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2 hours ago, MsCrystalina said:

There are many river boats, I sailed the Nile on a very luxurious one!  All luxury lines have expeditions vessels.  Why would Crystal need to add them??  

 

Maybe ER has returned as a consultant?

 

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Just like I posted back when Genting announced the details of the small vessels, Crystal desperately needs an adjacent market strategy to grow.  They need other ships they can fill from other markets that don’t solely cannibalize their ocean base in order to help distribute fixed costs better than they can now, and some of these customers will cross pollinate with the ocean product and help grow that market enough to help get over that “initial jolt” of inventory exploding.

 

This is the part that NYK was always missing.  They knew they needed more ships to make the line viable, but they could never make the numbers work for a customer base of 2 ships to grow by more than a third and not completely sink the company.  Within a couple years, they were able to project the customer base would support a second ship in 5 years, and by the late 90’s they projected they could support a third ship in the early ‘00s.  
 

The second ship panned out as planned, the third did not.  NYK launched two subsequent new build projects, and neither one got the red light because the sales numbers didn't support it.  Just like with Serenity, every indication was that they would just cannibalize the other two ships and not just grow the brand…. And neither of the other two ships was past its service life at the time, so replacing it with a costlier new ship just added more cost to an already (overall) money losing business model.  
 

The main difference between the success of the second ship and the failure of the third ship is that was that a second ship let Crystal open up new markets they couldn’t serve with just one ship (like a world cruise), while the third ship basically added inventory to the same markets Crystal was already in with the other two ships, for the most part.

 

I know no one wants to hear the need for anything but ocean ships, but there is a reason this keeps coming back up again across owners.  No one wants to repeat NYK’s error.

 

Vince

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With no statistical knowledge I do believe the market today has grown substantially since that time. Baby boomers are retiring in droves with fat 401s. Many of them are aspirational as we all pretty much are. Crystal is the only game at the top of the pyramid. However most cruise lines are missing the mark and think they should be chasing 50 year olds in mid career. This is a losing game. Let’s hope Crystal does not fall into this trap. 
Room for three Crystal ships?  Scary. Probably. But would I risk a billion on it?  Probably not. 

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Posted (edited)

To AveSaloon, 

 Yes it sounds like ER!!   Building all of those river boats and the most expensive explorer ship ever built was the beginning of the downfall!   Loved the Symphony and Serenity but need a replacement

before another 5 years, please!.

Edited by MsCrystalina
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30 minutes ago, Whipsnade said:

With no statistical knowledge I do believe the market today has grown substantially since that time. Baby boomers are retiring in droves with fat 401s. Many of them are aspirational as we all pretty much are. Crystal is the only game at the top of the pyramid. However most cruise lines are missing the mark and think they should be chasing 50 year olds in mid career. This is a losing game. Let’s hope Crystal does not fall into this trap. 
Room for three Crystal ships?  Scary. Probably. But would I risk a billion on it?  Probably not. 


Two thoughts…

 

1)  Whether we agree or not, every legacy luxury line’s sales department has it in their KPI’s to lower their average age to some degree.  Not that they’re going after millennials or anything, but customer acquisition is expensive, and you want some longevity out of your base.  The older the base, the higher the minimum annual acquisition requirement that you’re sinking right off the bat.  I totally agree in the value of courting people who have both the money and time to travel, BUT that market also comes with lots of downsides.  It’s not a slam-dunk.

 

2). There are actual (now automated) mathematical formulas they use to calculate the go or no-go decisions on expansion for a particular sized ship in a certain market, so I don’t want to give the impression that they’re spitballing these.  You can of course use really sunny, overly optimistic projections in those calculations to get the outcome you want, but you can also be pushed out like a former Crystal president was in 2001 when reality hit as inventory projections were created showing the disaster they were headed towards because of the bad assumptions.

 

Vince.

 

 

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8 hours ago, Whipsnade said:

ER!!!  Yikes. That’s why Genting went bust!  If that happens we will all be looking for a new home. 

It is the other way around.

 

Crystal went under because of Genting. Genting didn't go under because of Crystal. And yes you can blame some for recommending that NYK accept Genting's offer although none of us were privy to any of the discussions related to the acquisition so we really don't know.

 

I really don't understand why people continually put down someone who is long gone and blame every woe on the one person.  

 

Even Genting I try to forget about.  And it was them who made the decisions to go into the River market and Expeditions.  Like some owners they made almost every decision.  The same seems to be happening with another luxury line too whose owner has centralized most of the decision making. That is the prerogative of the owner.  An example of this was the ridiculous amount of money spend on Endeavor which was one of the last things they did.  

 

This is why I try to just put this out of my system because life is too short.

 

Keith

 

 

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37 minutes ago, Keith1010 said:

It is the other way around.

