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  #1  
Old January 14th, 2008, 08:46 AM
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Default Why did Holland America sell itself to Carnival in 1989?

The information I can readily find online doesn't provide any insight into the actual conditions, economic, financial and cultural, that served as foundation for the acquisition. I can readily understand why Carnival would buy up a cruise line, but why did this cruise line, specifically, sell itself?
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  #2  
Old January 14th, 2008, 08:54 AM
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Don't know how true this is, but what I was told, HAL was on the verge of going belly-up. HAL didn;t have the resources to build new ships to attrack more cruisers. Carnival did.

Maybe someone else can provide more information.
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Old January 14th, 2008, 09:46 AM
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Thanks for the info. If that was indeed the case, I'd also specifically be interested in information relating to why Holland America was in such dire straights, if there was any such insights available at the time.
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Old January 14th, 2008, 09:51 AM
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That was the same year that Sitmar was sold to Princess. We were originally scheduled to sail on an Alaskan cruise on Sitmar - I think the ship's name was to have been Majestic or Majesty (?). We got a call from our TA that Sitmar had been sold and she wanted to know if we still wanted to do the same cruise on the ship that Princess got from Sitmar - the original Star Princess. We went and loved it.
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  #5  
Old January 14th, 2008, 10:10 AM
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Default Why Hal sell?

Don't know for sure but Carnival perhaps made them an offer they couldn't refuse.
Here is info on Carnival from Wikipedia.

http://en.wikipedia.org/wiki/Carnival_Corporation_&_plc

and on HAL

http://en.wikipedia.org/wiki/Holland_America

and another good financial source on Carnival.

http://www.referenceforbusiness.com/...rporation.html

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Old January 14th, 2008, 10:17 AM
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Quote:
Originally Posted by Krazy Kruizers View Post
That was the same year that Sitmar was sold to Princess. We were originally scheduled to sail on an Alaskan cruise on Sitmar - I think the ship's name was to have been Majestic or Majesty (?). We got a call from our TA that Sitmar had been sold and she wanted to know if we still wanted to do the same cruise on the ship that Princess got from Sitmar - the original Star Princess. We went and loved it.

Krazy - It was the Fair Majesty. I also sailed on the Star Princess to the Caribbean in 1989. I was a loyal Sitmar cruiser and was upset when they were bought by Princess. I couldn't see how the British reserve of Princess could blend with the Italian warmth of Sitmar. But somehow, it worked and I love Princess. I'm an ELite member in their Captain's Circle.

But I wasn't the only skeptic at the time. Sitmar loyalists were very upset about the sale. I can just imagine what the Sitmar/Princess boards would have been like had CC been around then! Every issue of Cruise Travel for 2 or 3 years had several letters from former Sitar passengers who ranted about the sale to Princess. On our cruise on the Star, we were approached by several cruise staff who wanted to know what made Sitmar so special that their passengers were so loyal.

At least Carnival allows it's cruise lines to operate under their own brand and maintain their own identities. Princess absorbed Sitmar, much the same way HAL absorbed Home Lines or Cunard absorbed NAC, before they were purchased by Carnival. You used to have numerous cruise lines. Now there's basically 3 - Carnival, RCI and Star (NCL). If there are any smaller lines still operating, they they tend to serve a niche market. they just can't compete with the giants for market share. That's just the way of the business world today. The bigger companies gobble up the smaller ones in all industries. It's all about increasing revenue and profit and keeping shareholders happy no matter what business you're in.
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  #7  
Old January 14th, 2008, 11:00 AM
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Bicker, A little background - maybe this helps to answer your question : 1983 had been a disastrous year for HAL caused by a dip in bookings. As a result, cruises had to be severly discounted. HAL was in the middle of a merger (with Westours), moving its headquarters to Seattle, selling off older ships (Statendam IV, Volendam II, Veendam III), building new ones (Nieuw Amsterdam III and Noordam III) and there had been a relatively high turnover in top management positions. The booking problems could not have come at a worse time. This all changed when Mr. A.K. "Kirk" Lanterman was appointed as president and CEO in SEP 83. He would make HAL into one of the most profitable cruise companies the world has ever seen. This was achieved by relentless cost control and a strict focusing of the core qualities of the company's product.

