Seabourn and Silversea Cruise Lines - Are They Really Competitors?

At first blush this may seem like worse than a naive question, but one that is just silly. I mean, how could the two largest true luxury cruise lines not be direct competitors?

Yesterday I learned some very interesting statistics. Silversea claims that it actually has more former Princess passengers on it ships than Seabourn guests. More Holland America passengers. More Cunard (actually the highest percentage). More Crystal. In fact, when providing the statistics Seabourn wasn't even mentioned; and clearly isn't in its top four sources of prior cruisers.

When first faced with this surprise I was, frankly, shocked. Of course Seabourn had to been in the mix, didn't it? But then I started thinking...as I do.

Silversea provides a very upscale product; no question about it. It has gone through, and probably will continue to go through changes, while it struggles with its present situation. However, Silversea has stressed that it is not cutting back, but rather adding value through essentially keeping the product the same and lowering prices. (I do not acknowledge that to be true - I don't have personal knowledge - but that is the company line.)

Seabourn also provides a very upscale product, but what I experience and what I hear consistently - even with the launch of the Seabourn Odyssey - is that it is the staff that makes Seabourn Seabourn. (How many expressed concerns abouth whether Seabourn could deliver the same quality service on its larger ship? I have not heard a single person say Seabourn hasn't succeeded.)

Aside from opinions about cuisine and service levels (or, better, style differences) the ships are markedly different. The Seabourn triplets with only 208 guests are yachtie and the 450 passenger Seabourn Odyssey provides the same yacht-like service. Silversea, however, provides a large platform for all its ships (which are medium to medium-large). Is that why Silversea mentions passenger to space ratios rather than differences in service? Probably.

So with the similarity, and knowing that many cruise these lines to be on the ships first of all and itinerary second, why isn't there more cross-over? My experience tells me that I have a much more prevalent move to Seabourn from Regent and Celebrity (and a bit from Oceania). I have had Seabourners try Holland America or Cunard...once. But not so much the other way round. I do have some serious Crystal clients that happily swing between it and Seabourn.

One interesting observation: Seabourn's ships are sailing pretty full this summer. In fact, Seabourn is running into situations where it is oversold. Silversea, on the other hand, ha thrown everything it has (butlers, $1,000 onboard credits, deep discounts, etc.) to attract more guests...and its ships still have significant space available.

With such great deals (and they are) why aren't more Seabourn guests giving Silversea a try? I believe that at this level the guests know what they want and it is not necessarily about getting the best deal...when measured solely by the dollar/pound/euro.

Backtracking to the move-up clients, it would appear that it is a bit more in what the style of service is provided (or, in some instances, marketed) in the mass market/premium market that a particular person latches onto and becomes comfortable with. Every line tries to pitch some sort of service difference and, it would seem, that comfort with the "hint" given on Princess may build a natural acceptance to Silversea's marketing, while the "hint" on Celebrity favors Seabourn.

Regent is a whole 'nuther kettle of fish which I will address another day. Suffice it to say, as I recently discussed with a client, Regent seems to be more of a premium line with great suites; rather than a luxury line with great service and cuisine. It is when those that have been trained that what is truly faux luxury discover what luxury cruising is truly about, the change to Seabourn or Silversea happens. My experience is that there is no real trend toward one or the other. In that respect, I guess, Seabourn and Silversea do directly compete.

I guess, then, it is not so ironic as a top seller of Seabourn cruises I also tend to sell more Celebrity and Oceania than I do Silversea, Princess or Cunard. Mind you I sell them all, and am very familiar with each, but I cannot ignore the trend.

Funny thing, "This is My Yacht" and "Starring You" do have some symmetry.

Waiting for Last Minute Cruise Deals or Lower Prices For Your Preferred Cabin or Suite? You May Miss the Boat!

While all you have been hearing is news of new sales by the cruise lines, the fact is that while prices may be lower, passenger loads are actually increasing nicely and are, on some lines, even ahead of 2008.

Princess just sent out an email that the other day was the busiest booking day in the line's history.  SeaDream Yacht Club just stated in a conference call that it anticipates increasing its fares.  CLIA (Cruise Line International Association - the industry association) stated earlier this week that overall cruise line sales are up about 2.8% over last year.

To what extent this trend holds true for the luxury lines I am not sure.  Personally I am finding many Seabourn cruises this Spring to be very short on suites; one A2, a couple of A3s and such.  My cruise on the Spirit in September is essentially sold out.  Obviously that is not true for all cruises, but the sales are getting more bodies on the ships.  On the other hand, Regent is getting pretty aggressive as to added value while pretty much maintaining their "highest in the industry" pricing; Silversea is not seeing (from what I can tell) full ships, Crystal is apparently having light loads and Seabourn is running fairly aggressive discount promotions.

I have seen a definite trend toward less cruises, but for longer cruises with higher bottom lines.  Essentially my luxury clients are seeing "value" and, especially in rough economic times, "value" can be more important than price.  So rather than taking a one week cruise that last year would have cost $9,000, this year's similar cruise costs $6,000...so spending $12,000 for two weeks is such a great "value" makes the decision easy.

To be sure, I (and many travel agents) are spending almost as much time repricing previously booked cruises as booking new ones.  As a result I have figured out quite a few pricing strategies that can provide even greater "value" to my clients.  (I could let you know what they are, but then you wouldn't need me...at least as much!)

