Royal Caribbean Selling Azamara Brand

[Orator]

News just released that Royal is selling its Azamara brand to Sycamore Partners for $201 million.

[Baron Barracuda]

Royal Caribbean Group Enters Definitive Agreement to Sell its Azamara Brand to Sycamore Partners

PR NEWSWIRE 9:00 AM ET 1/19/2021

MIAMI , Jan. 19, 2021 /PRNewswire/ -- Royal Caribbean Group today announced it has entered into a definitive agreement to sell its Azamara brand to Sycamore Partners, a private equity firm specializing in consumer, retail and distribution investments, in an all-cash carve-out transaction for $201 million, subject to certain adjustments and closing conditions. Sycamore Partners will acquire the entire Azamara brand, including its three-ship fleet and associated intellectual property. The transaction is subject to customary conditions and is expected to close in the first quarter of 2021. 

Royal Caribbean Group noted the transaction allows it to focus on expanding its Royal Caribbean International, Celebrity Cruises and Silversea brands.

"Our strategy has evolved into placing more of our resources behind three global brands, Royal Caribbean International, Celebrity Cruises and Silversea, and working to grow them as we emerge from this unprecedented period," said Richard D. Fain, Chairman and Chief Executive Officer of Royal Caribbean Group. "Even so, Azamara remains a strong brand with its own tremendous potential for growth, and Sycamore's track record demonstrates that they will be good stewards of what the Azamara team has built over the past 13 years."

"We are pleased that Royal Caribbean Group has entrusted Sycamore to support Azamara in its next phase of growth," said Stefan Kaluzny, Managing Director of Sycamore Partners.  "We are excited to partner with the Azamara team and build on their many years of success serving the brand's loyal customers.  We believe Azamara will remain a top choice for discerning travelers as the cruising industry recovers over time."

Azamara's value proposition and operations will remain consistent under the new arrangement, and Royal Caribbean Group will work in close collaboration on a seamless transition for Azamara employees, customers and other stakeholders. In conjunction with the transaction, Azamara Chief Operating Officer Carol Cabezas has been appointed President of the brand.

The transaction will result in a one-time, non-cash impairment charge of approximately $170 million. The sale of Azamara is not expected to have a material impact on Royal Caribbean Group's future financial results.

[TeeRick]

Wow they must have needed the cash.  Only $201 million for three ships and operations.  Seems like a fire sale.

[EvoUSA]

While sad, especially since I can't imagine reciprocal statuses lasting, I think it can make sense given their brand positioning and immediate need for cash. The sale is supposed to go through pretty quickly.

This gives a lot more leeway to market Celebrity as anything between nicer mass-market/mega-ships (Royal Caribbean) and luxury (Silversea).

[sheeng]

So sad. 😰😰😰

[kathynorth]

The Celebrity AI changes now makes sense.

[Jeremiah1212]

It fits into the changes of Celebrity and in some regards, RCG's ownership of Silversea. Azamara was kind of an oddball to me. 

[Cruising89143]

Not surprised in the least. Azamara never really fit into the group. There was never new builds in the approx. ten years under RCG. Now that they own Silverseas, it makes even more sense.

[Orator]

Who they sold to is also a concern. RCL said in a later release that they want to concentrate on the RCCL and Celebrity brands. They still have Silversea to fill the luxury niche.

Edited January 19, 2021 by Orator

[Miaminice]

Not really surprising after they bought Silversea...

[Mr. Click]

And here I was thinking of doing Azamara in 2022 for Australia/New Zealand.....I will put that on hold for now.  The sale does make sense because it generates cash and reduces RCG's expenses as ships continue to sit empty all over the world.

[mahdnc]

Wow.  $201 million dollars.  Less than a month's worth of cash burn.

Edited January 19, 2021 by mahdnc

[jelayne]

Two weeks ago we booked a 23 night cruise for May 2022.  Guess we will rethink that now.

[terrydtx]

Good Riddance, they were sucking cash from the other brands to stay afloat.  They were never able to compete with Oceania and Viking Ocean. 

Edited January 19, 2021 by terrydtx

[terrydtx]

Good Riddance, they were sucking cash from the other brands to stay afloat.  They were never able to compete with Oceania and Viking Ocean in the in-between mass marketed Cruise  and true luxury lines market.

Edited January 19, 2021 by terrydtx

[ChucktownSteve]

24 minutes ago, terrydtx said:

Good Riddance, they were sucking cash from the other brands to stay afloat.  They were never able to compete with Oceania and Viking Ocean. 

 

That coming from someone who has never sailed Viking or Azamara and not yet Oceania.  I've sailed Oceania and Azamara and they have competed with O.

