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Royal Caribbean - Part 1
From SN Guides
Amazingly, each of the three cruise industry leaders came into being almost accidentally, as a consequence of other and unconnected events. It is thought that Royal Caribbean would never have existed, had it not been for the passionate desire of a New York based Norwegian shipbroker for a female radio officer serving on a cruise ship operating out of Miami!
The full story of the tragedy is told in http://en.wikipedia.org/wiki/SS_Yarmouth_Castle . The disaster led to the modification of the international Safety of Life at Sea laws, or SOLAS, in 1966. These laws created new maritime safety rules, requiring fire drills, safety inspections and structural changes to new ships.
The Yarmouth Castle and her sister Yarmouth belonged to the Yarmouth Steamship Company formed in 1961. Edwin Stephan had been appointed as the company’s general manager and Pete Whelpton as its operations manager just prior to the Yarmouth Castle disaster. Afterwards they tried to continue the business operating only the Yarmouth, but public confidence was understandably low and the ship only achieved a 28% load factor between January and March 1966 and the company folded.
Stephan spent all of his spare time creating his ideal Caribbean cruise ship. By this time Ted Arison was very successfully operating Kloster’s ex-European ferries as cruise ships out of Miami. Stephan reasoned that ships specifically designed for Caribbean cruising would be even more profitable. He persuaded Whelpton to join him and in their spare time they created outline drawings and a provisional specification. The main characteristics were: -
Stephan planned a three ship fleet to operate two departures each week from Miami. One would operate on the same schedule as Boheme. The other two would undertake 14 day cruises to the “real” Caribbean of the Lesser Antilles.
Chobol was not interested in Stephan’s concepts. At this time Norwegian shipowners were making considerable profits from the tanker boom that followed the Middle East Six Day War. Gathering his plans and documentation together, Stephan flew to Norway to seek backers for his proposals. Sadly none of the owners he saw were interested in his ideas. A despondent Stephan returned to Miami.
It was at this crucial moment that a Norwegian shipbroker based in New York is believed to have been desperately trying to find an excuse to visit Miami at his employer’s expense. He was in love with a female radio operator working on a Miami based cruise ship. One of his New York friends suggested that he visit this crazy guy in Miami who has this idea about tailor-made cruise ships and take a cruise on his girl friend’s ship “to assess the market.” The broker leapt at this suggestion, had a great time with his girl and most importantly was very impressed with Stephan’s ideas.
Creating a new cruise company
Like many of the Norwegian owners, Skaugen had made a fortune out of the 1967 tanker boom. He badly wanted to make a grand move to crown his career and he realised that Stephan’s plan was an ideal way to fulfil this ambition. Skaugen was not however, prepared to carry the investment risk alone and he carefully selected Anders Wilhelmsen as his partner. Whilst Skaugen was the head of a shipping dynasty stretching back to the early nineteenth century, Wilhelmsen was a former shipping office manager who had personally founded his business in 1939. Skaugen was privately confident that Wilhelmsen would accept a junior status in the partnership.
The formation of Royal Caribbean
The tender process for the two new ships continued into 1968, with the final outcome being a fierce bargaining duel between Wärtsilä and Italian shipbuilders. The Norwegians had a Scandinavian preference for the Finnish shipyard, but were determined to drive a hard bargain. Eventually however, an order was placed for two ships at the very low price of $15 million each, plus an option for a third ship at $16.5 million. The new cruise company was irrevocably initiated and Stephan resigned from Commodore.
Whilst the first two ships were under construction, three events occurred that were to be of considerable importance to the future of Royal Caribbean, or RCCL as it was already being called. Gotaas-Larsen, a Norwegian shipowner based in London and New York, became the third shareholder in RCCL and the option for the third ship was converted into a firm order. As part of this development, Royal Caribbean Cruise Lines A/S was formerly incorporated with a constitution that required unanimous agreement on all board level decision. Thirdly the 70 year old Anders Wilhelmsen died and control of the family firm passed to his 40 year old son, Arne Wilhelmsen. Arne, a Harvard Business School graduate did not have his father’s respect and tolerance for the pompous and bombastic Sigurd Skaugen and board level relations rapidly deteriorated.
