Occasionally I come across something in life that I know is going to be huge.  To be fair I’ve felt that way about a few losers in my day (*Ahem* Segway) but i’m usually more right than I am wrong about the tech even if I don’t pick the market leader or i’m a bit too early in my adoption.   For example, I had the Samsung SPH-i700, a smartphone with a camera a half decade before the iPhone popularized that particular technology. I owned DVDs before the actual players came out and well before I could actually afford one.  I had a DVR right when TiVo came on the scene.   I encouraged several investor friends I knew to invest in high speed always on internet companies in the era of AOL dialup, they made a mint as the tech exploded.  There were of course many many others. It was usually, but not always, technology-based.

You may look at that and say that cruising has little in common with the next great tech advances I could spot early on.  But if you really think about what the cruise ships are, you realize they can be looked at as the world’s biggest gadgets.  Consequently I love cruise ships.  Maybe not sailing on them as much because i’ve found that i’m a bit more susceptible to motion discomfort as I have gotten older, but I do love the underlying tech and the industry.   I loved it so much that when I first experienced them I opened up a cruise only travel agency and ran it with my wife for about a decade. That’s where I learned about  the history of the growth of the industry.

A Brief History of Modern Cruise Ships

Cruise ships, or more specifically the leisure cruise industry as we know it today didn’t exist throughout the majority of the last century.  Although there were always leisure cruises, they were rare.  There were many large ocean liners to be sure, but until the ascendance of intercontinental air travel for the average person, they mostly existed as the primary means of transportation for international travelers.  As the airline industry grew to the point where the majority of travelers switched to speedy and relatively low cost jet flights, one by one the transatlantic lines went out of business.  Many of the ships were repurposed for leisure cruises.  Carnival corporation started this way in the early 1970’s by acquiring ‘existing tonnage’ which is industry parlance for old ocean liners.  It was the early 1980’s with the one two punch of Carnival going public (and in that process Wall Street learning exactly how much money cruise ships can generate) and building its first ship purpose built for leisure cruises which set off the investment and ship building boom that resulted in the industry as it sits today.  The first ships were small compared to today’s new builds.  They would have smallish cabins that shared bathrooms or would have bunk beds built into the walls.  The pools were small, the public areas, shopping and restaurants were also very limited compared to what we have today.  Most importantly, almost none of the earliest ships had balconies.  As time went on, competition and innovation drove up the size of ships as well as the options available on the ships including so many balcony cabins that the they looked more like condo’s on Miami Beach than they did ships. Modern ships have transitioned from their genesis as passenger vehicles to floating cities replete with multiple restaurants, entertainment venues, and even different neighborhoods. They include areas that are like shopping malls and city streets. A few of them even had something that is sort of like a greenway or city park.  

 So what happened to the first generation ships?  Well it’s not very much different then when a family buys a new car.  The old one goes to the kids or a family member if it’s not sold.  Such is the case with the Cruise industry, the secondary brands that are in the lower producing markets get these older ships.   The ships would go from the premier brand to a secondary brand and then they are sold to independent small time cruise operators to be used as day trip boat or a floating hotel and casino boat.  After they live out their lives as something like a Casino they tend to be sold for scrap.  That was the old model, I think a new one is about to take over the world.  

It’s not just the Ships

Nothing big ever happens in a vacuum.  Naturally some other  influential things happened about the same time which helped act as a catalyst.  One thing that was happening simultaneously as the growth of the market was the development of a huge population of cruise aficionados.  These people loved everything about cruising and many have gone on dozens of cruises.   Most were normal people with regular jobs and average incomes.  Like any population there are outliers.  Some of these people who loved cruising were wealthy, and when I say wealthy I mean extremely wealthy.  Of course there was a segment of the cruising market that catered to ultra lux, but there was also  a couple of experiments in cruise ship condos.  Since a new build cost hundreds of millions of dollars and space is finite even on the largest ships, there weren’t as many apartments that could split up the cost of the ship. This is why only the ultra-rich could afford the multimillion-dollar cruise ship apartments.

Another thing that happened was the growth of reality television, and a segment of reality television was shows that catered to aspirational experiences. It started with lifestyles of the rich and famous.  There were also many shows like House Hunters International and Island Hunters where the living room set got to see up close and personal how the ultra rich could own multiple homes throughout the world, some in exotic and highly desirable locations.  There were shows about “The World”, the first Condo Cruise ship. There were shows about retirees who actually lived on traditional cruise ships full time.

So what do we have? You have a unique environment of supply and demand coming together in harmony. We have a proven business model that there are some people will want to spend their lives living on a ship that circumnavigates the globe. You have a media infrastructure already in place promoting the hell out of that lifestyle as aspirational. You have a tremendous amount of old tonnage from the initial cruise ship building boom that’s about to be considered too old and outdated to compete with the rest of the industry. You also have a hotel and casino boat market which is arguably not big enough to support most of this older ship inventory.  The options are float them to the scrap yard or come up with something new.

