Carnival/HAL Sells Windstar (4 Merged Threads)

[shipcafe]

Interesting

[hammybee]

What, No plasma TV?

[RevNeal]

<sigh>

This is most unfortunate, and very foreboding.

In favor of molding themselves to their "future growth plans," whatever those may be, they are willing to off-load a wonderful product ... which will probably DESTROY that product in the long-run. :( It sounds like an eventual lose-lose proposition for the customer/passegers and the industry as a whole.

 

Was Windstar losing Carnival money? Nope. They just don't want to be "bothered" with it any longer.

 

How long until Carnival sells HAL because HAL doesn't "fit in" with their "future growth plans?" And what, pray tell, ARE those future growth plans? Granted, they don't want to be a "niche player" ... will that eventually mean no more unique, exotic, "niche" itineraries or the vessels that cater to them, just mass-market bread-and-butter runs with great big ugly, glitzy, floating tubs??

 

"Windstar is an outstanding and unique cruise product and has garnered an extremely loyal following, however, Carnival Corporation & plc's growth strategy is focused on expanding our core growth brands and opening new markets," said Micky Arison, Carnival Corporation & plc chairman and CEO.

 

"Opening New Markets" .... while closing old ones? Narrow thinking, Micky. Windstar's assets and operations could have been useful in opening new markets. Right? Unless you have no interest in opening markets that will need smaller vessels.

 

GRRRRRRRRR

[hammybee]

WS, like HAL, has a loyal pax following but loyal pax do not consistently result in a sold -out state, necessary to ensure profit. For this, you need to attract new pax to the product. The WS product is different. It's difference, niche, cabin size, price point and lack of appeal to families makes it all the more challenging to sell out, beyond small group charters.

 

Carnival has revitalized HAL by investing in its future with new ships, albeit larger ones, necessary to acheive economies of scale. From the reports of those who have sailed on the Noordam, I think Carnival and HAL have achieved a sound and profitable balance and I expect nothing different from the Eurodam.

 

All things considered, I think this is a good business judgement on the part of the holding company.

[sail7seas]

Thanks so much for sharing, Steve. It's interesting to know.

 

I'm sorry to see Windstar leave the HAL family but in a sense understand it.

 

Windstar is a wonderful product and really has some very loyal customers but I wonder if it is even self-sustaining or a drain on HAL?

 

Always a shame when a good product is 'messed with' as one tends to think it will never be the same again.

 

Maybe this provides some additional revenue to finance new ships?

I read the financing agreement and who knows.......with Carnival taking back paper, Windstar could land right back in their lap if the terms aren't met some place down the line.

[localady]

Sadly put, Windstar doesn't fit into CCL's growth plans. The "bigger is better" corporate strategy seems to be prevailing and is in all likelihood much more profitable.

I am sorry to see it happen.:rolleyes:

[RevNeal]

WS, like HAL, has a loyal pax following but loyal pax do not consistently result in a sold -out state, necessary to ensure profit. For this, you need to attract new pax to the product. The WS product is different. It's difference, niche, cabin size, price point and lack of appeal to families makes it all the more challenging to sell out, beyond small group charters.

 

I don't think that WS has had trouble selling its cruises. They seem to sell out, actually, pretty quickly.

 

Carnival has revitalized HAL by investing in its future with new ships, albeit larger ones, necessary to acheive economies of scale. From the reports of those who have sailed on the Noordam, I think Carnival and HAL have achieved a sound and profitable balance and I expect nothing different from the Eurodam.

 

Carnival has owned HAL since 1989. Every ship currently sailing under the HAL banner has been acquired since the purchase ... INCLUDING the Prinsendam (which was a transfer from another Carnival-owned Line ... another "Niche" player, in fact). Indeed, the S ships were all designed and built AFTER the Carnival take over of HAL. And it was the S and R ships that revitalized HAL. The Vistas have extended that revitalization, and have provided a more mass-market appeal to attract younger people and families. It would appear that I am alone, however, in thinking that there is no reason why WS couldn't operate within the Carnival Family, as a subsidiary of HAL, without harming the overall business structure, even if it's not "big and flashy."

 

I'm sure that the sale of WS makes business sense ... much the same kind of sense as not honoring erroneous cruise quotes.

[hammybee]

 

Carnival has owned HAL since 1989. Every ship currently sailing under the HAL banner has been acquired since the purchase ... INCLUDING the Prinsendam (which was a transfer from another Carnival-owned Line ... another "Niche" player, in fact). Indeed, the S ships were all designed and built AFTER the Carnival take over of HAL. And it was the S and R ships that revitalized HAL. The Vistas have extended that revitalization, and have provided a more mass-market appeal to attract younger people and families. It would appear that I am alone, however, in thinking that there is no reason why WS couldn't operate within the Carnival Family, as a subsidiary of HAL, without harming the overall business structure, even if it's not "big and flashy."