 

Crystal went under because of Genting. Genting didn't go under because of Crystal. And yes you can blame some for recommending that NYK accept Genting's offer although none of us were privy to any of the discussions related to the acquisition so we really don't know.

 

I really don't understand why people continually put down someone who is long gone and blame every woe on the one person.  

 

Even Genting I try to forget about.  And it was them who made the decisions to go into the River market and Expeditions.  Like some owners they made almost every decision.  The same seems to be happening with another luxury line too whose owner has centralized most of the decision making. That is the prerogative of the owner.  An example of this was the ridiculous amount of money spend on Endeavor which was one of the last things they did.  

 

This is why I try to just put this out of my system because life is too short.

 

Keith

 

 

" some owners"  - yes that what is going on at Explora for the moment ... 

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Let’s not forget that A & K are one of the leading tour operators and currently book many trips on the Amazon and Nile.  They certainly know this market and I am sure they know the demand.  We are not dealing with amateur operators. 

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A&K plus Manfredi are the smartest guys around with the possible exception of Viking. They are small and nimble with vast experience. They don’t have to deal with corporate boards and layers of management above them. It is their $$$ on the line. Look at the bold decision to send Symphony up the Red Sea sans pax that allowed them to salvage the entire lucrative Med season. All the biggies sent their ships around the Cape costing beaucoup bucks but not risking g their butts. Only entrepreneurs can do what Crystal did.  
But let’s remember that a couple of river boats do not a ship make. And we have been promised ships. . 

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14 minutes ago, Whipsnade said:

A&K plus Manfredi are the smartest guys around with the possible exception of Viking. They are small and nimble with vast experience. They don’t have to deal with corporate boards and layers of management above them. It is their $$$ on the line. Look at the bold decision to send Symphony up the Red Sea sans pax that allowed them to salvage the entire lucrative Med season. All the biggies sent their ships around the Cape costing beaucoup bucks but not risking g their butts. Only entrepreneurs can do what Crystal did.  
But let’s remember that a couple of river boats do not a ship make. And we have been promised ships. . 


…And you’ll get them.  Proper growth in today’s cruise industry, for a small operator without shared maritime resources of other cruise lines in a conglomerate, is a process, and you can’t just skip the middle steps and jump to the end, as Crystal learned the hard way the last time they launched an ocean ship.  You can’t take industry-high fixed costs, raise overhead, and divide it among your existing customer base with incremental growth.  
 

You have got to either (a) merge to increase the base, (b) wait years until you slowly grow that base organically in your own market before ordering the next ship, or (c) harness adjacent markets for growth.  Those are your proven options for a good outcome, and A&K picked option C.

 

Vince

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Based upon what was discussed at the Q & A, we will have the answers to all of these questions by the end of June.

 

 Contracts may be signed, etc.  We already know… all balconies, promenade deck, 650 passengers, casino and they are retaining most of our favorite features about the ships.  They will not please everyone that is for sure but I think they are really trying.  

 

be patient for a few more weeks!

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2 minutes ago, ctjon said:

Can't remember and don't want to do a search but who bought the Crystal river ships and I wonder how they are doing.

This was just posted on this thread:

 

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Vince has it pretty much nailed. 
BTW the Europe river cruise business is a lose lose business unless you are as big as Viking. Marketing costs are the same for little boats as they are for big ships with quadruple the pax. Case closed. 

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10 minutes ago, Whipsnade said:

Vince has it pretty much nailed. 
BTW the Europe river cruise business is a lose lose business unless you are as big as Viking. Marketing costs are the same for little boats as they are for big ships with quadruple the pax. Case closed. 

I can't speak for all River Cruise lines but it is hard for me to believe that Viking is the only one making money.

 

The problem Crystal had with their vessels was the number of guests they carried which was lower than other companies including Viking so they couldn't realize as much revenue as needed to be profitable given all of the fixed costs.

 

Keith

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Posted (edited)
1 hour ago, ctjon said:

Can't remember and don't want to do a search but who bought the Crystal river ships and I wonder how they are doing.

They were all purchased by Riverside Luxury Cruises, who are operating the Mozart and Ravel, and have leased two of the others to Uniworld. Not sure about the fifth one. They plan to have all five operating under their brand by the end of 2026.

Edited by Roland4
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2 hours ago, Whipsnade said:

Vince has it pretty much nailed. 
BTW the Europe river cruise business is a lose lose business unless you are as big as Viking. Marketing costs are the same for little boats as they are for big ships with quadruple the pax. Case closed. 

 

False.  Do you really think investors would support over 300 money-losing ships if that were the case?  There are numerous large river companies (AMA, Avalon, Uniworld, Croisieurope, Nicko), all of which are building new ships every year, which I highly doubt would be the case if it was a loss-making industry.  Viking is the first river company to publish financials, so you can see its making money, but they are not the only one.  And marketing costs aren't the same as big ships because you need FAR fewer passengers to find.

