How to Start a Cruise Ship Company

by Catherine Capozzi; Updated September 26, 2017
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If you have millions of dollars in start-up capital and want to give people romantic honeymoons on a ship destined to Puerto Vallarta from San Diego, starting a cruise ship company may be a suitable business. Ryan Wahlstrom of the Cruise Market Watch website reports the worldwide cruise market raked in $29.4 billion in 2010. However, starting a cruise ship company is wrought with regulatory issues and tight competition from industry giants such as Carnival and Princess.

Step 1

Address the bureaucracy of starting a cruise ship company. Register the cruise line in a foreign country such as Liberia and Panama. Doing so will ensure your business avoids stringent U.S. regulations pertaining to environmental restrictions and taxation. Marianne Jennings, author of “Business: Its Legal, Ethical and Global Environment,” notes several cruise lines take advantage of loose foreign regulations as a way to have employees work for lower than the minimum wage in exchange for room and board.

Step 2

Buy ships. Expect to pay up to $1 billion for just one large vessel capable of carrying over 5,000 passengers. A 2006 article in "The New York Times" states that Royal Caribbean International spent $1.24 billion for its ship built by Oslo-based ship maker Aker Yards.

Step 3

Develop routes. Plan the cruise based on regions. Common U.S.-based destinations include Hawaiian Island cruises, California to Mexico destinations and Florida to the Caribbean Islands. Get a license from the port agents of the city where the ship will dock. Parking a large vessel requires coordination with officials of the city or state.

Step 4

Determine the pricing structure. Calculate how much it will cost per person per night. Include room, utilities, food and entertainment. Devise a markup but keep the price aligned with the rates of competitors. Charge high markups for goods and services provided on board, such as pictures, cafes, cigarettes and alcohol. Ross Klein, author of “Cruise Ship Squeeze,” states the fare itself may generate a loss with the knowledge that the captive passenger’s spending will yield considerable profit.

Step 5

Hire labor. Advertise the ability to work on a cruise ship on college campuses: Many recent graduates, particularly in theater, welcome the chance to work on cruise ships before establishing their career on land. Find staff to handle the food preparation and service, onboard activities and entertainment, booking and reservations, janitorial aspects and safety.

Tips

  • If your capital is low, consider starting a niche cruise ship company of small ships that offer high-end food and intimate rooms. Instead of spending billions on one ship, purchase several, million-dollar yachts. Charge considerably more money per person than a larger cruise line, and tout the exclusive, personalized nature of the company.

Warnings

  • Carry extensive liability insurance. Tumultuous waves and kitchen fires pose the greatest threats to cruise lines.

About the Author

Since 2008 Catherine Capozzi has been writing business, finance and economics-related articles from her home in the sunny state of Arizona. She is pursuing a Bachelor of Science in economics from the W.P. Carey School of Business at Arizona State University, which has given her a love of spreadsheets and corporate life.

Photo Credits

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