High Shipping Costs Are Here to Stay, Says Bloomberg
By Henry Ren (Bloomberg) Stubbornly high shipping expenses for businesses are getting sealed into contracts for the next 12 months, forcing companies to pass the extra costs on to consumers....
By Mark Ellwood
(Bloomberg) — Floating amid mega-yachts in Monte Carlo’s crowded harbor during the May 2015 Monaco Grand Prix was a startling sight: Windstar’s 212-passenger Star Breeze cruise liner. Lodged in one of the prime berths, the passenger ship was placed as a private yacht would be—because for the week, it was one.
“The ship is within inches of not being able to come into the harbor, but it fits exactly, down by the hairpin turn,” explained Windstar’s Amy Conover via phone from her office in Seattle. The 440-foot long Star Breeze wasn’t crammed with day- trippers midway through a jaunt around the Mediterranean, for which it was designed. The ship was serving as a private playground, rented by a wealthy client for use as a convenient perch for 200 friends while the ship’s crew catered to their needs. Guests could sleep and party aboard it during the week of Monaco’s famed car races, enjoying the comforts of the waitstaff and kitchen crew amid watertight security. The mogul renter even provided the most luxurious of day trips: Each of his lucky friends was offered a vintage automobile from the likes of Mercedes and Ferrari, including some retired Grand Prix race cars. Guests drove the race course on Saturday evening during the moments before it was shuttered to make way for Sunday’s grand finale.
Such ships have long been rented out for corporate charters, perhaps as end-of-year incentives for top-performing sales execs or as vehicles for political fundraising. Today they are increasingly taken out of public use for private hire, enabling billionaires such as that Grand Prix super-fan to upgrade to a personal cruise ship.
“It’s like owning a mega-yacht for a week or two,” explained Carolyn Spencer-Brown, editor of industry bible Cruise Critic, via phone as she was about to board a ship in Miami. “It’s much like if your first-ever flight was on a private plane. You’re starting at the top.”How Much Does It Cost?
Speaking of the top: A seven-day trip on one of Windstar’s 212-passenger Star-class ships could cost from $600,000 to $1 million; Crystal Esprit’s private-hire rates start at $500,000 per week. To charter the super yacht, you could pay $731,000 for the same time frame. Windstar’s prices don’t include surcharges of around $70,000 per stop at such popular ports as Edinburgh or Venice, Italy. Unlike a yacht, though, private chartering of cruise ships comes at all-inclusive rates, with no additional tab for food and drink, taxes, entertainment, or fuel surcharges. Even gratuities are included.
It’s enough of a growth market that it’s influencing the design of vessels newly ordered by many major lines. (See, for example, Crystal’s 62-guest Crystal Esprit, which made its debut in December, tailor-made for private charter. Since 2010, France’s Compagnie du Ponant—which just joined Gucci Group, Christie’s, and Château Latour as part of François Pinault’s Groupe Artémis S.A portfolio—has added four vessels to its fleet, each with just 132 cabins. Again, this is the ideal size for private hire. (Anthem of the Seas, the most recent addition to Royal Caribbean Cruises Ltd.’s fleet, has space for almost 5,000 passengers). With butler service and a tiny, tony spa, the designs of the trimmer vessels are inspired by those of private yachts.
Given the rates of custom hire, it’s not surprising the lines are keen to snare more private clients: even if Crystal fills Esprit to capacity – perhaps on a trip from Athens to Dubrovnik, with 75 passengers paying $6,230 each, that still only earns the firm $467,250 in a week, compared with snaring a half million dollars from a single client over the same period. Most dedicate a full-time staffer to oversee charter programs. Yet, notwithstanding daily inquiries about such private hires, most of the lines are oddly secretive about this revenue stream, preferring discretion.
A Quiet Habit
“Seabourn is not interested in providing this information and will have to pass on this opportunity,” sniffed one corporate spokesperson via e-mail in response to queries from Bloomberg. Rival Celebrity Cruises was equally evasive, though it did confirm after multiple e-mails that its 100-person ship, Xpedition, has been privately chartered. In part, companies fret that regular passengers might be deterred from booking if there’s a chance that a favorite ship might be off-limits for several weeks, though such charters are customarily planned two or more years ahead of time and rarely interfere with regular sailings. It’s easy to spot when a commercial ship will be offline for a private charter: Browse its year-long sailing schedule and look for weeks in which a vessel isn’t on offer and has probably been hired as a private, floating playground.
Renting an entire ship for the week puts no limits on what you can do, on or off the boat, according to Bruce Setloff, head of sales and charters for Crystal cruises. A wealthy Brazilian family hired the Crystal Esprit for a summer vacation tour of Croatia and the Mediterranean. “They asked us to clean the beaches at every port before they arrived, so we hired people to go and pick everything up, especially when they had to go to public beaches at a few of the ports,” Setloff said by phone from his Century City, Calif., offices. Celebrities Love It
When a well-known former talk show host hired a ship from Crystal, she wanted every guest to take a gift home from the trip. The solution: For mementoes, travelers’ initials were embroidered onto pillowcases in their staterooms.
Milestone birthdays inspire many private charters. Setloff cited the 60th-birthday celebration he oversaw for another wealthy client. The birthday boy wanted the ship festooned with his family crest. It flew from the mast and appeared on the staff ‘s custom polo shirts (which read “Happy 60th”) and even on a custom decal placed along the bottom of the swimming pool. “Every day was ‘Happy Birthday’ on board,” said Setloff.
Windstar relies on landmark birthdays for much custom business. Conover confided that a client from London takes a weeklong, private, birthday trip most years; in 2016, the woman plans to celebrate year 75 by cruising the Mediterranean with 200 close pals on a custom itinerary of private islands and coves that are generally off-limits to commercial sailings.
“She rolls out everything: They have high tea every day at her request, and there’s a theme dinner every time, with customized menus,” Conover said, flagging an additional bonus for any private sailings. “She drives the ship every day, too.”
Most cruise experts credit Larry Pimentel, an industry legend who is currently running Royal Caribbean’s upscale subsidiary Azamara Club Cruises, with having originally conceived the idea of private charters. Pimentel spent three decades atop several companies, including stints as chief executive officer at Cunard Line and Seabourn Cruise Line. He identified the opportunity for private charters when tasked with launching a newly refurbished, 50-stateroom ship right around the time of the Sept. 11 attacks.
“When the truly wealthy are looking to charter a yacht, most of them are too small for what they want–just 10 or 12 people,” Pimentel said via phone from Azamara’s Journey as it was emerging from dry dock in the Bahamas. “They love the notion of wealthy, privacy, exclusivity, and freedom.” One of Azamara’s midsize ships, with space for 686 guests, was recently chartered for an on-board wedding; the covered pool served as a dance floor and entertainers boarded the ship to play during stops in Corsica and Sardinia.
Nothing, though, tops the largesse of a recent Azamara booking by a client who was eager to celebrate his father’s 70th birthday on a certain date. The ship was scheduled to make a glorious journey from Venice to Athens via the Croatian coast and Greek islands such as Santorini. Pimentel had to tell him that many of the vessel’s staterooms had already been booked.
“He came to me and said: ‘I know your ship is full, but I’m prepared to give everyone who booked that week not one but two free cruises, whatever it takes to get that voyage.’ So he spent over $600,000 to buy them out—he had to handle some of the nonrefundable air tickets, too, of course—before he even got to the cost of the cruise.”
©2016 Bloomberg News
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