What’s the commission on a $240,000 cruise? For agents who sell a lot of Royal Caribbean, it’s a number worth calculating.
Yesterday’s announcement that Royal Caribbean paid a cool billion dollars for a two-thirds stake in the luxury Silversea line has the industry abuzz. And Wall Street analysts chimed in on the positives that the deal offers the cruise line, in particular, and the luxury sector, in general.
For Royal Caribbean customers and the travel agents they use, the acquisition opens a door to a discussion of higher-end options, from Silversea’s $5,000 Mediterranean itineraries to its 140-day World Cruise, where a stay in the Owner’s Suite goes for $240,000.
“Exciting for RCCL to finally have a true luxury brand in their portfolio!" said Ashley Metesh-McCoy, owner/head experience curator at Kinship Vacations in Williamsburg, Virginia. “I think it will offer a nice step up for RCCL’s existing Celebrity and Azamara cruisers who may not have otherwise been aware of Silversea. Luxury is a growing base for me and the more exposure we can provide luxury clientele to luxury brands the better!”
“I see this as the icing on the cake for this brand. They now truly offer something for everyone and everyone's pocketbook. I look forward to seeing how this plays out,” said Mary Evans at AlphaJ Travel Ltd. in New York.
At Post Haste Travel in Hollywood, Florida, Vice President Grace DeVita said agents will “absolutely gain from this. Silversea has been in desperate need of internal support, from reservation staff to their air department. The product is so good, and clients will only benefit because, as advisors, our job will become easier, with the support and knowledge from RCCL management ... I’m looking forward to things getting better for Silversea as a brand.”
Helping ‘Loyal to Royal’ customers transition to luxury
“This is wonderful news. RCCL has needed a luxury line in its family of brands! Even Carnival has a luxury line under its umbrella. I believe it will help those clients who are ‘Loyal to Royal’ transition to a luxury cruise experience,” agreed Vicki Watkins Briggs, owner/leisure travel consultant at Briggs World Travel in Woodbridge, Virginia.
Some Silversea fans expressed some concern about what the future might hold but were willing to give the deal a chance. “As a person who has sold Silversea for decades and not RCL, I’m not excited about this simply because of the idea of anything changing with Silversea. They are our best cruise partner. But I have faith in the people at Silversea, for now,” said William Kiburz at Coronet Travel.
Silversea is well-known as one of the world's premier expedition cruise lines.
But Adrienne Sasson, director of Rubinsohn Travel, said she “looks at the merger of Norwegian, Regent 7 Seas, and Oceania a few years ago and it didn't hurt Regent or Oceania and only made Norwegian a stronger competitor in the market. As long as they continue to keep all of their offices separate, as did the aforementioned, this may be a good merger for all concerned.”
“I don't know if this will encourage me to sell more. I am already a fan of both companies and believe they already have good products. The services offered by both products are very different. I can say I'm excited to see what comes next!”
Wall Street seemed to like the deal, too. “We view this transaction as credit positive as the addition of the Silversea brand gives RCL another platform to appeal to affluent cruisers with ultra-luxury and expedition cruises, a fast-growing segment of the cruise industry,” wrote Moody’s analyst Pete Trombetta. “We expect that, over time, RCL's scale will give it the ability to reduce costs at Silversea, which have resulted in low operating margins relative to peers.”
Susquehanna analyst Rachael Rothman agreed the deal “allows RCL to capture more guests on more occasions, and allows them to accelerate growth in a vertical where they previously had no presence. RCL’s entry into the ultra-luxury segment is similar to CCL’s Seabourn Cruise Line, and NCLH’s Prestige brands, adding credibility to the proof of concept."