 

I'm sure that the sale of WS makes business sense ... much the same kind of sense as not honoring erroneous cruise quotes.

 

We are, I think (???) saying the same thing, here. All of HAL's current fleet followed the acquisition of HAL, by Carnival. It was Carnival's shareholder monies that made this possible and there is a long track record of not reinvesting in a losing proposition.

 

I have no information relative to the profitability of WS or any of the cruise lines owned by Carnival, because all financials are reported on a consolidated basis.

[eroller]

I don't think there is any risk of HAL being sold off. HAL is a large ship brand catering to the ever growing upper end of the mass-market. Carnival Corp. likes common platform ships for it's various brands, and the Vista Class fit this mold quite well.

 

I believe Seabourn and Windstar have quietly been for sale for quite

some time. In fact when Seabourn was spun off from Cunard the

writing was on the wall. Unfortunately finding a suitable buyer is

easier said than done. In the case of Seabourn I think Carnival

realized there are no suitable buyers so they decided to build up the

brand. It's been stagnant for many years. Even with the new ships

on order, if the right offer came along I think Carnival would be

happy to rid themselves of Seabourn. Seabourn is a "niche" player

and this latest press release pretty much spells out that Carnival

has no interest in niche players.

 

Ernie

[hammybee]

I believe Seabourn and Windstar have quietly been for sale for quite

some time. In fact when Seabourn was spun off from Cunard the

writing was on the wall. Unfortunately finding a suitable buyer is

easier said than done. In the case of Seabourn I think Carnival

realized there are no suitable buyers so they decided to build up the

brand. It's been stagnant for many years. Even with the new ships

on order, if the right offer came along I think Carnival would be

happy to rid themselves of Seabourn. Seabourn is a "niche" player

and this latest press release pretty much spells out that Carnival

has no interest in niche players.Ernie

 

Ernie, I agree with you. It's been about 5 years since the Wind Star had a fire and sank ( no injuries) in the South Pacific. And in that time, another build was not ordered which suggests Carnival may have been looking for a buyer for quite some time. Like you, I sense a similar fate for Seaborn.

I would love to see the consolidating statement for each of the lines, cause that's the real bottomline.

[dougnewmanatsea]

they are willing to off-load a wonderful product ... which will probably DESTROY that product in the long-run. :(

What makes you think Ambassadors will destroy the product?

 

I think this is a good thing for Windstar. It puts the brand with a company that will actually focus on it, unlike Carnival who always had better things to do.

 

How long until Carnival sells HAL because HAL doesn't "fit in" with their "future growth plans?" And what, pray tell, ARE those future growth plans?

Their future growth plans have to do with large ships for Carnival, Princess, P&O, Cunard, Costa, HAL, AIDA, TUI... In other words, their large-ship brands.

 

I wouldn't expect them to sell HAL - it is a mass-market, large-ship line. This is what they're interesting in.

 

Keep in mind that they never even bought Windstar - it just "came with the package" when they bought HAL.

 

Unless you have no interest in opening markets that will need smaller vessels.

Exactly. They don't have any interest in opening markets that will need smaller vessels.

[eroller]

I would love to see the consolidating statement for each of the lines, cause that's the real bottomline.

 

 

I too wish Carnival Corp. would break down financial results for the various brands. My understanding is that Princess Cruises is the leader of the pack with a yield management and marketing strategy in place that any brand would be envious of. This is one reason we see other Carnival Corp. brands migrating to the Princess POLAR reservation system (such as HAL). Second I believe is Carnival Cruise Lines itself which is still doing very well but not as robust as in the past. It's all interesting stuff! I think Windstar and Seabourn have relatively no impact on the bottom line and therefore Carnival feels it's not worth it to keep them around. They have limited growth potential Carnival is only interested in brands that can grow exponentially.

 

One other brand that is slow to grow is Cunard. They only have two ships with a third finally being built but chances are QE2 will be retired soon after the delivery of QV. Thus they may remain a two ship fleet for many years. This does not bode well for Cunard. Carnival Corp. basically gave Princess Cruises the Cunard Line on a silver platter with the objective to make it profitable. It will be interesting to see just how successful Princess can make Cunard. Cunard is essentially a niche market as well, but I think they are pretty safe under the Carnival umbrella. Carnival spent a fortune on QM2 and she is sort of the unofficial flagship of the entire Carnival empire. I don't see the ship or brand ever being for sale.

