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Royal Caribbean, Silversea Execs Talk Navigating The Cruise Restart

Travel Agent Central by: Susan J. Young

August 4, 2021

lifestyle • travel • media

Cruise demand is soaring, loyal cruise guests are raring to sail and the cruise restart—while just beginning across the globe—is gaining traction.

That’s the perspective of top Royal Caribbean Group and Silversea Cruises executives interviewed by Travel Agent last week. All were in Piraeus, Greece, to attend the christening of Silversea’s new, 596-passenger Silver Moon. Tip: As reported by our sister publication, Luxury Travel Advisor, the new ultra-luxury vessel, a sister to Silver Muse, is debuting the brand’s new S.A.L.T. (Sea and Land Taste) program. After voyages in Greece, Silver Moon will operate cruises between Italy and Greece, before heading for Asia this coming winter.

Here are highlights from our executive discussions and interviews:

Cruise Demand, Consumer Mindset

For 2022, 2023 and beyond, “you’re seeing clear demand for travel, for experiences and it’s at levels that we saw pre-crisis which is really encouraging. In some cases, [it’s] even better,” said Jason Liberty, executive vice president and chief financial officer, Royal Caribbean Group.

Liberty also stressed that from the earliest days of the pandemic, loyalty cruisers from Royal Caribbean Group’s brands—Royal Caribbean International, Celebrity Cruises and Silversea Cruises—“have been exceptionally in touch with us, tuned in, supportive and so it’s incredibly humbling to me. We couldn’t appreciate them more before but we have found a new place of appreciation.”

In the short term, he said, they’ve asked for things such as making sure protocols for health/safety are in place and “making sure that you’re safer on our ships than you are anywhere else in the world. And we’ve made good on that promise, and we’re heavily committed to keeping that going through.”

But, he also stressed that cruise guests also “very much want to continue to experience the world—and they want us to add more destinations, experiences and the immersive” options.

 

While travel restrictions have held some back, Liberty’s view is: “Without those restrictions, they’re ready to roar.”

Greece, Iceland and other parts of Europe, along with some Caribbean isles, Tahiti and other spots across the globe including U.S. ports in Alaska, Florida, Texas and Washington state are now welcoming back cruise ships. Royal Caribbean Group’s ships visit more than 1,000 different ports across the globe. Liberty’s perspective is that the industry is now seeing “waves” of port openings with many more to come by year’s end and that things may be more back to normal in 2022.

In some markets, vaccinations came out a bit faster and were distributed quicker, he said, “so, there’s a little bit of a lag in certain destinations about getting back online [with cruising], but that’s occurring. Tourism for the places we go to is a major part of their economy.”

With employment suffering at ports and destinations, “everybody is aligned to get these ports and destinations back up online as soon as possible,” he believes.

Liberty also told Travel Agent that “in countries with a high level of vaccination rollout, people are traveling. When you look forward into the bookings, you’re seeing [that], you’re seeing demand,” he said. It generally lays out how it’s been in previous years with global sourcing—but with some exceptions based on government travel policies.

 

Left to right: Barbara Muckermann, Jason Liberty and Roberto Martinoli address questions following Silver Moon's christening. // Photo by Silversea

As for Silversea’s repeat luxury guests, the line’s Venetian Society members, the first thing is they ask is to get back aboard, according to Barbara Muckermann, Silversea’s chief commercial officer. But when the line asks them for details, they cite two important things. “The first one is the farthest the better” for itineraries, Muckermann emphasized. “When we tried to propose the domestic cruising, the ‘big no’ was really resounding.”

Secondly, past guests spoke their minds that they wanted a fully vaccinated crew and guests. So, the line assured that happened—thanks in part to the Greek government allowing crew members to receive the vaccines.

“We believe this comfort has really helped the demand,” which is “strong and unprecedented” for 2022 and 2023, said Muckermann.

