Which Azamara R ship is for Sale

[Flatbush Flyer]

Keep an eye out for another shift in the cruise industry: the revival of the concept floated several years ago by some coastal cities (including the San Francisco Bay Area) to acquire large cruise ship for modification and use as low income housing.

https://www.washingtonpost.com/travel/2019/12/13/oakland-is-considering-housing-its-homeless-cruise-ships-could-it-actually-happen/?back=https%3A%2F%2Fwww.google.com%2Fsearch%3Fclient%3Dsafari%26as_qdr%3Dall%26as_occt%3Dany%26safe%3Dactive%26as_q%3DUsing+a+cruise+ship+as+low+income+housing+in+San+Francisco%26channel%3Daplab%26source%3Da-app1%26hl%3Den

https://www.google.com/amp/s/www.nbcnews.com/news/amp/ncna917301

The days of way-too-many megaships are numbered.

[njhorseman]

34 minutes ago, Flatbush Flyer said:

Keep an eye out for another shift in the cruise industry: the revival of the concept floated several years ago by some coastal cities (including the San Francisco Bay Area) to acquire large cruise ship for modification and use as low income housing.

https://www.washingtonpost.com/travel/2019/12/13/oakland-is-considering-housing-its-homeless-cruise-ships-could-it-actually-happen/?back=https%3A%2F%2Fwww.google.com%2Fsearch%3Fclient%3Dsafari%26as_qdr%3Dall%26as_occt%3Dany%26safe%3Dactive%26as_q%3DUsing+a+cruise+ship+as+low+income+housing+in+San+Francisco%26channel%3Daplab%26source%3Da-app1%26hl%3Den

https://www.google.com/amp/s/www.nbcnews.com/news/amp/ncna917301

The days of way-too-many megaships are numbered.

The articles you cited were written pre-pandemic. I've seen nothing of the sort written recently.

If the mega-ships are in danger why is that all the ships that have gone to the breakers during the pandemic are older, smaller ships? 

In fact the new larger ships are far more efficient to operate and can still carry a substantial number of passengers even if forced to operate at 50% of capacity in the near future. On an operating basis the can actually break even at 50% or less capacity. that doesn't pay their construction loans, which will likely have to be renegotiated as many have already, but it prevents further draining of cruise line cash on hand.

[njhorseman]

1 hour ago, travelberlin said:

I am very glad that Pacific Princess is joining Azamara and that the speculations of the company not surviving under the new ownership can stop for a while. Great new for Azamara.

 

Why would Sycamore Partners have purchased Azamara if they didn't expect it to survive and eventually be profitable?

 

The scrap value of the ships would be be only a fraction of what they just payed for them.

 

Private equity firms are not in business to lose money for their principals.

[PaulMCO]

32 minutes ago, njhorseman said:

Why would Sycamore Partners have purchased Azamara if they didn't expect it to survive and eventually be profitable?

 

The scrap value of the ships would be be only a fraction of what they just payed for them.

 

Private equity firms are not in business to lose money for their principals.

Correct.

They are a low ball, bottom feeding group of investors who buy companies at fire sale prices.

Look at their properties and who they have been chasing lately (like JC Penney, Staples and other brick & mortar retail stores).  They are betting that cruising will return to some normal and at a fire sale price it is a good investment.   No different than you an me buying NCL at $8 a share.

[Jancruz]

Just now, PaulMCO said:

Correct.

They are a low ball, bottom feeding group of investors who buy companies at fire sale prices.

Look at their properties and who they have been chasing lately (like JC Penney, Staples and other brick & mortar retail stores).  They are betting that cruising will return to some normal and at a fire sale price it is a good investment.   No different than you an me buying NCL at $8 a share.

Personally I no longer see them as competing with Oceania..JMHO

Jancruz1

[pinotlover]

12 minutes ago, Jancruz said:

Personally I no longer see them as competing with Oceania..JMHO

Jancruz1

We’ll need time to see their product and pricing structure to make any determination in that regard. Seems money is no issue for some Oceania guests while others are very price sensitive. Time will tell.

 

some people shop at both Saks and Walmart.

Edited January 25, 2021 by pinotlover

[PaulMCO]

1 minute ago, pinotlover said:

We’ll need time to see their product and pricing structure to make any determination in that regard. Seems money is no issue for some Oceania guests while others are very price sensitive. Time will tell.

 

12 minutes ago, Jancruz said:

Personally I no longer see them as competing with Oceania..JMHO

Jancruz1

 

I do not see them competing with O either, in fact they took a left turn several years ago with their offerings with more country focused cruises.  Oceania took a right turn with Riviera/Marina and Allura.

