When Kruse took the helm at Holland America, his stated strategic objective was “to invest in systems, in the product and in the employees.
"Our business model requires our ships to operate, and we need to fill them, and we need to have a relevant product," he said. "Then, we have to exceed passengers' expectations.”
Kruse joined Holland America as senior vice president of fleet operations in 1999. He was appointed to president and chief operating officer in 2003 and became president and chief executive officer in 2004.
But it was Kirk Lanterman who has fundamentally ensured the continuity of the company, Kruse said, and "put the tools in place that have allowed us to continue to build." Lanterman led Holland America from 1983 to 2004 and still holds the title of chairman.
"We have a tremendous history as a premium brand," Kruse continued. "And we have very loyal employees – nearly 15,000."
As CEO, Kruse's role is also to set the strategic vision for the line and to make sure that everybody marches together.
Signature of Excellence
One of Kruse's first initiatives was to introduce the $225 million Signature of Excellence (SOE) program – a range of service and product enhancements across Holland America’s 13-ship fleet.
A similar program, called Degrees of Difference, is underway for sister company Windstar Cruises and its three ships.
Degree of Difference covers what Kruse said are the five pillars for Windstar’s overall guest experience: “Dining, accommodations, service, destinations and activities."
"We all get up every morning, thinking about how we can make this company better," Kruse said. "We have to continue to evolve. Once you get complacent or things go stagnant – that is where the dangers lurk, and it will not happen on my watch."
In seven years, Holland America has nearly doubled its lower bed capacity – growing from 12,000 when Kruse joined – to nearly 19,000 today.
Since joining in 1999, Kruse has taken delivery of the Zaandam and the Amsterdam; disposed of the old Westerdam and the old Nieuw Amsterdam; introduced the Vista class and taken delivery of the Zuiderdam, the new Westerdam and the Oosterdam, with the Noordam following this winter.
"Looking back, I am proud and pleased," Kruse said. "It has all gone pretty seamlessly. We have taken on a lot of new tonnage with few, if any, problems.
"The Zuiderdam turned a few heads when she entered service. At first, some thought she was too aggressive and too big for Holland America. When the Westerdam and Oosterdam followed they were more easily accepted," he said. The market may just have gotten used to a new and different Holland America.
Tradition Plays a Role
"But," Kruse pointed out, “we are still remaining true to what we used to be. Our ships are still painted the same colors. The crew is of the same nationalities as before. We continue to use silver in our dining room, and there is artwork throughout the ships.
"We remain true to our allegiance of 130 years, but we have evolved. We are a fresher brand – more spirited, a more upbeat product, more passionate and more contemporary in style," he said.
The passenger profile varies: the clientele on longer cruises is older, while the majority on seven-day Caribbean and Mexican Riviera cruises average 50, with a huge percentage under 18 during holidays, Kruse explained.
"We used to have more of an older clientele," he said. "But today, our guest profile is much more varied, depending on the itineraries. The ships have facilities for all age groups.”
The SOE program also includes the installation of children and teen areas on all the ships; part of Kruse's effort to make the product and the experience relevant.
And for those who want a unique, more upscale, but casual and very romantic experience, there are the motor sailing yachts of Windstar.
Unique Brand Position
"Maybe we were resting a little bit on our laurels in the past," Kruse added. "Now we are focusing on making our product relevant to the markets we cater to."
According to Kruse, Holland America has a unique brand positioning – between the large contemporary lines and the smaller luxury operators. "We are in a niche where we are the leader and set the standards," he said. "It is a comfortable place for us to be. We are not the lowest cost provider, nor the highest ticket revenue producer."
Holland America's passengers are mostly Americans, although the international contingent is growing. "As a brand, we are relatively easy to move into," Kruse said. "Whether you are Dutch, Norwegian or Australian, it is easy to descend into our brand and our service.
"People do not go onboard and say 'this is American,' we are not like Las Vegas. We are a little different – more of an international product – very cosmopolitan with our artwork and furnishings."
This year, Holland America expects to carry approximately 750,000 passengers at what Kruse called a "decent yield," noting his efforts also include maximizing revenues while minimizing costs.
Product delivery is always a challenge, Kruse said. He described the ships as organic – living and breathing – always operating with minimum downtime. However, there are always things that will go wrong – there is always something, including hurricanes.
Thus, the company has strong internal control procedures and the capability to adapt, according to Kruse.
Whether on a world cruise or sailing seven days in the Caribbean, Holland America is basically the same product, according to Kruse. "We offer the same quality of delivery," he said, "although there are some indigenous differences such as different menus. But the underlying product and service is consistent."
Holland America has the potential to grow bigger, according to Kruse, who said his target market is living longer, feeling younger, eating younger and thinking younger. While the American baby boomer generation is aging – with 87 million older than 50 – and growing to 100 million in the next five years, their horizons are those of much younger people than before, Kruse said. They also have more accumulated net worth and disposable income and are willing to spend more of it on themselves.
As cruising becomes more relevant to more people, Kruse thinks the opportunities for Holland America will be significant.
In addition, the brand only does modest international sourcing, so as it becomes more relevant in other markets as well, Kruse sees opportunities to grow Holland America beyond North America.
Looking forward, Kruse said the next generation of ships will probably be close to what Holland America has today. "We will probably just tweak the edges of what we have," he said. And future ships will not be substantially larger. If the ships get much bigger, it will be difficult to deliver a premium product, according to Kruse.
Just after making that statement (above), Holland America ordered a new 86,000-ton, 2,044-passenger ship – with a 10-percent-larger passenger capacity than its largest ships so far.
T he new ship is slated to enter service in summer 2008, with an option for a sister ship for spring 2010.
The all-in construction cost is estimated at $450 million – or about $220,000 per berth.
Meanwhile, the biggest news for 2006 is the completion of the $225 million SOE program, which will soon have been implemented on all the ships. “It is an adrenalin shot,” said Kruse. – Oivind Mathisen