Seabourn Has Record Sales Day - What Does It Really Mean?

Seabourn announced it had its single busiest day of sales this past Monday with 830 calls in 11 hours.  It also noted bookings have risen by 40% over the prior month and there remains a very high level of first time guests. 

Now, keeping it real, while there is no way to turn the information into bad news, I do wonder how much of it is really good news.  We know that cruises that were selling for $5,499 per person last year are selling for as low as $2,499 this year.  We know that rather than selling 3 208 passenger ships and then adding the 450 passenger Odyssey, the 450 passenger Sojourn is now open for booking, so available berths are up over 125%.  In addition the booking window has increased, so bookings are being made into April 2011 (a full two years out).

One has to wonder how many of the bookings are going to stick.  Crystal Cruises recently admitted that they had pretty good success in getting bookings, but when final payment time came there were serious issues.  Crystal thinks it has adjusted its strategy and is now finding more consistency between deposits and final payments.  I am not aware of Seabourn having a similar problem, but I don't have any data other than my own to say that it should not find itself in a similar situation.

That said, and not being terribly swayed by statistics generally (ex. are less bookings at higher prices of more value than more bookings at lower prices?), I do see something pretty remarkable compared to the other luxury lines.

I repeatedly hear that Silversea's marketing over the past year has left most people wondering, "What is the product that I am going to receive?  Am I going to be paying for alternative dining?  A children's program?  French Polynesia?  Refurbished Silver Cloud?  Any details on the Silver Wind?"  Regent's marketing has left more people thinking, "Huh?  Let's fight over what tours are included, at an added premium, or simply unwanted.  Let's wonder when the food will improve and the service actually be consistently top notch."

The net effect for these two lines has been reduced bookings and, in the case of Silversea the problem of having increased inventory (with the Silver Spirit coming on line in December) and spreading its already thin passenger base over more ships.

But Seabourn is like a rather elegant bulldog...confidently moving forward unconcerned with its challengers.  It says, "This is Seabourn.  We do not compromise.  We are consistent.  You know what the product is you will receive."  And maybe...just maybe...in these uncertain times it is why I so enjoy selling Seabourn cruises and so many people are finding enough confidence to say that now...or in the future...they are willing to rely upon Seabourn to deliver a true luxury cruise vacation.

So it is not the record sales day that means much to me, it is the consistency of the phones ringing and the increased bookings with the increased inventory that tells me Seabourn is doing something right.

Some Thoughts About Silversea Cruises

I was trying to stay away from another concerning post, but the news about Silversea Cruises needs to be discussed.

I have said for a number of months that I have concerns over Silversea's future.  In November 2008 I wrote Silversea - Lost at Sea? which was followed by a telephone call from Marilyn Conroy, resulting in my early December 2008 post Silversea- A Call From The Captain .  The news I have been hearing is not really any different from what I expected, but it is not what I would call good news.

Late yesterday it was reported on a variety of shipping sites that Silversea is effectively indefinitely postponing (canceling) its second new ship.  Now, the wording in these articles, quoting or referring to Amerigo Perasso, Silversea's CEO, is interesting.  I found the most accurate and complete quotation to be as follows, "But I don't anticipate us taking delivery of a second ship until a couple of years after the delivery of the Silver Spirit...I think we are approaching a moment when it will be very interesting to go back to the drawing board and sit down with Fincantieri...Commodity prices are going down dramatically, and not just the price of steel, and the order book of the yards is lagging. I believe it was a good idea not to confirm that option too soon."

But this information (which I will discuss below) must be coupled with two other important facts: 

     1.  Silversea is effectively mothballing the Prince Albert II for months due to slow...and I mean really slow...sales; and,

     2.  Silversea had put off indefinitely the refit of the Silver Cloud, which was scheduled to occur shortly.  According to Silversea, "The drydock is now scheduled to address the technical issues that ships need every so often as well as replacing some carpets as needed. The bathrooms, additional deck, new suites, flat panel TV's (which require a complete rebuilding of the cabinetry), etc. have all been postponed."
Clearly there are financial issues at work here, but that is not to be unexpected.  What really concerns me is that other than the Spirit (and I cannot help by believe there was an intention to confuse the market by picking the identical name of a Seabourn ship...not a class move at all!), there is a huge pull back. 
That may be fiscally responsible or fiscally necessary, but it most definitely is not a message you want to be sending out to the market.
Silversea has, in just a few months, gone from a cruise line that was consistent across the board to one that you need a flow chart to know what each ship offers. So you want to go on a cruise and you are looking for a luxury experience?  What flavor of Silversea are you looking for? 