 

Ernie

[hammybee]

Ernie,

We are on the same page.

 

I think Carnival is stuck in the overly competitive Caribbean rut.

 

The assimilation of the POLAR System into the Carnival empire created the framework for offering a best price guarantee for direct online bookings, no different than the airlines and major hotel chains.

 

What's your sense of COSTA? It seems to do quite well in Europe for Europeans and the winter sails attract European charters.

[Himself]

I am sorry to see Windstar go. It is obvious and has been for a long time that Carnival is pushing for bigger and bigger. I wonder how long it will be before the Prisendam will be sold off because it is too small. Have you noticed how HAL ships keep getting bigger and bigger? The Vista class ships are huge and I think the Eurodam will be even bigger. I just hope HAL keeps the S class ships and the R Class ships for a long time.

[eroller]

 

What's your sense of COSTA? It seems to do quite well in Europe for Europeans and the winter sails attract European charters.

 

 

I think Costa is a very high performer for Carnival Corp. In fact I would say they come in 3rd after Princess and Carnival. Costa is the fasting growing cruise line in the entire Carnival portfolio. They just keep building more and more new ships, with more on the way. Carnival does not invest that kind of capital unless the brand has proved it can sustain the growth, absorb the additional market share, and increase profits. I think Carnival knows Costa has great potential which is why they continue to build up the brand faster than any other.

 

On a personal note, Costa does nothing for me. All the new ships are comprised of Spirit and Conquest class ships which are the same as those used by Carnival Cruise Lines. In addition Joe Farcus (of Carnival fame) is the interior designer. I admit I was skeptical that Europeans would warm up to the Carnival style glitz that American's seem to love. For whatever reason that have embraced it and Costa is doing very well. Costa used to stand for style and beautifully designed ships, and now it's just a European extension of Carnival Cruise Lines.

 

Ernie

[dougnewmanatsea]

What's your sense of COSTA? It seems to do quite well in Europe for Europeans and the winter sails attract European charters.

Costa is doing very well in the rapidly growing European market. There is a lot more room for growth there than in North America, and Costa is far and above the leading brand in Europe, though MSC presents fairly strong competition.

 

I haven't counted (!), but I think Costa has more ships on order right now than any other Carnival brand.

 

Costa's US operation seems a bit redundant to me - though it is the often cheapest Carnival brand in the Caribbean - but as they have kept it at a steady two ships (the ships themselves ever-growing) for the past few years, I guess they see value in it. That said, it is just a "sideline" for Costa and their main market is in Europe and also (in the winter/Austral summer) in South America, their other traditional market.

 

The new Chinese operation does not seem to be a success and it appears that the Chinese market simply may not be ready for Western-style cruising (it may never be). This is despite the fact that the product was radically modified to be more suited to Chinese tastes, complete with ghastly new interior decor for poor COSTA ALLEGRA. These cruises have now been opened up to bookings from Westerners and I would not be totally surprised to see the China operation slowly but surely become assimilated back into the Costa mainstream.

 

We also need to remember that for the moment Costa also controls the fast-growing and wildly successful AIDA brand on the German market, though this will soon be transferred to the new joint venture company between Carnival and giant German tour operator TUI (75% Carnival/25% TUI) which will also result in a new mass-market brand called TUI Cruises.

 

Add in the also growing P&O Cruises in the UK, and Ocean Village which is about to double in capacity, and the picture is quite rosy for Carnival in Europe, as it is for the European cruise market in general.

 

The North American market is every so slightly softer than it has been in the past two years or so - still very strong, just not nearly as much as it was, owing largely to a falloff in demand in the Caribbean - but Princess and Carnival remain hugely successful and HAL seems to be humming along quite nicely on its own smaller scale as well. Princess also has substantial market presence in the UK and Australia, and remains (as it has been for years) the absolutely industry leader when it comes to yield management. (I speak not just of POLAR, which was fairly easy to export to other brands, but the whole on-board product which is thoroughly fine-tuned to optimize on-board revenue in a way nobody else has yet managed.)

 

This leaves P&O Australia (apparently doing decently despite a spate of bad publicity), Seabourn and Cunard. Seabourn was of course originally for sale (part of the trio of brands Carnival wanted to ditch, the others being of course Swan Hellenic and Windstar) but with the new ships just ordered it seems they have an eye towards expansion instead and with Carnival's money they can certainly become the premier brand in the luxury market again (there is no clear market leader at the moment). Despite not really fitting in with the group, I gather that Seabourn remains profitable and my take is that Carnival would like to keep it as a sort of "halo" brand.

