Continuing our popular series ‘The Rise & Fall of’ we are looking at Royal Olympic Cruises, whose collapse is a prime example of the dangers in the cruise industry. If you used to work for Royal Olympic Cruises or had been on a Royal Olympic Cruise please comment below, send us an email (Liam@Crociere.co.uk) or contact us on Twitter & Facebook. Continue reading
You probably would say that the current economic environment would be one you that you would consider launching a cruise line, especially not two. Continue reading
Royal Caribbean has today announced the purchase of Crystal Cruises from NYK, the purchase will see Royal Caribbean’s current Azamara brand merged into Crystal with Azamara Quest and Azamara Journey being renamed Crystal Quest and Crystal Serenity. Continue reading
6 Years ago I had an English Teacher, This English teacher was passionate about the Titanic and loved everything about it. He claimed however that Titanic was the most successful ship in the history of the world, and that thought grasped me. He had a point.
In the wake of the collapse of American Airline into Chapter 11 bankruptcy, I wondered if it was possible for a cruise line to perform a similar maneuver.
Now in the United Kingdom this came as a bit of a shock, the fact American hadn’t been into bankruptcy like Delta and United made us believe it was financially viable like our own British Airways, or Air France KLM. However we may have been distracted by the near collapse of Thomas Cook Group PLC, who needed to restructure its finances.
Now as I last covered Virgins Cruise Dream, and how in 2003 they may have been knocked off course by Island Cruises and Ocean Village Cruises. However it would appear that these cruise lines never throughly took to the market and neither are still operating, despite there apparent German counterpart Aida going from strength to strength.
The ‘First Time’ cruise market which these ships mainly catered for had three cruise options to choose from in 2007 Island Cruises, Ocean Village Holidays and Thomson Cruises. These lines operated in the 3-4 star bracket, and the ships were all over 15 years old.
Island Cruises was formed by Royal Caribbean and First Choice Holidays in 2001, starting operations in 2002, targeting the British cruise market with Island Escape, a former cruise ferry which had operated with a variety of cruise lines. During the launch the ship starred in the ITV show ‘Cruise Ship’ an Airline-esque tv show highlighting the ups and downs of cruising.
Island Escape was joined by Island Star in 2005, purpose-built as a cruise ship for Celebrity in 1990 this seriously improved Island Cruises product, with the new ship having Balconies and a large refurbishment prior to entering service.
However following the merger of TUI Travel and First Choice into TUI TRAVEL GROUP PLC which bought Island’s part owners into the same group as Thomson Cruises the line was disbanded, with Island Star going to Pullmantur and Island Escape joining Thomson Cruises.
Ocean Village was founded by P&O Princess Cruises PLC, a move which saw Arcadia transferred from P&O. Essentially a British adaption of Aida Cruises, Ocean Village was marketed as the ‘Cruise for People who Don’t Do Cruises’. It was this tag line that encouraged my parents to risk their hard earn wages to go cruising. As a safety anchor we did a week on land staying a Majorca, but more on our Ocean Village cruise next week. 😉
Following the merger of P&O Princess Cruises PLC and Carnival Corporation into Carnival Corporation & PLC (yes Dual Listed, a Anglo-American company!) Ocean Village received Aida Blu as Ocean Village Two in 2007. Then there was further talk of Oceana joining as Ocean Village Three, but this did not happen.
In 2008 it was announced that Ocean Village was to be disbanded by 2010, as the ships would generate a higher profit in Australia, who’s cruise market is booming, Ocean Village and Ocean Village Two where to join P&O Cruises Australia as Pacific Pearl and Pacific Jewel respectively.
Why didn’t we cruise Ocean Village again? I hear you ask. Well with the itineraries not having significant variation, and one of the great things about a cruise is the variety of destinations, our attention was drawn to other lines. But I think Ocean Village provided a suitable stepping stone to jump into cruising, something which no other line has effectively filled.
Both Cruise Lines, Island Cruises and Ocean Village provided a more informal cruising atmosphere, however since their founding nearly 10 years ago there has been a shift in the traditions of the more traditional cruise lines, with ‘Anytime’ dining, relaxed dress codes and changes in Entertainment offered onboard.