The first ships
When the orders for the first two ships were in place, Wärtsilä began to influence the design of the vessels, especially in the propulsion machinery arrangements. At the builder’s suggestion four, nine cylinder, two-stroke, medium speed Sulzer Z-40/48 engines were used, each pair being linked through Pneumoflex flexible couplings to single-reduction gearboxes for the twin shafts. This specification produced a compact, low-weight, flexible machinery arrangement.
Mogens Hammer was employed to carry out the design of the passenger accommodation. He had been responsible for the interiors of the Kloster ships, starting with his first ship Sunward. The passenger cabins were indeed small, but efficiently laid out and Stephan sought to counteract any adverse impact by providing a range of free gifts, including a daily supply of Hershey chocolate bars!
The exterior styling of the ships was the responsibility of Gier Grung. A deliberate effort was made to reassure the passengers by linking the style of the ships to the external appearance of the far more familiar contemporary airliners. The ships were fitted with a highly raked clipper bow and a large, fin-like funnel situated near the stern. The funnel carried RCCL’s new crown and anchor logo, which resembled an airline logo. The words ROYAL CARIBBEAN were placed along the base of the funnel in large airline-style upper-case san-serif letters. To complete the airline impression a wide blue riband was painted around the base of the superstructure, slightly deeper than the row of windows at this point. The aim was to subliminally link the passengers’ first dock-side view of the ship with their memory of the external view of the far more familiar appearance of the airliner that had brought them to Miami.
Stephan also wanted an external ship feature that would be unique to RCCL. His suggestion of a maritime version of the Seattle Space Needle was completely impractical on ships the size of the RCCL vessels. After considerable debate this was transformed into a Frisbee-like cocktail lounge embedded in the trailing edge of the funnel. For years this feature was used in the company’s “Sail a Skyscraper” advertisements.
As a foretaste of the lack of unity amongst the shareholders, the names of the three ships did not follow a common style. They were: -
The basic specification of the class was – 18,416 grt; 168.3 metres Loa; 24.0 metres beam; 714 passengers on the basis of 2 passengers per cabin; 870 passengers max; 300 crew; service speed 21 knots.
Preparation for commencement of service
Whilst the first RCCL ship was being built, Stephan took a tiny office, near the Miami docks and set about creating his concept of an ideal cruise operation. After a major fight with the Norwegians he succeeded in engaging Whelpton as his deputy, but Skaugen made it very clear that he would not tolerate any interference in his control of maritime matters. To reinforce this, Skaugen appointed a former liner captain, Aage Lindstad to command Song of Norway and sent him to Miami to establish shipboard protocols. As these would govern the status and authority of everyone on board the ships the discussions rapidly turned into a turf war between Lindstad and Whelpton. The resentments established at this time had a significant – and often destructive – effect in the company well into the 1990s.
Stephan was successful in persuading Skaugen that the ships’ captains and officers needed to train for their new working environment. They were sent in groups to a “charm boot camp” in Oslo, where they were required to learn conversation skills, social graces, American table-manners and to acquire a working knowledge of American history and society. Their passing-out examination was to host a dinner for young ladies from the US Embassy in Oslo, who were asked to rate the sailors’ acceptability!
A warehouse was rented in Miami where mock-ups were constructed of critical hotel areas in the ships. The hotel crews were largely recruited from the West Indies. All were trained in these mock-ups by Whelpton, who used stop-watches to assess their performance. Those who failed to meet his standards were replaced.
When Song of Norway entered service in November 1970, everything went as planned and by 1972 when all three ships were in service RCCL’s operations were outstandingly successful. The ships were constantly sailing with a full passenger list and the business was a great financial success.
The lost years
Stephan tried in vain to persuade the shareholders to build more ships. A fourth ship was considered in 1971, but Wärtsilä quoted $22.5 million and the board decided to postpone further new construction. The main problem facing RCCL however was the company’s constitution. Skaugen and Wilhelmsen each had defined areas of management responsibility but had developed a strong personal dislike of each other. All major decisions required unanimous agreement and the two men rarely agreed on anything. Harry Larsen spent most board meetings trying to arrange some temporary compromise between the two. To add to the company’s self inflicted difficulties, at the end of each year the entire net profit was distributed to the three shareholders. The company had no reserves and all new capital expenditure required new investment from the three shareholders.
