Royal Caribbean earns praise on response to Grandeur incident

By Tom Stieghorst
GrandeurDamage-AdamGoldsteinOnce again a fire at sea has made headlines, adding to the challenge for travel agents selling cruises.

Images of the fire-blackened aft of Royal Caribbean International’s Grandeur of the Seas were part of the Memorial Day programming on CNN and other cable channels.

The Baltimore-based Grandeur will be out of commission for six weeks, following a two-hour fire in the aft mooring deck, Royal Caribbean said. No cause has yet been made public.

Passengers were roused at 2:50 a.m. and assembled at muster stations. Most cabins and public areas were usable after the fire, but the ship was diverted to Freeport, Bahamas, for assessment.

After determining the extent of the damage, Royal Caribbean canceled the remainder of the cruise. It issued full refunds and a credit toward a future cruise, and it flew all passengers back to the U.S.

“We are gratified that no one was hurt and that the safety and comfort systems performed exactly as designed,” Royal Caribbean International CEO Adam Goldstein said.

John Lovell, president and CEO of Vacation.com, said initial indications are that the Grandeur fire has had a minor impact on bookings.

“Royal Caribbean has been upfront about the situation, communicated well and been very proactive,” Lovell said. “That has definitely helped them in the short term.

“Last week was a strong week for bookings, and it’s too early to say whether the incident will have any real impact on bookings moving forward,” he added.

Royal Caribbean did what it could to minimize the fallout from the fire.

Goldstein flew to the Bahamas to meet with passengers the day the ship arrived in Freeport.

The company released an image of the damaged area of the ship. It kept the media and public apprised through frequent updates on Twitter and other social media platforms.

Passengers praised the crew response as calm and competent. “They couldn’t have handled it any better,” first-time cruiser Craig Dzubak, 26, of Pittsburgh told the Associated Press.

Royal Caribbean benefited from the location of the fire in an area of the ship that did not affect propulsion or power generation, leaving most ship services and comforts unaffected.

Still, the incident will shave about $22 million from 2013 earnings, the company estimated. That amount, which is after insurance, includes the cost of repairs, lost revenue and refunds.

“The extent of the financial impact was relatively high because the affected sailings were during the premium summer season,” Royal Caribbean CFO Jason Liberty said.

It was the first incident since the industry adopted a Cruise Passenger Bill of Rights through CLIA. Royal Caribbean exceeded its obligation under the bill, which calls for a partial refund in cases where a cruise is cut short by an emergency.

Passengers booked on the six upcoming cruises that were canceled will also get full refunds. Commissions already earned by travel agents on those cruises were protected.

Royal Caribbean is also offering a $50 bonus commission if guests rebook using a 25% future cruise voucher.

Tim Conder, an analyst at Wells Fargo Securities, said the consequences from the most recent industry mishap would be mitigated by the location of the fire, Royal’s early media outreach and favorable commentary from passengers.

The biggest impact could be on close-in inventory that remains unsold. A Royal Caribbean spokeswoman said the company could not discuss booking patterns since the fire.

Sandy Anderson, who owns a Travel Leaders outlet in Coon Rapids, Minn., said her Royal bookings are normal.

“We have not had any customers call that are booked questioning the Grandeur situation. We actually booked two cabins yesterday and have some additional cabins on hold,” she said.

The Grandeur has been moved to the Grand Bahama Shipyard Ltd., in Freeport for repairs. Its next cruise is scheduled for July 12.
 
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