier classes of its ships, such as the latest Voyager class, then the Freedom class and now the Oasis class. “We didn’t just go to the Oasis overnight,” he notes. “For example, we had done things before, such as ice rinks, which we’ve done eight times,” he says. This left “lots of challenging new venues” to work on, such as an aqua theatre, which features high-diving acrobats and automated light and water shows similar to the famous Bellagio hotel in Las Vegas. Another feature was Central Park.

The final touches to the Oasis, as with many refit projects, involved the integration of elements brought as near to completion as possible elsewhere. For example, Douglas worked on the construction of one of RCCL’s signature premium dining outlets, Johnny Rockets. Its 4.5t galley was made in France, shipped to the Bahamas, and deposited by crane onto the The Majesty of The Seas.

For Central Park, the 12,167 designated plants were already planted when they got to the ship, Douglas explains. In advance, RCCL had consulted horticultural experts to ensure that the plants could survive on board and that they wouldn’t blow over and be a hazard. “But we needed to understand how to load them,” Douglas says. “We developed a scheme to lift the trees onto the ship and we adapted the luggage carts to move the plants into place.”

Cash flow

While Douglas lives in Miami, he grew up in England, serving at 16 as one of the first technical apprentices at the Swan Hunter shipyard. Later, after years building ships for Renaissance Cruises in France, Douglas joined RCCL in 2004. “It’s no secret the average age of our fleet is ten to 11 years,” Douglas says. RCCL must plan for major changes in the near future, he adds, given that small renovations are typical after seven to eight years, with $30-$40m overhauls after 15
years.

As for the effects of the economic slowdown on the refit-rebuild decision, Douglas says, “It’s fair to say there’s an industry wide slowdown in large-scale revits.” The Cruise Lines International Association (CLIA), representing 97% of the industry, says its members will launch 26 new ships in the next three years, 12 of them this year. Last year, 14 new ships were launched.

Counterintuitive as it may sound, Douglas says that it’s harder to get funding for refits than rebuilds when purse strings tighten. “Revits we tend to cover with existing cash reserves; for new ships you need a mortgage.” While the cruise industry has generally performed well in the downturn, there are few that would argue that there is extra cash to hand. By analogy, Douglas cites billionaire Richard Branson’s memoir on how Branson couldn’t raise £1m to change an in-flight TV system but could raise £1 in to build a new fleet.

In April 2009, in the depths of downturn, RCCL announced that it had secured final funding for the Oasis. It cost $1.4bn to create. The 2007 facelift given to the Majesty of the Seas cost $36m.

For RCCL, at least, such investment results in passengers spending nearly twice as much on board. Douglas says this is because it’s largely from passengers paying for food from specialty outlets, such as Johnny Rockets, rather than eating in the restaurants that are included in their fare.

“But you can’t just put in venues that are all about retail and making money or you’ll get a dilution. You must please your customer.”

Historically, this has meant balconies becoming almost standard and the proliferation of spas. Future drivers of refits will include, for RCCL, less obvious considerations such as ship stability, by adding ‘ducktails’. “Ships are like people, they get heavier as they get older. Think, for example, of every pot of paint. How many pounds does that add?”

Keeping ahead of regulations, including environmental conservation, will also be a big focus. One of his latest projects will bring him to the Blohm Voss shipyard in Germany to oversee a range of relatively small improvements to the Celebrity Constellation. Besides new carpets and renovated cabins, the Millennium-class ship will get three paid dining outlets to bring it closer to the Solstice-class of ships. “We can’t make the Millennium the same as the Solstice,” Douglas notes.

In all refits there is a risk of ‘cannibalising’ a fleet if some ships look so appealing that others seem shabby by comparison. However, Douglas says that operators can lessen that risk by moving older ships to markets where there is less competition from new ships. “The great thing about our business is that our assets are floating.”

As for his career floating between new shipbuilding, and renovations, or last minute fix-it man, Douglas says: “There are a few differences but the stresses are the same. There is never much time.” Douglas has two weeks to redo the thousands of cabins on the Celebrity Constellation. Surely a cinch after working on Central Park.