MIAMI (Bloomberg) ? Royal Caribbean Cruises Ltd. will pay at least $698.3 million for a third ship to expand capacity on its luxury Celebrity Cruises line.

German shipbuilder Meyer Werft will construct the 118,000 gross-ton vessel at a cost of $245,000 per bed, Miami-based Royal Caribbean said today in a statement. Each of the three planned Solstice-class vessels will hold 2,850 passengers, more than the 2,000-person capacity of Celebrity?s four Millennium ships.

Royal Caribbean, the world?s second-biggest cruise operator, is adding three new vessels to the Celebrity fleet as operators build ships and add features such as gourmet food to boost demand even as higher fuel prices cut profits. The company can earn more from Celebrity cruises than voyages on its Royal Caribbean line, said A.G. Edwards & Sons Inc. analyst Tim Conder.

The addition of the third ship ?shows management?s commitment to expanding the Celebrity franchise by giving them the flexibility to add itineraries and home ports,? said David Leibowitz, managing director at New York-based Burnham Securities, which owns Royal Caribbean shares.

Celebrity comprises about one-quarter of Royal Caribbean?s passenger capacity, the company said. The line competes with Carnival Corp.?s Princess and Holland America cruise lines, said Leibowitz. Royal Caribbean operates 29 ships, including nine Celebrity vessels.

Celebrity ships often travel to more exotic locales than the flagship Royal Caribbean vessels, said St. Louis-based Conder, who has a ?buy? rating on the shares and doesn?t own any. By expanding Celebrity, Royal Caribbean is ?trying to offer a trade-up to people who have taken a cruise,? he said.

Each of the three Solstice ships will be 1,033 feet (315 meters) long and have larger staterooms and more balconies than most cruise ships, Royal Caribbean said. The unnamed ship announced today is scheduled for completion in June 2010. The Celebrity is set to be finished in 2008 and the Celebrity in 2009.

Royal Caribbean has three ships under construction for its flagship line, said spokesman Michael Sheehan. The company agreed in February to pay a record 900 million euros ($1.1 billion) for the vessel codenamed Project Genesis, which will be the world?s biggest cruise liner when it is delivered in 2009.

About 11.7 million passengers will take a cruise in 2006, a 4.5 percent increase from 2005, according to Cruise Lines International Association, a New York-based trade group.