Oceania Cruises: Five

Years of Innovation

A Conversation with Frank Del Rio,

Chairman, CEO and Co-Founder

At left and above, Regatta transits the Panama Canal and guests enjoy a cabana.*

By Susan J. Young

Talk to Frank Del Rio, chairman and CEO, Oceania Cruises, and you’ll quickly get caught up in his robust enthusiasm and passion for the cruise industry.

Five years ago Del Rio, a former Renaissance Cruises executive, founded the upstart line (in conjunction with Joe Watters) with just $14 million in operating capital and Regatta, one leased 684-passenger ship. 

For many executives, that would have been the ultimate goal – but for Del Rio (shown at right*) it was just the glimmer of the dream.

Two more ships, Insignia and Nautica, were leased as the line grew. All three were purchased by Oceania in 2006.

Then earlier this year, the majority stake in Oceania was purchased for $850 million by Apollo Management, a well-known private equity investment group.

Del Rio now says he’s living the dream.

New Ships on the Horizon

“Apollo is very financially savvy,” notes Del Rio. “They’re experts at financing and interest rate hedging.” As a result, Oceania now has the financial clout needed to take it to the next level – negotiating and funding the purchase of the line’s new Oceania-class ships (see drawing below*).

Two of these 1,260-passenger vessels are on order for delivery in 2010 and 2011, respectively.

The line also has an option for the third.

Right now the financing is the big plus for Oceania, but over time look for Apollo's involvement to create other cost-saving synergies [perhaps for fuel, back office operations and other purchasing needs]. Apollo recently acquired a 50 percent stake in NCL Corp. 

“They [Apollo] have said they’re not done inquiring others,” stresses Del Rio. “There is a possibility -- depending on what brands get acquired – of additional operational synergies,” he believes, citing the Carnival Corp. model of operating independent brands but cultivating joint purchasing arrangements that cut expenses.

Asked if Apollo is really letting him and Bob Binder, the line's president, “run the show,” Del Rio says: "absolutely.”

At right, Del Rio (on the left) and Binder are shown at Oceania's south Florida headquarters facility with a model of a Regatta-class vessel.

Del Rio says nothing has changed in terms of running the day-to-day operations of the cruise line since the purchase transaction was completed in April 2007. 

Del Rio also says he's deeply involved in the design of the new 65,000-ton Oceania-class ship, referring with pride to plans spread about his office related to the project. 

“I’m committed to something [the cruise line] I created from scratch,” he says emphatically. “Now, I can get really involved, working on all the details needed to go into building a truly world-class vessel."

That new ship will be built in Italy by Fincantieri. Del Rio says the ship design will “be something extraordinarily different [than other line's new builds]– it’s not just about size."

"We’re beginning to turn back the clock where bigger and bigger isn’t always better," he notes.

For those into stats, the new ships will be 782 feet in length and 105 feet wide.

Draft will be 24 feet. The Oceania-class vessels will cruise at 20 knots.

That compares with the Regatta-class vessels (Insignia's bow is shown at left*) which are 594 feet in length and 84 feet in width. Regatta-class vessels need a draft of about 20 feet and cruise at just under 19 knots. 

Onboard, the repeat guests of Oceania will definitely notice a 20 percent higher passenger space ratio.

And with a crew of 750 the staff-to-guest ratio will improve from 1:1.7 to 1:1.65

Oceania-Class Accommodations

Oceania has said that 98 percent of all staterooms on the new ships will be outside and that 95 percent of cabins will have balconies.

The new ships will boast 630 guest staterooms and suites. That total includes four Owner’s Suites, six Vista Suites, 14 Oceania Suites, 120 Penthouses, 440 Veranda Staterooms, 20 Oceanview Staterooms and 26 Inside Staterooms.

Many guest accommodations will be approximately 50 percent larger than on Regatta, Insignia and Nautica. For example, an owner's suite of 2,500 square feet on the Oceania-class ships will be more than double the 982-square-foot version on the Regatta-class vessels. A veranda stateroom will be 312 square feet, up from the existing 216 square footage.

The line currently has butler service offered in 62 penthouse accommodations and above on each existing vessel (a penthouse on a Regatta-class vessel is shown at left.*) .

Six butlers handle service to guests in those accommodations. “So, guests do get the kind of true services that the butler is [expected] to provide,” says Del Rio.

“We have no plans to water down that service by expanding that to all cabins [onboard the new ships],” he stresses. 

While Oceania has never promoted itself as a family line and does not have children’s activities onboard, the larger ships will have some new options that appeal to families, such as more connecting cabins and larger bathrooms [than on the present vessels]. Plus, there will be more flexible dining options.

