This week at Fabled Voyages, we are going to discuss finances and solvency. This is a topic that has been coming up more frequently, particularly with the changes and challenges facing the Residential Cruise Industry, and rightfully so. When considering making a home at sea, the financial stability and long-term viability of the company operating that home should be an important consideration.
As a privately held company, Fabled Voyages is not required to publicly disclose its financial information, and even most publicly traded companies only release general financial statements and figures rather than a complete breakdown of every aspect of their operations. However, we believe that having conversations about our financial philosophy, planning, and approach to long-term solvency is important.
Throughout this week’s series, we will take a closer look at our financial planning, our approach to affordability, and the considerations that go into building a residential cruise operation designed to last. We want to give everyone a better understanding of how we approach these challenges and what we are working toward.
Is an “Affordable” Residential Cruise Possible?
At Fabled Voyages, we believe that our planning, ongoing goals, short- and long-term objectives, and underlying motivations are some of the things that will distinguish us from others in this industry. One of those motivations is the desire to offer a different approach to residential cruising, including the opportunity for people to slow down, travel longer, and truly experience the world rather than simply visit it.
Are we affordable? We are working toward making Fabled Voyages as affordable as reasonably possible while recognizing the costs, variables, and financial responsibilities involved in operating a residential cruise ship. We also recognize the importance of planning for the unexpected and setting money aside for a rainy day. Our goal is not simply to make something affordable today, but to create something financially sustainable that can continue operating for the years we hope it will.
However, affordability is subjective, and we recognize that residential cruising is a luxury and an expensive lifestyle. Nobody should go into this thinking that international travel around the world, particularly while living aboard a ship, is inexpensive.
Our initial affordability assessments were generally directed toward individuals and households within approximately the top 20–25% of U.S. income and/or net worth. As we continue reassessing our financial outlook, operational requirements, and long-term solvency, that target will change. It is possible that maintaining the financial standards and reserves we believe are necessary could mean that our offering ultimately becomes appropriate only for those within the upper 15-20% or higher.
Unfortunately, those living on a fixed or limited budget who can only comfortably afford a modest home or condominium, or who rely on living in a relatively affordable town or city to maintain their financial stability, Fabled Voyages may simply not be the right fit. We are not interested in draining the financial resources of our potential residents or putting anyone in a position where they jeopardize their financial security, their home, or their future just to live aboard our ship for a while. That is not what we want for anyone.
Affordability is relative to both an individual’s financial circumstances and where they live. Most people understand that what $500,000 buys you in Springfield, Missouri, compared to New York City, New York, or Chiang Mai, Thailand, can be dramatically different in terms of size, quality, amenities, and the surrounding community. The same principle applies to operating a residential cruise ship. Our operating environment and costs are considerably closer to those of New York City than Springfield, Missouri.
Do We Have Every Answer?
No, and we don’t believe anyone does.
Nobody could have predicted two years ago exactly where fuel prices would be today or how significantly those changes would affect nearly every aspect of our daily lives and the global economy.
For those of you who have spent extended periods traveling independently by RV or boat, you probably understand this better than most. Significant increases in fuel, maintenance, supplies, insurance, and other operating expenses can quickly change the financial picture of even the best-planned journey. As individuals, we should plan for changing costs, unexpected expenses, and emergencies. The same principle applies to operating a residential cruise ship, only on a considerably larger scale.
At Fabled Voyages, we periodically reassess our financial outlook and planning in response to changes in the world economy and the operating environment. We look beyond the initial costs and considerations for what it will take to maintain long-term operations and solvency. Part of that process involves expanding our baseline cost assumptions to account for changing expenses, unexpected events, and the financial reserves necessary to maintain the standards and quality of life we want to provide for our residents. We would rather plan conservatively and recognize that operating a ship cost more than initially anticipated than underestimate those expenses and find ourselves struggling to maintain operations later.
There is a significant difference between simply getting a ship underway and having the financial ability to keep it operating, maintained, and providing a quality residential experience for years to come. That difference is something we take seriously.
Why Not Just Buy a Yacht with Some Friends or Family?
Anyone who has the financial means and desire to purchase a yacht with friends or family can certainly do so. There is absolutely nothing wrong with that approach, and for some people, it may be the perfect way to travel.
However, we aren’t claiming that Fabled Voyages will be less expensive than purchasing and operating a private yacht. There are simply different considerations when comparing the two. With a private yacht, you are generally sharing a much smaller space with the same handful of people. You also have the responsibilities of ownership, maintenance, crew, provisions, fuel, insurance, and the many other expenses associated with operating a vessel. There is also a difference between having to be transported from one side of an ocean to the other and having the opportunity to make the ocean and the world your home.
With Fabled Voyages, our vision is considerably different. We are planning for a larger residential community, more space and openness, a broader selection of amenities and services, and the opportunity to experience the world contiguously alongside a much larger and more diverse community of residents.
To put some perspective on the comparison, we asked AI to help estimate the potential costs of purchasing a $18 million yacht with five residential cabins and continuously traveling around the world, one that would be able to cross an ocean independently. Using an estimated annual operating expense of $446,000–$682,000 per couple or cabin, that would work out to approximately $37,100–$56,800 per month, per couple or cabin. And that is after purchasing the yacht.
If five parties divided the $18 million purchase equally, each would be responsible for $3.6 million of the purchase price. With a 50% down payment, that would mean approximately $1.8 million upfront per party, with the remaining balance financed. For perspective, financing the remaining $9 million over 20 years at 8.5% interest would result in an additional payment of approximately $15,600 per month for each of the five parties, assuming equal ownership and financing.
Of course, these are illustrative estimates, and actual expenses would depend on the vessel, itinerary, operating requirements, financing arrangements, and many other variables. The point isn’t that one option is necessarily better than the other. It is that operating a vessel and traveling continuously around the world comes with substantial financial responsibilities, regardless of how you choose to do it.
Looking Ahead
At Fabled Voyages, we understand that financial planning and long-term solvency aren’t necessarily the most exciting parts of planning a journey around the world. Most people would rather talk about destinations, experiences, food, amenities, and the places they will get to explore.
We certainly enjoy those conversations as well!
We also believe that the less exciting conversations are some of the most important ones. A residential cruise ship isn’t simply a vacation or a short-term travel experience. It is intended to be a home, and that means approaching the financial responsibilities with a different level of consideration. Building something different in an emerging industry means learning, adapting, and sometimes changing course. As we have said before, we knew from the beginning that this would be like climbing a mountain. There will be challenges along the way, but reaching the summit is what makes the journey worthwhile.
Thank you for continuing to follow our journey and taking the time to learn more about what we are building at Fabled Voyages.