You know I have been emphatic that, especially when talking about luxury, there has to be - what's the magic word?:  Consistency.  Silversea has now positioned itself to have four (4) distinctly different ships.  Silversea will have one ship sitting idle, one ship in need of upgrading, one ship put off entirely, one ship refurbished and one new ship.     That is not a fatal flaw, and I do not mean to infer that.  But what I see are bigger problems coming...and soon.  I may be wrong, but here is my reasoning:

The delay...really canceling...of the second ship makes sense.  In this economic climate, visions of grandeur if you do not have the financial backing, simply is not an option.  (Why do I say "cancel"?  Because comments like not having a new ship until a couple of years after December 2009, means 2012 at the earliest and "going back to the drawing board"  effectively means that.)  I did not condemn Regent for doing it and do not do so as to Silversea.  So let's take that off the table other than to say the reasoning must relate to long term cash flow and Silversea's obvious perception that there is not a potential for a real return on investment in the next few years as its cash stores are depleted by a soft market not being as profitable as prior years.

I then look at the 50% off and 25% commission offerings.  That is discounting far beyond Seabourn's 40-65% discounts and seems to be a real scream for cash.  Add to that the charging for specialty restaurants and the change to less expensive Filipino crew...who were admitted not properly trained when installed on the ships.

Then I look at passenger loads.  One ship is actually vacant; not a single passenger for months.  The other ships are running at around 50% capacity or less.  (Yes, some cruises are higher occupancy, but not consistently.) 

Then I look at the cancellation of the Cloud's refit.  This screams of there not being enough cash in the coffers.  There may be enough to pay for the work (I don't know), but more importantly it tells me that Silversea is looking at its longterm situation and is now looking to keep its cash; calculating that its net cash from sales to reduced passenger loads will not be greatly affected by the loss of luxury quality on the Cloud.  (Remember my comments about downgrading a Five Star to a Four Star?  I am not saying it necessarily applies, for it is still a nice ship...today, but keep it in mind.)

There is no question that Regent's $40,000,000 refurbishment was designed to help it compete with the new Seabourn ships.  Seabourn's service and cuisine, by anyone's standard, is as good or better than any other cruise line's; and most would consider it to be the best.  Regent's "ace in the hole" has been its suites and multiple dining venues.  With the Seabourn Odyssey and Seabourn Sojourn, that immediately disappears, so the quality of the public spaces had to be improved.  [Also, I believe Regent has changed its demographic -so while demanding "Six Star" it shoots for the premium market; there by insulting itself a bit from the Seabourn luxury pull.  (Pricing is now a huge issue, though.)  But I digress.]

Silversea also sees Seabourn as its primary competition.  It has been providing a true luxury cruise experience and its "ace in the hole" was pretty much the same as Regent's (that why I spoke of Regent above).  Silversea sought to meet Seabourn head on:  New ships to counter Seabourn's new ships and to replace its aging (though not ancient) hardware.  Significant refurbishment of its older ships to keep their competitive edge over the Seabourn triplets (which are being modernized in many ways bit by bit).  The Prince Albert II, to grab the younger wealthy adventure traveler away. 

Now where is Silversea?  Regardless of whether Silversea is making the most prudent decisions regarding cash flow, the consistent issue I see in all of them is the failure to honor its plan.  As I showed, Silversea is now a fragmented product with a little here, a little there.  I am just now sure where it winds up.  But what I do know is that a steady course is really needed at this time.

If I have one suggestion, it is one I give credit to Seabourn for:  Make sure your service and cuisine is consistent.  (This is where Silversea has drawn the most criticism of late.)  Seabourn has a very loyal following on the oldest ships in the luxury business because of it.  Silversea's situation, from an operational (not fiscal) standpoint, need not be terrible.  Focus on the maintenance of a consistent luxury product.  Is that merely what I think?  No.  Mr. Perasso was quoted in the same articles as saying he would not reduce Silversea's luxury services. 

Service issues, cuisine issues and extra charges is  what I am hearing at the prime Silversea issues, as noted above.  Maybe Mr. Perasso's words will be backed by some of those unspent construction and refit funds to address these issues. We shall see.