Furthermore the British Cruise market has changed, Independence of the Seas sailing year round from Southampton, this still shocks me, this ship is huge and sails year round! There are less ‘new cruisers’ than before, and the cruise ships sailing for the British Market; Ventura, Azura, Independence of the Seas & MSC Opera, are better than ever before!
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For as long as I can remember Richard Branson has been linked to starting a cruise line, to date this has not yet surfaced, and recently its been even more quiet…
The core aspects of the Virgin brand is to create a memorable experience, with flair and fun. Virgin Atlantic succeeds very well in doing so, and their advertising campaigns show this. Richard Branson has said that any Virgin Cruise Line would target a 30-55 age group, so would likely carry over these core aspects.
The reason that such an endeavour may not have happened is that starting a cruise line is expensive, and the market is growing mature in Virgins UK home. However I believe there is also the problem that people actually like their cruise lines, with Royal Caribbean basically offering what Virgin Cruise Line would offer. Virgin has done well by going into an industry which isn’t particularly customer friendly – airline, telecoms and banking, and providing excellent customer service, something which is a core aspect of the Virgin brand.
Unfortunately for Virgin no cruise line actively annoys and disrupts their customers to make such a strategy worthwhile in the cruise industry. In 2003 I wrote to Virgin Holidays suggesting they should start a cruise line, their response being that they will look into all markets.
It was back in 2005 when Branson made lots of noise about starting a cruise line, he even met Stelios who had just launched ‘easyCruise’ (covered here) It is even reported he met with executives from Royal Caribbean over plans for a joint venture. Although the UK market quickly boomed with Island Cruises, Thomson and Ocean Village all quickly adding capacity. Ocean Village was probably most like what the Virgin product would have been like. It was a real belief at the time that it was just a few months away til Virgin Launched a cruise line there was even reports in Lloyds List.
Back in 2009 CruiseCritic suggested that Richard Branson would start his proposed cruise line within the year. While this has not yet been the case rumors still persist about Virgins entry into the cruising arena.
However if such a project was launched between Virgin and Royal Caribbean, we expect it would take a similar form as TUI Cruises, with Celebrity Century starting off the venture, with perhaps a new ship like what has been just ordered at STX Turku. Any Virgin Cruise Line would benefit from Virgin’s international airline system and worldwide brand partners, for which cross promotion would be irresistable!
Now with the closure of Ocean Village and the merger of Island Cruises and Thomson Cruises, it would be my belief that Virgin do not have a cruise product planned, as people are happy with what the market provides, only when the market gets it wrong will Virgin be able to make a valid attempt, otherwise we have another Virgin Cola.
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Continuing our series on ‘The Rise & Fall of’ we are looking at Festival Cruises, whose collapse is the most recent, declaring bankruptcy in 2004. If you used to work for Festival Cruises or had been on a Festival Cruise please comment below, send us an email (Liam@Crociere.co.uk) or contact us on Twitter & Facebook.
In 1992 George Poulides founded Festival Cruises, it started services in 1994 with The Azur, which had been acquired from Chandris Cruises, This was followed by Bolero and with continued success the company added Flamenco to the fleet in 1998.
In 1999 the company added Mistral, its first new build, at a cost of $240 million. The ship was built at the same yard as the Normandie & Queen Mary 2, Chantiers de l’Atlantique in St.-Nazaire, France.
The ship was built as part of a strategy to locate the company in the middle of the cruise market, just above Royal Caribbean, but below Celebrity, with a distinctly European flavour, the company was not allowed to operate in the United States under the Festival name, as it was deemed to be too similar to Carnival, so the company traded as First European in America.
Following on from Mistral, two slightly larger improved sister ships were ordered for delivery in 2001 & 2002, to be known as European Stars and European Vision. These ships features more balcony cabins, but, like Mistral were never going to win a beauty contest!
This would give the company three large new ships, in the growing European market. Upon delivery the older ships in the fleet were chartered out, making sure the brand had a solid identity, two further options for Mistral class ships were passed on, later being picked up by MSC Cruises, becoming MSC Lirica and MSC Opera (We have toured MSC Opera here)
In May 2000 P&O announced plans to acquire Festival Cruises for $600Million, who would join P&O Cruises, Princess Cruises, Swan Hellenic and Aida as a European brand. However two months later the merger plan was dropped, due to the low value of cruise shares at that time.
