Changes at Radisson

[Guest Jancruz]

There are many changes coming to Radisson..they have fired many of their Vice Presidents (last week) and a whole department of inside sales people..Mark Conroy is still there..but who knows for how long..They have been losing money for quite a while ( gossip inside the cruise industry) and will be down to 3 ships..I for one will be watching the new developments carefully..

Jan

*****

[NHcruisers]

Can't say I disagree much with Jan's post, other than my belief based on what I've heard that RSSC was profitable last year.

 

A few days ago, I wrote an email to a friend who shares a common interest in cruising and the business of cruising. As it may be interesting to some (probably very few) on this board, here's what I wrote in that email:

 

"I had heard of the management changes at the top, but did not hear about the other mid level changes. These changes don't bother me (too much) as reorgs are part of American corporate life, and the slimming down of HQ staff is probably a good thing. I do find it somewhat interesting (perhaps coincidental is a better word) that the sum of the additional revenue gathered by the fuel surcharge and the headcount savings over the next 12-15 months will come pretty close to covering their Diamond cancellation related expenses.

 

Much more a matter of concern is that Mark Conroy's aspirations for the line (expansion related revenue objectives he stated last October) seem further and further out of sync with Carlson's view. I also believe the reins have beeen tightened on Mark and his decisions are getting more scrutiny then they did before which he is probably not appreciating. As I mentioned before in a previous email, I think one of the largest challenges RSSC faces is that they are significantly undercapitalized and it appears to me that their corporate parent either doesn't recognize this (unlikely) or is very apprehensive about providing additional capital, or even access to additional capital, to RSSC. This is the major reason why I think Carlson should spin out RSSC, for the benefit of both corporate entities.

 

It will be interesting to see when they announce a new build. A new Voyager class would cost 70 million more to build today because of the unfavorable exchange rate, but the exchange rate is only one of four or five factors that cruise execs from other lines cite in deciding whether to build or not, with projected return on assets being the most meaningful. I think they are faced with an interesting dilemma: Build now and have per diems rise across the fleet which would distort their pricing/business model vis-a-vis the competition. (New builds can command higher per diems than than older ships but only for 2 years or so. Unfortunately, the higher debt service is for the life of the ship). Or not build for an extended period and see normally loyal RSSC pax go to other lines for limited itinerary reasons, with many becoming less loyal to RSSC in the future and some finding a new line of choice never to return to RSSC. Plus, RSSC will have over time an intensifying negative perception of some/many based on their concern about the health of RSSC that while other lines are at least staying the same size or expanding, RSSC is shrinking.

 

Just my opinions and arm chair quarterbacking.

 

Best regards,

Bill"

------

I hope my concerns are unfounded and that RSSC continues to offer the quality of cruise experience that my wife and I have experienced in the past and have come to love. RSSC is our favorite cruise line but we are not blind to the business challenges they face.

 

Bill

[Dolebludger]

Jan and Bill:

 

As a "mere customer" I know it is not my job to attempt to micro manage Radisson, EXCEPT when it does or may effect my cruise experience. The fact that Radisson did not have better contractual protection against short-notice cancelation on the Diamond lease and the fact that Radisson is apparently letting the Paul Gauguin go with no apparent replacement for its itinerary does not bode well. So I am eager to hear of any further corporate developments.

 

Thanks,

Richard:confused:

[Call me Ishmael]

Bill,

 

I, for one, am always interested in the corporate intrigue. And, as I mentioned before, to me Carlson's actions indicate a possible sale in the works. I suppose there could be a spin-off (or spin-out if you prefer), but since Carlson is a privately owned company so I don't see a ready market for RSSC.

 

In looking at Carlson's website, two things happened in '03 which may or may not be relevant: 39 year old Curtis Nelson was made President and COO; the company also acquired Peppers and Rogers, a management consulting firm.

P & R currently lists RSSC as a client.

 

Curtis Nelson did work for a time at Four Seasons Hotels, but aside from Regent Hotels, most of Carlson's brands are aimed at the masses. RSSC is the other odd duck.

 

He had no problem jettisoning Country Kitchens, the very division where he got his start as a dishwasher. His bio in the '03 news release emphasizes the 400% growth in Country Inns during his presidency of that division.

 

P&R's management consulting approach claims to emphasize customer relationships, but it really seems to be about identifying the customers who will have the most impact on the bottom line. "We develop mechanisms for identifying individual customers, differentiating them by value...."

(Maybe that explains why the headwaiters wanted to know our cabin number every time my wife made a special request.)

 

Sales announced earlier this month jumped 24% over the prior year, but it could be that RSSC is an anchor keeping this figure down. One rarely sees large scale firings of mid-management as a reward for good results.

 

Let's hope the handwriting on the wall is not as clear as it appears.

 

Ish

[richnot]

I think it is worth noting that most of the dismissals were on the marketing side of the business brought about by rssc having fewer ships and berths to sell. The operating side, which is what we cruisers care about, was not really affected.