Something New: Brilliant Repurposing

This is where our story really starts. I get a quarterly ad packet in the mail from some company that builds itself as “World’s Greatest Vacations”. It’s mostly just Flyers of mid to high-end cruises and all inclusive resorts. There was one new flyer in this last packet from a company that was branded “My Home at Sea”.  It was promoting condos on cruise ships for under 200k. Knowing the financial realities of cruise ship condos my immediate first thought was that it was a timeshare program targeted at cruise ships but my curiosity was piqued so I wanted to look into it a little bit further. I checked out the Facebook Link and found that they were surprisingly responsive to the chat requests and although there wasn’t too many details, because they still wanted to come out with a big bang announcement, it didn’t feel like they were pushing timeshares. This got me interested enough to do a little more digging.  I found the name of the parent company, ItsAfloat.  Yes, the name is cheesy, but so was ResdenSea, the parent company behind ‘The World’.  I guess we really are running out of decent URL’s.   It was reading the investor pages on their website when it all came together.  I run across several things that I think are ridiculous pitches in the past, but remember, I sold cruises for a decade and have followed the industry with an intensity even after I was done trying to grow the business.  I absolutely knew there was something there.    Just because there is a good business model, a great opportunity, and the type of lateral thinking that potentially creates a sensation, doesn’t  guarantee success.  I had several questions come to my mind.   

The Questions

There are several questions that came to my mind.  The first one is: Is there enough cruise aficionados in the upper middle class to support this potential new industry?   I often lament that there isn’t a strong enough retirement infrastructure for the middle class, but that doesn’t mean that none exists.  A fairly smaller subset of the population that has enough money to cruise regularly will have enough to invest in a second home, possibly one that is a cruise ship on a permanent circumnavigation.  

The second question is how much are these residences going to be like owning rental property at the beach, i.e. never ending costs?  This is another thing i’m familiar with living in North Carolina where many middle and upper middle class families have a second residence at the beach.  If you are ok with high levels of investment risk, probably putting in a little money every month (they usually don’t completely cash flow when a  mortgage is attached b/c of high maintenance costs) and dealing with the challenges of rentals to offset most of the costs of ownership, then there is a financial and lifestyle benefit to owning the property.  I can’t imagine that the cruise ship condos are going to be much different.  

How long is the reasonable life out of these ship condos?  Buildings can last a hundred years or more, sometimes several hundred years with proper maintenance.  These ships are planned to be well into their third decade before they are repurposed for these lower cost and middle class targeted condos.  Will modern ship designs transcend time well and continually be able to be upgraded over generations or are they still destined to go to the scrap heap, but now with a couple of decades reprieve?

How will this change the industry?   If this takes off as I expect it to, then this part of the lifecycle of the ship will be factored into future ship builds.  So the ships that start getting designed in the late 2020’s and early 2030’s are going to have an eye to the eventual conversion to condos.  That means the ships will have better full time housing related amenities for the millennials and generation next when they retire in the 2060’s and 2070’s.  For those of us in Generation X, well we’ll just have to deal with floating condos that may be a little quirky when it comes to full time living.  


These questions make me cautious.  One of the beautiful things about having a few years under my belt is that I have a more developed sense of caution.   This leads into warning bells that go off when something big is under consideration.  Cruise condo’s are not any different than any other big purchase so you have to look beyond the marketing literature.  I came up with a couple of things that keep me from wanting to sign on the dotted line today.  

Investment or Cost:  The biggest question is that property ownership is generally investment that always has some worth.   Even during the housing crisis the value of stick and brick permanent homes that were over leveraged never went to zero.  They may have lost half their value, but over time they recovered. That’s not really the case for products like mobile homes.  They go down in value like a rock and if not attached to land, eventually they have a net worth of zero.  Unfortunately I think this scenario is much more likely of an outcome for the cruise ship condos.  It’s not going to be something that can be passed down forever, you may get another 20 or 30 years out of the hull after the conversion to condos but unless i’m missing something, that’ll be about it.  I don’t know many banks that will give a mortgage on a property that may only be around for 20 years.    

Timing:   Don’t forget that the first part of the cruise ship building boom had lackluster ships compared to what is available today.  Also there will be a learning curve with the first few ships that ItsAFloat converts.  They will do some things right and some things will need to be redone, or just lived with and not repeated.  To me, that means proceeding with extreme caution.  The first iPhone was a great proof of concept but it was the second year launch of the  iPhone 3G with the app store that was the first true viable and life changing consumer grade smart phone.  The same may be said about the first conversions.  We just don’t know at this point.  

