Monday, October 31, 2011

What's Going On at Oceania Cruises and Prestige Cruise Holdings? Lots of Changes at the Top

Oceania Cruises has of late been changing its officers more often than hurricanes alter cruise itineraries.  Why?  I, honestly, do not have a clue.   

What I do know is that while change is good, there is a very curious and worrisome apparent conflict between reports of "All is well...and even better than that" and elimination of the officers that were involved during those period of success.  More on that in a minute.

There is no question that Prestige Cruise Holdings and its wholly-owned Oceania Cruises (and Regent Seven Seas Cruises) are the babies of Frank Del Rio, Senior.  This past May 2011 Bob Binder, long time (in Oceania's relatively short existence)  President of Oceania Cruises, was appointed President and Vice Chairman of Prestige Cruise Holdings.  While this sounds as if it usurped some of the authority of Frank, Sr., the CEO and Chairman, it did not.

Filling the void at Oceania Cruises was Bruce Himelstein, who had previously worked at a number of the top luxury hospitality companies, including Ritz Carlton during its rapid expansion.  Was appointed the new President.

Quietly, at the same time Victor Gonzalez, who was originally involved on with Oceania Cruises and then took on similar responsibilities for Regent Seven Seas Cruises, involved with call centers, yield and revenue management, training and development and...if that was not enough...Guest Relations.  (I always wondered how the person  in charge of getting the most dollars out of a passenger could be put in the position of overseeing Guest Relations, but I digress).  He was given the title of Executive Vice President...but with the curiously announced direct reporting to Frank Sr.; making me wonder not only what was Bill Binder in charge of, but what Himelstein would be in charge of.

The former head of yield and revenue management, Howard Sherman (one of the original founders of Oceania Cruises), was, in my opinion, demoted to overseeing the small area of overseas air; which I saw as an invitation to leave; reporting to Gonzelez; rather than Frank Sr. 

But, there was more:  Frank Del Rio, Jr. - who was in charge of hotel and land programs for Oceania and Regent was elevated to Senior Vice President of Port and Destination Services reporting to Robin Lindsay, Executive Vice President (and also a founder of Oceania Cruises).

Tim Rubacky, who served as Senior Director of Communications for Prestige Cruise Holdings and Director of Communications for Oceania was, shortly thereafter, let go.

While I will not bore you with who else was let go, the point is that less than six months ago there was a major reshuffling at Prestige Cruise Holdings and Oceania Cruises.  Relying on the old adage, "If it ain't broke, don't fix it", red flags started waiving in my breeze, if not everyone else's.  

But three things of significance happened:

First, Oceania announced the long term charter of the Regatta to Hapag-Lloyd, but it didn't announce it as she was permanently leaving the fleet.  Strange, but an oversupply of berths is an oversupply of berths...and if you can't sell them, you need to find someone who can that is not your direct competition (like Azamara Cruises).  And when someone doesn't want to buy your older hardware what do you do?  You charter it out.

Second,  there was the shocking (to me) 75% Off Sale (yes, 75% off) on a variety of sailings caused, I believe, in part by Oceania seeking a price point that might seem like a bargain compared to its sister company Regent Seven Seas Cruises, but actually quite similar (or more expensive than) the all inclusive luxury lines of Seabourn  and Silversea cruise lines as well as the very inclusive Crystal Cruises.  Let's face it even though cruises are marketed as 25% - 40% off right from the start, cutting that pricing by 50% in the cruise industry is pretty drastic.

Third, there was the announced, but never really explained, one month delay in the delivery of the the new Oceania Riviera.  This delay is unusual for a couple of reasons:  First, in this slow economy the ship yards have no backlog and a history of delivering virtually ever other cruise ship early, if not merely on time.  Second, the reason given:  To give the crew more time to become acquainted with the ship.  Folks, nobody has hardware costing hundreds of millions of dollars sitting around for a month so the crew can figure out how to do there job.  Ever hear of another cruise line doing that?  Didn't think so.

Now, Kunal S. Kamlani, has been appointed to replace Bruce Himelstein as President of Oceania Cruises.  However, in September 2011 Kamlani was appointed President and Chief Operating Officer of Prestige Cruise Holdings with both Himelstein and Mark Conroy (Regent Seven Sea's President) reporting to him.  Back then he was put in charge of  "overall strategic marketing, sales, e-commerce, public relations, promotions and procurement".  To make things a bit more confused, Mr. Kamlani was previously the Chief Financial Officer for Prestige Cruise Holdings before departing for Bank of American for a short stint. 

By this point I am confident you are confused about the structure and operating chain of command at both Oceania Cruises and Prestige Cruise Holdings...and why the things that are happening are, well, happening.

I have no answers, but I do have serious questions and concerns.  Whether it is a case of people jumping ship, being forced to walk the plank, a combination, or something else, in no way does this signal stability or promote a feeling that all is well.  What is does do is bring back memories of Renaissance Cruise Lines - also headed by Frank Del Rio, Sr. - that rapidly expanded, was hit by an economic slowdown and then filed for bankruptcy.

I am not saying Prestige Cruise Holdings or Oceania Cruises is at or even near that stage.  What  I am saying is that - just like I called the consolidation of Regent Seven Seas into Oceania Cruises years ago (and a process that keeps drawing nearer and nearer as more and more functions are Oceania-sized) - something is happening...and I don't know that it is all that good.

What do you think of the revolving door and consolidation of power and operations?  Join us on The Gold Standard Luxury Travel Forum to discuss it.