[Guest Jancruz]

Sorry Richnot..I dont agree..the firings were because the ships were going out with too few passengers and in the end this will affect the cruises..Just MHO

 

Jan

*****

[cruiseyguy]

Jancruz-Yes,they are going out with too few passengers, which implies that the pricing model is wrong. Maybe the loss of two ships will tighten things up price wise but, if it does, it would be unlikely that RSSC would build/purchase new ships in the near term. As I've noted in a couple of other posts, I think something is "in play" in the luxury niche right now but I don't know who the players are. I suspect it's the "big guys" simply because I can't see the smaller luxury lines trying to solve their problems through consolidation.

[caclays]

Jan, thanks for posting this where all can see it. You know how much Earl and I love Radisson but we have to admit that their pricing has climbed so quickly in the past 18 months that they have priced themselves outside our travel budget in most cases. We might make an exception for a particular itinerary, but when compared to some other line(s), even with the free wine and tips included, the pricing just doesn't work for us. We were so spoiled to travel with them four times including our b2b, and maybe if their ships are going out half full, they'll find a way to get the pricing lowered to where they can fill the ships and make a profit.

 

Keep us posted as best you can. I know that being on the "inside", there are some things you cannot share when you first learn about them. But let us know when you can.

[blackbird71]

It would be interesting to know how Silverseas is doing over this past year.

 

If Silverseas is doing better, maybe the price model is right and something else is wrong.

[English Voyager]

I disagree that either Radisson's pricing policy is faulty,or too high vis a vis it's upmarket competitors.

Radisson's philosophy appears to be that the best discounts,including many 2 for 1 offers,are available at the time of issue of the next year's brochure.Thus it pays,literally,to book early.

If one thinks that Radisson's current prices are high,then I suggest looking at Silversea will be a revelation.

[wripro]

i agree looking at silversea will be a revelation but only because there is very little price difference now and they include all drinks and dont charge for caviar.

[blackbird71]

I am looking at Silverseas myself and it is on the cruise I want cheaper than RSSC

[wripro]

i have found many SS cruises to be cheaper than rssc.

[Ngaire]

Dont want to contradict anyone here but I thought I should point out the RSSC 2005 season is really sailing pretty full. Of course there will be some sailings not full but you can see the sold out sailings very easily if you look at their schedule. You will find a lot of dates missing. These are sold out cruises. Some dates were charters from the beginning but many dates have been taken off the schedule recently and these are just normal sailings.

 

I am going on the PG on 5/21 it is sold out along with the PG 5/28 and I am on the Navigator 6/25 it is sold out, Voy 10/15 is sold out. There are others sold out as well. These are just the dates I know off the top of my head. The caribbean has been really full since January, the Diamond was sold out for Europe, the world Cruise was on a waitlist and many cruises you now have to book two segments to get a booking. I know the Mariner is that way on some of the Grand Circle Pacific cruises. Lots of dates now only have upper end cabins available. So I really dont think to say the ships are sailing empty is accurate for 2005. Perhaps more accurate for 2004.

[English Voyager]

At the time of introduction of the 2005 brochures last year,the quoted fares were:

Radisson Voyager:August,Northern Europe:11 nights,£2838(H category,cruise only)

September,Athens/Istanbul:7 nights,£1712(H category,cruise only).

Silver Whisper:August,Northern Europe:9 nights,£4021(verandah suite,cruise only)

Silver Shadow:September,Athens/Istanbul:7nights,£2896(verandah suite,cruise only).

The current Silversea prices are:

Whisper:£2872.

Shadow:£3158.

[simonv]

Darn!!! When I booked the Med cruise for May, SS was much higher for almost the same itenary. I'd much prefer SS over RSSC, but as I've already made the final payments, it's too late now. All inclusive, 300 vs 700 passengers and better service, SS would have been a much better deal. Oh, well......

[TedC]

Simon,

 

Are you taking into consideration that EnglishVoyager's quoted prices are in Pounds Sterling? The Pound costs almost $2 US nowadays.

[Call me Ishmael]

Prices are also hard to compare until you break them down on a per night basis. Even then you need to compare Verandah to Verandah (unless you don't care).

 

Pounds or dollars it looks like Silversea's per diem rate is higher.

[simonv]

Simon,

 

Are you taking into consideration that EnglishVoyager's quoted prices are in Pounds Sterling? The Pound costs almost $2 US nowadays.

In US dollars a veranda suite on SS for the same 7 nights is within $20 of what I paid for Radisson. So per diem price is the same, because the rooms are pretty much identical. Silversea includes drinks and wine everywhere, while Radisson does not. The itenary showed as 50% discount last night, but it's gone now. They must have sold out. Oh, well.... I'm sure we'll have a good time on Radisson, too.

[English Voyager]

Simonv,

I hope my examples showed that one has nothing to lose by booking early with Radisson.

The Silversea 7 night Athens/Istanbul cruise actually has increased in price,while for near enough the same money one has 2 extra days with Radisson on the North Europe cruise.

It all depends if one is able to cruise at short notice,and,therefore,wait for Silversea's late discounts.