Each luxury cruise line is drawing its own line in the sand right now. No two companies are approaching this economic crisis in exactly the same manner, but they all have one thing in common: the number-one priority of filling cabins.
The Yachts of Seabourn—A Success StoryThe Yachts of Seabourn has been especially focused in charting actionable itineraries, offering preferred pricing up to 65 percent off brochure fares, and building excitement about its soon-to-be sailing Odyssey. Other lines haven't been as aggressive and their bookings have suffered. Meanwhile, Seabourn announced a spike in both first-time guest bookings and first-time travel agent activity. Travelers know a good deal when they see one and that explains why Seabourn's first-time guest percentage rose to 67 percent for bookings during the first three months of 2009. Step Two of Seabourn's plan is to wow these first-time guests and convert them to loyal "Seabournites" that will return to the cruise line again and again in the future—even when rates rise to previous benchmarks.
While the media has been very favorable to Seabourn in recent days, other cruise lines haven't been so lucky. Rumors of possible bankruptcy plague Windstar Cruises (after parent company Ambassadors missed a loan payment last week) and the Norwegian press has been raising a warning about SeaDream Yacht Club. While less dire, Silversea has also been on the receiving end of some press coverage that questions their long-term strategies.
Should we be worried about these reports and rumors? Yes and no.
Can Windstar Cruises Avoid Bankruptcy?Let's start with Windstar Cruises. They are owned by Ambassadors International (NASDAQ: AMIE). They've been in the news a lot over the past few days because of a missed loan payment and their recently filed 10-K with the Securities and Exchange Commission. The information contained therein paints the picture of a company selling most of its assets as quickly as possible to avoid a bankruptcy filing.
Ambassadors owned Majestic America Line, which they mothballed in January 2009 after failing to find a buyer to take the beleaguered line off their hands. Since February Ambassadors has been open about the fact that they plan to focus solely on the Windstar brand in the future and, as such, sold off their travel and events division to Lakeview Equity Partners of Milwaukee. Several weeks ago, CEO Joe Ueberroth stepped down and Ambassadors announced it would move its corporate headquarters to Seattle, where Windstar is located.
I love the Windstar brand and am rooting for the successful restructuring of the company. However, if booking a Windstar cruise you may want to carry the appropriate travel insurance (a policy that includes the financial default of the travel provider). Windstar has some excellent pricing for the Mediterranean this summer and I may still taken advantage of one of the itineraries, but I would book a bit closer to the sail date.
I actually thought about buying some put options on Ambassadors' stock, but they're not being offered. Darn! That would have hedged my bet nicely!
Is SeaDream Yacht Club for Sale or Not?With its parent company in Norway, definitive information about SeaDream is a bit tougher to come by. Earlier this week newspapers were reporting that SeaDream's parent company, CG Holding, was in financial hot water because of the poor performance of its retail businesses. (The situation is similar to Regent's parent Apollo and the failings of Linens 'n' Things and other retailers under its wing.)
While the media reported that all CG Holding companies were for sale, SeaDream CEO Atle Brynestad came out adamantly on Tuesday saying the luxury cruise line was absolutely not for sale. He told Cruise Week that SeaDream itself is doing well and, in fact, has enjoyed 100 percent occupancy in 2008 and through the first quarter of 2009. (While I can't confirm that percentage, I do hope SeaDream I and II are sailing very close to capacity.)
While SeaDream isn't offering as deep discounts as Windstar, there are still some excellent values to be had for the Mediterranean this summer. Still, being the cautious one, I'd spring for the travel insurance just for peace of mind.
Silversea and Its Long-Term OutlookWhile the rumors aren't quite so loud about Silversea's financial fitness, there are some industry insiders and pundits who are actively questioning the future of this gem of a cruise line. If you follow travel agent Eric Goldring's blog, This Is My Yacht, you'll know he's got some strong opinions when it comes to Silversea.
Like the other cruise lines, Silversea is aggressively discounting its sailings in the hopes of increasing occupancy. They are also offering a 15 percent discount for prepayment. They've shuffled the management team and terminated several key employees including David Morris and Marilyn Conroy. Ken Watson, formerly with Regent, joined Silversea last month. And, troubling to many fans of the cruise line, they've put an indefinite hold on the dry dock of Silver Cloud.
What does all that mean? It's hard to tell. I'm less worried about the immediate future of Silversea, but this challenging economic landscape is of long-term concern to all cruise lines.
Ride the Waves
It's important that we are all aware of the financial health of all of our travel partners and make decisions that are in keeping with our personal comfort levels. Let's keep traveling and supporting the brands that we count on to bring us the best in luxury vacations.
—Andrea M. Rotondo
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Win a 33oz Tortuga Rum Cake. Simply comment on any post in this blog (include your e-mail address) or subscribe to have blog posts delivered directly to your e-mail in-box. Learn more about the contest here.Do you love cruising? Share your luxury cruise review at LuxuryCruiseBible.com. Submit your cruise review here.
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