Norwegian Cruise Line has a new hand at the helm, one that
has long experience in the cruise industry.
Newly named CEO Frank Del Rio is described as
entrepreneurial, financially savvy and in sync with his bosses at Apollo Global
Management, which holds a controlling stake in Norwegian Cruise Line Holdings
(NCLH), the line’s parent company.
The NCLH board named Del Rio president and CEO on Jan. 9
following the surprise resignation of Kevin Sheehan, who had been Norwegian’s
top executive for seven years.
The handoff comes just two months after NCLH completed the
$3.03 billion acquisition of Prestige Cruise Holdings, also Apollo-owned, of
which Del Rio was CEO.
Del Rio takes over at a crucial time for Norwegian, which
has been steadily improving its competitive position in the industry. It has a
new ship due in nine months, with more coming. It must fit the two upscale
Prestige lines, Oceania Cruises and Regent Seven Seas Cruises, into a company
that has long focused solely on contemporary, or mass-market, cruising.
And it will fall to Del Rio to maintain the company’s
momentum, exemplified by its string of 25 consecutive quarters of financial
improvement.
Del Rio, 60, brings to the job a 35-year career in the
travel business, starting in 1980 at Certified Vacations.
An accountant by training, he wound up as Certified’s vice
president for sales and marketing before jumping to Renaissance Cruises in 1993
as CFO.
Those who know him say Del Rio’s financial skills are among
his core strengths, along with a startup mentality, the kind of zeal typically
associated with a small-business owner and a certain impatience for results.
“Frank is extremely entrepreneurial,” said Kunal Kamlani,
who until recently served as president of Prestige.
“He tries to eradicate as much bureaucracy in any
organization as he can,” Kamlani said. “He runs a flat, lean organization. As a
result, decisions are made very, very quickly.”
Wall Street analysts voiced surprise at Sheehan’s departure
but expressed faith in Del Rio’s skills.
In a note to investors, Wells Fargo cruise analyst Tim
Conder called him a “very capable and experienced industry executive.”
Still, Sheehan’s resignation means that two top executives
at Norwegian — Del Rio and Drew Madsen, president of the Norwegian Cruise Line
brand — weren’t at the company three months ago.
Assia Georgieva, a principal at Infinity Research in Boca
Raton, Fla., said that NCLH CFO Wendy Beck will provide some continuity at the
top but that even so, abrupt management transitions could be unsettling.
“There is a risk when we have such major leadership changes
— and unexpected ones,” Georgieva said. “But I think [Del Rio is] probably
going to be able to handle the job well.”
She said Del Rio has a good relationship with the board
members from Apollo, which should be a plus.
Georgieva said one unknown that might remain an open
question for a while is whether Del Rio can bring the same level of passion
for, and understanding of, the Norwegian brand and passenger base as he has
demonstrated for the upscale lines at Prestige.
Del Rio founded Oceania in 2002 after leaving Renaissance
and has been running Regent since 2008.
As one sign of his commitment, Del Rio and co-founder Bob
Binder earlier this year published a book about the art that they had
personally curated on Oceania’s Marina and Riviera vessels.
During his seven-year tenure, Sheehan was unequivocally
enthusiastic about Norwegian.
He prided himself on making it edgier than other lines,
introduced many new features on newbuild ships, the Breakaway and Getaway, and
championed “Freestyle Cruising.”
The O’Sheehan’s Neighborhood Bar & Grill, a “Cheers”-style
pub on many Norwegian ships, is named after him.
Kamlani predicted that Del Rio will have no trouble making
the adjustment to embracing a “Norwegian” identity.
“The cruise business, regardless of what segment you’re in,
at the end of the day is about the guest,” Kamlani said. “They have a
management team that is guest-focused … it really doesn’t matter what segment
of the industry you’re in.”
Another industry executive who knows both Sheehan and Del
Rio said they share more similarities than differences.
Both started in finance and made the transition to
operations, and both have come up with innovations that set their lines apart,
the executive said, adding that both are “extremely smart and quick on their
feet.”
Also, both came from scrappy backgrounds: Sheehan is an
Irish son of New York’s Queens borough, while Del Rio’s family emigrated from
Cuba when he was 7, with just a suitcase each for belongings.
“My sense is [Norwegian] will continue to thrive under
Frank,” the executive said, “and I think the integration of Prestige into the
company will probably go smoother than it might have under Kevin, since Frank
knows the company from top to bottom.”
Analysts last week remained unsure about why Sheehan
departed.
A Norwegian announcement merely stated that he had “decided
to leave the company,” and Sheehan himself has offered no further details.
After the Prestige acquisition was announced in September,
Sheehan stated in several interviews and conference calls that he had never
been more excited to be in the job.
Conder, in his note to investors, said he had been led to
believe in discussions with management that “Sheehan had something from a
personal perspective that had changed in the last three months, leading to his
decision to leave the company.”
Efforts to reach Sheehan for comment were unsuccessful, and
Del Rio was unavailable last week.