The operational health of a cruise company is largely dependant upon the success of its marketing and on-board hotel operations. In RCCL these were Stephan’s responsibility, but as he was not a shareholder, he had little influence over the squabbling Norwegians. Perhaps unsurprisingly operational cost control became a low priority at RCCL. As the annual profit was all distributed in Norway, Miami tended to opt for the easy solution in every situation. For example, in June 1978, when the FBI busted the Miami organised crime rackets of the International Longshoremen’s Association, Carnival was the only cruise company not paying protection money, providing the mobsters with free tickets and employing the union’s high priced dockside services front companies. RCCL by contrast was providing the ILA representative with a bag full of cash every week and fully co-operating with the mob.
The major corporate development in RCCL during the 1970s was the sale of the Gotaas-Larsen business to the Philadelphia based International Utilities. The Chairman and CEO of IU was Jack Seabrook. He was a charming aristocratic man, but he did not always see the requirement to fully comply with Stock Exchange regulations! In 1979 he succeeded in moving Gotaas-Larsen, offshore to Bermuda into his personal financial control just before US financial regulators began an investigation into his corporate practices and personal finances. Seabrook eventually settled the investigation at a cost to him of several million dollars and his resignation from IU. As a result, by the early 1980s, Gotaas-Larsen became Seabrook’s major business interest and he began to pay much more attention to the affairs of RCCL.
Seabrook was amazed at the ineffectual corporate management of RCCL and soon was forcibly expressing his opinions about the Norwegian’s board room squabbles. Much of Seabrook’s influence was conducter through his more diplomatic, London based, Gotaas-Larsen managing director, Richard Fain. He was a graduate MBA and the son of a very wealthy American banking family. Fain tried to apply his dispassionate financial logic in an effort to break the board room decision making deadlock frequently created by the eccentric, ego-driven, tangled disputes between the two Norwegian shareholders. It was slow, tedious, work converting the Norwegians to normal corporate governance, but during the struggle Fain discovered that he was coming to love the cruise business.
A further factor of great significance to the shareholders in RCCL was that by the mid 1970s the great tanker boom had turned into an OPEC induced slump. As a result the continuing RCCL profits became far more important to the shareholders, but they no longer felt able to make significant investments in the company.
Stretching the ships
In 1976 the state of the tanker market forced one of the Royal Viking Line shareholders, A F Klaverness, to place his ship, Royal Viking Sea on the market. The RCCL partners were interested buyers. Skaugen’s technical department considered the problem of integrating the ship with the existing fleet. Although Royal Viking Sea was about the same size as the RCCL ships, she had much more spacious cabins and therefore a significantly lower passenger capacity. The proposed solution was to cut the vessel in half and to insert a new midship section. Unfortunately at the last moment, the other two partners in Royal Viking Line exercised their option and they bought the ship. Nevertheless RCCL decided to apply the same surgery to its Song of Norway.
Agreement on the conversion was reached with Wärtsilä and Song of Norway returned to Finland in August 1978. A 26 metre mid-body section was inserted and the work was completed by the end of November 1978. The new particulars of the ship were: -
23,005 grt; 194.3 metres Loa; 24.0 metres beam; 1,040 passengers on the basis of 2 passengers per cabin; 1,196 passengers max; 400 crew; service speed 21 knots.
The new capacity was immediately filled when Song of Norway returned to service and after considerable debate Nordic Prince was sent to Helsinki in 1980 for the same operation. It seemed logical to also convert the third RCCL ship, but Gotaas-Larsen objected before planning had started on this work. Carnival had just startled the cruise world by ordering a $100 million 36,000 ton ship from Aalborg Waerft in Denmark. The converted RCCL ships would be completely outclassed and Seabrook insisted that to proceed with the third ship would be futile. He proposed that RCCL should proceed with an existing Stephan project for a new, larger ship that could successfully compete with Carnival. The somewhat chastened Norwegian members of the board agreed to support the project for a larger ship.
