Latest News

Streamlined Prestige Cruise Holdings sees growth on the horizon

Frank Del Rio is the rare CEO who doesn’t mind stepping into a bathroom to make a point.

On a recent day aboard the newest addition to the cruise line he co-founded, the point to be made involved the presence of too many showers — a misstep he said would be corrected on any future ships.

It’s one of the few flaws he can point out about the Riviera, which he calls “the perfect ship.” But the episode also illustrates Del Rio’s attention to detail, his willingness to tweak those details as needed and, well, frankness.

Those qualities have served him well in the nearly 10 years since he started Oceania Cruises with a partner, two ships and a vision to carve out a place for itself in the industry: “upper premium.”

Now chairman and CEO of Prestige Cruise Holdings, the parent company that includes Oceania and the luxury Regent Seven Seas Cruises, Del Rio oversees two distinct companies that have managed to differentiate themselves from competitors — and each other.

Private equity firm Apollo Management bought a majority stake in Oceania Cruises in 2007; later that year, the firm acquired Regent Seven Seas Cruises and placed both under the ownership of Prestige Cruise Holdings, which is controlled by Apollo. At the time, Apollo said the two lines would keep separate operations and management.

Today, even as they continue on individual tracks, their operations are streamlining: Regent moved its headquarters from Broward to the offices of Oceania and Prestige Cruise Holdings in Doral last year. This year, the line shifted sailings from Port Everglades to PortMiami, where Oceania also sails in the winter. In October, the parent company announced that Regent president Mark Conroy would step down from that role starting Jan. 31 and Kunal Kamlani, president of both Prestige and Oceania, would add the same title at Regent.

Conroy, who was not available for an interview for this story, will still be involved with the company as an ambassador and consultant, Del Rio said.

“He wanted to step back a bit, still wanted to be involved and he’s going to be involved in many ways,” Del Rio said.

The recent changes, however, don’t mean the two cruise lines will ever become one (a question Del Rio said he hears frequently). Only about five percent of customers overlap on both lines, he said.

“I’ve got two different brands, two different types of ships, two different types of customers, two different brand positionings,” Del Rio said. “Why in the world would I want to combine them? I have the best of both worlds now ... It would literally be the dumbest thing we could do to combine both brands together.”

Regent, founded about 20 years ago as Radisson Seven Seas Cruises, sits firmly in the luxury category, with two 700-passenger ships and one 490-passenger vessel and an all-inclusive policy that includes alcoholic beverages, airfare, gratuities, a pre-cruise hotel stay and shore excursions. Free excursions — some activities carry an extra charge, but there are a multitude of options included in the fare — were added to the package during the recession as an incentive for travelers; they were so popular that the company chose to keep the feature in place.

“Its inclusivity program is the best; I’ve never seen anything like it,” said Carolyn Spencer Brown, editor-in-chief of the website, which recently named Regent best for luxury in its Editors’ Picks Awards. “You’re spending a lot of money up front, but you’re spending very little on the back end.”

Competitors are Seabourn, Silversea and Crystal Cruises; the average cruise fare starts at $599 per person per day, according to the company. Even though it is privately held, the line reports financial results because it carries public debt. The quarter ending Sept. 30 showed strong results: revenue of $159 million, an increase of more than 5 percent from the same time 2011, and a nearly eight percent increase in profits to $21 million.

Del Rio said the possibility of the company going public exists if Apollo wants to monetize its investment — but he doesn’t know when it would happen.

“I personally believe, as an investor myself, that there is a dearth of investment opportunities in the cruise space,” he said. “For the longest time, there’s always been two [publicly held cruise lines]; I think there’s opportunity for more than two.”

Since Apollo acquired the line, executives have spoken openly about their hope that new ownership could mean a new ship. The newest Regent vessel debuted in 2003 and the oldest, launched in 1999, was just renovated. The line received kudos for best dining and best suites in Cruise Critic’s 2012 Editors’ Picks Awards.

“We have no concrete plans yet to announce a new build. We are considering it,” Del Rio said.

Oceania, on the other hand, launched critically acclaimed 1,250-passenger sister ships in 2011 and 2012. Marina and Riviera feature details such as a Lalique staircase, Bon Appétit Culinary Center, Canyon Ranch SpaClubs, suites by Dakota Jackson and Owner’s Suites furnished by Ralph Lauren Home.

“They’re gorgeous ships, they’re just elegant and classy,” said Jeff Gordon, owner and president of The Gordon Group — Luxury Cruise Planners in Davie. “Doesn’t matter where I take people on those newer ships, they cannot stop raving about how gorgeous the facilities are, how great the food is, how good the service is.”

