Which Azamara R ship is for Sale

[PaulMCO]

A few months back we debated which R ship was for sale.

Looks like it was the whole line.

 

https://www.wsj.com/articles/royal-caribbean-to-sell-azamara-luxury-cruise-line-for-201-million-11611063900?utm_source=facebook&utm_medium=news_tab&utm_content=algorithm&fb_news_token=pZ8WYPD4WjWFI2nJFTp4UQ%3D%3D.n5evg8sUDt9aDYrhD5dMXrST84v1oHhYVEUfDC7Ykq3M5Yu2%2BYSn04Tjxuyd39JH4Fz7w40tjDPbVjDNif895b5q9Tui39nP1PygXq3RWK4jof%2BvdI05pjSmwvLRMKm72VlAOY%2Fw53eXXeQfvKdvYHtgH4EXeqbPTbNTKo1MNNOvraNSiRfDp8xsbWoVL%2F9wPcaUPx5NskyeS3nGn1pOtQEQKAquSHDUpTWpWKwuuEGotBm%2FSIfrBBpke9BI6EdOcSCvAObnFjeGNlIYdUaH1QKq%2BVDkffqD4YgLJRjfYesinYqXtK2uzsOHoLQDvOrRYNyyveKFA6ThxGxWsIYJYA%3D%3D&fbclid=IwAR3B1s8djt3NCP_2rScBPfJoii2M7CepYFziHr4dhkFh9fWNsF14hk3QBJo

Edited January 19, 2021 by PaulMCO

[susiesan]

Wow, a whole cruise line for only $201 million.seems like a deal to me☺️

I went on 2 Aazamara cruises and enjoyed both. Once they became more all inclusive and raised their prices I came back to Oceania for this level of cruise experience. 

[PaulMCO]

Here is a better link if you do not have a WSJ subscription.

 

https://www.marketwatch.com/story/royal-caribbean-to-sell-azamara-line-for-201m-2021-01-19?mod=mw_latestnews

 

They took a charge of $170M as the $201 is less than the pre-COVID book value of the ships.

[Flatbush Flyer]

5 minutes ago, PaulMCO said:

Here is a better link if you do not have a WSJ subscription.

 

https://www.marketwatch.com/story/royal-caribbean-to-sell-azamara-line-for-201m-2021-01-19?mod=mw_latestnews

 

They took a charge of $170M as the $201 is less than the pre-COVID book value of the ships.

It will be very interesting to see what Sycamore Partners will do with those R ships. 

While it makes some sense for RC to drop one of its four brands (the one representing <5% of its business), IMO it would’ve made more sense to just modify the product offerings and fold them into either Celebrity or Silversea while focusing on unloading significantly bigger mass market RCI ships which will be a real “lead weight” for post-Covid years to come.

I am still convinced that the post-Covid new normal will favor smaller premium/luxury ships catering to folks who can still afford cruising. But, one thing is for sure: Without Azamara in the mix, RCI will start advertising Celebrity as a “premium” line though the only indication of any real difference in the product will be significant price hikes.

 

I’m also thinking that, if the cruise industry wasn’t in such a state of uncertainty, FDR would want to acquire/update at least one of those Azamara ships to help meet the increasing demand for the Oceania product/experience. But, since that won’t happen, one other downside of this Azamara deal (that will impact O regulars) is that you can expect Oceania demand to increase and that will result in “supply/demand” price increases.

[ORV]

12 minutes ago, Flatbush Flyer said:

It will be very interesting to see what Sycamore Partners will do with those R ships. 

While it makes some sense for RC to drop one of its four brands (the one representing <5% of its business), IMO it would’ve made more sense to just modify the product offerings and fold them into either Celebrity or Silversea while focusing on unloading significantly bigger mass market RCI ships which will be a real “lead weight” for post-Covid years to come.

I am still convinced that the post-Covid new normal will favor smaller premium/luxury ships catering to folks who can still afford cruising. But, one thing is for sure: Without Azamara in the mix, RCI will start advertising Celebrity as a “premium” line though the only indication of any real difference in the product will be significant price hikes.

 

I’m also thinking that, if the cruise industry wasn’t in such a state of uncertainty, FDR would want to acquire/update at least one of those Azamara ships to help meet the increasing demand for the Oceania product/experience. But, since that won’t happen, one other downside of this Azamara deal (that will impact O regulars) is that you can expect Oceania demand to increase and that will result in “supply/demand” price increases.

Looking for something to agree with here, just can't find much. 

 

Personally I think they're all likely to go under. 

[pinotlover]

The Day of the R Ships are numbered. Pre Covid even NCL/Oceania was going to phase them out as they brought on the new A class ships. Quite a few regular O cruisers have already stopped sailing on R ships.

 

AZ and Oceania are small niche lines appealing to small niche markets. With only $200 million in debt, the new AZ can put price pressure on Oceania. On a port intensive cruise, where only breakfast and dinner is eaten aboard, how much premium is one willing to spend for “the best food at sea” versus good food? $100 or $200 per day each? A lot of price delta there for what’s really only 1 meal, and one still gets the R bathrooms.

