Royal’s preview of Quantum draws praise

By Tom Stieghorst
Quantum of the SeasPAPENBURG, Germany — A little more than two months from completion, the Quantum of the Seas looms large over the flat north German countryside at the Meyer Werft shipyard here.

The powder-blue-and-white ship now has its basic structure but awaits all of its interior appointments plus a few special features such as the North Star observation arm, which has yet to be installed.

But the ship was complete enough last week for Royal Caribbean International to open it to a small group of reporters and about 50 travel agents for a sneak peek at the next big thing to sail the high seas.

Royal officials are increasingly confident that in the Quantum, they have a ship that will give the groundbreaking Oasis-class vessels, which the line introduced in 2009, a run for their money.

“I think you’re going to have two reactions,” Royal Caribbean Cruises Ltd. Chairman and CEO Richard Fain told agents a day before the three-hour tour of the 167,800-ton work in progress. “You’re going to think the ship is magnificent, and you’re going to say, ‘It will never be done on time.'”

In fact, more than one agent agreed with Fain’s assertion. Michael Detrick, managing director for Adelman Travel in St. Louis, said he had expected interior work to be further advanced and the ship to look less like a construction site.

The guts of the Quantum at this point are still raw insulation, naked steel, unfinished carpet and open pipe and cable runs. But several areas were finished early, including a few cabins, to give visitors a sense of the final product.

Detrick said one of his favorite features on the ship are the interior cabins, which offer floor-to-ceiling electronic views of the ocean. “The virtual balcony cabins are phenomenal,” he said.

In an interview, Fain agreed, saying they were one of the innovations he’s most pleased with. (Read more with Fain, In the Hot Seat.)

“They just work,” he said.

Quantum of the Seas interior cabinAgents had mostly praise and only a few reservations after traipsing through the Quantum in hard hats and boots while Fain described some of the vessel’s signature elements to them.

“It was a very impressive reveal,” said John Lovell, president of Vacation.com. “I love all the technology. It’s really going to appeal to young people, especially the millennials that we’re all trying to attract.”

Atop the ship are two novelties that depend on view: the Ripcord by iFly skydiving machine and the North Star observation gondola. Sandwiched in between is the multipurpose SeaPlex, an indoor activities hub for everything from bumper cars to basketball.

“That’s going to be a home run,” Lovell predicted.

Others agreed.

“I see it as a space where parents and kids will come to play together,” said Alex Sharpe, president of Signature Travel Network and a father of three.

Sharpe said the Quantum will buttress Royal Caribbean’s reputation as the leader in innovation and deliver great value for the money.

“It’s clear why the big Royal ships get the premiums they do,” he said.

Sharpe said he’s concerned that some of the features will be so popular that Royal might not be able to handle all the demand. The SeaPlex, for instance, will be catnip for meetings and incentive groups, he predicted.

Fain said his team was confident that everyone who wants to try something will be able to do so over the course of a seven-night cruise, although it might be harder to squeeze everyone in on short introductory cruises.

In admissions to the North Star, for example, attendants will give first preference to those who haven’t done it, Fain said.

A significant change with the introduction of the Quantum will be the elimination of the main dining room in favor of four smaller, themed restaurants, each seating about 430 diners. A fifth complimentary restaurant with 128 seats will be reserved for suite guests.

RCCL Chairman and CEO Richard Fain“I’m very impressed with Dynamic Dining,” said Uf Tukel, co-president of WMPH Vacations in Delray Beach, Fla. “Having those different themed restaurants, those are going to be stunning to look at.”

Noting that dining at all five restaurants will be included in the cruise fare, he said, “Typically, they’re the kind of experience that might cost more.”

Although far from completed, the restaurants had certain features already in place, such as a striking pair of louvered lenticular screens that display photos of regional America in the American Icon Grill.

Food and beverage director Cornelius Gallagher also teased some of the more exotic dishes, including one at the experiential Wonderland restaurant that involves chocolate chili foam cold-fried in liquid nitrogen. When diners eat it, smoke comes out of their noses, Gallagher said.

The tour concluded with a preview of Two70, a three-story aft room that will showcase an innovative 3-D projection system and a sextet of 100-inch, robot-controlled video screens.

“The Two70 is just ridiculous — tech-wise, art-wise, functionality-wise,” said Andy Albright, president of National Agent’s Alliance in Burlington, N.C., a life insurer that buys a large volume of incentive cruises. “It’s unbelievable what they’re going to get out of that room.”

Paul Largay of Largay Travel in Waterbury, Conn., said the homeporting of the Quantum and its sister ship the Anthem of the Seas in New York, combined with some of the new check-in technology Royal has developed, will make them very convenient for his customers.

“That’s a huge attraction just because of the logistical considerations,” he said.

Largay said the various uses of technology on the ship were very impressive. “I think the general public is going to love that,” he said. “They’re going to wonder where it has been all their lives.”

Of the ship overall, Largay said, “I think it is going to be a new standard.”

Royal Caribbean gets leg up in China with Ctrip deal

By Tom Stieghorst
Celebrity CenturyThe sale of the Celebrity Century to the Chinese travel agency Ctrip opens a second way for Royal Caribbean Cruises Ltd. (RCCL) to develop a passenger business in the world’s most populous country.

Starting next year, the 19-year-old Century will sail for a new venture owned by Ctrip, a Shanghai-based online travel agency (OTA) that also supplies travel products and services.

