Richard Fain Named to UK Travel Hall of Fame – Other Cruise News: Viking Ocean Cruises Goes To Italy – Does Princess Listen To Its Passengers?
by Kevin Griffin
Royal Caribbean Cruises chairman and ceo Richard Fain was inducted into the British Travel & Hospitality Hall of Fame last week. As an executive, he spent thirteen years in London with the Norwegian shipping company Gotaas-Larsen, an early one-third shareholder in Royal Caribbean and owner of Eastern Cruise Lines. In Miami since 1988, Fain has been involved with Royal Caribbean for thirty-three years and at its head for almost twenty-five. His biggest regret must be having lost to Carnival a decade ago in his attempt to take over P&O and Princess Cruises. But his success in expanding Royal Caribbean worldwide into half a dozen brands and building the world’s largest cruise ships must far outweigh that set-back. Elsewhere, Viking Ocean Cruises have moved from France to Italy to build their two, option three, new oceangoing cruise ships, which will be slightly larger, at 998 berths and delivered slightly later. Finally, two Panamanian fishermen died in the Pacific last month because the master of the Star Princess was not informed that their small fishing boat was in trouble after some of his passengers reported their plight to a crew member. One has to ask, does Princess Cruises listen to its passengers?
THIS WEEK’S STORY
Richard Fain Named to UK Travel Hall of Fame
Richard Fain, chairman and ceo of Royal Caribbean Cruises Ltd was last Tuesday inducted into the British Travel & Hospitality Hall of Fame at London’s Savoy Hotel. Created in 1994 to recognize individuals who have made an outstanding contribution to the travel and hospitality industries, past recipients have included low-cost airline pioneer Sir Freddie Laker, Sandals founder Butch Stewart, Virgin boss Sir Richard Branson and Carlson chair Marilyn Carlson Nelson.
Other inductees for 2012 include Abercrombie & Kent founder and executive chairman Geoffrey Kent, British Airways chief executive Willie Walsh and Stagecoach Group ceo and co-founder Brian Souter.
Fain joined Royal Caribbean in 1979 as an outside director, and became company chairman and ceo in 1988. Under his leadership, the business has grown to become the world’s second-largest cruise operator, with its brands Royal Caribbean International, Celebrity Cruises, Azamara Club Cruises, Spain’s Pullmantur Cruises, Croisières de France and a half interest in Germany’s TUI Cruises.
Prior to joining Royal Caribbean, Fain spent thirteen years as treasurer, chief financial officer and joint managing director of Gotaas-Larsen Shipping Corp, a London-based owner and operator of cargo ships.
At a breakfast hosted by Pricewaterhouse Coopers and law firm Gates and Partners on Wednesday, Fain was questioned about the development of Royal Caribbean and the industry in general. One of the first questions was about the extent to which cruise lines now rely on increasing their on board revenues to maintain their profits in these days of slow economies and discounted fares.
Fain’s response was agile, as he said that even if 30% of revenue came from on board spend “and other revenues,” this still meant that they depend on fares for 70% of their revenue. This may be true, but just a few years ago that figure was probably closer to 80% of revenues and a 30% proportion is still 40% extra on top of fares.
Fain then went on to volunteer how much more Royal Caribbean was dependent today on the children’s market. He suggested that once you had kids on board, they, being at an impressionable age, would keep coming back – his phrase was “we own them.”
With the presence of Shrek and other Dreamworks characters on Royal Caribbean ships, not to mention rock climbing walls, ice skating rinks, flow riders and Johnny Rockets, this is probably quite true. The average age of Royal Caribbean passengers is now 40.
Another point he made was that when he first started with Royal Caribbean in Miami, the line had only four ships, all sailing from within sight of his office, whereas today more than half of the company’s revenue comes from outside of North America. This is especially true since recent years’ advances into Europe, South America, the Far East and Australia and the addition of new brands in Spain, France and Germany.
On the subject of getting more people to cruise, Fain made the comment that negative impressions and imagery collected early in life were hard to change and that previous cruisers were five times more likely to book a cruise than non-cruisers. Stressing how important the travel agent was to Royal Caribbean, he maintained that “first time cruises are sold and not bought.”
And when it was suggested by the interviewer that once people book a cruise the cruise lines “don’t need agents any more,” Fain was quite emphatic that this was not the case, and that Royal Caribbean relies upon agents to supply the bulk of its business.
While some in the UK think that Carnival UK, having cut agents commissions to 5% this year, want to cut out agents and take more direct bookings, Fain, however, said that Royal Caribbean “will take no precipitate action” on commission levels.
And on the subject of UK agents rebating, a field that was largely inhabited by P&O agents in the past, Fain pointed out that he did not think the system was broken, and that the people who benefited from rebating accounted for only a small percentage of the overall. With Royal Caribbean and Celebrity each bringing one more ship to the UK in 2013, Royal Caribbean lines will keep their options open while continuing to pay the usual minimum commission level of 10%, as do other lines in the UK. Carnival UK, i.e. P&O, Princess and Cunard, on the other hand, are holding to 5%.
Finally, Fain stressed how Royal Caribbean’s modernization programs for older ships were designed to bring those ships up to the standards of newer tonnage so that its lines deliver a consistent product. This is especially necessary as the majority of the company’s passengers continue to cruise on older ships. He added that while “Oasisization” was a little more difficult to pronounce than “Solsticization” that was indeed what was happening as older ships go to shipyards for some quite extensive updates that go well beyond mere refurbishments.