This is a rare article on this blog about the collision points between work and life where i’m not really venting about some major challenge of the professional class.  I rarely find myself saying, hey, if you do the right things, here is something really cool to consider.  Over the next year I will put much more effort to discuss the positive versus the challenges we face in life. This article is a bit of a precursor to that.   

This idea of repurposing old cruise ships to allow something that feels like rich and famous lifestyles for the professional class offers a good mix of optimism and pessimism.  I am optimistic that there is going to be a cool new option for those of us who get a little lucky, work our tails off, exhibit extreme discipline and retire in financial category that allows for a second home, even if it’s relatively modest.  I’m also optimistic that there will be business opportunities in and around this new type of market that can be very profitable, at least until the vendors figure out how to extract every last penny, which by the way, is why I advise to never sell someone else’s product.  

I’m not so hot on some other aspects.   I’m positive that there will be gotchas in fees, market undulations, and there will be big disappointments in the early adopter population, because there is always is with generation 1.0 products.  A repurposed cruise ship converted to condos targeted at mainstream consumers has to be one of the biggest 1.0 product launches in history, physically and maybe even economically.  

What I’m going to do and Advice for you!  

My wife and I always planned a retirement that was 6+6, meaning six months somewhere that’s cool in the summer and six months in somewhere that’s warmer in the winter.   This idea has me rethinking that plan.  If I can get my sea legs back it may be 6 months in the USA and 6 months circumnavigating the world.  If I can land a gig that’s 100% telecommuting I may even consider transitioning when the second or third series of ships gets converted.  It would be nice if my kids could get a real international perspective that I never had but most likely the right ships for me won’t be converted while they are young.   I figure the timing will be right when something like Royal Caribbean’s Voyager class is repurposed for condos.   Voyager hit the oceans in 1999 which means she will be converted around 2029 to 2039 if the 30-40 year window remains.  I’ll be 57 to 67 years old at that point and should have the flexibility to really consider it.  

My advice to anyone considering this new concept would unsurprisingly be to not stray to far from what i’m doing.  Unless you can afford to completely lose all the money it’ll cost to buy and maintain a cruise condo, sit back and watch the early adopters buy the first round.  See if costs and values go up or go down.  Look at the pro’s and con’s after normal people have bought in and spent a bunch of time living the cruise condo lifestyle.  Do they quickly get bored?  Are they creative with itineraries and shipboard lifestyle?  Are the hidden costs too much?  Let’s face it, a special assessment from the HOA for a new ship azipod or unexpected drydock is going to be a hell of a lot bigger than spending a couple hundred bucks to put new sod down in the public areas of your condo.  These are the types of things that is better to be figured out by someone else.    

If all these things get worked out, if the promise of affordability matches the reality of costs and if the re-engineering and conversions of these ships really do make them ideal for year round living then there is something really cool coming.  Something I would say is unique and a great way to leverage your retirement, assuming you are fortunate to have panned for a good one.   At that point, if you love to travel by ship and this idea tickles you as much as it did me,  then I would say full steam ahead and the first round of Saki is on me when we get to Japan!   

Posted by Mike Peluso

Mike Peluso writes about the collision between between the business / professional world and life. He also writes about the journey involved with the Peluso Presents efforts including the Blog, Books, and Podcast so that others may benefit from his efforts. From Mike: I spend hundreds of hours working on these articles every year with no compensation other than support I get through donations. You can support with a tip and by Subscribing to the Podcast (and writing a review on iTunes would be really appreciated as well!) One time tips: www.paypal.me/pelusopresents https://venmo.com/pelusopresents

One Comment

  1. […] I had written about the idea that we were on the precipice of another transition in the market for these old ships.  There had been some successful experiments with condo cruise ships.  They weren’t owned by big cruise lines but by very wealthy people who loved the big-ship cruising lifestyle. They paid an annual management fee and either lived on the ship full time or part time and had the option to lease out their condo when they weren’t using it.  It was a ship based model very similar to other vacation properties in exclusive areas.  I knew there were some companies emerging who were going to use the oldest tonnage and take that ownership concept, and sell it down market to the middle class. Once a ship was at the end of its commercial cruising life, they would buy it for cheap, refurbish it and sell the cabins piecemeal to upper middle class cruise afficanados, of which there are now hundreds of millions of people who cruised their whole life.   When I wrote about all this, I advised caution when moving forward with these cruise condo companies.  I was thinking caution because I knew that it would take some time before this new market segment built around refurbished condo ships settled out and there was less risk in buying a condo on one of them.  Also, as I opined, I was going to jump in when it was time for the ships with balconies, i.e. the second wave of purpose built cruise ships, was released into the condo cruise ship market.  The earliest purpose built cruise ships still sailing were built in the 1980’s and 1990’s and didn’t have balcony cabins.  I figured by the time the second generation of ships hit, everything would have figured itself out and the condo cruise ship market targeting the average consumer would be a stable place to buy a vacation property. COVID changed all this.   […]



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