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I remember when Deilman farmed out the marketing to Cunard because they just couldn’t cut it on their own. Didn’t work. Deilman, arguably the best as the Mozart was Queen of their fleet and has sailed under several brands since went kaput. Same for Crystal and others. Not enough heft to warrant big time marketing efforts. 
Same marketing challenges for ocean cruise lines with few ships. Crystal. Silversea. Seabourn. Sea Goddess. RVL. Swedish American Line. Norwegian American Line. Even Cunard was basically bust with only a couple old ships until Carnival. snapped them up for the value in the Brand. Very tough business even if you have 100 ships. Two or three?  Forget it. You are doomed to a slow death. New Crystal can only make it if they manage to at least double their fleet before they either sink or die an agonizing slow death. I think they know that. Manfredi built Silversea over three decades but was losing as ships aged and he could not keep up with upgrades and expansion. At least he  was smart enough to sell to RCL.  I don’t think he will make the same mistakes again. 

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I think you all miss the point as to what caused Genting to go belly up taking of course Crystal.

It was buying a pig of a shipyard MV Werften still mired in the days of the Soviet Union.  A shipyard that had never built a large Cruise ship.  GHK had to invest 100's of million into the shipyard then of course its only one Ocean ship was ever completed that being Endeavor.  Global Dream of course was a 1billion white elephant.  The reason Endeavor was a 350M Euro ship was not its beauty, hi-tech features, or high end fixtures but the inefficiency of building it.  GHK was so over leveraged when COVID hit, the house of cards had to fall.  Crystal was just a pimple on that house of cards,

 

 

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28 minutes ago, PaulMCO said:

It was buying a pig of a shipyard MV Werften still mired in the days of the Soviet Union.  A shipyard that had never built a large Cruise ship. 

 

I always thought....if vertically integrating ship building with ship and cruise operating was such a great idea, Micky Arison and Carnival would have done it years ago.

 

But they didn't.

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Paul is of course correct. The shipyard and hubris done em in. 
But Crystal alone never made any money. Under NYK it was always a loser. Too few ships. Same problem now belongs to New Crystal except they now have the same two ships only 30 years older. But the. Again they bought them for peanuts. Time will tell if they can get the equation right. I am rooting for them but they need to get new ships in the pipeline sooner rather than later as the clock is ticking ever faster. 

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While size has its benefits because there are embedded costs that are the same or close to the same whether you have two ships or four ships growing slowly in the luxury market has its benefits over very high growth.

 

I remember when Serenity was added to the fleet it took time before the service on the ship was similar to Harmony and Symphony and even they took a hit because I believe 2/3's of Serenity's crew came from Harmony and Symphony and 1/3 were new to the company.  Some lines grow way too quickly and that has diluted their product.

 

On land I think of Nordstrom.  They were a big customer of the company I was with and we invited them to talk with us about customer service and how they provided it.  They did three things that I consider unique. 

One.Customer always right even when they were wrong.  Sometimes they would take back items that could not have been purchased at Nordstrom even though the customer said that is where they got t.


Two. They empowered their sales people so they didn't have to check with a manager first on a return.

 

Three. When they opened a new store they staffed it with all management and as many sales people as possible who were already working for Nordstrom. This way the culture remained in tact and when the new store opened the staff understood the Nordstrom culture.

 

One of the things that dramatically impacted their business was growing way too fast where they no longer could staff stores with experienced Nordstrom staff and if you went to their new stores you could see the difference as we did.

 

As long as Crystal grows and we see the start of it with the first new ship I will feel very good about it. I want to see them grow but not so fast that the on board experience is impacted and of course not so fast that they can't be profitable.

 

There are a few major cruise lines out there that I wonder how things will work out. Some have borrowed vast sums of money and in the case of at least one they had to arranged for a large sum of money to get through COVID-19 at a very sub-optimal financial arrangement.

 

So while large looks impressive there is no guarantee how that will look in the years to come.

 

I am reminded that Sears and Kmart were very large but made some very poor decisions and look what happened.  Walmart has actually learned from them addressing things that were problems rather than not trying to change.  

 

I often worried more when I was in business when things were going too well because that is a time that many companies let down their guard and sometimes with very poor results.

 

Anyway, glad to see that we will learn a lot more next month and many thanks to those of you who are on the current segment of the World Cruise who have posted about the Q&A including what was said about a new ship(s). 

 

Keith

 

 

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One more comment about the two new ships now under construction. I was told that they would operate under the A & K flag not Crystal.  Also, they have been in the planning for A & K for a long time and are needed to fit into their business model.

 

 

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