Tuesday, May 15, 2012

Regent Seven Seas: Ships Fuller, But Very, Very Slim Profits

It is fairly common knowledge that Prestige Cruise Holdings is trying to bring Regent Seven Seas public and the most recent financial report out today doesn't bode well for that as revenue, capacity and passenger counts are up, but profits were cut to a third of what it was a year go over the same quarter.

More specifically, Regent's revenue was up over 15% to a new record, its passenger count was up 4.7%, but its profits plummeted to a mere $400,000.  To keep that in perspective, there was $119,900,000 in revenue so something is amiss.

To me it is a mindboggling disappearance of profits when a 15% increase in revenue is shown.  And, to be sure, to this skeptic, I have a sense of where there is smoke there is fire. 
  • Were/are costs being deferred with creative accounting to make things look better than they really are (and it is catching up ala Renaissance Cruises)? 
  • Are costs associated with Oceania Cruises (which is struggling to fill its ships and just had two new ships built) being pushed onto Regent now that the they have combined back-offices?
  • Is the high cost of "free", "free", "free" everything catching up with it?
And, once again, the concept of Regent building a new ship has risen its head...for five years running now, I believe.  Folks, a new ship requires profits and profits equal to one cruise line executive's compensation package for a year isn't going to justify to even the most liberal of spenders that a new ship can be afforded or justified.

But to me the thing that I honestly cannot understand is how Regent continues to fill its ships while the reviews continue to roll in with great inconsistency and every time I comparatively price a Regent cruise versus a Seabourn or Silversea cruise it comes out to be more expensive. 

From a business stand point I would consider Regent Seven Seas a "sell", but from a travel advisor's perspective I would consider it a "buy with caution". 

Don't agree with me or want to see for yourself, call me at (877) 2GO-LUXURY or email me at eric@goldringtravel.com .  I would love to chat about it.