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Residential Cruise Ships on the Rise

October 9, 2006 By: Joe Pike Travel Agent

The World will have competition from at least two other residential cruise ships by 2009

The World has proudly described itself as the only residential community at sea ever since the cruise ship first launched four years ago. However, with the Four Seasons' upcoming vessel and the Magellan, owned by Residential Cruise Lines, Ltd., The World now has to make room for some competition. The World, the first residential sea community, launched in 2002 (above, in Hong Kong)

But when Travel Agent spoke with Nikki Upshaw, senior vice president of sales and marketing for ResidenSea Ltd., the management company behind The World, the reaction to the seemingly bad news was a bit surprising. "I think it's a great thing," Upshaw says. "The school of thought is we will always be the pioneers and the first ones who launched this genre of lifestyle. To have other companies entering into the arena is validation for what we have done." Imitation is the highest form of flattery. If The World had failed, as is the possibility for any company that enters an untapped market, there would be no competition. If The World hadn't been successful, perhaps other companies wouldn't have given the idea of building a residential cruise community much thought. And that's a Catch-22 that Upshaw welcomes. "The fact that in four years, we are already seeing two other companies join the market shows how well we have done," Upshaw says. Ocean Development's The Four Seasons, slated to launch in 2009

After all, the only reason the Four Seasons Ocean Residences, developed by Ocean Development, would have even considered balking on its now seven-year mission to launch its first residential cruise ship, the Four Seasons, by 2009 was if The World had been a failure, says Leif-Erik Hvide, partner and senior vice president of sales, marketing and strategic planning for Ocean Development. "They had the idea in '95 and launched in '02, which was the year we began planning this," Hvide says. "So, it made sense to use them as a model of what to do and what not to do and we wanted to see if this was a market people were going to be interested in. It was natural since they were the pioneers of this product that they were going to make some mistakes," he says. "We wanted to duplicate what made them successful and eliminate some of the mistakes. The World has eliminated those mistakes as well." The retractable marina on Residential Cruise Lines' $750-million Magellan

One such "mistake" Hvide says that The World
made and that he didn't want the Four Seasons ship to make was incorporating
more than 80 studios to be used by the occasional cruise passenger, as opposed
to the remaining units, which serve as privately owned homes.

Upshaw says that owners did not like the idea that some of
the units were privately owned and others weren't. Responding to the feedback
from its passengers, The World sold all of its studios. Perhaps the
smartest offering by The World, at least as far as travel agents are
concerned, is its policy for renting out unoccupied residences.

Owners are allowed to rent out their property. Agents
receive a 10-percent commission for rentals and 1-to-2-percent commission for
any sales.

About 5-to-10-percent of all of its units are expected to be
resold, Upshaw says. That's a number agents should pay especially close
attention to, since The World sold the last of its 165 on-vessel homes
this summer, proving that there are enough ultra-luxury travelers who want to
travel the seas throughout the world without being away from their own quarters
for too long.

This success led to Ocean Development signing an agreement
with the Four Seasons in 2003 and one with Aker Yards ASA in 2004, Hvide says.

The Four Seasons' Ocean Residences vessel, the Four
, will be 48,600 tons, 720 feet in length (219 meters) and 12 decks
high. It will house 110 residences, ranging in size from an 800-square-foot,
one-bedroom unit, priced at about $2.5 million, to a three-story,
7,000-square-foot penthouse that goes for more than $25 million.

The stage was set for The World and the Four Seasons
Ocean Residences to be the only two companies in the residential cruise ship
business before Residential Cruise Line, Ltd., announced recently its plan to
get in the mix with the 2009 launch of its Magellan, a $750 million

Randall Jackson, CEO of Residential Cruise Line, drew up the
idea for the ship just last year, says Teri James, spokeswoman for Residential
Cruise Line. James says there are already preliminary plans to build two more
vessels in the future.

"The reason I think this market is so appealing is that
it's perfect for anyone who likes to travel and then wants to immediately go
back home," James says.

"I think there will be more and more competition in
this market. What it will come down to is who offers the best service and the
best amenities, and that's the Magellan. There is no competition as far
as we are concerned."

Plans for the ship include a retractable marina, on-call,
private Bell
429 helicopters and 300 ports of call; all are reasons why James is confident.
Pricing on the Magellan starts at $156,250 for a one-month ownership of
the two-bedroom Barcelona.
The three-bedroom St. Tropez will start at $276,000 and the four-bedroom Cannes will start at
$358,000. Full ownership of residences on the Magellan will range from
$1.875 million to $8 million.

Units have already been sold on both the Magellan and
the Four Seasons. James would not disclose how many of the Magellan's
units have been sold, but noted that sales have "far exceeded our
expectations." Hvide says about 30 units have already been sold on the Four

James says it's too early to say what rental opportunities
will be available aboard the Magellan, but noted that property owners
will most likely be given the option of renting out units, either using their
own travel agents or going through Residential Cruise Line.

Although specific details aren't finalized yet, Hvide says
that agents will have commission opportunities if they book rented units. Units
on the Four Seasons must be rented for at least 30 days, he says.

"I would say that with the other companies involved
now, there is going to be a tremendous amount of potential for travel
agents," Upshaw says.

"For the agents who can sell this type of travel,
ultra-luxurious travel, this will be a phenomenal earning opportunity for them
and that will only grow as more and more companies get involved in this market.
I think the fact that we have others involved in the market is great news for
agents," he says.

Residential Cruise Line, Ltd. ,
480-497-8833,; The Four Seasons Ocean
, 305-438-7447,;
ResidenSea, Ltd. , 800-970-6601,

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