Also joining in 2002 was ‘the ship that sank the Andria Doria’ the former Stockholm, now named Caribe, this ship is regulary forgotten as operating for the Festival fleet, she sailed out of Havana. Now this ship operates for Classic International Cruises as Athena, and is one of the oldest operating cruise ships in the world. This could surely have only confused the Festival cruises product.
During 2003, an interesting concept was launched between Festival and Hilton, where there would be 25 ‘Hilton Suites’ on its new builds, these would feature butlers who had been trained by Hilton, and the suites would contain Hilton branded amenities. The idea being that the line could use a trusted brand to expand further into the America market.
In 2004, Festival Cruises ships were arrested, and the battle lines were drawn for a complex bankruptcy, drawn out over five months. During this time Royal Caribbean, who had lost out to Carnival for P&O Princess PLC, were linked to takeover the company. The ships were arrested as Alstom (owners of the shipyard) claimed Festival had broken its
contractual financial obligations.
The company made a series of announcements that operations would restart, but slowly, one by one its offices were closed and the ships auctioned off. The company even attempted to relaunch with just its new ships, Mistral, European Stars & European Vision. In July 2004 MSC acquired European Stars & European Vision, to join sister ships MSC Lirica and MSC Opera. European Stars is now MSC Sinfonia. European Vision now operating as MSC Armonia. Mistral was sold to a group of French investors, who have chartered her to Ibero cruceros now named Grand Mistral.
The company, like a lot of cruise industry failures, went too big too fast. If acquired by P&O it is likely the company would still be operating. Of most cruise lines which declare bankruptcy, I think this one has probably gotten the closest to success due to its modern ships, ironically it was paying for these modern ships that caused their collapse.
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– Festivals Fuzzy Future – News article during bankruptcy
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– Festival & Hilton News Article
– MSC Opera Visit
– P&O + Festival Merger cancellation
The cruise ship for Libya, known as Phoenicia, which is currently under construction in France is up for sale. This follows the default on payment for the second instalment of the payment plan.
Phoenicia is part of the Fantasia class, of which MSC have MSC Fantasia, MSC Spendida and MSC Divina. The similarity in the design has meant that MSC are seen as the lead bidder for the 140,000GT cruise vessel, the ship is currently due for delivery in December 2012. MSC Cruises head Pierfrancesco Vago has been quoted as saying the ship would make a suitable addition to the fleet, In addition Lloyds List reported that MSC FRANCE boss Erminio Eschena said his company was considering to buy the vessel.
When ordered, it was widely wondered why Libya’s GNMTC (General National Maritime Transport Company) has ordered one of the worlds largest cruise ships, who would cruise on Gaddafi’s cruise liner? And with 4000 passengers this would not have been a small operation, with Americans likely to stay away the ship would likely have been targeted to the Domestic and Southern european market. There was also a suggestion the ship would be chartered to MSC. At the time or ordering GNMTC were quoted as saying ‘We haven’t got any plans for the time being. We have just ordered it.’
As for the interior decoration of the vessel would also be similar to that of the others in the Fantasia class, which would mean that for a traditional cruise operator to take over changes in design could be small.
Other possible bidders include TUI Cruises who have been continuously mentioned as requiring an additional cruise ship and P&O Austalia, as competition down under heats up. Perhaps even NCL, with their previous history of buying abandoned cruise ships will prevail? Who knows, but they will have to be quick for a December 2012 launch.
Personally I hope its MSC, as MSC Phoenicia sounds quite nice, and it would make a suitable addition for the rest of the fleet, with her three sister ships. Once MSC Divina is delivered next year MSC have no further ships on order.
Tripoli Post – http://www.tripolipost.com/articledetail.asp?c=1&i=4681
GNMTC Press Release – http://www.gnmtc.com/default.php?pname=News&cat_id=1&art_id=81&la=1
This blog is a long one, and based on what I currently understand about Carnival Corporation & PLC, as well as economic principles which I learnt in sixth form and at Maersk Line during yield management. There is no doubt flaws, but I’m a student, so tell me what you think.
Carnival is an amazingly successful business, which has delivered strong earnings and growth, however its internal set up confuses me as an outsider and I just feel that there is an easier way to do business. I have used the three main headings: Intergrate, Outsource, Internationalise.