[susiesan]

45 minutes ago, pinotlover said:

 

AZ and Oceania are small niche lines appealing to small niche markets. With only $200 million in debt, the new AZ can put price pressure on Oceania. On a port intensive cruise, where only breakfast and dinner is eaten aboard, how much premium is one willing to spend for “the best food at sea” versus good food? $100 or $200 per day each? A lot of price delta there for what’s really only 1 meal, and one still gets the R bathrooms.

I'd like to see that happen, Oceania prices go down. I'm almost at the point of not cruising with O anymore due to their ever increasing prices. I sail for the ports, food is secondary. I am one of those not willing to spend an extra $100-$200 a day just for better food.

[Flatbush Flyer]

9 hours ago, susiesan said:

Wow, a whole cruise line for only $201 million.seems like a deal to me☺️

I went on 2 Aazamara cruises and enjoyed both. Once they became more all inclusive and raised their prices I came back to Oceania for this level of cruise experience. 

And there’s the Oceania “good news/bad news” side of this. Unless Azamara is reborn in a new guise, many “A” fans will move to Oceania which will cause increased new demand (good news for O) sufficient to drive up prices (bad news for O regulars).

 

As for the suggestion that the two Allura class O ships will mark the start of the end of the Rs, I wouldn’t bet on it. The Rs have a tremendous following (including us). We look forward to cruising on the Allura ships (IF they ever get built). And we do like the Oceania class ships for “once in awhile.” But, the Regatta class is what got us started on O and will keep us going for at least another decade after cruising restarts.

[pinotlover]

People we’re driving the Edsel into the 80s. R ships are a niche market for a small niche crowd. The crowd that delights in those “ spacious “ bathrooms is shrinking. The power trains are no longer efficient in 2020 standards. However, the Edsel people didn’t care about mpg, think O might be concerned about fuel usage?

[Flatbush Flyer]

12 minutes ago, pinotlover said:

....think O might be concerned about fuel usage?

No. As long as there’s demand for small ships and less of them available, a sufficient number of O devotees (along with the Celebrity et al. [and now Azamara] ship jumpers) will pay the Oceania fare - even if it means fuel surcharge or other forms of price increases. 
Remember, we’re only talking about a total of under 3,000 cruisers at any given time on O’s 4 current R ships.

[deadzone1003]

10 minutes ago, pinotlover said:

People we’re driving the Edsel into the 80s. R ships are a niche market for a small niche crowd. The crowd that delights in those “ spacious “ bathrooms is shrinking. The power trains are no longer efficient in 2020 standards. However, the Edsel people didn’t care about mpg, think O might be concerned about fuel usage?

For those exotic itineraries, It will always depend on whether you can fill those larger ships or charging higher, yet profitable prices but still able to fill the smaller ship, efficiency be damned.   I think the latter is generally more achievable.  Even if you can charge a higher price on an O-class ship on a virtual identical itinerary such as in the Caribbean, the demand on an exotic itinerary may be quite limited due to total cost or time constraints.  I see R-class ships running until the propellers fall off (I didn't think "wheels" would be appropriate).  There may be fewer of them, but there should be enough to do the exotic itineraries

[KirkNC]

Anyone think O could be next.....

[Flatbush Flyer]

14 minutes ago, KirkNC said:

Anyone think O could be next.....

O will outlast them all if for no other reason than it was/is FDR’s “baby.” 
Seriously, O has an extremely loyal following among a very defined niche population (well travelled, accomplished and financially stable) to which it has successfully catered for more than fifteen years. It has only to fill six rather small ships (hopefully, eight - eventually) which it does consistently. Just look at current bookings through 2022.

[PaulMCO]

There must be a market for a mid-market semi-Luxury cruise line.  Especially since Viking entered the market.  Azamara was not a very well done brand, their two ship fleet could not really compete with a varied itinerary to keep loyal passengers.  Adding of Pursuit, ship refurbishments was too late and competition from O and Viking, plus COVID was too much.  Having both Celebrity and Azamara seemed contradictory (they even shared the loyalty Captains Club programs) plus the addition of Silversea gave them duplicative small fleet options.

 

As far as O, fits NCLs strategy of mass market (NCL), mid-market (O), and luxury (RSSC)

[Redtravel]

Last spring, NCL was in financial distress.  They figured out a way to stay afloat. Selling off Azamara fleet may be RCL way of staying afloat.  The longer ships not sail, the more they have to spend without getting any income.  Hope that cruise lines figure out ways to avoid folding.

[njhorseman]

45 minutes ago, Redtravel said:

Last spring, NCL was in financial distress.  They figured out a way to stay afloat. Selling off Azamara fleet may be RCL way of staying afloat.  The longer ships not sail, the more they have to spend without getting any income.  Hope that cruise lines figure out ways to avoid folding.

The $201 million they got for Azamara, while helpful to their liquidity is  only a relatively small percentage of Royal Caribbean's cash on hand, which was over $3 billion as of their last SEC Form10-Q filing  for the quarter ended September 30, 2020.

