Premier to Houston

Premier Cruise Lines will enter the growing Texas market in May 2000 with the 1,146passenger IslandBreeze, sailing weekly cruises from Houston to first-time cruise-port Vera Cruz and perennials Cozumel and Playa del Carmen.

Together with Norwegian Cruise Line’s 1,504-passenger Norwegian Sea – also sailing seven­ day cruises out of Houston – and Carnival Cruise Lines’ 1,486-passenger Celebration, to sail four- and five-day cruises from Galveston, the Texas­ homeported cruise market has clearly arrived.

With all three ships in year-round service, Texas ports will boast the capacity to carry 254,000 passengers per year by 2001.

“If you’re not successful here, it’s not the market that’s at fault, it’s your execution,” said Premier President Bruce Nierenberg, who noted that NCL doubled its Houston capacity “and the market didn’t flinch.” Premier’s IslandBreeze will depart from the temporary cruise terminal in Barbour’s Cut on Sundays, while NCL will continue to leave on Saturdays. NCL previously had an exclusivity contract for the use of the terminal building, but their contract expired in May, “opening the door for Premier,” said a spokesperson for the Port of Houston Authority.

The spokesperson also said Premier was considering a short-cruise product that would utilize the port facilities during the weekdays, but Nierenberg said it was “too early” to comment on that plan.

The Houston program is only one of several recent developments at Premier, which is finally showing signs of life. Nierenberg said that the new Mexican­ based program, beginning in December, will use the 400-passenger Odysseus and the 620-passenger Triton, to be chartered from Royal Olympic Cruises (ROC). He said the larger Triton will replace the 300-passenger Stella Oceanis, originally scheduled for that deployment, due to greater-than-expected demand.

The Triton will sail three- and four-day cruises from Calica on Mexico’s eastern coast; the Odysseus, three- and four-day cruises from Puerto Vallarta on the western coast.

Nierenberg also confirmed that Premier was in the final stages of negotiations to charter or buy the Edinburgh Castle from Cammel Laird. Three deals are under consideration, he said, each with different charter/acquisition schemes.

With the addition of the Odysseus, Triton, and Edinburgh Castle, Premier would expand its berth capacity by 37 percent – not including the increased capacity available through the full-year deployment of the formerly chartered IslandBreeze (Thomson Holidays has a full-ship charter of the IslandBreeze during summer 1999 in the Mediterranean and a half­ ship charter in winter 1999-2000 in the Canaries).

So where is the money coming from for all this, and how is Premier – recently believed to be on the verge of dissolution – capable of such rapid expansion?

Nierenberg remains somewhat defensive regarding such questions. Still, while claiming many industry criticisms hold no water, he added, “I’m not brushing these questions aside. If I were a travel agent, I would ask these questions too, given the background but everything has changed now,” he insisted, referring to the shift in Premier’s ownership to bondholders.

Nierenberg’s present task is to instill stronger confidence in Premier within the travel community, which be believes would allow the company to raise its per diems. The hoped-for price hike has obviously not begun yet – the announced starting rate for the Houston program is $650.

“We ‘re not Crystal Cruises, but what we are interested in doing is raising the average per diem to a level that makes sense within the industry,” he explained, maintaining that “we’ve been put in a situation where we were price bottom-feeding as a result of the past legacy of the company.” In other words, he claims that Premier’s prices are not in line with the product’s true value.

Nierenberg plans to enhance that value through his new “Seven-Star Service” plan – but there has been skepticism about whether this slogan is just a new company motto for the same product, or whether money is available to be invested in a true change. Nierenberg counters the skeptics, noting that $12 million will be put toward fleet upgrades by the end of this year, and additional investments in service will come from company shareholders.

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