CNBC - Discusses Cruises With Goldring Travel - UPDATED

A couple of days ago I received an email from CNBC letting me know that they read this blog and thought I might find its upcoming show "Cruise Inc: Big Money on the High Seas" of interest, which begins airing on March 24, 2009 at 9:00 pm EDT. They also sent me a link to a preview of the show. While the clip tends to show the same thing that many of us have seen on other shows or on the ships, I am hopeful that more than how much food is prepared on NCL is discussed.

According to the just received press release: Correspondent Peter Greenberg and his crew investigate the strengths and weaknesses of the fastest growing segment of travel, as they spend seven days aboard the Norwegian Pearl, one of the newest ships in Norwegian Cruise Line’s fleet...Greenberg was granted extraordinary access above and below deck to document the inner workings of the ship and the business itself.

Greenberg investigates the intricate pricing structure of the cruise industry, starting with the most luxurious accommodations, which go for $26,000 a week, butler included. He explains the huge gap that exists between the baseline cabin fee and the actual cost of indulging all the ship has to offer. The report also explores common perceptions and misperceptions about safety and security at sea, and takes viewers behind the scenes as the crew of the Norwegian Pearl train for worst-case scenarios. CNBC gets a rare look at the Pearl’s state-of-the-art security operation, where officials use 1100 surveillance cameras to monitor the ship 24/7.

But, it got me thinking (as I do): The viewers of CNBC probably would be more interested in how things operate on a ture luxury cruise ship (as opposed to a mass market ship with some luxury suites) and how that business model is run, which is far different. In my initial email I wrote, in part:

"For the majority of my readers, Norwegian Cruise Lines would never be considered an option. The quality being provided just isn’t near acceptable. Food preparation, service and amenities are on a whole other level. For example, while Peter was watching the NCL galley pre-cook meals (lobster, etc.) well before dinner was being served, on Seabourn the meals are prepared ala minute.

And, as another example, for the guest it is not about consuming as many pre-cooked lobster tails as possible, but rather enjoying Lobster, Lobster, Lobster…which is an elegant plate of small portions of lobster presented three ways served with complimentary wines chosen to enhance that specific course. (And, of course, the wait-staff is wearing true formalwear, not t-shirts mocking them.)"

I had some additional preliminary telephone discussions today to see if either a follow-up or compare and contrast type program might be of interest. Hopefully I will be able to report back some progress in the coming weeks.

I did mention to him that CNBC did highlight one of my legal clients is Fischer Travel Enterprises. Fischer Travel is the travel agencies for the ultra-wealthy -and if you watch the video by clicking the link, you will know what "ultra-luxury" is about. BTW, don't try to find the telephone number for Fischer Travel; as they say, "If you don't know it, you wouldn't use him." If you want to engage in an OMG comparison, try to squeeze in our Five vs. Six Star Luxury discussion when talking about that kind of luxury.

So if you have any suggestions as to approaches for such I show I would love to hear them. And, even just putting them out there might just lead to some interesting discussions.

Concerns: Apollo Management and Prestige Cruise Holding (NCL, Regent Seven Seas and Oceania)

I have hesitated to write about the effects of this poor economy on the cruise lines themselves because, in large part, we really don't know what the long term effects will be. While the issues of last minute discounts and more close-in bookings (ala post 9/11) on less than full ships are not beyond possibilities, the fact is that right now people who are cruising paid for their cruises before the bottom seemingly fell out and it is too early to really see what the next couple of months (post-election) has in store for us, the consumers and them, the industry.

Also, while some cruise lines are panicking, others are being creative and yet others are still figuring out what, if anything, should be done differently. So that too is not the focus on this post and speculating would not be fair or productive.

However, over the past three weeks there has been much in the industry news about NCL and Aker Shipyard having a "dispute" over Norwegian Cruise Line's new F3 ship. While Aker claims it has not stopped work on the first F3 (which is about 25% complete), it has been reported that they are now trying to sell the hull to other major cruise lines...and there is not much interest. Aker, though, has also stopped work on the second F3 ship.

Apollo and NCL have been silent claiming they do not discuss disputes or litigation. What has happened, however, is that their announcement of the new ship is not as clear in their taglines, mention of the F3 is all but absent from the NCL website, the F3 microsite has been buried (You you can still find it via http://www.f3.ncl.com/main.html.) and the person who was in charge of the PR for the F3, Susan Robison, has left NCL.

The word on the street is that Apollo has shut down the project as simply being too expensive. I think there probably is another, related, problem: Financing. Most entities like Apollo leverage their assets in order to obtain sufficient cash to improve products and then sell them off at a profit. If the product is losing value, or if a cash infusion will not increase its value, the desire to put money in drops. Banks and lenders - especially now - are not as willing to finance companies to put cash into a potentially unprofitable venture. Add to that the unexpected strength in the US dollar versus the Euro and some of the math turns upside down.