She added that “our guests are realizing that immersing yourself in nature is a really good idea to escape from a pandemic, so we see very, very strong demand for our exotic sailings including Antarctica, Galapagos, and the Russian Far East.”

New Programs, Supportive Parent

It’s been a few years since Royal Caribbean Group purchased a majority stake (67 percent) in Silversea Cruises from the Lefebvre family. Prior to that, the line had invested in the brand, as well. But did the outright purchase do what Royal Caribbean Group wanted?

“It’s worked very well,” believes Fain. “The whole point was not only to add the brand, but also to have the opportunity to expand the brand both in terms of what it was offering and in terms of its scale. I think you’re seeing onboard that we’re doing both.”

The new S.A.L.T. Kitchen on Silver Moon // Photo by Silversea

Fain cited the newly debuted S.A.L.T culinary program, as well as the Invictus Project, Silversea’s upgraded complimentary caviar program and the ultra-luxury line’s new complimentary limousine service.

Royal Caribbean’s ownership also provided the financial clout for Silversea to take pandemic-era delivery of two new ships—Silver Moon and the expeditionary Silver Origin. A third new ship, Silver Dawn, is set for delivery later this year.

Prior to the majority purchase of Silversea, Royal Caribbean Group had admired that ultra-luxury and expedition brand for quite a long time, according to Liberty. In looking to add those specific cruise segments to its brand portfolio, he said executives asked themselves: “Do you make it or do you buy it?”

In the end, Royal Caribbean Group opted to buy. “We had always said that [Silversea was] really the leader… and, if there was that opportunity, we would try to do it,” he added.

In addition, Liberty points to the fact that “our customers grow over time.” He believes that younger guests just starting their careers and in their early family years will find the Royal Caribbean International brand a great fit, but as they move to the next stage of life, their children are older and their careers are maturing, they could then, in turn, shift to Celebrity Cruises.

In the next chapter of their lives, with even greater career development or even retirement, additional wealth and different family dynamics, they may be traveling heavily and trying to check off bucket-list destinations. So, having an ultra-luxury line that offers far-flung itineraries is important.

“Having that total offering available is what we aspire to be, and that’s why Silversea really was a perfect fit into the family,” Liberty says.

Reestablishing Credibility

While demand for cruising is growing industry-wide, putting an entire fleet back in operation and filling all those ships isn’t necessarily an easy task. Some countries still have COVID-19 restrictions, others tight protocols and the Delta variant is on the rise.

Some consumers also have a negative perception of cruising given the highly public events of early 2020 as television and other news outlets showed sick people onboard ships, reported deaths of passengers, talked about ships being turned away from ports and detailed issues of people being “stuck” at sea for days or even weeks onboard.

As a result, “we really have to reestablish the credibility, the trust in travel, in safety and in cruise safety,” Richard Fain, chairman and CEO, Royal Caribbean Group, told Travel Agent. “The image of the industry 15 to 17 months ago was very much tarnished by incidents that happened then.”

Richard Fain speaks at Silver Moon's christening. // Photo by Silversea

Fain said it’s crucial “to go from being the example of what could go wrong…to what could go right” and “an objective of being better than any other kind of vacation you could have. We thought that was possible.”

Explaining the steps in that process, he joked with Silver Moon’s christening audience attending the naming ceremony in the ship’s theater last week: “We were even desperate enough to tie up with another cruise line—Norwegian Cruise Line—and trust me, we have to be really desperate to tie up with another cruise line.”

Yet, that outcome was positive for the two cruise competitors and the industry as a whole. Together, Royal Caribbean Group and Norwegian Cruise Line Holdings formed the “Healthy Sail Panel,” which last summer began to change the industry dynamic. “It was a really amazing group of people who worked hard at this,” says Fain “We brought in every expertise we could. It turns out that when you put a whole lot of smart people together in a room, they come up with good answers.”

“Science wasn’t the answer… science informed the answer,” Fain stressed. That group’s work on developing health/safety protocols was submitted in September 2020 to the U.S. Centers for Disease Control and Prevention (CDC).

