Wednesday, 3 September 2014

Norwegian-Prestige deal raises prospect of UK deployment

Norwegian-Prestige deal raises prospect of UK deployment

Norwegian-Prestige deal raises prospect of UK deployment
Norwegian Cruise Line’s acquisition of Oceania Cruises and Regent Seven Seas Cruises will give it the courage to base a ship in Southampton or Dover, according to Norwegian chief executive Kevin Sheehan.
He said it was too much of a risk to commit so much capacity to the UK market when you have only 13 ships, but with 21 in the combined group, it would definitely be a consideration now.
Sheehan said the deal was financially beneficial but also brought other benefits.
“It helps us withstand economic situations like recessions – the type of customers who travel with Oceania and Regent have a lot of money and that top end of the industry weathered the downturn well.”
It also helps it become more resilient to geographical situations and makes it operationally “smarter”.
But he said “synergies” across the three brands would be created “behind the curtain” initially.
“Certainly for a period of time because we don’t want to do anything stupid, we will continue selling and marketing the three brands individually as it’s worked well and we don’t want to mess that up.
"I don’t want to keep changing strategies like Royal Caribbean has, so we will stay as we are for quite a while,” he said.
But he said sales and marketing teams for each of the three brands would start to share knowledge and best practice.
And commenting on Royal Caribbean chief executive Richard Fain’s recent declaration that he wanted his company to be the best, Sheehan added:
“He can say he wants to be the best, but the report card comes out once a quarter and then we will see who’s best.
“We are bringing together two excellent businesses. Norwegian has gone from being a joke in this industry to the best in class in terms of yields, operational profit and onboard spend. It’s very positive and is only going to become more so.”
Sheehan said the deal had been financed by raising cash, selling some equity and raising money from banks including JP Morgan, Barclays and Deutsche Bank adding that every other bank had fallen over themselves trying to be part of it as “they could see how compelling the transaction was”.
Sheehan said bringing Oceania and Regent parent company Prestige Holdings into the fold had always been on his mind, but talks had never got far.
“I brought it up a couple of times but it never really got going. It was always too complicated or things were happening and getting in the way, like launching ships or taking the company public.
"But then Frank del Rio and I started a romance – we went for dinner and got to where we are now. It’s extremely exciting.”
Sheehan said he was not looking for any further acquisitions in the immediate future.
“We’re a conservative group of guys and girls and our hands will be full for a while. Our focus now is to ensure we have a very successful launch of our new Norwegian ship, Escape, next year and of the new Regent ship in 2016.”