 

We looked to Azamara for a Japan cruise.  Lots of small ports plus the usual large ones.  Also more country focused land tours at the beginning of each cruise. 

O does not do this -- wish it would do this plus an Italy/Sicily focused cruise.

 

Whether this current strategy will be enough or do they hire an new CEO to remake themselves only time will tell.

[YoHoHo]

I was preparing to duplicate an early 2020 European cruise/land trip that was cancelled. Same sailing on O is up >30% (lots of availability still). Though O is my preferred line I will be taking a look at what Az has now that speculation of its (immediate) future has passed. I am leery of how the new owners will manage the on-board product but might place a booking to hold a spot and then watch the Az board for posts of the new cruises while I can still back out. For the increase O is wanting we likely will do all land instead if Az (or another line in mind) does not work out.

[nocl]

7 hours ago, PaulMCO said:

Correct.

They are a low ball, bottom feeding group of investors who buy companies at fire sale prices.

Look at their properties and who they have been chasing lately (like JC Penney, Staples and other brick & mortar retail stores).  They are betting that cruising will return to some normal and at a fire sale price it is a good investment.   No different than you an me buying NCL at $8 a share.

Oh like Apollo did with Oceania?

 

I expect that they will do something similar that Apollo did with Oceania.  Make substantial investments, build the value of the brand and then make multiples of their investment when they take the company public. Keep in mind that when Apollo sold to NCL they keep substantial ownership with NCLH went public.

[pinotlover]

18 hours ago, PaulMCO said:

 

 

I do not see them competing with O either, in fact they took a left turn several years ago with their offerings with more country focused cruises.  Oceania took a right turn with Riviera/Marina and Allura.

 

We looked to Azamara for a Japan cruise.  Lots of small ports plus the usual large ones.  Also more country focused land tours at the beginning of each cruise. 

O does not do this -- wish it would do this plus an Italy/Sicily focused cruise.

 

Whether this current strategy will be enough or do they hire an new CEO to remake themselves only time will tell.

Paul;

 

Perhaps not compete in the aspect of those that enjoy late departure from port , say 23:00, are not looking for a cruise line that typically leaves before 18:00. Likewise, those that race back to the ship by 13:00 or so, to eat lunch aboard, could care less about staying in port late. That’s not competing, it’s alternative markets. As an example, even as an Oceania cruiser, I found it outrageous to leave Dubrovnik at 18:00 to sail to Split the next morning.

 

Another example. I could care less who the Captain or Executive Concierge for my ship is. If I never meet them, it doesn’t impact my enjoyment of the cruise. It is a big deal for some cruisers however. They like to meet the senior officers and have those officials “ mingling with the Crowd “. I’ve been on O cruises where the Captain never made an appearance at any function. I could have cared less, for others it was a big deal. If one likes one over the other, it’s more alternative sailing options than actual competition of lines. It’s like the Terrace doesn’t compete with Jacques for diners. The offer alternative dining options.
 

The lines do different things to attract their own niche market.  Likewise, I know some people that sail both depending upon the quality of the itinerary offered. 
 

Time will tell on how well the lines flourish, or not.

[PaulMCO]

12 hours ago, nocl said:

Oh like Apollo did with Oceania?

 

I expect that they will do something similar that Apollo did with Oceania.  Make substantial investments, build the value of the brand and then make multiples of their investment when they take the company public. Keep in mind that when Apollo sold to NCL they keep substantial ownership with NCLH went public.

Agree --  another question will Sycamore buy other distressed cruise properties (ex. Crystal) and build the group and then spin it out once the Industry inmproves.

[mrlevin]

1 hour ago, PaulMCO said:

Agree --  another question will Sycamore buy other distressed cruise properties (ex. Crystal) and build the group and then spin it out once the Industry improves.

I think they will buy Oceania's four R ships; either all at once or two now and two as Allura class arrives

[bbqoug]

23 hours ago, Jancruz said:

Personally I no longer see them as competing with Oceania..JMHO

Jancruz1

They are competing for my cruising $$ in 2022.

We will choose to book a cruise with the one that offers the most interesting itinerary (for us) along with the best value for our money.

And yes, we really enjoy late stays & overnights as a way to get a better feel for the places we are visiting.

 

[nocl]

Might be more of a question if one of Oceania's R class ships might be available with their new build coming on line in 2022 considering the current state of the industry.

[njhorseman]

1 hour ago, nocl said:

Might be more of a question if one of Oceania's R class ships might be available with their new build coming on line in 2022 considering the current state of the industry.

 

The first Allura class ship won't be delivered until 2023 per the latest NCLH 10-Q for the third quarter of 2020 which was filed with the SEC in early November 2020. You can find that information on page 9 of the report http://www.nclhltdinvestor.com/static-files/2236733f-dba0-4a36-a902-cc3da3a296aa  :

 

"We have two Allura Class Ships on order for delivery in 2023 and 2025."