Here, the F3 ships have a radical - and unproven - interior design for a market that is being hit hard by the economic problems and, at least in the near future, probably are not going to be parting with as much cash on the holy grail of the mass market cruise business: onboard revenue. Add to that the downward pressure on pricing and the drop off in (long range) bookings, Apollo and its lenders have probably (my guess) said something along the lines of, "NCL's Hawaii plan seemed good, but we took a bath as it was unconventional and had unforeseen problems. NCL has lost over $350,000,000 in the last two years. Now we have a $1,000,000,000 (yes, one billion dollar) project which is now seeing cost increases (due to the loss in value of the Euro - the currency of the contract - as well as difficulties in creating the radical design elements) and we cannot assure a profit at higher prices with possible reductions in passenger loads...and NCL is bleeding cash flow as it is."

While that "magic" is playing out, the operationally pretty solid Oceania, through Apollo's Prestige Cruise Holdings (separate from NCL) is working hard to clean up the issues at Regent by increasing efficiencies on many levels and revamping the luxury line's ships from hardware to software to crew. We have seen the previously greatly publicized talk of a new ship for Regent being, quite obviously, pushed to the back...see the parallel here!...and, in its place, a $40,000,000 refurbishment of the Voyager and Mariner; leaving the Navigator for another day (if there is another day for that ship!) and there being talk on the street and some publications of the end of its relationship with the Paul Gauguin. Now, there is talk of the Voyager and Mariner refurbishments being scaled back as well.

I am not so sure these fiscally stringent moves are a bad thing. The concept of growth through huge increases in inventory has a great flaw: Not enough buyers of that inventory (i.e. cruise passengers). That, added to the cost of creating that additional inventory, can destroy a positive bottom line. So, Apollo and Prestige Cruise Holdings may just be saying that we would rather utilize what we have and utilize it well, possibly generating smaller profits, than growing ourselves (and our debt) right out of business.

I much prefer a higher quality product from a profitable cruise line than a less quality product from a cruise line trying to find its way out of a problem it created which, inevitably, would cause the passengers to pay more to get less.

It is going to be interesting to see how all this plays out.

Why Do Changes Always Bring Out Those People That Complain? (The Seabourn Experience)

It always fascinates me how anytime a cruise line makes a change it is perceived as an attack on the value of their cruise(s) to be. Whether it is an improvement, the elimination of an underutilized item or an actual cost-cutting measure (as if finding ways to keep prices down is a bad thing!), there are those that absolutely find it not only a horrible, but a sign of more things to come...raising the threat of the loss of loyal passengers.

Seabourn just spent many millions of dollars revamping the Sky Bars and Verandas on all three of the triplets (with structural and furniture changes) , improved the bedding, changed out the carpets, installed LCD TVs, announced the change out of all of the deck furniture and replacement of the tableware...with more improvements to be announced. Oh, yes, Seabourn is shortly going to be christening the first of three new ships which are being outfitted with two story, indoor/outdoor spas, cabanas, state of the art fitness equipment, more dining venues, etc.

Despite all of that, today I read on Cruise Critic how some perceive the elimination of the underutilized Seabourn Experiences (with many seeming to ignore that the most popular ones are being retained!) as cause for concern that the quality of the wines and liquors freely poured may soon be downgraded. Where the heck did that come from?

Celebrity eliminated its "gourmet bites" (waiters passing through the various public spaces in the evenings with after dinner snacks) because it found the vast majority of the food was being returned to the kitchen uneaten. Does that mean that Celebrity is going to reduce items on the buffet? Hardly.

Regent is eliminating its Circles of Interest program (a highly overpriced and underutilized program of supposedly more in depth learning and experiences over the course of a cruise). Does that mean it is eliminating some of its more unique ports? No way.

Norwegian Cruise Lines donation of its old mattresses...I can only imagine what could spin out of that!

Seabourn has announced, in advance of the maiden voyage of the Seabourn Odyssey, that it is making changes which will create overall improvement in the quality of the Seabourn product through establishing consistency through all it ships, installing upgrades to the existing fleet to assure same, and changing/eliminating various items whose time has come and gone.

Will some of the changes disappoint a few of their loyal guests? Of course. But just as I much preferred the blue ticket wallets of old, while others loved the Tumi ticket jackets in a presentation box, others like the newest ticket wallet, which I truly do not like! I can't wait to hear the same people claiming that the next version of ticket wallet will be an ominous omen. Yes, there will be concern over ticket wallets!

I guess some people just have to say what a terrible thing it all might be and how it just might shake their loyalty over the elimination of items which are, in relation to the cost of their cruises, hard to find affecting their bottom line among the tours, spa treatments and reserve wine selections they make. I do not count any person's money, but I do try to keep the value of the items complained of in perspective. For example, might I just say, if the complainers can find a cruise line that offers a complimentary tour like Seabourn has been providing (or even as it will still provide), cruise that line (and save the $200). Oh! That right. It doesn't exist. Or, if that complainer can find a cruise line with a more generous frequent guest program than Seabourn, providing a free 7 day cruise after 140 days, put your money there. Oh! That right, again. It doesn't exist. Or if that complainer can find a cruise line that has a more generous definition of which liquor is included, start drinking there (if the $200 extra on your cruise bill actually makes a difference).

And, as I mentioned in my post about the Mutiny on the Carnival Miracle, one must think about all the reasons you choose to cruise a particular line and a particular ship. You can complain about little tweaks made by a cruise line that are not going to change and you can even threaten to take your business elsewhere (thereby increasing the effect of that issue upon only yourself), but alas you will be ruining that which you came to enjoy: Your Cruise.