In a statement, Ctrip said an affiliate will own the Century and that the affiliate will form a joint venture with RCCL to manage the ship’s operations. The companies have a memorandum of understanding to set up the venture “and potentially broaden the relationship,” the statement said.

While RCCL will recognize a $20 million loss on the ship’s disposal, company Chairman Richard Fain nevertheless called the sale “an excellent business opportunity for both Royal Caribbean and Ctrip” that will generate “strong value for both companies’ shareholders.”

RCCL had previously decided to get rid of the Century, the last remaining ship in Celebrity’s Century class. At one point, it appeared bound for a French cruise line owned by RCCL that operates two other former Celebrity ships.

RCCL already is marketing several ships to Chinese passengers, including the Mariner and Voyager of the Seas. It is raising the ante in the Chinese market next year by deploying its newest ship, Quantum of the Seas, for year-round sailings from Shanghai.

Having the Century in China at the same time will offer a lower price point on a smaller ship for the new joint venture, which will take delivery of the ship in April after it completes its scheduled cruises for Celebrity.

Matt Jacob, an analyst with ITG Research in New York, said the sale of the ship into a less-developed market makes sense at this point in its life.

“Royal Caribbean is looking at this deal as allocating its ships in the best possible manner,” Jacobs said. “They believe the Chinese market represents a great opportunity, and this is another way to get exposure to that market.”

As Europe has evolved over the past decade, older tonnage sent there is competing against new ships. But that’s not the case in China.

“There’s an opportunity to take a ship that might not be viewed as competitive in the more saturated markets and position it for the Chinese market where the requirements and desires of that clientele at this stage are not as developed or as stringent,” Jacob said.

RCCL did not disclose the sale price, but one analyst estimated it at $157 million.

If the price was at or above the market for such ships, disposal at a loss could still be a win, Jacob said. “Although they’re taking an accounting loss, this I imagine is the highest-yielding use they have for that ship at this time.”

Ctrip offers RCCL established connections to Chinese consumers. Founded in 1999, it provides hotel reservations, transportation ticketing, packaged tours and corporate travel management in China.

In 2012, Priceline invested $500 million in Ctrip, calling it the “clear leader in online travel in China.” The OTA offers an English-language version of its website to promote U.S. travel to China and is already active in selling cruises to Chinese passengers.

In announcing the acquisition of the Century, Min Fan, vice chairman and president of Ctrip, said, “As the largest cruise agency in China, Ctrip has sent over 120,000 guests to cruise trips so far and acquired more than 10% of market share in China.”

Addressing this deal specifically, he added, “Ctrip will capitalize on our strong brand, large customer base and superior service quality, as well as our partner’s extensive cruise operating experience to generate great value to our customers and shareholders.”

The Ctrip deal resembles one RCCL formed with German travel conglomerate TUI AG in 2009. The two companies formed TUI Cruises after TUI acquired the Celebrity Galaxy, another Century-class ship, to cater to the growing German market under the name Mein Schiff (My Ship).

TUI Cruises later acquired the Celebrity Mercury and this year took delivery of its first newbuild, the 100,000-gross-ton Mein Schiff 3.

RCCL’s deal with Ctrip is in the early stages and hasn’t gone beyond an agreement to jointly manage the Century. An RCCL spokeswoman said the companies are still in discussion about what else their cooperative venture might entail.

Peter Whelpton, a consultant in Gainesville, Fla., and a former RCCL executive, said that in his experience, Chinese companies prefer becoming partners with U.S. businesses rather than selling them services.

Whelpton said he was part of a group that raised money in China to start a cruise line there. “Everything we attempted to do in China, we were told, ‘We’ll be your partner,’” he recalled.

Whelpton added that RCCL is pursuing a familiar model by selling the aging Century to a foreign buyer. “They started the same way with Pullmantur,” he said.

The Century will continue its scheduled sailings through the March 22 itinerary. A final 15-night trip from Dubai to Rome is being changed to a 14-night sailing ending in Singapore. From there, the ship will be renovated and altered for the Chinese market before redeployment later in the year.

Norwegian in talks to buy Oceania and Regent parent

Norwegian in talks to buy Oceania and Regent parentNorwegian Cruise Line was last night reported to be in “advanced talks” to take over the parent company of luxury lines Oceania and Regent Seven Seas Cruises for around $3 billion.

Reuters cited “people familiar with the matter” and said a deal could be announced as early as this week.

A deal would give Norwegian, a company with a market value of $6.8 billion, access to Prestige Cruise Holdings’ luxury ships and affluent clientele as it competes with larger rivals Carnival Corporation and Royal Caribbean Cruises.

But sources cautioned that the talks could still fall apart. The owner of Prestige Cruises, private equity firm Apollo Global Management, also owns a 20% stake in Norwegian.

Miami-based Norwegian Cruise operates 13 cruise ships in North America, the Mediterranean, the Baltic, Central America and the Caribbean. It had revenues of $2.57 billion in 2013, up 13% from 2012.

Oceania and Regent together have eight cruise ships operating worldwide. Prestige posted revenues of $1.2 billion in 2013, up 6% from the year earlier.

Prestige registered with US regulators for an initial public offering in January. Apollo has been the company’s majority shareholder following an $850 million deal in 2007.

Apollo made a $1 billion investment in Norwegian in 2008 and the company went public in January 2013.

Carnival, Royal Caribbean Cruises and Norwegian together account for 82% of the North American cruise passenger berth capacity, according to Prestige Cruises’ initial public offering registration document.

Norwegian and Prestige representatives did not respond to requests for comment, while an Apollo spokesman declined to comment, according to Reuters.