Seatrade Cruise News is part of the Informa Markets Division of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them. Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 8860726.

Experts say refurb market is roaring along

Experts say refurb market is roaring along
The need for refurbishments and upgrades is growing faster than the demand for new capacity, according to Carl-Gustaf ‘Calle’ Rotkirch, chairman and ceo of Grand Bahama Shipyard.

Ships older than five years are driving the trend, particularly as operators want their existing fleets to pick up the newest brand features. Technological advances are sparking changes in piping, pools and other wet spaces, new regulations are driving further changes and the demands for energy savings are mounting. Service needs are now global.

On a panel at Cruise Shipping Miami, Rotkirch’s remarks on the rising market for refurbishments were echoed by senior executives from Carnival Corp. & plc, Norwegian Cruise Line, Fincantieri and STX Finland.

NCL president and ceo Roberto Martinoli cited a good outlook for the sector, particularly as owners seek to optimize existing tonnage, and said refurbishments generally offer ‘excellent returns on investments.’

Mike Kaczmarek, vp corporate shipbuilding for Carnival Corp., predicted the sector will pick up further in 2011 and beyond.

Refurbishment costs run 2% to 3% of the price of a newbuild lower berth, which Rotkirch called ‘a reasonable cost to keep the sailing fleet up to date.’

The panelists said contractors are gaining experience in the sector, but the Grand Bahama chief suggested there is room to improve: ‘The services business is becoming a multibillion-dollar business. Do we operate as if we were a multibillion-dollar business? Not yet.’

In the past five years, the Freeport facility has carried out progressively challenging work from the installation of ducktails to major engine upgrades, balcony additions and, in its biggest project, the April 2009 Veendam conversion that added a steel block containing new staterooms and a resort-style pool, among other changes.

Rotkirch called Veendam a learning experience and said the new knowledge benefited projects that followed. [Similar work on a subsequent ship, Rotterdam, is detailed in the current issue of Seatrade Cruise Review.]

The Grand Bahama chief questioned the shift to dockings every five years. ‘Five years since delivery is OK, but does that save docking days later?’ he asked. From a product standpoint alone, Rotkirch suggested fast-moving market trends and the need for brand alignment make more frequent dockings desirable.

Pointing to his company’s Lifecycle Services group, STX Finland president Martin Landtman cited a market need for ‘more demanding conversions, when you need a newbuild team as a backup.’ However, he said STX doesn’t require a dedicated dock; it is happy to work with a specialized refurb facility like Grand Bahama on such projects.

And Fincantieri will keep the focus on newbuilds, said chairman Corrado Antonini. ‘We need 25 refurbishments to compensate for one ship so I strongly encourage shipowners to start building again,’ he told the Miami audience.