Sheehan Makes a Splash

Kevin Sheehan 

Steps Down as CEO

Kevin Sheehan, President & CEO of Norwegian Cruise Line resigned from the company.  The announcement was unexpected and comes on the heals of the completion of the acquisition of Prestige Cruises International, which operates two upscale cruise brands, Oceania Cruises and Regent Seven Seas Cruises.

Frank Del Rio was named by the Board of Directors as the new President and Chief Executive Officer.  He has more than 20 years of cruise industry experience and has served as CEO of Prestige since 2007.  

"Frank Del Rio has established himself as a leader and innovator in our industry," said Steve Martinez, member of Norwegian's Board of Directors. "Norwegian is poised for continued growth and we are delighted to have Frank lead our team during the next phase of the company's evolution. We also thank Kevin Sheehan for his service to the company. Kevin has built Norwegian into the highly successful company it is today – a company that has reported 25 consecutive quarters of growth in trailing twelve month Adjusted EBITDA coupled with consistent margin improvement. Most recently, Kevin was integral to the Prestige acquisition, assembling a diversified portfolio of brands that spans all market segments in the cruise industry, which we believe puts the company in a strong position for the future."

I am excited to begin this new chapter in my long career in the cruise industry," said Mr. Del Rio. "I am blessed with a great team at Norwegian, and I am confident that together we can help our company continue to realize great things."

Reaction to Announcement

 "Cautious optimism" might be the best way to describe consumer reaction to the announcement.   The acquisition of Prestige Cruises had caused some concern that there would be changes in the luxury product after the merger.   With Del Rio now at the helm, one would hope that any change would be positive influence on the contemporary part of the portfolio of the combined company.

Some industry watchers had expressed concern about Del Rio's involvement in the defunct Renaissance Cruise Line.   From our perspective, that is old news,  with his successful co-founding of Oceania Cruises serving as proof that there were lessons learned from the past.

Any way you look at it, this is exciting times for Norwegian Cruises and their guests as changes unfold and their young fleet expands with the arrival of Norwegian Escape later in the year.

Norwegian Oceania and Regent to Wed

Norwegian Announces Marriage With

Prestige Cruises

Norwegian Cruise Line published a press release on Tuesday announcing that it has entered into a definitive agreement to acquire Prestige Cruises International, Inc, parent company of Oceania Cruises and Regent Seven Seas Cruises, in cash and stock for a total transaction consideration of $3.025 billion, including the assumption of debt.

"The combination of three distinct brands, each serving a different market segment, under one umbrella immediately creates an industry-leading cruise operator with an unmatched growth trajectory and a portfolio of products that allows us to appeal to guests at every stage of their life cycle. We are fully committed to retaining the brand propositions, guest experiences and cultures of the Norwegian, Oceania and Regent brands that have allowed each to realize such success."  ~Kevin Sheehan, Norwegian Cruise Line's CEO

Following the announcement, they also had several meetings with investors, media, and their travel partners to discuss the transaction in further detail.  What does this mean to you as a cruise enthusiast?

The Courtship

It is important to note that both company's senior management forged relationships during the courtship, prior to this transaction being entered, and sought to understand the philosophies that drove each individual company.  As stated by Norwegian's CEO, Kevin Sheehan, these distinct brands serve different market segments and have loyal followings.   It is critical that the brand cultures don't change and that guest experiences are preserved.

The Wedding

The actual consummation of the deal will not occur until some time later this year, most likely in Q4 2014.  Until then, customers and travel partners should expect "business as usual".   If you are really interested, all the legal-ESE can be found in the actual press release.

In the industry briefing, it was clear that both companies had taken this merger seriously and done their due diligence.  This was "day one" and too early to answer many questions that were lurking in people's minds, but assurances were given that in due time there would be answers.  

The Honeymoon

After the deal becomes official, there may be some changes as one might expect.  Indications were that both companies have some best practices and that the intention was to learn from each other.   Prestige for example has already merged two companies, Regent and Oceania, so some of those past experiences will come in handy with this new entity. Customers and travel partners should benefit in the long run from the merger.

There is a definite life-cycle that cruise guests follow.   Using these three brands as an example customers going on their first cruises would typically start out on Norwegian.   As they mature and have families, Norwegian would still most likely be a fit.  As the kids get older, couples may want to cruise on their own and have a more upscale experience.  Oceania could be the cruise line of choice for those guests.   Later in life, Regent, with their all-inclusive experience, might become the preferred cruise line.   There should not be a need to go outside this new family of cruise lines to meet goals of any specific cruise vacation.  (There could be exceptions to that, such as river cruising).

There were questions about the loyalty programs as you might expect.  It is too early to determine what changes, if any would be made.  As travel partners and guests, the hope is that loyalty will be rewarded, while still preserving the individual benefits for the given brand within the family of brands.

Married Life

This deal has a life-cycle as well, and all we can do is wait and see.  We've been invited to the wedding feast and anxiously await the day of the event.   We all wish the partners well in their new journey together.  After all, it is in everyone's interest that this new "marriage" live long and be prosperous.   We expect more announcements in the months ahead and we will bring you updates as appropriate.

Congratulations to the entire Norwegian and Prestige Cruises family - we wish you well.