Renaissance Reorganization

At embattled Renaissance Cruises, long­ time chairman and CEO Edward B. Rudner has resigned and has been replaced by two co-chief executives Richard Kirby and Frank Del Rio. Kirby was president and COO and Del Rio was executive vice president of marketing. Rudner, who is the largest single shareholder, remains a member of the board.

In addition, Fred Kleisner, president and CEO of Wyndham International and a Renaissance director for the past two years, was named non­ executive chairman.

Kleisner said that the appointments mark the beginning of an “exciting new chapter” in Renaissance Cruises’ “phenomenal success story.” He added that there is now a “tremendous opportunity to bring Renaissance into an enhanced, mutually beneficial relationship with the travel agent community.”

In what seems like a complete turnaround from the company’s earlier direct sales strategy, which generated a veritable flood of travel agent complaints, Kleisner also said, “We plan to make travel agents our full partners by revamping our marketing programs and commission structures.”

Renaissance said it will shortly roll out agent­ friendly policies, including agent compensation and override rewards, and modification of the company’s cancellation policies. “We recognize that in order to optimize our sales we need the support of travel agents,” said Del Rio. While the company will continue its direct marketing program, “it will do so in a manner that recognizes and rewards the participation of agents,” Del Rio said.

As a first step, the company said it will adopt the industry standard 10 percent commission rate structure and will seek to provide override reward agreements. It will also offer group discounts and bookings plans, brochures, co-op advertising and travel agent fam trips.

He also said that paying commissions would not add to the company’s cost structure. ‘We now have certain economies of scale which we did not have before,” Del Rio said. “In fact, our cost structure can improve. We only pay commissions when travel agents generate bookings.”

Up to now, Renaissance has mostly been marketing its cruises directly, often underselling and bypassing travel agents, and so offending agents that it was expelled by the Society of American Travel Agents in 1998.

Putting a positive spin on what was a bold but apparently flawed sales and marketing strategy, Del Rio said, “We need to understand that we made some mistakes and upset agents unnecessarily. We are truly sorry for what we have done and want to earn the agents’ trust. We are prepared to earn our way back.”

Del Rio said that Renaissance will be rolling out new itineraries in 2001. Other changes include dropping the minimum passenger age of 18. ‘We will adopt standard industry practices,” he said, “and will lead the industry in setting standards,” he added.

Del Rio said that Renaissance was a premium­ market-plus product and had pioneered such concepts as open-seating dining and cabins with balconies in this market segment. “We are competing successfully against Holland America Line,” he noted. “Although our physical plant can support us in the luxury market, that is not where we want to be.”

Renaissance operates six new 684-passenger R­ class vessels, with two more slated for deliveries later in 2000 and 2001, and the 114-passenger Renaissance VII and VIII.

Both Del Rio and Kirby have ownership in Renaissance, which is privately held. Other owners include Credit First Suisse Boston. Del Rio said that shipbroker  does not hold any ownership, contrary to speculation.

Del Rio also added that Renaissance has been profitable since 1995 and described the company as the fifth largest and fastest growing cruise line in the world.

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