The list has become a blueprint that many lines have adopted as all or part of their own health/safety program. For example, “I think Silversea has very much taken it to heart and worked with that,” said Fain, “and I think we’ve seen that throughout.”

On the road to re-establishing credibility in cruising, “everybody has to work on this,” he said. “Everybody has to pull together. But when they do the outcome is terrific, so I think that’s the answer.”

Lessons Learned

When asked during a post-christening Q&A session on Silver Moon about what lesson they’d learned during the pandemic, here’s what some officials relayed to the audience:

“I think that if you cater to travelers, they find these products so addictive that it’s really [the result that] they cannot stay at home,” said Muckermann. “It’s mostly thanks to our passengers who always have the desire to travel the world.

Muckermann also said that the first reason why passengers come back is the crew. “So, this has not changed, and it never will change. This is the strength of our industry and I think it’s a lesson that was reconfirmed.”

Liberty quipped that “I learned that my kids aren’t that cute. I think it also taught us a level of humility, made us a lot more humble and to really appreciate everyone.”

 

Jason Liberty speaks to media in Greece. // Photo by Silversea

Also, he observed that in trying to build, sell, market and deliver world-class vacations, it’s easy to get into a routine and become “like a machine.” So, “when it stops, you can really step back and look at what you have, what you created,” Liberty acknowledged. “I think you can really be changed by frame of mind, which I really appreciate.”

Silver Moon’s captain, Chavdar Georgiev, said the lessons he’s learned are to “be thankful and appreciate every day because anything may happen.” Eliciting chuckles from the audience, Silver Moon’s godmother, Gaia Gaja of the Italian Gaja Winery, quipped: “I hear that wine is more important than what I thought.”

Roberto Martinoli, Silversea’s president and CEO, said: “What I personally learned is that there is always a way out. Never give up.

“So, I think that was the big lesson learned because we went through extremely difficult times.” But he said “persistence paid off. It’s important to never give up.”

Separately, in a private interview, Travel Agent asked Liberty if he ever felt, on the financial side, that things were so bad in 2020 that there wasn’t much hope for the industry?

At Royal Caribbean Group, “our culture is always very optimistic,” Liberty said. “We’re very solution-oriented” and focused on continuous improvements. As a result, he stressed, “I don’t think there were days where we were worried that we weren’t going to be able to make it.”

That said, “you know there were tough days,” he acknowledged. “In the early days, if you remember, the capital markets were closed…and all of a sudden you need some short-term liquidity.”

But Liberty said it was a testament to the company’s culture and its strong relationships with banking groups, as “they all really stepped up for us.” Now, “the company is in a very strong financial position,” he believes. “We’re leading in getting our ships back up and running because we took the right actions at the right time.”

A New Ship, New Hope

Launched on June 18, Silver Moon was the world’s first new ultra-luxury ship to set sail after the pandemic. Martinoli thanked Fincantieri, the Italian shipbuilding company that built Silver Moon in its Ancona, Italy, shipyard, with more than 1,000 workers toiling on the project through the pandemic’s toughest times.

Silver Moon at Fincantieri's Ancona, Italy shipyard. // Photo by Silversea

When told by Fincantieri that “the delivery is confirmed, we didn’t believe it,” Martinoli acknowledged. He and others just didn’t see how it was possible to build a ship during a pandemic, but “it happened.”

Noting that taking delivery of a new ship and any naming ceremony is always cause for celebration, Fain said this christening was even more so: “It is emotional for me to stand on this stunning new ship.”

While the world is still highly isolated and travel is still more limited than he’d like, “I am pleased to say that cruising is leading the way toward opening up the world in general,” said Fain.