 

The culture and enjoyment on Azamara was better than our Oceania experience.

Edited January 19, 2021 by ChucktownSteve

[ECCruise]

32 minutes ago, terrydtx said:

Good Riddance, they were sucking cash from the other brands to stay afloat.  They were never able to compete with Oceania and Viking Ocean in the in-between mass marketed Cruise  and true luxury lines market.

Wait.  There are a couple of other threads you can post this totally unqualified information.  

I can find them for you if you'd like.

 

Please list the Oceania, Azamara and Viking Ocean sailings that you have taken and we will be happy to assess your thoughts.

Edited January 19, 2021 by ECCruise

[ECCruise]

16 minutes ago, ChucktownSteve said:

 

That coming from someone who has never sailed Viking or Azamara and not yet Oceania.  I've sailed Oceania and Azamara and they have competed with O.

 

The culture and enjoyment on Azamara was better than our Oceania experience.

Totally agree.  We virtually did B2B sailings (separated by a couple of weeks) AZ and O cruises of 24 and 26 days about a year ago.  I can absolutely say that not only did Azamara compete effectively with Oceania, they beat them on virtually all aspects.  Service, approachability, food choices, responding to minor issues and lots more.

We came off those 2 sailings and booked 3 more Azamara and vowed never to sail Oceania again. 

[ECCruise]

55 minutes ago, jelayne said:

Two weeks ago we booked a 23 night cruise for May 2022.  Guess we will rethink that now.

Lots of time to assess the changes that may or may not occur.

We are staying put with 3 of our 4 sailings.  The fourth we never expected to take anyhow.

[pumpkin 11]

I don't think royal did this for the cash, they probably did it because Azamara was not very profitable. Also makes sense with how they are positioning celebrity as more upmarket (but that is another topic)

[Jeremiah1212]

Does RCG report financials for specific brands? I've never seen anything other than speculation. Hard to definitely say what the true driving factor was without that info on hand. 

[BigAl94]

Won't even cover one month cash burn!

[Bruin Steve]

Makes some sense...

Here's a little history:

When the old Renaissance Cruise Lines went out of business, the ships were dispersed across the cruising world...

Princess picked up three and merely re-branded them and adopted them into the Princess line as Pacific Princess, Ocean Princess and Royal Princess.  They haven't really worked out that well under the Princess formula and they've since sold two of the three....

Pulmantur picked up one...but quickly sold that to Oceania...

Oceania picked up two initially, then later got another from Princess and another from Pulmantur.  Oceania was a company founded by former Renaissance executives...and had a pretty good idea as to how to run these.

Royal Caribbean picked up two ships--and, originally, intended to merely place them under Celebrity and run them as Celebrity ships...But, seeing how well the Oceania operation was run, they then switched to trying to buy Oceania...But the deal fell through...Instead, they decided to create Azamara and, more or less, copy the Oceania model.

 

But, over the next several years, Oceania grew by acquiring two more ships AND by building two newer, larger "newbuilds" with all the modern bells and whistles--making the cruise line more stable and more flexible.  Azamara stayed with the same two small 600 passenger ships.

 

Turn out that running a cruise line with just 1200 total berths on two ships is not really that easy--or financially profitable... especially at this "somewhere between mass-market and luxury" price point.

 

At this point, I'm guessing Royal Caribbean has figured it doesn't want to expand Azamara and it doesn't want to operate 600 passenger ships unless they can command a luxury fare structure...and the ships ARE over 20 years old...They lack some amenities and the staterooms are small compared to most luxury line ships (and include many inside and OV cabins)...

 

So, time to move on...

[dabear]

I have to disagree with terrydtx and correct Bruno steve. we've also cruised on Azamara, initially when it was a subsidiary of X & then moved into a separate category. We think that they competed well with Oceania ( r class ships which we also have cruised on). while the bathrooms were small on the 8 original R class ships , the cabins & rest of the ship were elegantly appointed , with excellent food and service. We also liked that we earned X points on A cruises. We recently took a 15 day SE Asian cruise with A & they still had a good product although the included beverage choice was not very good (we upgraded). We're sorry to see A leave the RCCL family, but perhaps for the better for the both of them. 

 

FYI, the R class ships originally held 680 pax. 2 of the 3 A ships had recently removed their casinos for other recreational use. we preferred the casino. Only time will tell if X can move successfully in the near luxury market. In our opinion, while we like X, it does not compare to O, Viking or then the luxury brands such as Regent, which is substantially more expensive. 

[TeaBag]

Sorry to hear this.