In fact, on top of the recent Celebrity “Solsticization” work, Royal Caribbean is spending $300 million on its own “Royal Advantage” program of ship updates, a sum that is itself enough to build a moderate sized cruise ship.
OTHER CRUISE NEWS
Viking Ocean Cruises Goes To Italy
We brought you the news late in December that Viking Ocean Cruises, the oceangoing sister company of Viking River Cruises, had negotiated a contract with STX France of St Nazaire, who had built the eight Renaissance ships, Crystal Serenity and Regent’s Seven Seas Mariner and are now building Hapag-Lloyd Cruises’ Europa 2.
This agreement called for two 41,000-ton 888-berth ships for delivery in the spring of 2014 and spring of 2015, with an option for a third. News came early this month however that negotiations had come to an end, evidently as the subject finance could not be completed.
Now on Thursday comes news from Viking Ocean that it has signed a new memorandum of understanding with Italy’s Fincantieri for two slightly larger 45,000-ton 998-berth ships, with option for a third, for delivery in late 2014 and late 2015. Fincantieri have recently built the latest Oceania ships Marina and Riviera, as well as a number of other upmarket ships.
According to Torstein Hagen, chairman of Viking, “The ship designed by Fincantieri has a fresh and innovative design well suited to deliver the award-winning Viking experience.”
Being a Fincantieri design will presumably mean that these will be quite different ships from those that were originally planned from STX France. If anything, they are expected to be very outward-looking vessels, influenced to a large degree by Viking’s experience with river cruising.
While the dimensions for the STX design were stated at 755 feet by 87 feet, those of the 66,000-ton 1,258-berth Riviera and Marina are 785 x 106 feet, the main difference being that the Oceania ships are much wider, being of present Panamax beam.
The last line to have made this kind of shift was Regent, which had the Mariner built at St Nazaire and the Voyager built at Mariotti (not Fincantieri) in Genoa. The 48,000-ton 708-berth Mariner has dimensions of 713 x 95 feet while the 42,000-ton 708-berth Voyager is somewhat shorter at 673 x 95 feet.
It will be interesting to see the eventual release of the new Viking Ocean design. As we said in December, although the ships will be built to a more human scale, it will be interesting to see whether they will have all the traditional marks of a comfortable ship, i.e. forward-facing observation lounges, walk-around promenade decks and tiered decks aft, in addition to today’s usual outfit.
Does Princess Listen To Its Passengers?
A month ago, on the morning of March 20, some hundred miles from land, Princess Cruises’ Star Princess was en route from Ecuador to Costa Rica, on a Round South America cruise, when she passed a small 26-foot fishing boat with three men on board named the Fifty Cents.
Not noticed by those on the bridge of the Star Princess was that the Fifty Cents, about a mile away, was adrift without power, and that its crew, having no radio, was trying to signal their distress to the Star Princess.
Elsewhere on the Star Princess, a group of three birdwatchers using binoculars and telescopic lenses, managed to spot the drifting Fifty Cents and noticed that one of its crew members, Adrian Vasquez, 18, was waving a red shirt. The Panamanian fishermen had been adrift in the Pacific for sixteen days and had no food left when the Star Princess came into view.
The fishermen waved for help and the birdwatchers alerted the crew, but to the amazement of both groups, the Star princess carried on. Later that day, Fifty Cents’ Capt Oropeces Betancourt, 24, died of dehydration, and five days later, Fernando Osorio, 16, succumbed to dehydration, sunburn and heat stroke.
The sole survivor, Adrian Vasquez, 18, was not rescued until twelve days after the Star Princess passed, when he was found by a larger fishing vessel near the Galapagos Islands, six hundred miles from Rio Hato, Panama, from where the little fishing boat had set out. After pushing his friends’ bodies into the ocean, Vasquez had managed to survive on rain water, raw fish and floating coconuts
Despite the birdwatchers having reported the boat in distress, the master of the Star Princess, Capt Edward Perrin, a veteran who had previously served in the Royal Fleet Auxiliary, was never informed and was later said to be devastated when advised of the men’s fate.
Press reports stated that Judy Meredith, one of the birdwatchers, from Bend, Oregon, described seeing a man waving a red T-shirt. She said: “You don’t wave a shirt like that just to be friendly. He was desperate to get our attention.”
She was apparently not allowed to go to the bridge to tell the captain, and the only crew member she could find was a member of the ship’s sales team. The birdwatchers said they showed the crew member the drifting boat through a telescope. When the liner did not stop they thought the crew must have alerted the authorities.
A statement issued by Princess Cruises on Thursday said that it “deeply regrets that two Panamanian men perished at sea after their boat became disabled in early March. Since we became aware of this incident, we have been investigating circumstances surrounding the claim that Star Princess failed to come to the aid of the disabled boat, after a crewmember was alerted by passengers. The preliminary results of our investigation have shown that there appeared to be a breakdown in communication in relaying the passenger’s concern. Neither Captain Edward Perrin nor the officer of the watch were notified.”
I am sure that spurious press reports speculating that the ship had to proceed in order to meet her schedule are just that – spurious. But we now wait to hear the results of this investigation as to specifically how it was the master was not informed of this serious report by passengers on that cruise. Does Princess not listen to its passengers?
Or is there some other explanation?
(Kevin Griffin is managing director of specialist cruise agency The Cruise People Ltd in London, England. For further information concerning cruises mentioned in this article readers can visit his blog)