 

Reportedly, Royal's cash burn is about $300 million per month so the $201 million for Azamara buys only a couple of weeks of additional liquidity.

 

So, no...this wasn't needed right now to stay afloat. Just like Carnival and NCLH, Royal had previously taken far more significant actions to shore up their liquidity. For example in October they raised an additional $1 billion through stock and convertible note offerings.

Edited January 21, 2021 by njhorseman

[Jancruz]

On 1/19/2021 at 8:46 AM, Flatbush Flyer said:

It will be very interesting to see what Sycamore Partners will do with those R ships. 

While it makes some sense for RC to drop one of its four brands (the one representing <5% of its business), IMO it would’ve made more sense to just modify the product offerings and fold them into either Celebrity or Silversea while focusing on unloading significantly bigger mass market RCI ships which will be a real “lead weight” for post-Covid years to come.

I am still convinced that the post-Covid new normal will favor smaller premium/luxury ships catering to folks who can still afford cruising. But, one thing is for sure: Without Azamara in the mix, RCI will start advertising Celebrity as a “premium” line though the only indication of any real difference in the product will be significant price hikes.

 

I’m also thinking that, if the cruise industry wasn’t in such a state of uncertainty, FDR would want to acquire/update at least one of those Azamara ships to help meet the increasing demand for the Oceania product/experience. But, since that won’t happen, one other downside of this Azamara deal (that will impact O regulars) is that you can expect Oceania demand to increase and that will result in “supply/demand” price increases.

No he would not have considered any one of them since he has the new Allura Class coming out next year..

Jancruz1

[Jancruz]

On 1/19/2021 at 5:29 PM, Flatbush Flyer said:

And there’s the Oceania “good news/bad news” side of this. Unless Azamara is reborn in a new guise, many “A” fans will move to Oceania which will cause increased new demand (good news for O) sufficient to drive up prices (bad news for O regulars).

 

As for the suggestion that the two Allura class O ships will mark the start of the end of the Rs, I wouldn’t bet on it. The Rs have a tremendous following (including us). We look forward to cruising on the Allura ships (IF they ever get built). And we do like the Oceania class ships for “once in awhile.” But, the Regatta class is what got us started on O and will keep us going for at least another decade after cruising restarts.

1st Allura is under construction now and will be out in 2022..I agree with you R ships have a huge following and are small enough to stay in the mix..

Jancruz1

[Jancruz]

11 hours ago, PaulMCO said:

There must be a market for a mid-market semi-Luxury cruise line.  Especially since Viking entered the market.  Azamara was not a very well done brand, their two ship fleet could not really compete with a varied itinerary to keep loyal passengers.  Adding of Pursuit, ship refurbishments was too late and competition from O and Viking, plus COVID was too much.  Having both Celebrity and Azamara seemed contradictory (they even shared the loyalty Captains Club programs) plus the addition of Silversea gave them duplicative small fleet options.

 

As far as O, fits NCLs strategy of mass market (NCL), mid-market (O), and luxury (RSSC)

My comment to FDR was its about time they sold Azamara I truly believe the only reason they kept them was to spite FDR! If you know the story behind the start of Azamara you will understand..

Jancruz1

[cruiseaholic78]

1 hour ago, Jancruz said:

1st Allura is under construction now and will be out in 2022..I agree with you R ships have a huge following and are small enough to stay in the mix..

Jancruz1

If the Allura will be out in 2022 when will they show her itineraries, any idea love to book one?
Rosalyn

[hamrag]

17 hours ago, Flatbush Flyer said:

O will outlast them all if for no other reason than it was/is FDR’s “baby.” 
Seriously, O has an extremely loyal following among a very defined niche population (well travelled, accomplished and financially stable) to which it has successfully catered for more than fifteen years. It has only to fill six rather small ships (hopefully, eight - eventually) which it does consistently. Just look at current bookings through 2022.

Similar to Az then!!

[susiesan]

I would like to see Princess buy them. They used to have 2. Princess is my go to mass market line when not on Oceania or Windstar.

[Flatbush Flyer]

11 hours ago, Jancruz said:

No he would not have considered any one of them since he has the new Allura Class coming out next year..

Jancruz1

 

4 hours ago, hamrag said:

Similar to Az then!!

Azamara? What’s that?👀

[Flatbush Flyer]

11 hours ago, Jancruz said:

No he would not have considered any one of them since he has the new Allura Class coming out next year..

Jancruz1

I would have agreed with you had Azamara not been dropped. And, though my post ultimately said that the current industry situation makes adding another Oceania R ship a “no go,” I’m betting an R acquisition had to be at least a fleeting thought for FDR. 

[ORV]

11 minutes ago, Flatbush Flyer said:

I would have agreed with you had Azamara not been dropped. And, though my post ultimately said that the current industry situation makes adding another Oceania R ship a “no go,” I’m betting an R acquisition had to be at least a fleeting thought for FDR. 

Not that I have anything to base it on, but I would like to believe they would be looking forward instead of backward. As you've said many times, the R ships are a niche market, there's only so many customers in that demographic.