There's a product hole in the cruise industry. Looking at shipbuilding data from 2009-2020, I show how to objectively measure cruise ship quality, and I demonstrate that nobody has built a seemingly obvious cruise product.

1. What can we learn from
new cruise ship orders?
Jess Peterson
jessp@cs.stanford.edu
August 12, 2015

2. Dataset:
• Includes 83 new build orders, from 2009-2020
• Data for each ship: GRT, Lowers, Yard, Price (nominal, unadjusted for inflation)
• Data Source: Austrian Marine Equipment Manufacturers maintain a database
• Excludes Carnival’s recent memo of understanding with Fincantieri and Meyer to
build 9 ships between 2019-2022
There’s a hole in the cruise industry.
Looking at data from a decade of cruise ship orders, I
1. Objectively rank cruise companies using two metrics
about ship design and construction.
2. Show how these metrics are affected by economies of
scale.
3. Demonstrate that cruise companies only build two
types of ships, and they ignore a product category.
Summary

3. 1. An objective ranking of
cruise lines
Space
I calculate space using gross tons per passenger. Gross tonnage is a measure of a
ship’s volume, and therefore space. While many factors influence cruise quality,
space per passenger is a common proxy for quality.
Building costs
Cost per passenger allows us to capture quality of construction separately from
space. Of course, this measure also reflects the ability of cruise lines to negotiate
good deals and economies of scale (discussed later).
Most ways of measuring a cruise line’s product quality are
subjective. Based on shipbuilding data, I obtain two objective
rankings for brands’ “hardware” product. I rank brands by:

4. Space Ratio
(avg GT/person)
Hapag Lloyd 83
Regent 73
Seabourn 69
Silversea 67
Oceania 52
Disney 51
Viking 50
Star 45
Cunard 44
Celebrity 42
RCCL 41
Ponant 41
Princess 39
TUI 39
HAL 39
P&O 38
NCL 38
Costa 37
Carnival 35
Aida 34
MSC 34
Cost per Passenger
(avg, in thousands)
Hapag Lloyd $698
Regent $608
Silversea $556
Ponant $553
Seabourn $530
Oceania $421
Disney $360
Cunard $338
Viking $326
Star $285
Celebrity $270
RCCL $244
NCL $237
TUI $235
HAL $228
Costa $221
Aida $209
Carnival $203
P&O $199
Princess $192
MSC $182
Spacious
Dense
High Build
Cost
Low Build
Cost

5. 2. How economies of scale
in cruise shipbuilding work
Cost per Gross Ton
This measures the cost of a ship in terms of its physical size. Because of this, cost
per gross ton reflects the way shipyards think about their costs. It is similar to cost
per square foot in buildings.
Cost per Passenger
This measures the cost of a ship in terms of the number of passenger it carries
(assuming two per cabin). Cost per passenger reflects the way cruise brands think
about their capital costs. It is analogous to cost per room in land-based hotels.
Economies of scale in shipbuilding differ significantly depending on
how one measures cost. The two ways to measure cost are:

6. Plotting marginal cost per
passenger and per ton, I get
a surprising result. Returns
to passenger are 3x higher
than returns to gross ton.
Why? What’s the other
variable? $0
$2,000
$4,000
$6,000
$8,000
$10,000
$12,000
$14,000
$16,000
0 50,000 100,000 150,000 200,000 250,000
CostperGrossTon
Gross Tons
Linear Regression Slope =
0.022
$0
$100
$200
$300
$400
$500
$600
$700
$800
0 1,000 2,000 3,000 4,000 5,000 6,000
CostperPassenger(000)
Passengers
Linear Regression Slope =
0.065

7. 3. Space explains the discrepancy, and it
exposes the limited variety of ship designs.
Cruise ships fall into one of four categories:
Space
and
Luxury
Size
Small &
Spacious
Small &
Dense
Large &
Dense
Large &
Spacious

8. 0
10
20
30
40
50
60
70
80
90
0 50,000 100,000 150,000 200,000 250,000
GrossTonsperPassenger
Gross Tons
However, modern cruise ships only fall into two of
these four categories. They are either large and
dense or small and spacious.

9. Space
and
Luxury
Size
Carnival
Holland America
Princess
Celebrity
Royal Caribbean
AIDA
MSC
Costa
Cunard
Disney
Silversea
Seabourn
Regent
Hapag
Ponant
OceaniaViking
TUI
NCL
P&O
Here’s how cruise brands map onto these categories

10. Space
and
Luxury
Size
Carnival
Holland America
Princess
Celebrity
Royal Caribbean
AIDA
MSC
Costa
Cunard
Disney
Silversea
Seabourn
Regent
Hapag
Ponant
OceaniaViking
TUI
NCL
P&O
What would cruise brands in each of these
unexplored areas look like?
Crystal’s new 100K GT Ships
????

11. Thanks!
jessp@cs.stanford.edu

12. Appendix

13. 0
10
20
30
40
50
60
70
80
90
0 50,000 100,000 150,000 200,000 250,000
GrossTonsperPassenger
Gross Tons
Two interesting examples regarding space vs size
Theory: Small ships have
less absolute space, so
common space takes more
tons per passenger.
Counterexample: Ponant
cruises built 3 luxurious
small ships with high
density.
What this shows: small
ships can be dense and
compelling
Oceania and AIDA built similar size ships in
2010-12. Oceania’s are low density at 1,260
passengers and 65,000 tons; AIDA’s are high
density at 2,174 passengers and 71,000 tons.
Despite these differences, both ships cost about
$500-550 million.

14. Cost per GT w/ Log Trend
$0
$2,000
$4,000
$6,000
$8,000
$10,000
$12,000
$14,000
$16,000
0 50,000 100,000 150,000 200,000 250,000
CostperGrossTon
Gross Tons

15. Cost per Pax w/ Log Trend
$0
$100
$200
$300
$400
$500
$600
$700
$800
0 1,000 2,000 3,000 4,000 5,000 6,000
CostperPassenger(000)
Passengers

16. Fincantieri and Meyer dominate cruise shipbuilding
Shipyard
Total Gross Tons Built
(2009-2020)
Fincantieri 35%
Meyer Werft 30%
STX France 18%
STX Turku 11%
Mitsubishi 2%
Mariotti 1%
This concentration has only increased with Meyer’s 2014 agreement
to purchase 70% of STX Turku.

17. Brand
Avg. Space
Ratio
Avg. Cost per
Lower Berth
(000)
Avg. Lower
Berths
Hapag Lloyd 83 $698 516
Regent 73 $608 740
Seabourn 69 $530 512
Silversea 67 $556 540
Oceania 52 $421 1,260
Disney 51 $360 2,500
Viking 50 $326 944
Star 45 $285 3,364
Cunard 44 $338 2,092
Celebrity 42 $270 2,867
RCCL 41 $244 4,867
Ponant 41 $553 264
Princess 39 $192 3,587
TUI 39 $235 2,500
HAL 39 $228 2,451
P&O 38 $199 3,344
NCL 38 $237 4,143
Costa 37 $221 3,004
Carnival 35 $203 3,781
Aida 34 $209 2,467
MSC 34 $182 4,384

18. • AMEM - http://www.amem.at/pdf/AMEM_Cruise-
Ships-on-Order.pdf
Source