Tag Archives: Oceania Cruises

Travel agents seek details on Norwegian-Prestige merger

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By Tom Stieghorst
Norwegian EpicNorwegian Cruise Line moved up its regular Wednesday webinar by one day this week to address the agent implications of its $3 billion acquisition of Prestige Cruise Holdings.

Agents listening to the webinar asked Norwegian’s executive vice president, Andy Stuart, and Prestige President Kunal Kamlani about its effect on commissions, about how the loyalty programs will be handled and whether they will see a cheapening of Oceania Cruises and Regent Seven Seas Cruises to make the acquisition produce financial savings.

Both said several times that it will be “business as usual” for agents and consumers. “In our minds, it all starts with the clients,” Kamlani said.

On commissions, Kamlani said there are no plans in the next three months to change commissions for 2015. He said this is the traditional time of year to review agency agreements but that nothing should change because of the merger. “It is business as usual,” he reiterated.

The two executives said that how or whether to make Norwegian’s past guest loyalty benefits available to Oceania and Regent cruisers, and vice versa, was high on the list of things to consider but no decisions have been made.

Kamlani said in response to a question that he doesn’t expect to begin offering solo cruise rates after the merger. “We probably would never measure very well on that metric,” he said.

A question about merger savings hurting product quality at the Prestige brands drew a strong response from Kamlani.

“That travesty will not occur on any of our watches of anyone involved in this transaction. That’s as direct as I can be,” he said.

Norwegian-Prestige deal raises prospect of UK deployment

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Norwegian-Prestige deal raises prospect of UK deployment

Norwegian Cruise Line’s acquisition of Oceania Cruises and Regent Seven Seas Cruises will give it the courage to base a ship in Southampton or Dover, according to Norwegian chief executive Kevin Sheehan.

He said it was too much of a risk to commit so much capacity to the UK market when you have only 13 ships, but with 21 in the combined group, it would definitely be a consideration now.

Sheehan said the deal was financially beneficial but also brought other benefits.

“It helps us withstand economic situations like recessions – the type of customers who travel with Oceania and Regent have a lot of money and that top end of the industry weathered the downturn well.”

It also helps it become more resilient to geographical situations and makes it operationally “smarter”.

But he said “synergies” across the three brands would be created “behind the curtain” initially.

“Certainly for a period of time because we don’t want to do anything stupid, we will continue selling and marketing the three brands individually as it’s worked well and we don’t want to mess that up.

“I don’t want to keep changing strategies like Royal Caribbean has, so we will stay as we are for quite a while,” he said.

But he said sales and marketing teams for each of the three brands would start to share knowledge and best practice.

And commenting on Royal Caribbean chief executive Richard Fain’s recent declaration that he wanted his company to be the best, Sheehan added:

“He can say he wants to be the best, but the report card comes out once a quarter and then we will see who’s best.

“We are bringing together two excellent businesses. Norwegian has gone from being a joke in this industry to the best in class in terms of yields, operational profit and onboard spend. It’s very positive and is only going to become more so.”

Sheehan said the deal had been financed by raising cash, selling some equity and raising money from banks including JP Morgan, Barclays and Deutsche Bank adding that every other bank had fallen over themselves trying to be part of it as “they could see how compelling the transaction was”.

Sheehan said bringing Oceania and Regent parent company Prestige Holdings into the fold had always been on his mind, but talks had never got far.

“I brought it up a couple of times but it never really got going. It was always too complicated or things were happening and getting in the way, like launching ships or taking the company public.

“But then Frank del Rio and I started a romance – we went for dinner and got to where we are now. It’s extremely exciting.”

Sheehan said he was not looking for any further acquisitions in the immediate future.

“We’re a conservative group of guys and girls and our hands will be full for a while. Our focus now is to ensure we have a very successful launch of our new Norwegian ship, Escape, next year and of the new Regent ship in 2016.”

Norwegian Cruise Line to acquire Prestige Cruise Holdings

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Updated: Norwegian Cruise Line to acquire Prestige Cruise Holdings

By Tom Stieghorst

Oceania RivieraNorwegian Cruise Line has announced it will acquire Prestige Cruise Holdings for $3.03 billion in cash, stock and assumed debt.

Norwegian said it will issue more than 20 million shares to help finance the purchase.

Prestige includes Oceania Cruises and Regent Seven Seas Cruises.

Prestige shareholders are entitled to an additional contingency payment of $50 million “upon achievement of certain 2015 performance metrics,” a statement said.

Apollo Global Management controls Norwegian through a 20% ownership stake and rights to nominate a majority of the board of directors. Two other partners in Norwegian, Genting Hong Kong and TPG Pacific, have assented to the deal.

Merging Norwegian and Prestige would create a company that can appeal to a broader market swath than Norwegian can on its own, Norwegian CEO Kevin Sheehan said.

“The combination of three distinct brands, each serving a different market segment, under one umbrella immediately creates an industry-leading cruise operator with an unmatched growth trajectory and a portfolio of products that allows us to appeal to guests at every stage of their life cycle,” he said.

After the merger, Frank Del Rio will remain chairman of Prestige Holdings, the statement said. The companies expect the deal to close in the fourth quarter.

In a teleconference, Norwegian CEO Kevin Sheehan said he sees opportunity to use the business model from Oceania and Regent to do a better job of marketing Norwegian’s Pride of America ship in Hawaii. Pride of America is a one-off product with an unusual itinerary, which lends itself to some of the Prestige approach, he suggested.

Sheehan emphasized he has a long list of potential synergies beyond an initial $25 million but that implementing them cannot damage the guest experience.  He said the synergies will remain “behind the curtain” and invisible to guests.

The synergies Sheehan identified in the call are in areas such as purchasing, crew recruitment, port relations, fuel and insurance sourcing, maintenance and dry dock contracts and marketing sponsorships and partnerships.

Sheehan said there may also be consolidation of the two shoreside organizations, which are located within five miles of each other in western Miami-Dade County.

Prestige chairman Frank Del Rio, who turns 60 in two weeks, said he was committed to remain with the company through the end of 2015. “After that, we’ll see what happens,” he said.

Del Rio said the Prestige brands are best at executing a good cruise but haven’t been as sharp on cost savings because of the company’s small size.

Sheehan suggested that negotiations with Del Rio over the deal were at times acrimonious. “We had our moments in the negotiation process, but at the end of the day we’ve shaken hands and are best buddies again,” he said.

Sheehan suggested that the $50 million contingency payment was a way of building into the deal the Prestige view of its future performance, while not paying for it upfront in case it proves less than forecast.