 

Finally, Cunard - Carnival's problem child ;) . In all seriousness, the Cunard situation has improved dramatically since P&O Princess took over, and my understanding is that Cunard does turn a profit. That said, it remains to be seen whether a replacement for QE2 will be built, or whether the company will drop back down to two ships soon. Obviously Carnival and P&O Princess have enough confidence in Cunard to build QUEEN VICTORIA but ultimately she may not turn out to be so much an expansion of the brand as an eventual replacement for QE2. My thought is that they will test the waters with three ships and if it works, they will build a QE2 replacement; if not, then QV will be the effective replacement when QE2 sails off into the sunset. Either way, Cunard - especially with QM2 - is another "halo" product and invaluable to Carnival's overall image, even if its profitability cannot match the mass-market brands. Like Ernie, I do not foresee a situation in which Cunard would be put up for sale, simply because of the prestige of the brand in particular of QM2, the de facto flagship of the entire Carnival empire and indeed of the cruise industry as a whole.

[hammybee]

Host Doug:

Have you heard anything of the COSTA winter in Dubai?

[RevNeal]

What makes you think Ambassadors will destroy the product?

 

History.

Think "The United States Line" and the purchase of the Nieuw Amsterdam to serve as the Patriot. That failed ... and, yet, the US Line was a company that focused its attention on one thing only (Hawaii cruises). Yes, I know, 911 had something to do with the failure of the US Line. But, in truth, they were not doing well before 911. My criticism is that, while being bigger is not always better, neither is being smaller -- it means fewer assets, fewer resources, less experience. Perhaps I'm utterly mistaken and this will be a good thing for Windstar. I do seem to be nearly the only person here who is sad to see the Line sold and fears it will eventually destroy the product; that may well mean that I'm wrong. But, then again, perhaps not?

 

One of the concerns which I see coming down the pike, soon, will be that of crew staffing. Windstar, being a Holland America Line company and, hence, falling under the same labor agreements which are in effect with HAL, generally obtains its crew from Holland, Indonesia and the Philippines. In other words, dining staff and cabin staff have been our Indonesian friends, while the beverage staff have been our pals from the Philippines (same as on HAL). With the sale of Windstar, doesn't this mean (1) that those labor laws will no longer apply, and (2) Windstar will have to seek employees to operate the ships elsewhere. Without HAL's infrastructure to provide training for staff and logistics for deployment, I don't see Windstar continuing with the current staff.

 

Now ... correct me if I'm mistaken ... but isn't the crew one of the things which most of us adore about HAL?? And, doesn't it seem logical to extrapolate that something SIMILAR is part of the reason why Windstar has such a loyal following? Will Windstar, as operated by Ambassadors, still have such a loyal following after the Indonesian and Philippine staff are replaced by surly Europeans or lazy Americans? (I'm not trying to offend anyone ... just being blunt).

[dougnewmanatsea]

Have you heard anything of the COSTA winter in Dubai?

It's been very successful. They are going to two ships in 2007-2008.

[hammybee]

[quote name=revneal;

Now ... correct me if I'm mistaken ... but isn't the crew one of the things which most of us adore about HAL?? And' date=' doesn't it seem logical to extrapolate that something SIMILAR is part of the reason why Windstar has such a loyal following? Will Windstar, as operated by Ambassadors, still have such a loyal following after the Indonesian and Philippine staff are replaced by surly Europeans or lazy Americans? (I'm not trying to offend anyone ... just being blunt).[/quote]

 

This is not too dissimilar to selling your home. When the transaction closes, the buyer is free to do what he wants with the home. There are many, too many, former owners who stalk their former homes and tsk-tsk about changes and maintenance and their perception of the new owners. They are unable to detatch and it makes them sad and sick about the whole thing.

 

Corporations do not suffer from such emotions. They can't afford to. It's a bottom line decision.

 

Unless HAL has an ongoing facilities management agreement with WS, don't you think the then former WS staff will be absorbed by HAL, which is good new for us HAL PALS?

[hammybee]

It's been very successful. They are going to two ships in 2007-2008.

 

Thanks, I just noticed this myself and answered my own question. And thank you for sharing your insight into the Carnival organization and pecking order.