During 1988, the cruise industry for the short Alaska and Caribbean markets had been rapidly expanding with a continuous growth indicated. To be a serious player in this market, bigger ships were necessary as they had to offer all the amenities of a floating resort and at the same time be also more cost effective as they had lower operating costs. Other companies followed the same concept as it was the only way to survive.

One of the major operators was Carnival Cruise Lines of Miami. Carnival, with a very agressive new building program, was cornering a substantial part of the cruise market and appealed very much to "first time cruisers". HAL felt this competition severely! Carnival's way of operating severely threatened the seven-day cruise market as it could offer , with its biger ships, the same itinerary for a much lower price. In order to survive, HAL had to follow the other companies and order bigger ships, although it was not consistent with the company's policies. At the time, HAL had a fleet of four ships: Rotterdam V, Nieuw Amsterdam III, Noordam III and Westerdam II. A decision was made to order two 65,000 ton cruise ships from a German yard with a capacity of 1,876 pax each.

Before the new ships could be built, however, Carnival surprised everybody with the announcement on 25 NOV 88 that an agreement had been reached between Carnival Holding Ltd. of Bermuda and the Holland America Line Trust Ltd. of Bermuda thet it would buy their Division Tourism for U.S. $625 milion with all its assets and liabilities. This takeover became effective on 15 JAN 89.

Carnival , being the fastest expanding cruise company in the world, was also shopping around to expand even more quickly. After a failed attempt to take over Royal Caribbean, Holland America Line came into the picture. HAL was already firmly established in the cruise market and well run but did not look as if it was able to survive if Carnival continued to grow. A take-over would benefit both companies .

Source: 125 Years of Holland America Line by H.A. Dalkmann and A.J. Schoonderbeek.
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  #8  
Old January 14th, 2008, 01:04 PM
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I had checked wikipedia earlier and didn't see anything illuminating. The third link there indicated that the intent by Carnival, with respect to specifically the Holland America part of the acquisition, was to gain access to "higher-income" passengers.
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Old January 14th, 2008, 01:05 PM
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duplicate post
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Last edited by bicker; January 14th, 2008 at 01:11 PM.
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Old January 14th, 2008, 01:08 PM
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Quote:
Originally Posted by Copper10-8 View Post
One of the major operators was Carnival Cruise Lines of Miami. Carnival, with a very agressive new building program, was cornering a substantial part of the cruise market and appealed very much to "first time cruisers". HAL felt this competition severely! Carnival's way of operating severely threatened the seven-day cruise market as it could offer , with its biger ships, the same itinerary for a much lower price.
So basically, it sounds like Holland America felt it couldn't survive unless it reduced costs, because its customer base was being drained away by Carnival.
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  #11  
Old January 14th, 2008, 01:10 PM
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HAl is my preferred line but it seems to me that the HAL I originally
fell in love with, has eliminated alot of their amenities. For one, I can
do w/o the dutch nite & I don't like baked alaska but I am sure
new cruisers to HAL are suitably impressed as it does add to the
'gaiety' of the evening.

Who should be assigned blame for this? Carnival's take-over or
HAL merely watching their bottom line?

Just a query, folks...I am not jumping ship but would appreciate
more of the classical entertainment (i.e., the pianist Mr. Finkel)
formerly offered.
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Old January 14th, 2008, 01:16 PM
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HAl is my preferred line but it seems to me that the HAL I originally
fell in love with, has eliminated alot of their amenities. For one, I can
do w/o the dutch nite & I don't like baked alaska but I am sure
new cruisers to HAL are suitably impressed as it does add to the
'gaiety' of the evening.

Who should be assigned blame for this? Carnival's take-over or
HAL merely watching their bottom line?

