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Exclusive SCG 2016 report – President of Costa Cruises discusses the challenging South American market with Cruise Business Review

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Written by Teijo Niemelä Teijo Niemelä

Category: Top Headlines Top Headlines

Published: 16 March 2016 16 March 2016

Alan Lam reporting from Fort Lauderdale

As the South America cruise business softens, Costa Cruises has been forced to reduce capacity in the region. CBR spoke exclusively with Neil Palomba, President of Costa Crociere S.p.A., about prospects and challenges of this once promising market.

It would appear that the economic crisis of the region is only one half of the story, what is equally disconcerting is the prevailing hostile operating environment. “Right now we believe we have the right capacity for this market,” said Neil Palomba. “We have one ship out of Brazil and one ship out of Argentina. We are anxiously waiting for the decision from the Brazilian government about the renewal of an agreement that would allow us to continue developing the market. There is a lot of potential in South America, but in order for us to invest in this market, we need a sustainable environment.”

By that he meant permanently overcoming specific legislative constrains. “There are certain laws that have been introduced,” he went on, “especially the requirement of recruiting Brazilian crews on our ship, which are limiting our development prospects.”

After devaluating its currency, Argentina, according to Neil Palomba, was now back on track. He saw massive opportunities in both Argentina and Brazil that were not being taken advantage of. “We would like to deploy more ships there,” he said, “but the high costs in Brazil and Argentina are limiting our development. Buenos Aires is the most expensive port in the world to operate out of. This is something has to change otherwise they will lose valuable business. It is difficult for us to invest in a market that has such a high cost. We are constantly in talks with the authorities there over these issues. So far no sustainable agreement has been reached.”

But Neil Palomba is hopeful. “I am confident that the Brazilian government will see the value of cruise business to the country’s economy,” he concluded, “especially through job creation. Because of the smaller number of ships deployed now, there are fewer jobs available than it used to be.”

Costa was a forerunner in the South American cruise market. Its tenacious spirit was forged in those early pioneering days. It has never lost that steadfastness in confronting challenges. We believe it is the very same spirit that has prompted the company to invest in two LNG-powered mega ships (the first of which will be introduced in 2019 and operate out of Savona).

It absolutely must be recognised that Costa has that rare quality of indefatigability that will serve its ambition well. It will never let go of pursuing the South American market.

SCG 2016 report - Industry captains discuss innovation and Cuba

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Written by Teijo Niemelä Teijo Niemelä

Category: Top Headlines Top Headlines

Published: 16 March 2016 16 March 2016

Alan Lam reporting from Fort Lauderdale

During the customary opening State of the Industry address at this year’s Seatrade Cruises Global, currently underway at Fort Lauderdale, the four industry captains – Arnold Donald of Carnival Corporation & plc, Frank Del Rio of Norwegian Cruise Lines Holdings, Richard Fain of RCCL, and Pierfrancesco Vago of MSC Cruises – shared their views on innovation, differentiation and potentials of the Cuban market.

On innovation

While ‘differentiation’ is now the buzzword of the rapidly maturing industry, the definition of ‘innovation’, too, has diversified.

For Arnold Donald, the President of Carnival Corporation & plc, innovation is all about meeting guest expectations and providing them with emotional experiences associated with cruising. Moreover, “To be innovative means thinking outside of the box,” he said. “It is not just about ship size; it is not just about spaces; it is about passenger interactions and transformative experiences.”

Frank Del Rio, President of Norwegian Cruise Line Holdings Ltd., was more specific. “To me innovation means, firstly, understanding your customers,” he said, “secondly, it means what works for your brand; what differentiates your brand. Otherwise it will be a total flop.”

He also pointed out that innovation did not necessarily mean building new ships “I think the industry made the mistake of only looking at new ships,” he said. “You can be innovative with older ships, too. In future, we will adopt a more balance approach by maintaining the existing fleet to a higher standard and generate better yields with them.”

For Richard Fain, President of RCCL, innovation was something very important. “It defines us as an industry,” he said. “Innovation has nothing to do with ship sizes; you can be innovative here, there, and everywhere; big or small. Creativity is about ideas; innovation is putting them into action.”

Pierfrancesco Vago, Executive Chairman of MSC Cruises, broadly concurred with his peers. “Innovation means designing something totally new,” he said. “Innovation must concern with the experience of the passengers. We want to create a different experience. But innovation can be seen in many different ways.”

As the industry matures, it is becoming ever more important for the brands to be innovative in the face of increasing competition, shifting operational geography and the changing customer tastes. Different approaches to innovation can only mean more product differentiation and choices in the future.