About to celebrate its 10th year in 2013, Oceania is “luxurious but not luxury,” Del Rio said. Unlike Regent, Oceania is not an all-inclusive product and staterooms are smaller.

Del Rio founded the line with a partner in 2003 a couple years after he was fired as co-chief executive of Renaissance Cruises by new investors. That company soon went into bankruptcy and within a couple years, Oceania was sailing three former Renaissance 684-passenger “R class” ships, now called Regatta, Insignia and Nautica.

While Insignia is chartered to Hapag-Lloyd Cruises until spring of 2014, the other two ships are still sailing with Oceania.

Oceania’s focus has always been food; chef Jacques Pepin is executive culinary director and the new ships feature restaurants devoted to French, Asian and Italian cuisines as well as a classic steakhouse and an intimate seven-course wine pairing option.

“There’s much more of a pop and a jazzy vibe to Oceania,” said Cruise Critic’s Spencer Brown. “And a lot of that revolves around the restaurants. I think the food is dramatically different; the food on Oceania is maybe dramatically more upscale. Whereas on Regent, it’s very very good, but it’s not Jacques Pepin. It’s not shouting at you.”

Oceania’s main competitors are Holland America Line, Celebrity Cruises, Azamara Club Cruises, SeaDream Yacht Club and Princess Cruises. But, as Del Rio points, out: “They have a cheaper price point.”

By positioning itself as “upper-premium,” Oceania seeks to fall between the typical cost of $200 per day or less for a premium line and the luxury prices that can reach $600 a day. A 10-day Mediterranean sailing in August 2013 aboard the newest Celebrity ship, Reflection, starts at about $195 a day per person; a cruise departing from the same port around the same time aboard Riviera, by comparison, starts at about $415 per person per day.

“In order to overcome that, we must be able to provide an extraordinary product to lure customers to our brand,” Del Rio said.

Guest feedback is crucial to Del Rio as well, who describes himself as a “Cruise Critic junkie.” Known on the site as “FDR,” he said he spots trends and problems that need to be fixed on discussion boards. Not long ago, he said, users were complaining about slow Internet speed. The company took action and tripled the bandwidth to fix the problem.

Recently, he came across a woman’s post wondering what she should do in the long window of time between disembarking from a cruise in Miami and flying home from Miami International Airport.

“I said, ‘I’m a long-term Miami boy, I know exactly what you should do,’” Del Rio said. He planned a day and made a sign with her name using his grandkids’ construction paper and markers.

“She couldn’t believe that I had shown up,” he said. “I was there on time too.”

Kamlani, who was born in Hialeah and lived there until his family moved to New York when he was 13, said he tries to visit the company’s ships in port on a regular basis. He finds the experience valuable, especially when people mistake him for crew and ask for help with their luggage.

He helps, he said, and then turns down their offered tips, explaining his position with the company (and that he’s already taken their cruise fare). He said the encounter usually enables him to make friends with the guests — and establish a line of contact to get their feedback.

“You now have a one-on-one relationship with a guest,” said Kamlani, 40. “It’s actually a great opportunity.”

A graduate of Colgate University who got his MBA at Columbia, Kamlani first joined the Prestige Cruise Holdings as chief financial officer in 2009. He left to run a division of Merrill Lynch the next year, but returned as the parent company’s president and chief operating officer in September of 2011. He added the role of Oceania president a month later when former president Bruce Himelstein left.

Kamlani said he’s determined to make sure that each brand learns from the other’s successes and failures. One policy that the company says has worked is a decision to avoid slashing fares to fill ships.

At Regent, that led to including shore excursions in the all-in cost. And at Oceania, it means spending more money on marketing when a particular sailing is not selling well.

“What we’ve been able to do over the years is to show travel agents and consumers alike that if you want to buy an Oceania cruise, you ought to buy it early,” Del Rio said. “If you wait, you may not get the cabin you want on the sailing you want and you’re probably going to pay a higher price.’’

That policy is a hit with travel agents, a key distribution channel.

“They compensate the agents well, both lines do,” said Mike Driscoll, editor of the weekly trade publication Cruise Week. “You just don’t hear complaints about them — and that’s rare in this business.”

Del Rio’s expectations for the new year are unlikely to prompt any complaints from travel partners. He said occupancies are slightly better and pricing is stronger looking forward. Despite the problems that the industry faced this year, especially in Europe, the company has had a record year, due in part to a sophisticated client base that’s not easily shaken.

“2012 was a record year, and 2013 will be even better,” Del Rio said.

As for the longer term, Del Rio is optimistic.

“I think both brands will continue to grow,” he said. “Five years from now, they will have more ships, serve more guests, will be more profitable than they are today. I can’t wait.”