The aim of this report is to suggest possible options on how to improve clarity in how Carnival Corporation & PLC operates, as well as reduce costs and improve yield. Basically if I was Micky Arison I would do this…
As a legacy of being separate companies Carnival appears to operate semiautonomous divisions namely:
Holland America Line – Seabourn and Holland America
Princess Cruises – Princess Cruises
Costa Crociere – Costa Cruises, Aida Cruises, Ibero Cruises
Carnival UK – Princess Cruises UK, Cunard, P&O Cruises, P&O Australia
Carnival Cruise Lines – Carnival Cruises
I would dissolve all these separate divisions, instead splitting the company into managing its business in regions, with Carnival UK managing all Carnival brands in the UK. In Europe, Carnival Europe (Costa Crociere) dealing with all Carnival brands in Europe and so on. I believe this is how Royal Caribbean operate, but again don’t know.
My example for Intergrate would be at Carnival UK were Holland America Line and Carnival Cruise Lines have separate offices from P&O, Princess and Cunard who are based in Southampton. HAL and CCL are based in London, surely there is enough space, perhaps by moving some desks round to combine the offices in Southampton, releasing expensive office space in London.
Another example being Holland America and Princess who are both on America’s east coast, I would combine the offices, there would be duplicated jobs which could be removed, HR, Payroll, Purchasing. I would also centralise many departments under the corporate banner.
As part of this integration I would effectively stop each brand being responsible for several functions they previously managed (as they had been centralised), there is a problem of the brands then slowly losing focus. But by creating Brand Ambassadors who would manage the marketing, and lobby the centralised functions for their brand could keep the distinct brand image. The brand ambassadors would be like a board of directors whose sole aim is to improve their brand.
I’ve called this section ‘Outsource’ but it doesn’t necessarily relate to outsourcing. Firstly my example is that Maersk Line moved a significant amount of functions to Liverpool in order to move out of London, there was two reasons for this, the wages in Liverpool are lower than that of London, and there is also a large talent pool to choose from. Secondly office rental prices are MUCH lower in Liverpool, saving significant amounts of money.
In addition Maersk Line also outsourced functions which could be performed overseas in cheap countries to them countries, by implementing strong communications links between the offices, it became just as easy to speak to someone in India than someone across the office. Maersk also used Six Sigma to sort supply chain problems, but without working in the industry this would be impossible to consider applications for passenger shipping, but small changes in business operation yielded great results.
An example of outsourcing in the container shipping industry meant that online bookings which were previously completed by staff in the UK was transferred to lower cost countries, jobs which involve basic data entry made sense to move overseas as the internet has made such possible, easily.
I would pause from moving ‘contact centres’ overseas as people hate phoning overseas call centres and it can ruin a person’s opinion of a brand, which is what Carnival is building.
Carnival have previously commented that Cunard is their sole international brand, I believe Holland America and Seabourn both can be ‘internationalised’ under these new plans, which these larger possible audiences and the new corporate structure Carnival could charge higher prices, as the market for the product is larger, improving yield, also both of these fleet operate worldwide itineraries meaning there is no need for redeployment.
Why Holland America? – Well I believe there is no European equivalent to Holland America, and with an aging population in Europe I believe Holland America would make a great fit in the European market if more people where aware of the product. Its closest rival in my mind being Celebrity Cruises seem to be doing well in Europe naming Celebrity Silhouette in Hamburg earlier this year.
Why Seabourn? Again, Like Holland America I believe that Seabourn could, through bet promotion as part of the Carnival family improve sales in Europe, Asia and Australia. Its new ships providing a great opportunity to go worldwide.
The theory behind ‘Internationalise’ is that of Kraft’s purchase of Cadbury, which then allowed Kraft’s brand of chocolate ‘Milka’ to piggy back into news agents and supermarkets on the back of Cadbury’s Dairy Milk.
I believe that Carnival is taking slow steps towards this model, as in the United Kingdom Carnival UK represents Princess Cruises, but this could just be a legacy of how the former P&O Princess used to operate. I expect Carnival already outsources a lot of functions already.
I think the plan outlined above would work, and simplify the Carnival product line up, It would be great to hear from someone at Carnival on what they thought of my plans and suggestions.
Well I’m not sure how this one will go down, viewing figures for some blogs have confused me in the past week. The stuff i thought would be popular hasn’t been! (I’m not expecting this to be too popular) But Ship Visits always go down well!