[GPoll189]

Come on all, maybe this is good in the long run for HAL and the Carnival family but only time will see. Just want to mention something the Noordam III, and its sister ship the Nieuw Amsterdam are still part of the HAL family themselves. What actually was done when these to ships was actually what is happening with Windstar. It really seems like a lease that Carnival is putting on these three ships. Its a ten year buy out for 100million dollars. So if the company does not work out WS will return to the family. The Noordam and Nieuw Amsterdam were put on an endless lease with Thompson which seems is working out good. And they won't be coming back. Remember both Noordam and Nieuw Amsterdam were built in the early 80 which makes them only in there late 20s, it seems that these ships were to much of an expense to keep up and they could get newer ships and more passengers with new ships, and that is were the S-class entered the picture followed by the R-class. If you look at Carnival and there history of moving ships around you can see that once ships reach the mid 20's they are a expense that Carnival wants to get rid off. Look at the Holiday and Celebration, or another not totally sure but they too went to Thompson. Most of the WS ships were in the mid 20's and I guess Carnival saw them as to much of a risk and decided to let them go. I was talking to Capt. Scott on Noordam my last trip and he relayed the same information that the late Capt. Eulderink from Statendam said. He said that these newer ship with less of a draught have a life expectincy in the mid 20's to 30's. They can push it longer but they are not like the ocean liners or the old. As we all know they are completely made differently than those old liners.

 

Deep down in my heart I have a good feeling that HAL will be around much longer. However, I have a strong feeling that HAL in about 10 years won't look like what we see now. There will be more ships that are the Vista type and bigger and fewer of the smaller ships. These smaller ships will do the excotic sailing while the larger ships will be place with the greastest passenger base. Another thing is, and I am sorry to mention this to the older passengers that sail HAL is that HAL will continue to get younger and younger. I remember when I first started sailing in the 80's average age of passenger on HAL was mid 80's, now it is in the 65's and getting younger. You will start to see more and more kids on HAL ships especially with new club HAL programs coming aboard the ships. HAL/Carnival will want to open the idea to cruising to families and the future generations of cruisers.

 

I feel sorry for the lost of WS but it might be a good move to help Carnival in the long road with the other brands that they control. I don't know why people feel Carnival is so bad. Remember before HAL was bought it was a family run business from the Netherlands. The family was dieing off and the remaining family members didn't want anything to do with the old HAL. If you really look back to when HAL was bought HAL was going towards the way of other lines. HAL bought Homes lines and Windstar, and decided to build two new ships. But other lines that decided to buy other ships went bankrupt, could HAL been going that way we wouldn't know because Carnival came along and bought HAL cancel the HAL's plan of two new ships and then building all the new builds they did. If Carnival didn't come along I could tell you that HAL might have ended up like, Regent, Commodore, Preimer. Lets not make judgements so fast, let time show us how this sale works out for WS and Carnival.

 

In closing remember there were rumors last year that Prisendam would be sold, nothing on the horizon so it doesn't look like there will be any major changes in HAL in the year to come.

 

Geoffrey

[dougnewmanatsea]

Think "The United States Line" and the purchase of the Nieuw Amsterdam to serve as the Patriot.

Sorry, but what has that got to do with anything?

 

Ambassadors wasn't involved in that at all, though they did happen to buy Delta Queen which was the "rump" of American Classic Voyages which was behind the PATRIOT. But the American Classic Voyages people are gone... Ambassadors' cruise division is a whole new company, led, incidentally, by a former senior executive from HAL.

[RevNeal]

This is not too dissimilar to selling your home. When the transaction closes, the buyer is free to do what he wants with the home. There are many, too many, former owners who stalk their former homes and tsk-tsk about changes and maintenance and their perception of the new owners. They are unable to detatch and it makes them sad and sick about the whole thing.

 

Corporations do not suffer from such emotions. They can't afford to. It's a bottom line decision.

 

Unless HAL has an ongoing facilities management agreement with WS, don't you think the then former WS staff will be absorbed by HAL, which is good new for us HAL PALS?

 

That is precisely what I suspect ... meaning that WS will go to other staffing solutions. And THAT is one reason why I fear that WS will be ruined by this sale and removal of one of the critical features which made it work ... its staff; the staff will be removed and redeployed within HAL. Subsequently, WS's loyal following will discover that their favored cruise line has undergone a massive change ... one which will probably not be to their liking, resulting in them no longer sailing with the Line. With no Alumni base, WS will then fail. The redeployment of the Windstar staff within the HAL fleet may be good for HAL, but it will spell disaster for Windstar. :(

[RevNeal]

Sorry, but what has that got to do with anything?

 

Ambassadors wasn't involved in that at all, though they did happen to buy Delta Queen which was the "rump" of American Classic Voyages which was behind the PATRIOT. But the American Classic Voyages people are gone... Ambassadors' cruise division is a whole new company, led, incidentally, by a former senior executive from HAL.

 

Actually, my point had nothing directly to do with the particulars of that case, no was I making a direct relation between them. Rather, I was making a general reference (as my subsequent remarks within that post should have made abundantly clear): that sale failed; for different and unrelated reasons, I fear this one will too.