Classic Fleet Update

Cruise Holdings has acquired ownership of Dolphin Cruise Line and increased its ownership in Seawind Cruise Line to a majority control position.

Cruise Holdings, which is headed up by Kristian Stensby and describes itself as “a long-term strategic investor and operator in the cruise industry,” owns or manages seven cruise ships, including the ships of Mayesty Cruise Line and Canaveral Cruise Line.

“We are bringing economies of scale to our operation,” said Richard Knott, senior vice president of sales and marketing for Seawind. “Within our ‘family’ we are able to reduce expenses.” Meanwhile, the companies will be marketed as separate brands.

Captain Paris G. Katsoufis, president of Dolphin and Majesty, noted that “this is the first step towards consolidating this segment of the market.”

But is there a future for older ships in North America?

It depends on whom you ask.

The answer is yes according to Knott, who said that the large cruise lines are producing an ever larger base of experienced cruise passengers who may be looking for a new experience. “Eighty percent of our passengers have cruised before,” Knott explained. “We don’t have to overcome the traditional barriers to cruise travel anymore.”

But the group is not putting all its eggs in one basket. The Seawind Crown gets more than half of its passengers from Europe and South America, and Dolphin will be chartering the Island Breeze to Thomson Vacations for the British market.

Despite Knott’s optimism. most operators of older ships in North America have either sunk or are selling out, such as Regency Cruises and Premier Cruise Lines.

Others have adjusted or found niches such as American Hawaii Cruises, which has cut back from two to just one ship; and Commodore Cruises which operates only one ship in the retail market while chartering out the other.

New Definition

The older ships used to be defined by budget pricing, but increased competition has brought the price point down to a level where both new and old ships offer cruises at the same price.

“The pricing has eliminated the logic of selling older ships,” said Bob Falcone, chairman of Cruises Inc.

“I personally appreciate older ships, but unless somebody specifically loves these ships, I see no reason to book them.”

Falcone sees only one way these ships can survive in North America. They must take the road of the hotel industry, according to Falcone, who said that some of the finest hotels in the world were old and small.

“That means that these ships have to be maintained unpeccably,” Falcone said. “They must be refurbished to original as-new condition; the on-board service must be impeccable; and it must be elegant.”

According to Stensby, the older ships offer a more traditional cruise experience and are being re-created as classics. In fact, some older ships today are more “classic” than they were when new, be said.

In an age of shoebox-shaped mega ships, neon lights, and modern art, there is also something to be said for curves, brass and mahogany.

“But even so,” Falcone cautioned, “these ships will only appeal to a relatively small section of the North American market.”

Niche Marketing

It boils down to finding a niche. “The operators of older, smaller vessels must find a niche and differentiate their product,” said Ron Kurtz, president of Management Resources Group, a Miami-based consulting firm.

Differentiation can be achieved by sailing from a different homeport, offering a unique itinerary, or drawing from different markets, according to Kurtz.

Knott pointed out that Seawiod bas a very special product. “We offer a cruise, resort and vacation experience,” he said, noting that cruises can be combined with complimentary hotel stays in Aruba or St. Lucia. “We are destination-oriented rather than ship­ oriented,” Knott said, adding that be sees a “tremendous future” for ships in the 700 to 1,100 passenger range in North America as the market continues to expand.

Kurtz added that older, mature passengers may be intimidated by the mega ships and find the smaller ships and their traditional ambiance more comfortable.

“It is easier for passengers to find their way around the smaller ships,” said Katsoufis. “They meet the same people and feel at home faster. And the crew members are more likely to remember the passengers and learn their names.

“Our crew-to-passenger ratio is two-to-one, while on the big ships the ratio is four-to-one or even five-to­ one, ” Katsoufis added.

The advantages and disadvantages are in the eyes of the beholder, according to Gary Saio, senior vice president of Premier Cruise Lines.

“Everybody does not want to cruise with 4,000 other people,” Sain said, pointing to the resulting long lines for embarkation and disembarkation, as well as for the midnight buffet, and other common events.

Admitting that the smaller and older ships do not offer the economic efficiencies of the new mega ships and that the older ships cannot make as much on-board revenue or tariff revenue, the big ships may only be able to make more money for so long, according to Sain, who added that “the big ships can also be turning people off to cruising.”

Sain referred to a 1996 study by the Lou Harris organization that concluded that passengers were less impressed by size than by quality. Their first concern, according to the study, was a cruise line’s reputation, Sain said.

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