Royal Caribbean and First Choice to Launch New Brand

Royal Caribbean Cruises (RCC) and British tour operator First Choice have joined forces in a 50/50 venture to launch a new cruise brand targeting what they called the mass-market European vacationer.

Yet unnamed, but scheduled to begin operations in the spring of 2001, the new company will own and operate the 40,000-ton, 1,500-passenger Viking Serenade.

The ship will be renamed and offer programs in the Mediterranean in the summer and in the Caribbean in the winter.

The oldest ship in Royal Caribbean International’s (RCI) fleet, the 1982-built Viking Serenade was originally a car ferry, but was rebuilt in 1991, and has long been reported to be for sale. She will now be transferred to the new company at an agreed-upon valuation of $100 million, or approximately $66,000 per berth.

RCC is also investing $300 million in First Choice for a 20 percent interest.

First Choice is the third largest tour operator in Great Britain, after Airtours and Thomson, and generates more than four million customers annually from Great Britain and Canada. The company has its own retail outlets and its own online e-retailer. In addition, First Choice has a charter airline with 25 aircraft.

As a result, RCC said it expects to quickly see a positive impact on the European passenger sourcing for its two cruise brands, RCI and Celebrity Cruises.

First Choice is chartering two ships this year, the 506-passenger Ausonia and the 850-passenger Bolero. RCI, which has been operating the Viking Serende on three- and four-day cruises from Los Angeles since 1991, has not announced a replacement yet.

At the Port of Los Angeles, cruise marketing manager Karen Tozer said the port was discussing the available slot with RCI and several other interested cruise lines.  

By starting a new cruise line jointly with First Choice and by investing in the British tour operator, RCC gets a stronger foothold in the British market. But unless First Choice grows out of Great Britain and into Europe, RCC’s potential seems limited. First Choice executives were not available for comment.

While the British market bas been expanding rapidly, the growth has been slowing down and the market already includes several major players including P&O and Airtours’ Sun Cruises. In addition, the North American-based lines have been marketing cruises in Great Britain for some time.

Thus, RCC’s move comes a bit later than Carnival Corporation’s investment in Airtours several years ago. Meanwhile, P&O bas moved into mainland Europe with its investments in Aida Cruises and Festival Cruises.

In the short term, RCI finally gets to sell the Viking Serenade, which leaves the cruise line with a younger and more efficient fleet. But long term, the jury will be out for some time to come.

The Viking Serenade may be competitive against the fleet of Airtours’ Sun Cruises on a product-basis, but a one-ship operation will lack the efficiencies of Sun’s four ships.

And the Viking Serenade will come short up against P&O’s new ships, Aida’s new fleet, and Festival’s new ships.

What will make the difference is for the new company to deploy a Voyager-class vessel in the European market.

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