Del Rio says the traditional “family” model is evolving. “It’s no longer Ozzie and Harriet, David and Ricky. It’s no longer the Leave it to Beaver clan.” His personal definition of traveling with family is taking along his adult children and his grandchildren.

More Public Spaces

While Del Rio says it's too early to get into details about the new ship, he does say the spas will be larger and unique. 

One thing to expect? Del Rio confirms there will be cantilevered spas off the sides of the ship [similar to those on Royal Caribbean’s largest ships].

Public spaces on Oceania-class ships will feature many of the line's signature venues. These include Martinis, Horizons (the Regatta-class version is shown at right*), The Patio, an extremely large Library, and a Grand Staircase. 

On the shore side, “the way we’ve designed the ship, the entries and exits will allow us to disembark the vessel quickly,” says Del Rio.

“One of the most frustrating things is to pull up to a port where you can’t dock unless you’re a small ship, you see it from afar and it literally takes two or three hours to get people off," he emphasizes. "One of the things we strive to avoid is anybody having to stand in line. I hate standing in line.”

Vessel Upgrades

Del Rio’s goal with the line’s three existing 30,227-ton vessels, Regatta, Insignia and Nautica, is that “I want you to feel you’re boarding a brand new ship. The highest marks we get [from guests] are on ship cleanliness and ship condition.”

He also notes that carpets are completely replaced at every drydock every two years. “On the average cruise line the carpet stays on the floor for six to eight years,” Del Rio says.

For example, check out the fresh looking carpeting on a Regatta-class vessel at left.*

Calling his three vessels classic, he says: “Those bigger ships with all the fads of the day get dated quickly. These ships don’t have those fads, therefore the design is classic and the public rooms and cabins are not dated at all.”

In November 2007, Nautica will go into drydock. Del Rio says Oceania will update all bathrooms in the 52 Penthouse level accommodations with marble and granite.

Insignia will get the upgrade in her drydock in March 2008. Since Regatta just came out of drydock earlier this year, she’ll get the upgrade in April 2009.

Cost for the upgrade program? It's $1 million or more per ship. 

“We’re also installing flat screen LCD and plasma tvs in all cabins,” says Del Rio. That will occur in all cabins on all three vessels over the next six months.

While the line is known for its gourmet cuisine and fine dining experiences, it also recognizes that guests still want casual options.

This past summer, the line added a new milkshake bar to all three ships adjacent to Waves, an outdoor grill.

“What’s more American than having a fantastic burger and a creamy milkshake,” Del Rio asks? Burgers on the line might be a Pachy Burger, named after the wife of a crew member. 

It’s a hamburger topped with braised short ribs and blue cheese crumbles. This is the number one hamburger selection requested by guests.

Another burger choice is the New York Burger which is drenched with chili and cheddar. The Roma Burger has proscuito ham, pesto and provolone cheese. Guests might also choose a Swiss, Texas or other themed burger. 

“Our creamy milkshakes are hand dipped and made to order,” says Del Rio. Above right, a crew member is ready to hand a guest one of these treats.* 

He estimates that on an average day, half the guests eat at Waves. “For even the most dedicated gourmand, after three or four or five days, you just want a burger and a milkshake,” says Del Rio. Burgers and milkshakes are complimentary to guests.

In terms of staying connected, the line's existing vessels have the usual components and so will the new ships: Wi-Fi, cell phone service at sea and Internet access. “We’ve seen that grow [as a component of] onboard revenue,” Del Rio notes. “People are so connected.”

While guests can’t book a cruise online with the line [only through travel agency partners], 85 percent of Oceania's shore trips are now sold on its Web site, showing the tech-savvy nature of the line’s clientele.

“Even with the 'vacation part' of their lifestyle they just can’t disconnect,” Del Rio stresses. “We have computers in all owners and Vista suites, in addition to 20 computers in the library and Internet café. In time, we’ll probably have computers for all cabins,” he says. 

Sailing Opportunities

Consumers interested in an Oceania cruise need to book early, at least as long as the line’s inventory of space is limited to its three 684-passenger ships. “We’re nearly sold out for 2007,” says Del Rio, reporting only about 50 cabins available for booking. 

In 2008 and 2009, the booking pace is robust as well. The line has already sold more than 77% of its total 2008 inventory.

"We’re seeing our customers buying further and further in advance,” says Del Rio. “And there is absolute strength in the Caribbean.”

