Frank Del Rio, CEO of Prestige Cruise Holdings, was in New York last week to reveal a restaurant on Oceania Cruises' upcoming newbuild, Marina, run by and named for the line's master chef, Jacques Pepin. Cruise editor Johanna Jainchill spoke with Del Rio about an improving economy, shore excursions vs. discounting and the new chief at Azamara Cruises.
Q: The year is more than halfway over. The fourth quarter of 2008 made you question the long-term business. How are things going?
A: The fourth quarter was absolutely abysmal. It was like we were closed. Had it continued past one-third of 2009, we would have had to significantly overhaul our business plan. No industry can sustain the results of the shock of that quarter, when the stock market was going up or down 500 points from one day to the next.
The velocity of new bookings and pricing has returned to historical levels. This proves to us that cruising is the most resilient sector of the travel business. Look around: Ships are not being foreclosed on like some hotels, and you are not seeing thousands of people being laid off. The cruise industry is resilient and well capitalized.
Q: But the economy is still hurting. Aren't consumers still under stress?
A: Our target market is focused on the health of their portfolio more than the unemployment rate and foreclosure numbers. The market has stabilized, and people have come out of shell shock. We have to motivate them to spend their disposable income with us.
Q: What would you say the turning point was when sales began normalizing?
A: In January and February and early March, things picked up. They were not normal, but there was business. It really turned back in mid-March. And it's not a coincidence that the stock market hit its low point on March 9 and has since rallied from there. [Oceania] has now sold 47% of 2010. We are right now tracking 3 percentage points behind where we were last year at this time, and we are catching up every week. Occupancy will be slightly down in 2009 vs. 2008, but we are on pace to return to normal in 2010.
You know how I know that things are getting better? Because I was just on vacation in Colorado, and a day didn't go by that I didn't get an email from a travel agent asking me to clear a wait list.
Q: With Regent, you chose to include shore excursions rather than lower prices. Did that stimulate sales?
A: Like nothing you've seen. It's one of the reasons why our business is stronger than most right now. This industry is one of lemmings. There is too much copying going on. Everyone lowers prices to stimulate sales. It works, but it hurts the travel agents. Every week I hear that half a dozen agencies are going out of business. We said, we don't want to hurt travel agents, and knocking $60 off our cruise won't motivate a sale the way it might at [a mass-market line]. Including shore excursions makes them commissionable.
Q: How do you feel about Larry Pimentel taking the helm at Azamara Cruises?
A: I welcome Larry joining Azamara. I told him that. And I hope he does the right thing and stops copying Oceania.
Q: You said you want people to associate Oceania with good taste. How do you market that?
A: The brand screams taste. In our decor, culinary program and our itineraries. Every great brand should be able to be defined with one word. When I say Volvo, you think safety. When you think of Oceania, we would like you to think of taste.