What I am wondering, and I have no data on this, is if the cruise lines (especially the inclusive luxury ones) are trading dollars for passengers, but are losing revenue because of the lower fares.  (Less passengers paying higher fares vs. More passengers paying lower fares)  On the mass market lines, the holy grail of onboard revenue plays a large part in revenues, so I can understand the discounting a bit more.  Only time will tell if luxury net revenues are up or down. 

But, if you are looking at cruising in 2009 I am getting the feeling that NOW is the best time to book your cruise. 

Cruise Lines' Fuel Supplements Suspended by Carnival Corp.

With oil prices having plummeted to $46 a barrel, Carnival Corp. has suspended (not eliminated) its fuel supplement for all of its major brands: Seabourn, Cunard, Holland America, Princess, Costa and Carnival.

This is how it will work:  A refund of the fuel supplement will be made in the form of a shipboard credit for all bookings within the final payment period for departures on or after December 17, 2008. All bookings outside of the final payment period for departures on or after December 17, 2008 will be adjusted to remove the fuel supplement and guests will be provided with a revised final payment amount.

I am confident the other cruise lines will follow suit shortly. 

Now, if only for the airlines!

Carnival Corp.'s Response to Anticipated Cash Flow Reductions: Shareholders, Not Passengers, To Feel the Pinch

Carnival Corp. (owner of Carnival, Princess, Costa, Holland America, Cunard and Seabourn) announced yesterday that it was suspending the distribution of dividends for 2009; not because of a lack of profitability - Carnival's products are, and are projected to remain, profitable - but because of a change in cash flow and cruising habits on most of its brands.

Even though Carnival reports it is sitting with over $1.3 Billion dollars in cash, it is anticipating that (as occurred immediately post 9/11) (1) people are not as easily committing to cruises 6-9 months or longer in advance, so the immediate cash flow from the deposit payments is reduced; and, (2) people are not willing to travel as far to get to their cruise vacation (and the increases in air fares and reduction in airline service doesn't help). 

What this also means is that people are going to be booking more of the less profitable Caribbean cruises than the higher profit European cruises on most of the Carnival brands.  Ships are being repositioned as we speak; with, for example, Baltimore announcing it will be a home port for Carnival, Royal Caribbean and Celebrity on an extended (almost year round) basis.  [Note:  Seabourn is not taking these steps.  It has, in fact, announced its expansion into Asia and its commitment to finding additional unique European ports.  More to come on this.]

One other thing to consider, there will not be many new ships added to order books.  So what is seen as a lack of shipyard capacity today, may result in an overcapacity situation in a few years.  To me this is a classic example of how the economy is grown from the bottom up.  If the consumers aren't spending money...or even just aren't spending it as fast...the businesses contract, the investors get less in the short term and industry retracts. 

With Exxon Mobil announcing $13.8 Billion dollars in profits in the 3rd Quarter, one wonders what the effect of shorter cruising itineraries (driving first by the outrageous oil prices and now by reduced/changed itinerary demands) will have on the 4th Quarter 2008/1st Quarter 2009 profits.  We have all seen the drastic effect a 5% drop in U.S. driving has done on the price of a gallon of gasoline, so the cruise lines' changes will most definitely have some affect.  I think those investors - who have been extremely happy over the past few years - may see a bit less in the way of dividends and stock value increases.

While I am not thrilled with the concept of Carnival suspending dividends to its shareholders for 2009, in the long term (as Mickey Arinson asserts) this bit of fiscal conservatism (rather than gimmicks) is designed to assure Carnival will remain fiscally strong in the long term.  (Now reflect on some of the short term gimmicks I wrote about earlier in the week and you can better understand why I see some of them as Red Flags.)

Report: Regent Seven Seas to Cease Operating Paul Gauguin in 2009 - UPDATED- Renovations Announced

A reliable travel industry source is reporting this morning that Regent Seven Seas will be announcing that it is ceasing operating the Paul Gauguin at the end of 2009.

While I have heard this sort of news previously - believing it to be more of a negotiating tactic than anything else - the fact is that Grand Circle Travel owns the ship and with the departure of Princess Cruise Lines from French Polynesia it really has the market cornered. (True, Star Flyer is there and Silversea is offering its Prince Albert II for a limited period of time, but they put little dent in the year round market that Regent had tapped.) Therefore, it is not surprising that GCT may want the ship for itself.

When one considers the high cost of chartering, the high cost of airfares, the high cost of operations, etc. in French Polynesia, Prestige Cruise Holdings may have decided that in this economy it had better consolidate and focus on its core product.

UPDATE: In an apparent consistent twist, today (October 16, 2008) Paul Gauguin Shipping Limited, not Regent Seven Seas Cruises, announced a $6,000,000 renovation of the ship. It will include the conversion of 26 Category D oceanview staterooms into balcony staterooms (done on the exterior, so the staterooms remain the same size), modifying Le Grill (the poolside dining area) and Le Veranda's (the alternative restaurant) al fresco dining area, recarpeting and upgrading the public areas/internet cafe and "refreshing" the staterooms (whatever that means). The work is to be completed during the late January - early February 2009 drydock in Brisbane, Australia.

Also, on October 10,2008 PGSL announced it has a new Executive VP of Sales, Roy Grimsland. "He will be responsible for driving product sales of the five-plus star, 332-passenger Paul Gauguin." Interestingly, Mr. Grimsland worked for Radisson Seven Seas "where he launched and drove sales of Paul Gauguin for seven years" according to Cruise Industry News.

I will update this as information becomes available.