Just a query, folks...I am not jumping ship but would appreciate
more of the classical entertainment (i.e., the pianist Mr. Finkel)
formerly offered.
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Old January 14th, 2008, 01:36 PM
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Quote:
Originally Posted by bicker View Post
So basically, it sounds like Holland America felt it couldn't survive unless it reduced costs, because its customer base was being drained away by Carnival.
In a nutshell, yes - specifically in the short Alaska and Carib market. HAL's world cruises on Rotterdam V were doing fine
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Last edited by Copper10-8; January 14th, 2008 at 01:41 PM.
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Old January 14th, 2008, 01:44 PM
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John, thanks for the fantastic history lesson!
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Old January 14th, 2008, 02:13 PM
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Quote:
Originally Posted by Copper10-8 View Post
In a nutshell, yes - specifically in the short Alaska and Carib market. HAL's world cruises on Rotterdam V were doing fine
That raises the question, I suppose, as to whether just doing world cruises is a viable market niche, by itself, in the absence of a broader set of leisure cruise offerings. I suspect that dichotomy, between the world cruises and the short cruises, is the fundamental dichotomy between what some people want Holland America to be and what other people want Holland America to be.
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Old January 14th, 2008, 02:51 PM
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Quote:
Originally Posted by bicker View Post
That raises the question, I suppose, as to whether just doing world cruises is a viable market niche, by itself, in the absence of a broader set of leisure cruise offerings. I suspect that dichotomy, between the world cruises and the short cruises, is the fundamental dichotomy between what some people want Holland America to be and what other people want Holland America to be.
I've never been on a WC and doubt seriously that I will ever have a chance to go on one (unless maybe I can get a job in the galley peeling potatoes ) but I've got a feeling there is a group of HAL fans (traditionalists, maybe) that are perfectly happy taking HAL's world cruise/grand voyage every year while steering away from Alaska and the Carib (I guess you can add the Mexican Riviera to that now also).

Crystal, maybe, Cunard and some others are probably the closest to that WC niche you are referring to

You're welcome Aaron
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Old January 14th, 2008, 03:11 PM
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My husband and I were on our 3 and 4th cruises B2B) on Cunard's Vistafjord. We loved that ship. We had a standard cabin, but on these sailings we sat at the Cruise Directors table, and he provided champaigne on the formal nights. We were also invited to a cocktail party in the Captain's suite. They also asked us to be in new promotional video they were shooting. We pretended to be dining at the Captain's table and toasted "The Vistafjord".
We were advised, at one point, that the ship now belonged to Carnival and that. in fact, the new owners were on board. Within the year, the name of the ship was changed to the Caronia, obviously the video was scrapped and we never received any further promotional literature from Cunard (Carnival)
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Old January 14th, 2008, 04:02 PM
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The 20th Century saw the failure or demise of several exquisite cruise lines that were dedicated to doing it the right way.

Royal Viking was arguably the deluxe cruise line of it's day. They really set the standard for cruising in the late 20th century. As the American Public suddenly started shopping for the cheapest cruise available, Royal Viking suddenly found itself with half-full ships and diminishing revenues. Owner Knut Kloster swore that he would refuse to take the cheap route, and vowed to continue to offer a first class product if it killed him. It didn't kill him, but it murdered his excellent cruise line company. The American cruising public voted overwhelmingly for cheaper alternatives. When Kloster declared bankruptcy in the 1990's, they were 8 BILLION Dollars in debt, with very few assets left.

Holland America has a similar story. They tried to maintain a high level (and costly) product in the face of heavy discounting from big rivals like Carnival.
When it came time for the American Public to vote for high quality or low price, too many chose low price. HAL couldn't make a profit - and certainly couldn't raise new capital to build new ships. HAL could have silently faded away, but Carnival chose to resurrect them in a form that preserved some of the old elegance, but in a fashion that allowed them to remain profitable.

Royal Cruise Line remained very high profile and very popular until the early 1990's. In 1992 and 1993, Conde Nast named them the "Best Cruise Line in the World". The next year, heavy discounting from rivals prevented them from filling their ships. The American cruising public voted with their wallets. If quality cruising was going to cost more money, they didn't want it. Royal Cruise Line couldn't raise enough money for new ships. In 1994, NCL purchased the line and dismantled it to try to stave off bankruptcy for it's parent, Kloster Holdings
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  #19  
Old January 14th, 2008, 04:32 PM
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Thanks Bruce! Makes you wonder how lines like Silversea, Crystal, Regency and a few others survive on their own nowadays(without having a Carnival to back their play with $$$). They must have carved out that niche that Bicker is talking about
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Old January 14th, 2008, 06:44 PM
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Excellent explanation, Bruce. That's it in a nutshell---ya gets what ya pays for.
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