Song of America
Most of the same designers were retained and the building contract was again placed with Wärtsilä. The contract price was $130 million.
The standard cabins were essentially the same as the tiny cabins fitted in the earlier ships. There arrangement however was entirely different. The additional beam of the new ship allowed a high density cabin layout with the inside cabins arranged beam-wise in blocks of twelve off athwartships passages. This layout is to be found in a number of large ferries, but it is unique to RCCL in modern cruise ships and has been repeated in their subsequent ships. Song of America also had a small number of deluxe cabins.
Despite other owners moving to two low-speed main engines, RCCL continued with the four-engine medium-speed arrangement fitted in its first ships. The opportunity was taken however, to change to the four-stroke Sulzer ZL40 version of the same basic engine. These engines were said to cope more effectively with the high vanadium content of the heavy fuel oil available in the Caribbean.
The decor in the public areas Song of America was very different from the cool Scandinavian theme of the earlier ships. The new ships decor was based upon a typical Las Vegas hotel. The design was less original than Farcus’s work for Carnival but great care was taken to maximise encouragement for passengers to increase their on-board spending. For example, the spacious discotheque in Song of America was fitted with smoked glass to avoid the passengers being distracted by the tropical moon from the important task of buying more drinks.
Externally the funnel was an enlarged version of the earlier ships with the observation lounge expanded into a doughnut configuration encircling the funnel. The blue hull riband was thickened to two deck height in the centre of the superstructure. Without question the new ship was visually part of the RCCL fleet.
The basic specification for Song of America was – 37,584 grt; 214.5 metres Loa; 28.4 metres beam; 1,414 passengers on the basis of 2 passengers per cabin; 1,575 passengers max; 501 crew; trial speed 21 knots, service speed 17 knots.
The First Giant
In 1983 Fain and Stephan proposed that there was potential for still further growth in the cruise industry, but the company needed to make innovative change to regain a dominant position. The RCCL board agreed to explore their concept for the construction of the largest cruise ship in the world. This would be a ship that would the about twice the size of Song of America and slightly larger than Norway. A project team was established under Fain’s chairmanship. It consisted of representatives from the three shareholders; the heads of RCCL’s operating departments with their management staff and the design team from Wärtsilä. Initially three separate sub committees were established to consider the project’s financing, the market for the ship and its technical design. Once the basic feasibility of the ship had been confirmed, the teams regrouped to produce a detailed contract specification.
Despite having worked on the project from the outset, Wärtsilä’s tender was greatly undercut by the French shipyard, Chantiers de l’Atlantique who submitted a French Government subsidised price of $180 million. The design process was so far advanced that the French yard was able to offer delivery in only twenty-nine months from the signature of the contract with them in July 1985.
The new ship had a waterline length that was 55 metres greater than Song of America. Her beam was increased by 3.8 metres, which provided space for an additional inside cabin to be fitted in each side-to-side cabin row. The cabin size remained painfully small. The greater internal volume allowed inclusion of two extra decks in both the hull and superstructure.
The sheer size of the new ship required RCCL to undertake a complete review of the arrangements for the provision of all passenger services. One requirement that had a major impact upon the internal layout of the ship was need to design the arrangements to feed 2,600 single-class passengers in a way that avoided creating the impression of a troop ship mess deck. While a two-sitting service was still considered acceptable for mass-market passengers, it was felt that it would be difficult to creatively design a 1,300 seat dining room and impossible to provide a satisfactory catering service in such a vast space.
The steering committee decided to have two 650 seat dining rooms, one above the other, each with its own kitchen aft of the dining rooms. Each kitchen was self contained and independently produced the finished meals for its dining room, but the pre-preparation work was functionally optimised between the two kitchens. The kitchens also served the crew dining rooms, which were situated aft of the kitchens. The entire catering complex was located in the extreme stern of the ship to avoid the need to provide space for passenger flows around the facility.
Although the passengers’ use of the dining rooms was predictable, the steering committee felt that they had inadequate data on the passenger requirements for the other public spaces. To fill this information gap, a team of observers were posted on Pride of America to carry out a head count in each public space, every 10 minutes throughout the day, throughout a cruise. This data was used to optimise the size of each of the public spaces. The actual rooms were essentially similar to the arrangements in Pride of America.
