Late last night I received word that NCL's holding company is in the end stages of negotiations to acquire Prestige Cruises, which owns Regent Seven Seas and Oceania lines. Things are still dicey and it could fall through, but given the owner of Prestige also has 20% ownership of NCLH it would seem this is a deal between kindred spirits.
If approved, this puts NCLH in a position to challenge RCCL and Carnival Corporation on a more even footing. The current offer on the table is for $3 billion dollars.
Last edited by Dave Beers; September 4th, 2014 at 02:34 PM.
I have no doubt that some Regent and Oceania loyalists are aghast at this deal. In some ways it is a form of mass hysteria. Even though the steak served to them on Oceania is cooked by the same staff and the beef was sourced from the same supplier as before the acquisition, it will now bear the mark of Norwegian and suddenly be less flavorful and tough.
I remember the Cunarders were among the most horrified when Carnival started buying up cruise lines and they got swept up in a deal. A friend of mine lives in England and regularly sails Cunard and he tells me the line is every bit as good as it used to be, if not better.
I have spoken to both Kevin Sheehan and Frank Del Rio (the CEOs of NCL and Prestige, respectively) and I like them both.
But I know Frank and he is a very tough and steadfast thinker and negotiator. Sheehan allused to "rough times" and "having our differences" during the negotiations. (also, just for the record, there was also an independent board of negotiators actually hammering out the deal).
But the $50-million "bonus" to Prestige to be given at the end of 2015 based on certain "performance metrics" is interesting. Prestige is currently about 50% more pre-booked than Norwegian, and with a new ship and just continued growing popularity Prestige believed that their 2015 growth potential was not baked into the deal - and that is the reason for the $50-million contingent bonus if they reach certain metrics (I assume sale figures, per diems (and other technical cruise terms for how much money they make per customer per day)
When asked Del Rio said "I'm committed to staying until thru 2015" but Sheehan responded "Of course we are hoping and expect to keep the relationship going far longer than that."
I would not be surprised if Del Rio chooses to retire early. He strikes me as a fellow who burns the candle at both ends, plus he has a big family and is family oriented.
On the other hand, I feel Sheehan (who came from the car rental industry and frankly inherited most of the NCL cruise experience from his predecessor) is looking forward to learning a lot from Frank, especially when it comes to marketing and brand image.
Let;s be honest, NCL has improved its lot a great deal since Sheehan took over, but it has plainly just been through growth, not through changing the product. There are other aspects such as Travel agent relationships that I don't have personal access to see, but the difference between the two in terms of approach is vastly different. And Frank doesn't have much patience with picayune (meaningless) details when it comes to business - he knows what's worthwhile and what isn't, and that's the way he rolls.
I think of Sheehan's obsession with making Getaway "New York's Ship." All the hype and PR areound that - and has it sold an extra cabins?
Del Rio focuses on just one thing - the guest experience and effiency in delivering it without sacrificing quality. NCL could learn a lot in that area.
I am thinking the number of years Del Rio stays on will be directly related to how much he feels personal satisfaction in what he does. He has groomed a great COO, by the way, in Kunal S. Kamlani.
But I just can't see Frank at a meeting discussing having the Rocketts come on the ships to eats Sabrettes hot dogs as a marketing pitch.
Same goes with all the Miami Dolphin cheerleaders and South Beach disco hype for Norwegian Getaway. I was on the inaugural voyage and enjoyed it very much, but at the end of the day it was still a mass market cruise and none of the passengers that I encountered were there for the "Miami experience". As with the Sabrett hot dog stand on Breakaway, the Getaway has a Cuban style food bar. But every passenger I met who was from south Florida told me they weren't really interested in it because "we get the genuine thing, and better, every day if we want".
Norwegian has successfully gotten past the Colin Vetch era but they need more than a mojito bar, Cuban sandwiches, and dirty water hot dogs to really be distinctive.
Ideally, what Norwegian wants is to elevate its entire cruise experience and especially sell "The Haven" a lot more. That is one thing they are really hoping to get out of Prestige is that database of more high-dollar cruisers. (that's a trade secret, though, so I didn't just say it).
Frank made a very interesting comment in the conference call. Some guy asked if buying Prestige would "hurt" Norwegian's image because it no longer had the youngest fleet, etc.
Frank answered "You have to understand that in mainstream cruise lines the ship is the experience - but we are not like that. Our cruisers are experienced travelers who want comfort, great cuisine and destinations. The ship is not the main focus."
That is all true, and really suggests there is not really an over-abundance of commercial synergy between the lines - except for the Haven. Most of the benefits will be behind the scenes, as Sheehan pointed out.
They expect an immediate cost savings of $25-million, which one analyst pointed out is really a very low number, but Sheehan laughed. he said "that's what we see immediately, but long term there could certainly be much more.
There is immediate savings in fuel & supplies, but long term you get better interfacing with travel agents, airlines, ports of call and marketing cost efficiency. Also crew enrollment and maintenance. But those things take time to develop.
Yet to be mentioned is how they will treat the three loyalty programs: Oceania Club, Seven Seas Society, and Latitudes. Will they offer equivalent recognition on all three lines for certain tier levels, such as RCCL does with their brands? Or will they leave them totally separate as does Carnival Corporation?
I am interested in how they will market the Haven to RSSC and Oceania customers. Norwegian doesn't seem to have a problem selling out the Haven currently, so how will that work out if enticements to try Norwegian's Haven are offered to RSSC and Oceania loyalty members? And, while the Haven is certainly exclusive and has doting service, I don't think the food in the Haven restaurants is at the level of that served in Seven Seas or Oceania.
I am a Regent loyalist who strongly supports the purchase; just wish that Del Rio was jettisoned in the process. NCL and Regent were the first two lines to do away with fixed seatings and also formal wear; I think it is a great fit.
It appears you feel Del Rio has been a negative influence on Regent.
For those who don;t know - Frank was the Founder/owner CEO of Oceania and he built it up from scratch. Then the Apollo Mgt Group also acquired Regent and they asked Frank to become the CEO of both cruise lines, so he did.
This was after Frank tried a sailing on Regent and the rumors are that he found some things that he found to be unexpectedly subpar - particularly in the food department.
Out of curiosity - What are your thoughts about Del Rio, more specifically, Marc?
I don't really think you have targeted the right person for your ire. Frank was with Renaissance until the end - maybe you are thinking of Ed Rudner, the CEO of Renaissance that was ousted.
The decision of when to build the new ship was in the hands of Apollo (the board of Prestige which they controlled). It was made before Frank was even affiliated with Regent. They were focused on financing the Oceania ships and it wasn't until Riviera was finished that rumors of the new ship for Regent were even starting the get verified. When it was announced, Frank was made CEO of both companies.
Frank's main focus at Regent was the food, so if it is better you can thank him.
Yes, Frank wanted the name Oceana, and he was tripped up by the trademark, but by then they had already invested a fair amount into branding the name, so they did not want to outright change it. Personally, I don't see the name "Oceana" as being so predominant that it was "untouchable" it was just the name of one of P&O's older ships, as I recall. And in truth they didn't want to be pedantic about the pronunciation. It is easier to say Ocean-EE-a.
So far, out of all your complaints, I have never heard anyone else even mention any of these criticisms, so it makes me wonder if you are just looking for things to criticize.
The one thing where I will give you some possible agreement is the destinations. I don't know about the destinations for Regent or what has changed. Are they docking in more remote port facilities now? That was often one of Frank's tendencies where I would agree with you that they could do better.