Page 45: of Maritime Reporter Magazine (February 1999)

CRUISE SHIPPING REVIEW • Ship Management

Cruise Lines Benefit From Quality Third-Party Ship Management

By Jim Barreiro de Leon

By all indications, both the number of cruise ships and their sizes are growing. At this writing, there were an estimated 50 cruise ships on order and that number is expected to increase. Many of the leading cruise lines have vessels under construction in sizes rang- ing from 22,000 gt to 142,000 gt.

With price tags estimated between $150 to $550 million, and the com- bined cruise newbuilding order- book totaling an estimated $12.5 billion, cruise ship owners are unquestionably expecting to turn a profit. Preoccupied with the "hard- ware," they have made sound deci- sions relating to the selection of architect, consultants and ship- yard, but what consideration has

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Internet: www.shipmachinery.com been given to the "humanware" or specifically, their shipboard man- agement once they are ready to sail? For many cruise lines, under- standing the value of a high quali- ty, third-party ship manager is a lesson still to be learned.

Probably the single greatest obstacle for third-party ship man- agers in winning cruise ship con- tracts is the trust factor. The best managers know how to develop trust at all levels of the cruise ship operation; from owner and tour operator to concessionaires. This trust is further cultivated through direct, open and honest communi- cation between ship manager and the various other parties.

Regardless of the performance specification (i.e.,Three-Star, Four-

Star, etc.), it is the ship manager's role to assure that the optimum performance standards are met consistently and cost-effectively. In view of increased competition and continually changing passenger demands and market trends, ongo- ing communications and perfor- mance evaluations are especially important. Through the communi- cation process, ideas can be exchanged, and enhancements to the overall product delivery can be implemented quickly and effec- tively to meet these market demands.

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Building A Partnership

The best ship managers operate less like contractors and more like partners to the cruise ship owner/operators. In the best cases, these ship managers are ship own- ers themselves and therefore have direct knowledge of the issues fac- ing today's cruise ship operators and the liabilities involved. They possess a clear understanding of passenger vessel trends, regulato- ry matters and market conditions.

They know, for instance, that dif- ferentiating your cruise ship with unique offerings (e.g., themed restaurants, skywalks, atrium spaces, dramatic staircases, sports/recreational facilities, med- ical services linking on-board facil- ities to land-based hospitals, etc.) means more than just gaining attention, but rather gaining the competitive edge. They also under- stand the cost-to-benefit ratios of these various value-added offer- ings and how they must be ana- lyzed in the ship's overall budget.

Still, even those management organizations with a proven track

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