Late last year, Apollo Management LP – a multi-billion-dollar private equity firm – made a deal with Carlson to buy Regent Seven Seas Cruises, thus adding a luxury brand to its cruise holdings. The purchase price was not disclosed.
Regulatory approval was received recently from the U.S. Department of Justice and several European countries earlier this year. So, the sale has closed. It's a done deal.
Apollo is building an impressive portfolio of cruise brands. Earlier in 2007, Apollo purchased a majority ownership stake in premium Oceania Cruises.
Last summer, it also invested $1 billion capital for a 50 percent stake in the contemporary NCL, sharing ownership with Star Cruises.
Apollo also appointed Frank Del Rio as chairman and CEO of a new umbrella group called Prestige Cruise Holdings.
Both Bob Binder, the president of Oceania Cruises, and Mark Conroy, the president of Regent Seven Seas, will report to Del Rio.
We recently chatted with Conroy (shown at left in the Oceania offices in Miami during a meeting of the new team) about what he thinks of the recent deal and how it will impact consumers.
How will Regent Seven Seas Cruises work with Oceania Cruises?
We really don’t want to confuse consumers. Yes, we'll work together [looking for synergies in back-office operations or purchasing; Del Rio is heading this effort], but we’ll remain very separate brands.
We have different price points for consumers -- one in the luxury category and one in upper premium -- and we have different approaches to the marketplace. So both brands will continue to operate independently. Bob Binder will continue to run Oceania and I'll continue to run Regent.
Will you work well with your new boss, Frank Del Rio?
Did you know that we have a similar background and we’ve worked together in the past? It’s true. At one time, we both worked for Renaissance Cruises. I look at what Frank and Bob have done with Oceania and I keep admiring what they’ve created out of nothing. So, yes, I believe we’ll work well together.
How will Regent Seven Seas work with The Regent Hotels?
Carlson still owns the Regent brand and we’re still licensing that [on the cruise side] from them.
We must make sure we know who our customers are, and that we give them the kind of service they expect from us. The more success the Regent Hotel brand has, the more success we’ll see at Regent Seven Seas Cruises and vice versa.
The key is this: We need to make sure the customer that goes to a Regent hotel gets the same service as what a cruise guest would receive on Regent Seven Seas, and vice versa.
What about your reservations operation? Any shifts? Anything consumers should notice?
No. We share offices now in Omaha with Carlson, but we’ve always had our own dedicated reservations agents. We’ll just keep our reservations agents there but divide the space.
We'll create a little bit more formal relationship between us and Carlson – determining what part of the building is theirs and what part is ours. Most of our bookings are through travel agents and both agents and consumers should see no differences.
What about a new ship? What will we see? What new features can we expect?
I’ve had just a few conversations thus far with Frank [Del Rio] about a potential new ship. But it’s something we’ll be talking about a lot. We’re probably looking at a new ship that’s a little larger than our current 700-passenger ships.
For example, I anticipate the standard suites will be 45 meters not 35 meters as they are now. So they’ll be about 1.5 times the space of our standard suites on Seven Seas Voyager.
We likely will have the opportunity to build new single accommodations. That's a growing market for us. We’ll also probably have additional dining venues and a much larger spa.
We’re also looking at potentially adding a magradome (a pool with a sliding roof that can be opened on sunny days and closed on bad weather days).
Sizewise, I’d say we’re looking at a ship in the 50,000 to 60,000 ton range. The key differences are that the suites will be larger with not that much more overall guest capacity.
What about shipyard capacity? If you want to build a ship, can you find space in the shipyards. Everyone says the yards are full when it comes to ship building capacity?
We’re in a bit of a niche market. The shipyards actually have capacity in our segment. Everybody is building giant ships [which is where the capacity is tight for new builds], but nobody is building medium-size ships, so we can fit in our new ship order between the big orders.
What’s the biggest benefit of the Apollo deal to both Regent and Oceania?
Oceania is a well-run company and I believe Regent too is well run. But both of us needed sizable capital [for buying new ships]. Through the Apollo investment, we can expand and gain more capacity.
When we take delivery of any new ship, we'll be able to offer more choices in itineraries to consumers.
But while the new ships will allow for additional deployment, the earliest delivery for Regent would be in 2010, so we have some time to determine what specifically that means.
What should consumers expect before and after the deal closes? What if they’re booked on Regent now for a future date? Will they see differences from the Regent product that existed in early 2007 under Carlson?
The guest should notice very little, if any change, although we continue to work on improving the product.