He continued: “A year and a half ago, cruising was criticized by some as a highly unsafe environment. It was isolated and crowded. But in the last 17 months, we’ve worked hard with government officials, with safety experts and others to turn that around.” In addition, “people seem to look at cruising as large business, but we rely on everything from stevedores, taxi drivers, bus drivers, all the small businesses that support our industry,” Fain noted. “So, I’m glad that we’re back.”

Mary Jean Tully, co-founder and CEO, Tully Luxury Travel

During a Q&A in Silver Moon’s theater, Mary Jean Tully, co-founder and CEO, Tully Luxury Travel, expressed the agency community’s appreciation to Fain and his team for their support and relationship with the trade throughout the pandemic months.

Tully emphasized: “I would just like to thank you all for what you’ve done for our industry from the travel agents’ perspective. You protected us on commissions. You reached out to other travel agents who didn’t know if they were going to make it. You offered them money to keep them going. Really, we’ll never forget it. And thank you for that.”

Vaccinated or Not Vaccinated

Cruises sailing from Florida ports (given Florida law, which does not allow businesses to require a vaccine for consumers to receive services) are now setting sail with both vaccinated and unvaccinated guests. That said, the latter have to comply with additional protocols and testing requirements (often at their own expense).

While Silversea is not sailing from Florida as yet, both Royal Caribbean International and Celebrity Cruises are. “It’s working a little better than we expected, and I think the reason is that the vast bulk of our guests want to be vaccinated and they are,” Fain stresses. “There are some exceptions of guests that don’t want to be vaccinated, and in Florida we are accommodating them, but with additional protocols to make sure that everybody stays safe.”

Still, Fain says the ships are sailing with 90-plus percent vaccinated travelers, as well as 100 percent of crew vaccinated.

“But I think what people also want to see is that the proof of the pudding is in the eating,” he notes, adding that “people are seeing that the cruises are going on, [the industry across the globe is] carrying hundreds of thousands of people and we are having instances of positive COVID-19 cases” but dealing effectively with those in previously set-down protocols agreed to by governments and agencies.

For example, Travel Agent was sailing on Celebrity Millennium earlier in the summer when two vaccinated passengers tested positive. But contact tracing was done, all passengers were retested and no one else got sick. All guests and crew were vaccinated on that vessel sailing from St. Maarten.

Those two Celebrity guests were asymptomatic, yet tested positive during a routine antigen test taken by all guests. “They were isolated, their close contacts were isolated, they were taken home, got to fly on a private plane—because we have so few cases, we could handle them well—and it didn’t affect anybody else’s vacation,” noted Fain.

“The beauty here is that we’ve taken an industry which was seen as huge potential risk factor, and we’ve taken those same attributes and turned it 180 degrees so that it’s now the safest place to be,” Fain believes.

The fact that the industry has some cases on cruises, yet few of them and is now handling them well is critical, Fain said, adding: “The important thing is that they’re not infecting other people.”

Just the Beginning

So, where is the cruise industry on a scale of recovery? “The first ships started sailing in June in the Caribbean and that area,” Fain said. “That was really the start of the major resurgence.” Isolated cruising had previously occurred in such destinations as Italy, the Canary Islands and Singapore, “but I think now you’re seeing a massive resurgence” elsewhere, he noted. “We’re all coming back.”

Still, “we’re just at the beginning of it,” Fain said. The percentage of the total fleet that has returned to cruising is small, “although in our case, it’s probably a little bit higher.”

He says it likely will take a little while for two things to happen:

First, he says the itineraries, the ships and the crews need to stabilize. Second, the public needs to see that those elements are stabilized, which “could take awhile. Fain cited the confusion of the past 18 months with voyages cancelled and itineraries changed.

“I think the public wants to see a period of stability [and be able to say] “aah, now it’s back. It’s back,’” Fain said, “and that doesn’t happen overnight,” which is why Royal Caribbean Group was anxious to get as many ships as possible operating as quickly as possible.

That’s what’s most important, Fain said, “even if we’re doing so at the beginning at low load factors—just to get the flywheel going—to regain the trust that cruising actually is back.”

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