Wednesday, November 26, 2008

Silversea - Lost at Sea????

Every time I go to post something about Silversea Cruise Line, something else comes about that makes me shake my head. 

Not so long ago I posted about the Prince Albert II making a big play in Tahiti and French Polynesia.  Well, scratch that out.  That itinerary has been pulled.  It is not surprising in that it drew so little interest.  I, personally, found that a March sailing was literally wide open....and I mean WIDE open.  Obviously, either from a marketing, pricing or some external factor, people found the Paul Gauguin to be a better choice...if they even knew about the Silversea option.

Instead the Prince Albert II is. according to a Silversea announcement, heading to the Artic, but there is catch.  If you go to the Silversea website there are no itineraries.  That three month block of time is nowhere to be found.  On March 8, 2009 the ship is in Valparaiso, Chile and on June 1, 2009 it is in Hamburg, Germany.  Huh?

There may be good reason for this, but as a travel agent who specializes in luxury client√®le, I am very confident in saying that the appearance of chaos is not a good thing.  And, without question, this appears like chaos.

But then there is the whole discounted cruise issue and how that was handled.  Silversea announced that it was discounting its cruises through March by as much as 50% or more.  But then it was announced, to the public in places like Seatrade, that it was providing its travel agents with an unheard of 25% commission.  Doing the simple math:  A $10,000 brochure fare would really have a 20% early booking savings on it already, so it is a real $8,000 fare.  When that fare is reduced to 50%, it becomes a $5,000 fare.  When you then give a 25% commission, it becomes a $3,750 net fare rather than a much more significant one.  (I can't give you the exact amounts as commission information is supposed to be confidential, but know it is significantly more.)

This resulted in literally every one of my clients that showed any interest in a Silversea cruise afraid to book a cruise with it because it sounds like the line is starving for cash.  And being cash-starved in a credit-tight world is not a good thing.  Considering the last thing someone wants to worry about is whether their reduced expendable income is going to be lost (or, at a minimum, a credit card dispute tying up funds for weeks or months) or their getaway becoming a "get involved" or worrisome, the logic of Silversea's actions just escapes me.

I started to write, "I am assuming there is a plan in there somewhere", but then I thought again.  I must restate it as, "Is there a plan in there?" 

I am, to be sure, very concerned about the survival of Silversea.  Do I have firm evidence of financial
distress?  Absolutely NOT.  But I still have my opinion based upon the following series of events: 

     - Change from European to lesser trained and not all English-fluent Filipino staff;
     - Rotating chefs and reduction in food quality;
     - Announcement that Silversea wants over 50% of its passengers to be non-U.S. based;
     - Claims of passengers loads increasing by over 30% (a clear indication of empty ships, for you can't increase passenger loads if you have full ships and no new ones in operation);
     - Touting that there are many new passengers, so there should be no intimidation of feeling left out (Isn't that an admission of passenger not being satisfied, so the repeater numbers have declined?)
     - Sharp reductions in pricing through March 2009;
     - Publicly announcing 25% commissions to travel agents; and, without limitation,
     - Prince Albert II chaos.
     - (Note:  I have no solid information on this last one, but I have heard rumors of it:  Construction on the new ship has been slowed.)

I may criticize some aspects of other lines, as I just did with the Regent Seven Seas Prime 7 Steakhouse, but there is a big difference.  I have commended Apollo Management and Prestige Cruise Holdings for taking a much more fiscally responsible approach any effectively canning the new ship, not wasting money on the Navigator (which I believe will be leaving the fleet at the earliest possible time...which probably will be at least a couple of years away) and making upgrades (mechanical and in public spaces) on the Voyager and Mariner.  I also surmise that ending its relationship with the Paul Gauguin is based upon the net smaller returns since it had the added costs of chartering the vessel to deal with.  I also may not agree with Regent's pricing, but alas it is not "giving away the ship", but has focused on marketing (even making cold calls to past passengers).

So, there are ways to be aggressive in this slower market and there are ways to cut costs and expenses.  I see Apollo/Prestige Cruise Holdings/Regent's logic and await the results.  I hope someone can tell me what is going on at Silversea. 

I think it is important that Silvesea survives and flourishes.  Competition and Alternatives are both good and necessary...and they inspire Confidence in the marketplace.