While the industry at large has reported soft Caribbean sailings -- with much availability -- and soft pricing, Del Rio acknowledges the Oceania product is a bit different. Also, the line has "less exposure" with fewer Caribbean voyages and thus fewer cabins to fill.

In addition, rather than spending seven days in the Caribbean, the typical Oceania Caribbean sailing may be 10, 12, 14 or even 26 days, far longer than most traditional Caribbean cruises. 

For example, a 26-day roundtrip cruise from Miami departs Nov. 10 and goes all the way to the Amazon and back. While on limited sea days, guests enjoy the top pool deck of the ship, shown above right.*

And on Oceania's voyages, the port time is intensive. On Dec. 21, 2008, a 12-day Regatta sailing features two days at sea outbound and one day at sea inbound to Miami, but the voyages covers a lot of territory and boasts nine days of back-to-back, full-day port visits, something its guests love.

Elsewhere in the world, Oceania calls at exotic ports in places like Albania or  Monemvasia, Greece (see photo at left*) .

Europe continues to be a blockbuster destination. “South America continues to perform very well for us, "says Del Rio.

It's now Oceania's fourth season there. "When we first went down there, we thought it might not something we’d do every year -- that there might not be the sustained demand for that product," Del Rio stresses. "But every year the demand for South America gets stronger."

This is the line's first year in Australia and New Zealand and "those sailings were sold out more than 12 months ago," he says. "We’re seeing the same pattern repeat itself for 2009.”

Will Oceania sail from the southern U.S. to Cuba if it opens up? “In a heartbeat,” says Del Rio, an American of Cuban descent. “We have our itineraries all laid out… and our shore excursions. It’s Shangra La waiting to open.”

It’s all about the destination for the line's clientele. As a result, “entertainment is not the reason people cruise on Oceania,” Del Rio says, when asked about any changes in onboard programming. The line does offer cabaret lounge acts.

“But if people want a Broadway show, they’ll go to New York, if they want a Vegas act they’ll go to Bellagio," says Del Rio. "Our guests are here to see the destinations, so the entertainment we provide co-exists with that policy.”

Oceania’s primary customers? “They’re experienced travelers over the age of 50 and -- more likely than not -- American,” says Del Rio. “They enjoy cruising on other lines but are ready to move up to the product that truly has most of the attributes of the luxury lines but at a price that’s affordable.”

Upscale Premium Product, Price Value

They certainly enjoy the exotic itineraries, as well as the value provided. On many voyages, the line offers free air and two-for-one fares.

For example, the new 2008-2009 Winter Collection features those deals on all voyages to Asia, Australia, South America and the Caribbean. Expect those sales hooks to continue, according to Del Rio. He believes that it’s something travelers have come to expect and it’s a big selling feature.

Oceania was one of the first in the industry with a limited smoking policy. From the start, smoking has only been allowed in two places onboard – in one corner of the pool deck and outside the Horizons Lounge. “End of story,” says Del Rio. “We take it [the smoking policy] very seriously.”

Since the Star Princess fire, he says the line has ramped up its diligence on policy enforcement: “We give one warning, if they don’t heed the warning, they’re escorted off at the next port and we make no apologies.”

As the line’s fifth birthday looms, Del Rio says he hadn’t really thought about any celebratory events although the anniversary is now on his radar screen.

One thing is sure, though. Moving forward, “we continue to refine the product,” Del Rio notes. “We believe innovation is the key to Oceania Cruises success. We’ve seen copycat brands and imposter brands, but they can no longer fool the enlightened guest.”

He says the keys to the line’s success thus far have been its exotic itinerary deployment, its Tranquility Beds, the onboard fine dining experiences and overnights in port – that allow guests get off to have dinner or enjoy nightlife ashore.

The line’s repeat guest ratio right now is 35 percent and climbing.

That’s quite good considering that Oceania is less than five years old. Also, not every guest takes a cruise every year.

At left, one of the Regatta-class vessels is shown on an exotic cruise." 

Del Rio still sees his line as firmly entrenched in the upper end of the premium category, despite many of its luxury attributes.

“Guests are comfortable with that positioning at the end of the cruise as the product has been over-delivered and under-promised," Del Rio stresses.

That said, Del Rio continues to seek out innovative options.  One only wonders what he’ll dream up next?

For More Information

Contact your travel agent or visit Oceania Cruises at www.oceaniacruises.com

Note to readers: Have you sailed on Oceania of late? What was your impression of the onboard product, the service, the itineraries? Send your comments to editor@southerncruising.com.

*Photos are owned, copyrighted and used courtesy of Oceania Cruises. All rights reserved. Please do not link to nor copy these photos.