Silversea - A Call from the Captain!

Late today I received a call from Marilyn Conroy, Silversea's senior vice president of sales and marketing concerning my most recent post.

We had a wonderful chat about Silversea, her perspective on a number of my comments, concerns and theories. And, of course, I listened carefully to both the information she had to share as well as her perspectives.

With Ms. Conroy's permission I want to share the following comments:

First, I am assured Silversea is financially sound. According to Ms. Conroy Silversea has invested $500,000,000 in the purchase and refit of the Prince Albert II, the refurbishment of the Silver Wind and Silver Cloud and, of course, the new Silver Spirit. While I do not equate spending money with having money (Wall Street are you listening?) Ms. Conroy's assurances as to the owner's financial strength cannot be ignored; taken with a grain of salt, possibly, but they most certainly are worthy of note.

Second, news on the Spirit has admittedly been slow in coming and brochures have been delayed because, in part, the desire to have the itineraries perfectly set. However, I am advised that the Spirit is still scheduled to be delivered in December 2009 and, in fact, there may even be a Christmas Cruise offered somewhere in Europe. I am told information will be forthcoming around the first of the year, so we will all have to stay tuned.

Third, I am told the concept behind the desired passenger mix is as a result of Silversea's vision of creating the ambiance of a grand European hotel. Along those lines, the passenger mix is approximately 55% North American and, of those guests, approximately 51% are first time guests from North America. This is actually pretty similar to the information I previously provided here. I can't say if it is a pure marketing scheme or one created out of the reality of where bookings are of recent history coming from (i.e. with the then weaker dollar), but it is what it is.

Fourth, passenger loads/occupancy is not what Silversea (or frankly any cruise line) wants it to be but Ms. Conroy claims Silversea is running at about 80% or so of capacity...which is actually an increase from a few years ago.

Now for the other, not as positive, information - but provided with all due candor...and that is, to be sure, priceless:

Fifth, the Prince Albert II in French Polynesia was not a good idea. It is an exploration ship and, thus is without a pool...not a good thing for many in French Polynesia. (Though, frankly, I don't think I ever went into Regent's Paul Gauguin's pool after spending my days in the sea.) It just didn't sell. So the ship is literally being laid up and will be doing Antarctic and Artic voyages. That is why there is a hole in the schedule. My question was answered, but laying up a cruise ship (no matter the size) is not one's favorite choice as it just costs money with absolutely no return.

Sixth, according to Ms. Conroy the change from European to Filipino staff was done, in part, because some of the European staff were not as friendly as they might have been. However, the training of the Filipino staff was not instantaneous and there was a significant learning curve. Personally, I am not buying this one. While there are definite cultural differences between Filipinos and Europeans (and many cultural differences between Europeans!) this all comes down to training, training and training (as well has happy staff). I have had wonderful Filipino staff on Celebrity and outstanding European staff on Seabourn. It can be done regardless of culture...even though the styles may be different as a result of those cultures. I also remain convinced that the change was, in the other part, a cost savings measure.

Finally, the 25% commission offering combined with 50% off savings. As I tried to explain in my original post, 50% off savings are not really 50% off of a real price. Ms. Conroy also correctly points out that Silversea does have 50% off savings for its past passengers from time to time and extending it to first time guests is not the most desirable thing, but in this economic climate all cruise lines are sweetening the pot (my words) so different schemes are tried.

Further, while the 25% commission rate is very high (and, again, I hesitate to provide the "normal" rates) the design was asserted to be a motivator. Again, I am not sure I am buying that one. I sell the cruises my clients desire. To claim I would sell them a less desirable cruise because I would be making more money is not exactly a compliment. To be sure not every travel agent is as passionate about the business in the long run as I am, but whether it be the exploiting of greed or providing a way for agents to provide additional savings to their clients, the 25% commission thing still bothers me and indicates something isn't right. (We can agree to disagree on this point.)

So what does this all mean? It means that communication is a wonderful thing. Expressing different perspectives on the same facts is a fantastic way to allow each reader to decide for themselves where things are...and if they are relevant to them or of just passing interest.

I am pleased that the Cruise Lines read my blog. I am more pleased that they speak with me and provide me with information. That is, in the end, a great benefit to you. You get the real information, discussion and perspectives.