With its first month in business under its belt, Oceania Cruises has hired its core executive team and sent out its first brochures, and is reporting favorable occupancy and per diems on inaugural sailings this summer - despite admitted concerns over the travel environment.
"With the exception of myself, it's really an all star group," joked President Frank Del Rio of the newly appointed executives. With former Crystal Cruises President Joe Watters as chairman and Robin Lindsay hired away from Silversea Cruises as senior vice president of hotel services, "it shows what level of onboard experience Oceania is aiming for," said Del Rio, adding, "We've been fortunate to lure away a number of top-notch executives from other cruise lines - people looking for the opportunity to imprint their own style and vision onto a new cruise line." Among the most recently appointed are Andrea Corman as vice president of passenger services; and Jeff Drew, most recently at Clipper Cruise Line, who has just been named senior vice president of sales.
According to Del Rio, Oceania will shortly appoint a vice president of national accounts, and put in place 12 district sales managers, hopefully by the end of March. To date, the cruise line has signed preferred supplier agreements with Cruise Shoppes and Cruise Planners "and we're talking to the consortiums, the usual suspects." But he added: "The one thing worse than not having preferred supplier agreements is having them but not being able to service them" - thus the company's hesitance to move forward on this front until the sales force is fully in place.
Despite the absence of a sales force and the fact that brochures were just being mailed out this week, Del Rio noted that the inaugural cruise of the Regatta on July 5 was 54 percent booked, the July 19 cruise 45 percent booked, and the next five voyages between 32 and 36 percent full. Per diems have ranged from $210 to $231, which are in accordance with Oceania's business plan.
Oceania went to market with two-for-one pricing and will be offering two-for-one air to former Renaissance Cruises customers for selected sailings, but these offers are part of the startup strategy - there has yet to be any strategic discounting introduced. 'I'm happy with the prices we're getting, given what I'm seeing and hearing in the marketplace. We have a competitor selling outside cabins on Baltic cruises at $75 a day."
Asked about war concerns and what implications they have for Oceania, De Rio said, "The experts say that once the bombs stop dropping there will be all this pent-up demand corning out of the woodworks. I'm a little more cautious, and I think people may be overly optimistic about this being a short-term situation.
"I think this is going to be a tough year. I think it's going to be a terrible second quarter; I'm very happy I don't have any cruises to sell in that quarter. And I'm also happy that in the third quarter, with the exception of the inaugural cruise, our next eight sailings are in Scandinavia - which has proven stronger than the Med when there are tensions in the Middle East."
Del Rio believes that at the moment, his target market is not being impacted as much by financial concerns as by terrorism-related fears. "The people cruising in Europe are generally not the ones facing unemployment issues; if anything they're facing a lower-return-on-fixed-securities issue. I think the hesitance to book now, and the trend to book late, has everything to do with 9/11-type concerns."
If the situation deteriorates drastically, he explained, Oceania does have the possibility of postponing the delivery of the Insignia, and contingency plans have also been developed to reposition the vessels if necessary.
The Regatta will be drydocked for refurbishment in Genoa from May 10-May 25. The Insignia will be drydocked March 10-25, and will then be chartered out to French company TMR International between April 19 and Sept. 27, operating a series of cruises in the Mediterranean and Baltic. The Insignia is scheduled to join the Oceania fleet for its inaugural cruise on Oct. 4.
During the refurbishments, new teak decks will be installed and the pools will be totally redone; interior appointments will be refurbished, with bedding and towels upgraded; the Italian restaurant will be entirely redesigned and a new bar, Grappa, developed there; and the casino bar will also be redone and renamed Martini's.
Concluded Del Rio: "If I can feed you like a king and if you sleep like a prince, and we take you to worldwide destinations day in and day out, and if we offer the right pricing, I think we can create a following. When it comes to startups, the biggest risk is that you open your doors and you don't have any customers, you never had any customers, and there's no assurance you ever will have customers. We're in a different situation. Nearly a half million passengers sailed with Renaissance and were very satisfied with that product - and we're marketing directly to these people."