On Cuba

Aside from redefining the concept of innovation, the four chiefs of the cruise industry shared their perspective stances on cruise business in Cuba. Arnold Donald saw opportunities beyond the boundaries of the island. “Cuba will benefit the entire Caribbean,” he said. “People will return to the Caribbean because of Cuba.” But there were still many hurdles to overcome particularly for the US-based cruise lines, chiefly among them, for example, US credits cards still could not be used in Cuba.

Frank Del Rio was critical of the US policy towards the maverick island nation. “After 55 years of failed strategy, something must change,” he said. “We have had a shorter Cold War with Russia than we do with Cuba, and we are now doing business with China. It is time to change. This is nothing more than a family feud.”

Cuba has every attraction available: beaches, culture and a rich architectural heritage. But in practice, according to Frank Del Rio, when Cuba eventually opens up completely, it will be a low-volume start because of its limitations.”

It is widely accepted assertion that Cuba will not have a negative impact on cruise business in the rest of the Caribbean. “In terms of its size Cuba is not going to divert too much traffic from other destinations,” said Richard Fain. “Its infrastructure will not be able to support that.”

Cuba will become a part of the differentiation process. Perhaps it will occupy a different niche on account of its unique characteristics. As more players enter this market, they will be forced to be innovative in order to thrive.

As a non-US cruise line, MSC is already off the starting blocks on the great Cuban race and reaping the enviable rewards. But, to maintain its market share in the long run, it will need to be innovative.

Fincantieri’s Vard in four ship deal with Ponant

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Written by Kari Reinikainen Kari Reinikainen

Category: Top Headlines Top Headlines

Published: 15 March 2016 15 March 2016

Fincantieri has announced that its subsidiary Vard Holdings Limited has signed a Letter of Intent with the French ship owner Ponant, a subsidiary of Artemis Group, for the construction of four small-sized luxury cruise vessels. “The Letter, subject to several conditions including satisfactory ship owner financing, marks the entrance of Vard in the cruise shipbuilding sector,” Fincantieri said in a statement.

Vard is a Norwegian company active in the design and shipbuilding of offshore and specialised vessels. These markets have suffered significantly in the past two years following the sharp fall in the price of oil and other commodities. Fincantieri owns 55.6% of the shares in Vard.

The four exploration cruise vessels will be 128 meters long, 18 meters wide, and will be approximately 10,000 gross tons. They will have a cruise speed of 15 knots and they can accommodate 180 passengers in 92 cabins with a 110-member crew. The deliveries are scheduled in Norway in the period summer 2018 to the summer 2019.

“The ships will be arranged with the very latest environmentally friendly technologies and with high class of luxury facilities on board. They will be able, due to their small size, to reach ports and destinations inaccessible to larger vessels. The interior fittings will be designed on a “human scale” with the utmost attention to detail,” Fincantieri said.

Fincantieri has built four ships for Ponant, the entire current feet of the French company.

Cindy D’Aoust Appointed As Cruise Lines International Association President and CEO

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Written by Teijo Niemelä Teijo Niemelä

Category: Top Headlines Top Headlines

Published: 15 March 2016 15 March 2016

Cruise Lines International Association (CLIA) has announced today that its Global Executive Committee has appointed Cindy D’Aoust as President and Chief Executive Officer effective immediately. D’Aoust joined CLIA in December 2014 and has served as CLIA’s Acting CEO and Executive Vice President of Membership and Operations. She will continue to oversee CLIA’s operations globally while working with the senior leadership team to propel the organization forward and work on behalf of all CLIA members.

D’Aoust brings more than two decades of experience in the hospitality and travel industries, including a leadership position at Meeting Professionals International, where she served as Chief Operating Officer, overseeing global operations, marketing and member services. She held other senior roles with Maxvantage and Maritz Travel.

“Cindy has proven to be an extremely valuable and knowledgeable member of our executive team. Her extensive experience in the hospitality and travel industries, combined with her leadership skills and passion for the cruise industry, made her the right person to guide our global industry association on an exciting journey forward.” said Adam M. Goldstein, Global CLIA Chairman and President & COO of Royal Caribbean Cruises Ltd.

In the role of President and CEO, D’Aoust will direct CLIA’s global team to successfully unify, represent, advocate and promote the common interests of the organization’s members and the global cruise industry. Among her top priorities is the commitment to unite the industry and create a stronger voice, making cruise travel the best vacation choice for every traveler around the world.

“I am honored to take on the official role of President and CEO of CLIA, representing Cruise Lines, Travel Agencies and Agents, and Executive Partners across the globe” said D’Aoust. “CLIA is a strong and well-respected organization with an impressive global team. Now more than ever, it is important for the cruise industry to collaborate and create a stronger global voice. I look forward to building on the organization’s current success and delivering on our mission to be the unified global organization that helps our members succeed by advocating, educating and promoting for the common interests of the cruise community.