I read an interesting article yesterday in Cruise Week, “Report on CCL/Raising Cash“. It states, in relevant part:
In a report out on Carnival Corp. this morning headlined “CCL-Don’t rule out selling a brand or two in order to raise cash/reduce debt”. Patrick Scholes of Truist Securities writes, “…While investors have been more focused on the possibility of debt and/or equity raise(s), we believe the possibility of selling one or more brands should not be overlooked….We reached out to CCL to inquire about such a sale(s) possibility and they gave us a high level reminder that they evaluate all opportunities at the right price (as has been the case when asked about such items in the past).
…It would not surprise us if a private equity group and/or sovereign wealth fund would be interested in a brand such as Holland America and/or Seabourn.”
Cruise Week goes on to state, “This is not the first time we have heard of reports regarding brands potentially for sale. Last year we heard of Holland America and Seabourn perhaps for sale and Sycamore Partners [who ultimately purchased Azamara from Royal Caribbean] as a potential suitor as well. Nothing came out of it.“
So is Carnival Corp. stating that it is open to offers? That anything is for sale at the right price? Or is it that it doesn’t want to commit to retaining Seabourn?
With Seabourn once being considered the Crown Jewel of the Carnival Corp. family, but now not exactly receiving a resounding show of love- knowing the rumors are out there – let’s take a look!
I have often-times complained about Seabourn’s pricing strategies -as for years it focused on ridiculously high prices and then, as cruises came closer in, prices would drop and amenities would be added. This resulted in many thousands of dollars in booked cruises having to be repriced lower. And, of course, Seabourn chasing the business that it sent away! There are basically – to my mind – only two realistically possible reasons for this: (1) Overly optimistic views of demand and customer perception of Seabourn’s value; and/or (2) Making Seabourn’s financial prospective views look stronger than they really are. (Having the “potential” to sell at higher prices allows for showing more “potential” profits on the books.)
When this seemingly omnipresent practice is coupled with the infiltration of the Holland America and, now, Princess philosophies…which have little to do with delivering the best luxury experience, but rather more homogeneity across the three brands, it again looks to the bottom line being more of a balance sheet sort of approach. And where the cost savings are is in the Pre-Cruise Experience which, without question, has suffered mightily over the past few years.
But there is another factor that continues to make me wonder if Seabourn is for sale: The lack of new cruise ships. Yes, the Seabourn Venture and Seabourn Pursuit are eventually going to be out there, there is nothing publicly out there about new classic ships. The Seabourn Ovation was launched in 2017 and the Seabourn Odyssey – though still in great shape – was launched way back in 2009; thirteen years ago. So while diversifying into the expedition world is one thing, Seabourn’s failure to expand in the luxury cruise world is of note.
Keep in mind that the other luxury brands are all building not only new ships, but increased luxury cruise capacity. Heck, just two examples: Silversea has two new ships in service (Silver Dawn – which was just christened last week – and Silver Moon – which is soon to be) along with the Silver Nova (late 2023). Regent Seven Seas recently launched the Seven Seas Splendor. Each of those ships has a greater guest capacity than both of the Seabourn expedition ships combined.
To color that further, Seabourn’s new “parent”, Princess, and its other “parent” Holland America both have new cruise ships. What does that say about CCL’s commitment to – or is it confidence in – Seabourn’s near-term luxury cruise growth?
As I have written before, almost all of the longtime Executives and many of the top hotel staff have left Seabourn; mostly for other cruise lines. The consistent issue expressed is the corporate culture and the failure to treat them as valued and knowledgeable humans. The failure to retain those who are most committed to, and familiar with, a brand is not a sign of stability or focus on the future.
Add to that Seabourn’s recent practice of collecting the final payments on Seabourn Venture cruises when it knew the cruises would not be happening due to construction delays, and it really makes me wonder to what extent that troublesome practice was to glom guests’ money versus its effort to pad the balance sheet.
To be fair, while there are some strong sales in the luxury cruise market, there is also a good bit of softness brought about not only by Covid, but the Russian invasion of Ukraine and the emotional recalcitrance of many to making what now seems like a giant leap back into international travel.
I spent nearly two decades involved with Seabourn; most of them more than a mere travel agent. I have many friends that still work for Seabourn, and many clients that still have cruises booked with it. Obviously the past few years have been tough…and then rough. But that does not mean I wish Seabourn harm or that it cannot deliver the luxury experience that so many desire.
What it means is that I believe Seabourn is for sale and that nothing could be better for the brand than it being sold. I stated my real concerns back when Seabourn was merged with Holland America and pretty much every concern I had has come to pass. And when the two of them were merged with Princess, it became clear that the focus was not on “product” but “profit”. And when the “profit” wasn’t forthcoming…here we are.
So while I still have a soft spot in my heart for Seabourn and firmly believe that Seabourn – if managed correctly and given enough of the proper support it deserves – can be what it’s reputation was built on, at this point all I can do is hope that the rumors are true.