 

I wouldn't be surprised if that new build were pushed off even further. We'll see if there's something to that effect in NCLH's 10-K for the year 2020, which should be filed in about a month .

 

Edit: The ship's delivery being changed to 2023 was actually noted in NCLH's second quarter 2020 form 10-Q, which was filed with the SEC in August 2020.

Edited January 26, 2021 by njhorseman

[Flatbush Flyer]

4 hours ago, mrlevin said:

I think they will buy Oceania's four R ships; either all at once or two now and two as Allura class arrives

LOL.

 

[floridatravelersforlife]

2 hours ago, Flatbush Flyer said:

LOL.

 

If Norwegian sells all the R Class, NCL will not have enough cash flow to fund the rest of the O fleet.  There is a point where shrinking will lead to insufficient operating revenues to maintain their business.

[njhorseman]

2 minutes ago, floridatravelersforlife said:

If Norwegian sells all the R Class, NCL will not have enough cash flow to fund the rest of the O fleet.  There is a point where shrinking will lead to insufficient operating revenues to maintain their business.

That would be the case if the O ships were not profitable, and I'd suggest that is not true. Why would Oceania be building the two Allura ships, which are about the same size as the O ships if the O ships were not profitable?

[nocl]

34 minutes ago, njhorseman said:

That would be the case if the O ships were not profitable, and I'd suggest that is not true. Why would Oceania be building the two Allura ships, which are about the same size as the O ships if the O ships were not profitable?

If I recall correctly aren't the Allura ships about the same size as their last two new builds, around 1200 passengers or almost twice the capacity of an R class.

[njhorseman]

1 hour ago, nocl said:

If I recall correctly aren't the Allura ships about the same size as their last two new builds, around 1200 passengers or almost twice the capacity of an R class.

Yes...that's what I said..."the two Allura ships , which are about the same size as the O ships..."

The O ships are the Marina and Riviera.

 

[Flatbush Flyer]

3 hours ago, njhorseman said:

That would be the case if the O ships were not profitable, and I'd suggest that is not true. Why would Oceania be building the two Allura ships, which are about the same size as the O ships if the O ships were not profitable?

Not rocket science here. Ultimately, four <700 passenger ships (Rs) and four <1200 passenger ships (2 “O” and 2 “A”) based on more than a decade of demand data for the R vs the O ships. It’s a balanced formula addressing a very specific niche market. And it will work for you many years to come.

[Jancruz]

On 1/25/2021 at 7:00 PM, nocl said:

Oh like Apollo did with Oceania?

 

I expect that they will do something similar that Apollo did with Oceania.  Make substantial investments, build the value of the brand and then make multiples of their investment when they take the company public. Keep in mind that when Apollo sold to NCL they keep substantial ownership with NCLH went public.

You really cant compare the two Apollo kept FDR and he was not going to let his cruise

line fail..Azamara never really had anyone who cared

Jancruz1

[njhorseman]

4 hours ago, Jancruz said:

You really cant compare the two Apollo kept FDR and he was not going to let his cruise

line fail..Azamara never really had anyone who cared

Jancruz1

The new owner of Azamara kept its CEO so their opinion of whether that person cares is clearly different than yours.

[pinotlover]

I believe that Oceania’s current true competition is Viking . Reports from those that had recently sailed both lines, Viking had significantly closed the differential in food quality in the last couple of years. Additionally, their more modern ships are more spacious, airy, and less expensive. Since ship tours are included in Viking’s fare, Oceania would be in a greater price disadvantage if only ship sponsored tours are mandatory.

 

Oceania has been blessed in that they haven’t had to discount prices on the R ships vis-a-vie the O Class ships. As the R ships further age, especially with the A Class on the horizon, that pricing strategy may be difficult to maintain. Azamura then becomes the great unknown. For R ship enthusiasts, will they price their, yet undefined, product at a level to encourage price conscious travelers to give them a try. If successful in doing so, Oceania’s pricing structure may be forced to adapt to a new landscape brought on by both Viking and Az. 
 

I believe the pandemic will create a lot of seismic shifts in the industry by 2023. Lots of opportunities along with pitfalls are ahead.

[YoHoHo]

Seems like the former Holland America Line president Orlando Ashford has been advising Sycamore for a few months now. He is now named Azamara's incoming executive chairman. 

 

Some vocal long time HAL loyalist been unhappy with changes over the years (who really does like cut backs) but who knows where that direction was coming from (i.e. executive, bean counters, shareholders). It will be interesting to see how this plays out.