NEW YORK -- Cunard Line Ltd. launched a reorganization plan that
will split the Cunard Line and Seabourn Cruise Line divisions into
separate operating units, each with its own management team.
Some operations, including the Cunard/Seabourn field sales
force, will remain unified under the plan, said Carnival
officials.
The restructuring is the latest move in a program to
reinvigorate Cunard Line Ltd., Carnival's underperforming luxury
operator. But the Miami-based giant is launching Cunard's makeover
in the midst of the most competitive and price-intensive luxury
market in years.
The changes include two new hirings. Last week, Rick Meadows,
formerly vice president of marketing for Carnival Corp., joined
Cunard's Seabourn Cruise Line unit as senior vice president, sales
and marketing. Cunard also hired Edie Bornstein, a 12-year veteran
of Amadeus, as vice president of business development.
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The appointments follow the resignation of Larry Pimentel,
Cunard's president and chief executive in early February, and the
promotion of Pam Conover, the chief operating officer, to the role
of president.
Meadows said Cunard "has to grow" to keep pace with the
industry's expanding luxury fleets. The transatlantic operator will
add capacity in 2003 with the introduction of Queen Mary 2, its
first new ship since 1969.
Seabourn is not expected to add any new vessels in the near
future and will instead focus on refurbishing a fading
reputation.
The line is launching "Seabourn Refined," an onboard "refinement
and enhancement" program that will include complimentary wine and
spirits, a complimentary "shoreside" experience at each port of
call, and complimentary on deck "mini-massages."
"We have to make sure Seabourn is the best cruise experience in
the world," said Meadows. "Seabourn is a top-drawer product and our
best strategy is to communicate that."
The Cunard/Seabourn dilemma crested last year when then Cunard
chief executive officer Larry Pimentel predicted a "stealth-speed
decline" in luxury cruise pricing for 2001. Cunard and Seabourn
subsequently issued a series of fare discounts, intensifying price
competition in the luxury arena.
"I had a problem with Larry when he was saying that," said Bill
Smith, president and chief operating officer of Silversea Cruises,
among the highest-priced operators in luxury cruising. High-end
operators have to avoid price initiatives, said Smith, to continue
attracting upscale passengers and maintain the service and
standards that justify the "deluxe" label.
"You can get a Ford Taurus a lot cheaper than an Audi or a
Mercedes Benz," said Smith. "You can add a larger steering wheel,
fancy upholstery, dress it up and you still have a Ford."
Silversea's affiliations with high-end brands including Moet
& Chandon champange, Davidoff cigars and Frette linens, he
said, not only justify higher rates, but "are the things our guests
expect."
Striving to stand out
Cunard's reorganization is the latest effort by the operator of
Carnival's luxury brands to keep two proud names at the top of an
increasingly crowded field.
Only a few years ago, Seabourn was widely considered among the
industry's most feature-filled, service-oriented operators, but the
five-ship line has been increasingly obscured by an armada of newer
luxury vessels at other brands.
The Cunard brand also has withered in the face of heated
luxury-segment competition.
Beginning in the mid-1990s, new luxury operators, most notably
Crystal Cruises, Radisson Seven Seas Cruises and Silversea Cruises,
emerged to challenge Cunard and Seabourn for deluxe-segment
bookings.
Radisson and Silversea have been particularly active
shipbuilders, introducing feature-rich vessels emphasizing balcony
accommodations largely absent from Cunard and Seabourn ships.
Crystal Cruises will join the race to add capacity with a new ship
in 2003.
In addition, Renaissance Cruises' routes closely follow luxury
cruise itineraries, and its upscale accommodations are comparable
to those of luxury fleets. As a result, Renaissance's aggressive
rate discounting has made the line a factor in luxury-market
pricing. Renaissance also is an active builder: In February, the
line took delivery of R8, its third new ship since June 2000.
"Clearly, there's been more capacity coming into the luxury
market, and pricing has been difficult to achieve," said Howard
Frank, Carnival Corp.'s vice chairman, in a February conference
call with analysts. "Renaissance's prices have fallen tremendously
and have affected the market."
Also, luxury operators are under increasing pressure from
premium-market fleets. Operators like Celebrity Cruises, Costa
Cruises and Princess Cruises are building ships whose upper-level
suites rival the best accommodations on some luxury ships, but at
lower prices.