The most stunning innovation in the new ship was the provision of the first cruise ship atrium, extending from the foyer of the lower dining room up to the boat deck. This huge space was to prove very popular with passengers, who were subtly encouraged to patronise the shops, bars and cafes located on the various decks. The success of this first atrium has led to variations of this feature being incorporated in most subsequent cruise ships.
The machinery arrangements for the new ship were a continued evolution from earlier RCCL ships. Four medium speed engines were again fitted, but these were the first marine application of the long stroke Pielstick PC20L engine. These were selected because of their reliability and economy during part load operation on low grade fuel. In a major engineering change however, the pair of engines for each shaft were fitted on a flexibly mounted raft to reduce hull transmitted noise and vibration. Remarkably, as a result of refinements in hull form and propeller design, the propulsion power is only 24% greater than that in Song of America, which is half the size of the new ship.
Externally the new ship’s funnel carried an enlarged version of the doughnut shaped lounge introduced in the Song of America. The RCCL paint riband looked wrong on models of the new ship’s hull, with its rows of large windows to the public rooms. After some experimentation the ship was painted with a riband around the uppermost cabin windows in the superstructure and three shorter bands on the main rows of larger windows in the hull.
The new ship was completed by the end of 1987 and named Sovereign of the Seas, thereby starting the RCCL use of its distinctive “of the Seas” nomenclature. After a Christmas crossing to Miami, she began her operational career on 16 January 1988, her commanding presence heralding the start of a new golden age of passenger shipping.
The basic specification of Sovereign of the Seas was – 73,192 grt; 268.3 metres Loa; 32.2 metres beam; 2,276 passengers on the basis of 2 passengers per cabin; 2,694 passengers max; 780 crew; service speed 21 knots.
One of Fain’s tasks was to find a future for the Gotaas-Larsen owned small Admiral Cruises. This was a company that operated elderly ships on three/four day cruises on both coasts of the USA plus an odd car/cruise ship working to Alaska in the summer and Mexico in the winter. Seabrook had tried in the past to fold his company into RCCL, only to be rejected because the Norwegians felt the short duration cruise market was tainted with a booze and gambling image. This prejudice was overcome at the time of the delivery of Sovereign of the Seas by Admiral placing an order with Chantiers de l’Atlantique for 48,000 grt ship specially designed for the short cruise market. The Norwegians accepted that this sector had evolved into a part of the normal family market and a merger was agreed.
By 1988 the operational style of RCCL was the consequence of two decades of bickering, pampered, self-indulgent and extravagant management. By stark contrast, Admiral typified the desperate, penny-pinching, precarious existence of the companies scraping a living at the very bottom of the US cruise market. Even with the improvements that Admiral’s new ship would bring, it is difficult to see how the RCCL board imagined that the two organisations could work together. None of the other board members realised that this transaction was the opening move in Seabrook’s secret plan to divest himself of all of his shipping interests.
Admiral Cruises was created in 1983, to bring together three Gotaas-Larsen owned single-ship companies. These were Eastern Cruises, Western Cruise Lines and Sundance Cruises. The company’s three ships were:-
Azure Seas was originally built for the Shaw, Savill & Albion UK-round the world service. After being withdrawn from this service she was extensively rebuilt as a cruise ship in Greece. Emerald Seas was built as US Navy troopship. After the war she was refitted as an interim transatlantic liner for American Export Line until their new tonnage was delivered. She then served with American President Lines, Hawaiian Steamship Company, American President Lines again and Chandris before being bought by Eastern Cruises. Stardancer was built to launch the DFDS ferry service from New York to Bahamas and Miami. This venture was a financial disaster and seriously undermined the on going stability of DFDS. The ship was brought back to Europe and placed on the Copenhagen to Oslo service, where it was much too big and she dwarfed her running mates. In 1985 she was sold to Stanley McDonald (the founder of Princess Cruises who had moved on to independently form a new cruise company). In 1986 she was bought by Gotaas-Larsen.
Royal Admiral Cruises Limited
Royal Caribbean History