One On One: Larry Pimentel, President & CEO, Azamara Club Cruises

Pimentel: “Next year and even into 2018, there is too much capacity coming into this segment of the market too quickly.”

Since he joined Azamara Club Cruises in January 2010 as president and CEO, Larry Pimentel has taken on a much wider role than just overseeing a fleet of two 694-passenger ships that he puts in the “upmarket” class of vessels. He now oversees all tour operations for Azamara parent Royal Caribbean Cruises Ltd., helping devise the shore excursions and pre- and post-tour for Royal Caribbean International and Celebrity Cruises, as well as Azamara.

Long known for his expertise in luxury travel as CEO of SeaDream Yacht Club and president and CEO of Cunard and Seabourn, Pimentel now has completely revamped Azamara Quest and Azamara Journey, ramping them up to make those ships competitive with some luxury lines. TMR sat down with Pimentel recently to talk about what he’s doing with Azamara and his other responsibilities at Royal Caribbean. 

You’ve made had a few changes on your two ships. What have you done with those two vessels this year?
The very first thing we’ve done is a massive renovation of both the Azamara Journey and the Azamara Quest. One was completed in January and the other in April. They both have been completely redone from bow to stern. Every single stateroom was reconstructed and rebuilt. We also put in new spa suites that are quite elegant and very luxurious. In addition to that, all the public spaces have been redone and we’ve reimagined certain areas. We’re calling it “Reimagined Azamara.” It was an attempt to upgrade the physical plant substantially and I think we’ve exceeded that.

So the renovations are totally complete and the ships are cruising now. What is the experience you deliver now? Is it a luxury experience?
I still call it “upmarket,” but these are often personal experiences. Our number-one client base has frequently come from Regent Seven Seas Cruises, and I put them in the luxury category. There are those who are ultra-luxury clients and those who are reaching up from more modest means. I still squarely put us in the upmarket space, though I think we straddle the two. But clients of either upmarket or luxury are still very, very happy with our product.

You mentioned you now have a better suite product, right?
Yes that’s correct. We wanted to add suites because it’s our number-one selling category; we’re actually selling from the top down. In fact, the inside cabins are some of the last to move on our ships at this point. That’s quite a transition in five years.

A few years ago you developed some destination programs that really made Azamara fairly unique in the market, including AzAmazing Evenings and more overnights in ports. Can you talk a bit about what you’ve done to augment those programs recently?
We call it destination immersion. The focus is on longer stays, more overnights and night touring. We set a path to do that and we were the first to do so, and a lot of other lines are copying it today. Guests go on us first and foremost for the destination product, because we’re in port so often at night, when so many of the deliverables in places like the Mediterranean are just glorious. But we’ve augmented that a lot. You mentioned the AzAmazing Evening, which is included in the tariff. That’s where all of our guests go on a phenomenal  event like an incentive evening. We’ve also added such for-purchase programs as Insider Access (small-group shore excursions that interact with locals) and Nights and Cool Places (programs that feature a curated selection of after-dinner tours highlighting architecture, arts and scenery), plus additional pre- and post-tours. In fact, our guests have been coming to us for the destination so much so that up to 22% of them have never been on a ship before. Their first experience is Azamara because they are coming for the destination.

Let’s talk a bit about those destinations. You have just two ships, but you feature a wide variety of itineraries. How have you extended those itineraries to go to even more distant and unusual places?
That’s another good question. Our guests are port and country collectors. Our ships feature a slow form of cruising and overnight stays. But we’re adding areas. Most recently we added New Zealand and Australia, and big parts of the Pacific that we had never been to before. So we’re mixing it up with a lot of research on new ports and new places. We’ve already published our schedule through 2018, and we’re about to publish 2019. I think you’ll see a lot of new ports and places we have not been to before. We’re going to give our guests the destinations they are looking for, especially in a geopolitically complex world.

You also wear another hat overseeing all the tour products, pre and post, for Royal Caribbean as a whole, right?
Yes, I’m the chief destination experience officer for Royal Caribbean Cruises Ltd., so I oversee that for Royal Caribbean and Celebrity, as well as Azamara. I have a great team under the direction of Roberta Jacoby (managing director-global tour operations), who is an amazing pro. And we are putting together all the unique programming for all of our ships. This is no longer the bus trip; it’s way beyond that. We offer unique culinary programs for Celebrity and unique family and multigenerational programs for Royal Caribbean. There’s just a lot of great product because we want our lines to be distinguished by destination, not just the physical plant.

Just how inclusive is Azamara’s pricing right now?
It’s probably one of the most inclusive products and most people don’t realize that. In our case, the AzAmazing Evening is included in the tariff, and that’s an entire incentive event. But standard call liquors, boutique wines, boutique beers and all gratuities are included in the price. We also include complimentary machines for guests who want to do their own wash. For our suite clients, we include things like alternative dining, one Insider Access, one Nights and Cool Places excursion. The higher you go up in the category, the more inclusive it gets.

You have two ships now and both are former so-called R-ships (because they were build by the now defunct Renaissance Cruises). Where do you go from here and are you going to get another ship?
Let me first of all say that these aren’t the old R-class ships; they are the new A-class Azamara ships. If you lined them up with other R-class ships in the market, they wouldn’t look alike at all. I think we are in a very interesting nexus in the upmarket space. Next year and even into 2018, there is too much capacity coming into this segment of the market too quickly. On a percentage basis, it’s one of the largest double-digit growths I’ve seen and I don’t think it’s sustainable. Right now it’s not a good idea for us to be introducing anything new at this point in this segment. My position with our chairman and the board is this is not the time to introduce ships. This too will pass, but let’s see how the geopolitical stuff goes, because right now it seems pretty precarious.

How do I know there are too many ships in the upmarket? I just look at rates. And when you get too much upmarket capacity, the rates begin to compress, and that’s what I’m seeing happen. That’s not a formula for success and we want to stay profitable

Do you believe both of your existing ships have a long life ahead of them?
Very much so. At the end of the day, for a ship that’s 14 or 15 years old today, the hulls can easily last twice that. With the amount of effort, money and work that’s been put into our two Azamara ships by Royal Caribbean, they’ve been renewed. In fact, the value of the two ships has increased, especially when you consider a changing geographical situation with destinations like Cuba opening up. It’s not the big boys who are going to be going there; it’s going to be the smaller ships. So these ships are ideal for many, many years to come.