Thursday, December 16, 2010

Oceania Cruises to Acquire Regent Seven Seas Cruises: A Theory?

I am fascinated by the interrelationship between Oceania Cruises and Regent Seven Seas Cruises and I have come to the conclusion that eventually Oceania is going to take over Regent Seven Seas’ ships and Regent will no longer to exist.

On January 10, 2010 I wrote an article: Hello Oceania Marina…and, Quite Possibly: Bon Voyage, Regent Seven Seas.  It discusses a number of reason I believe the new Oceania Marina (and the since announced Riviera) mark the beginning of the end for Regent Seven Seas.  I would encourage you to read it as it lays the foundation for much of what I am about to say.

In the year since writing that article, things at Regent Seven Seas have not gotten better.  In fact, it shows - at least to me - strong signs of it beginning its breakdown. 

1.  A couple of months ago Mark Conroy, Regent Seven Seas now (but previously not) extraordinarily quiet president, publicly stated that over 25% of those who book a Regent cruise cancel it before final payment.
You can read more about this in my article:  Regent Seven Seas - What The...(People Are Jumping Ship) .  Regent's response to this was not to improve its product...in any way...but rather to increase its penalties for those who wish to cancel their Regent cruise and to start those penalties further out.  You can read my article:  Regent Seven Seas Expands and Increased Cancellation Penalties.

2.  Regent has announced nothing to improve its onboard product in any way.  While more and more former Regent loyalists are trying and enjoying Silversea and Seabourn (noting on most all message boards that the service on those two lines is far superior to that on Regent) and others are complaining about the quality and disorganization of the "free" Regent tours, Regent announces that it is (a) increasing its industry high prices yet again; and, (b) if you book at those higher prices you receive a "free" pre-cruise hotel room.  (But, of course, if you booked at the lower price you do not get the "free" room.  Do the math!  I did in this article.)

3.  PCH floated the idea of offering Regent Seven Seas as a publicly traded stock in an IPO and/or floating $200,000,000 in bonds.  Either way, there is an indication that Regent may not be so favored. 

4.  Regent Seven Seas announced that in 2011 it is moving its offices to the same location as Oceania Cruises headquarters. In Regent's press release Mark Conroy stated, "‘Our lease here in Fort Lauderdale is up in 2011 so we will be consolidated in one office which will put us closer to our finance and accounting team who are already in the Prestige Cruise Holdings office in Miami." So now finance, accounting and executive offices are all under one roof.

5.  Oceania Cruises is training some of the staff it will be moving to Marina on the Regent Seven Sea's ships.  Obviously being trained to work on a ship of similar size, with similar sized accommodations, and with similar passenger loads makes all the sense in the world, since when does one cruise line use its ships to train a competing cruise line's staff.  (Don't even think of Holland America training Princess staff!)

6.  Oceania Cruises has, to my mind, a curious marketing plan where it pretty much ignores the differences between its three smaller ships (and their attendant much smaller cabins, less dining options, etc.) and is focused on pushing the overall Oceania product of higher quality cuisine and service.  To me that is like ignoring the elephant in the room. One thing I am very confident in is that Frank Del Rio and his executives are smart people, so there must be a reason - a good reason - they are ignoring the elephant. 

With the greater consistency between the Oceania's Marina and Riviera and Regent's Voyager and Mariner (and even Navigator), the combining of financial, accounting and executive offices, the generally lesser performance of Regent and the higher quality of Oceania and the actual difference in the products (other than Oceania's generally more consistent service and cuisine) merely being Regent's higher prices incorporating gratuities, drinks and tours vs. Oceania's ala carte structure, it just makes sense to me to get rid of Regent's issues and focus on what both lines actually are:  Premium (Not Luxury) Cruise Lines.

I could be wrong and, to be sure, I have absolutely no information confirming my conjecture.  However, I am pretty good a reading tea leaves and even if I don't, I think it is a very good idea.