Royal Caribbean Purchasing Majority Stake in Silversea Cruises

Jason · August 23, 2001

Royal Caribbean Cruises Ltd. is best known for high-energy innovation, with onboard rock-climbing walls and surf pools on its Royal Caribbean ships and cutting-edge dining on its Celebrity brand.

Thursday the Miami-based company announced it will purchase a 66.7 percent stake in Silversea, a privately owned ultra-luxury and expedition cruise leader. For luxury vacationers, the union will likely bring expanded offerings and greater value for money, said experts.

The deal unites "two companies with bold, long-term visions for the cruise industry," according to a statement from Royal Caribbean. Royal Caribbean's shares moved up on the news.

The purchase price of the equity acquisition is estimated at $1 billion. Silversea owner and co-founder Manfredi Lefebvre D’Ovidio will hold the remaining ownership of the Monaco-based company and act as its executive chairman. CEO Roberto Martinoli will continue in his role. Though Silversea doesn't sail from South Florida, it has 183 employees in its U.S. headquarters in downtown Miami. That office will continue to be run by industry veteran Mark Conroy.

For Royal Caribbean, the acquisition adds a luxury component to its existing portfolio of general audience and premium offerings. "Our focus has been to be the leading brand in each of our market segments, to offer the best crew and facilities," said Royal Caribbean chairman and CEO Richard Fain in an interview. Growth in luxury travel, especially in luxury expedition voyages, left the company with a gap in its offerings. While Royal Caribbean could have built its own expedition division, "we saw that there is a synergy here with Silversea. ... Silversea exemplifies the innovation that is so important to us. This is a chance of a lifetime."

The marriage brings Silversea greater resources for marketing, distribution and financing of new ships and greater buying power for supplies and back-end operations. The company has nine ships and travels to more than 1,000 destinations. Last year it christened a new all-suite expedition vessel, Silversea Muse; it is slated to launch two sister ships in 2020 and 2021.

"For Silversea, it is a unique opportunity," said D’Ovidio. "We have huge market potential and brand recognition but we needed to have more distribution. We needed more of a powerhouse."

For travelers, Silversea has brought a luxury approach to expedition cruising — one of the fastest-growing segments of cruising.

"Traditional expedition cruises were like camping at sea," said Carolyn Spencer Brown, chief content strategist for Cruise Critic. "Everything was about what you did on land. Silversea was the first to understand people want to be as comfortable on the ship as they would be in a hotel."

Silversea's new vessels offer all-suite accommodations for a maximum of 596 guests, gourmet dining in multiple venues, pool, spa, gym and casino.

Other lines including Ponant, Scenic and Lindblad have also added new amenity-rich expedition vessels. Today, "expeditions aren't just for the heartiest of hearty adventurers," said Brown. "These travelers still want to have vibrant, sophisticated experiences on board and on tours."

For travelers, the deal will make small-ship cruising more accessible — and give it a greater share of voice in the overall cruise marketplace, said Brown. Travelers who find the idea of large-ship cruising daunting will likely be less intimidated. And while prices for trips to remote places aren't likely to drop, extra amenities are likely to be added in, raising the value for the cruiser.

Royal Caribbean also own Azamara, a premium brand known for its medium-sized ships and overnight port stays. It recently announced the addition of a third vessel. The company has 66,000 employees.

By Jane Woolridge, Miami Herald
Re-posted on CruiseCrazies.com - Cruise News, Articles, Forums, Packing List, Ship Tracker, and more
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