How to Buy a Cruise Ship for own use..

One of the areas in shipbuilding that takes place far from the public eye is financing cruise ship deals. For obvious reasons, Holland America Line doesn’t like to discuss specific figures for all the stuff that goes into building a cruise ship. After all, they wouldn’t want their competitors to find out what they paid for the buttons on the captain’s uniform, right?




ENB sat down with Tim Murphy, director of budgets and planning for Holland America Line, and talked about cruise ship financing in very general terms.



“First, you make an economic decision about whether you need a new ship,” Murphy said. “Then you negotiate a price with the shipyard. Generally, you then make a down payment, usually in the range of 5 percent. Then there is a series of staged payments while the ship is being built, with a final big payoff at the time the ship is delivered.”



Murphy said that Eurodam is being financed by Holland America Line through Carnival Corporation’s ownership of the company. “We are in the enviable position that we can self-finance a new cruise ship due to our parent company’s strong blanace sheet and solid cash flow,” he said.



Another of Murphy’s areas of responsibility is warranties. A cruise ship is a very large, complex machine made up of lots of smaller systems and moving parts, and just like with a new car, the owner is going to want warranties for a set time period in the event that there are problems with any parts or systems.



“Pretty much everything on board that’s not a consumable, like light bulbs and that kind of thing, is under warranty for a year,” said Murphy. “Larger, more complex and more critical systems like the engines or water treatment plant would have an extended warranty.”



Before the line takes possession of the ship from the shipyard, any outstanding warranty issues are negotiated and a pre-delivery list of things that still need to be done such as painting, laying carpet or other cosmetic finishes is made and the shipyard is obligated to finish those tasks as soon as possible.



On the day of the actual delivery, Holland America executives including President and CEO Stein Kruse, Fincantieri representatives including Chairman Corrado Antonini and usually Carnival Corp. Chairman Micky Arison gather in the Crow’s Nest Lounge to review the contract and sign the ownership paperwork.



Then, a Holland America exec on a cell phone says, “Transfer it,” and a Fincantieri exec on a cell phone across the room says,”Ricevuto,” and the transfer from the cruise line’s account into the shipyard’s account of several hundred million dollars begins. After that, there are handshakes and congrats all around, a champagne toast is made and a new ship enters the Holland America Line fleet.