IN THE HOT SEAT
Royal Caribbean Cruises
Royal Caribbean Int’l
Royal Caribbean Cruises Ltd. CEO Richard Fain and Royal Caribbean International CEO Adam Goldstein were in New
York last week to reveal the newest details
of the upcoming Royal Caribbean cruise
ship, the Oasis of the Seas, slated to be
the largest in the world when it debuts in
2009. Cruise Editor Johanna Jainchill sat
down with them to talk about the ship’s
new “neighborhoods,” fuel surcharges
and Royal Caribbean’s stock price.
tions at this point. It depends how the
market develops. We have tended to
focus on the exterior aspects because
opening the superstructure to create
these spaces is so dramatically new.
But we really do have a lot more to
say. A good amount of the rest will be
about the interior spaces of the ship.
Fain: When we built the Voyager, we
never thought you’d see anything that
large doing European itineraries. Now
you see Voyager and Free-
dom in Europe and just how
well-received they’ve been.
economic times, people tend to be
more careful about the way they spend
their money. They study the true all-in
cost of the vacation they are looking
at more closely than they do in other
times. The cruise is a great value compared to their alternatives. While we
don’t like anything that raises the cost
to the consumer, we start from such a
good base that we think we can absorb
it better than other industries.
Goldstein: I felt that recently. We went
to a land-based resort, and it really reinforced the value of our proposition.
They charged for the youth program,
to go to the fitness center, for the rock-climbing wall. There were just constant
charges. What you get for our ticket is
special, and we think that will serve us
well in challenging economic times.
Why is Royal Caribbean revealing
major details of
its Oasis class of
ships, which don’t
come out until late 2009 and
compete with the
excitement over its sister brand Celebrity’s
new class of ship debuting this fall with
the Celebrity Solstice?
Q: Your Freedom-class ships
seemed more amenity-driv-
en, with a surfing machine
and boxing ring, while this
seems more about experi-
ence with the neighbor-
hoods. Is that what your
Fain: It wasn’t so much that
we wanted something dif-
ferent from Freedom, which has been
unbelievably successful. But the large
platform opened up architectural op-
portunities that nobody had imagined
on a ship before. When you start with a
blank piece of paper and the enormous
space, you can do almost anything. We
[asked], what would give people some-
thing else, something more? Fairly
quickly we focused on the neighbor-
hood concept. It’s a wonderful thing
and an important element to make it
easy to go around the ship. But there
are a lot more amenities to come.
Q: You just raised your fuel
surcharges. Could it go any
Goldstein: We are mindful of
the oil price, which is pain-
ful for us and has been go-
ing up. We have no desire
to be charging our customers any fuel
supplement. But the level of cost to
us is significant, and we, like so many
other industries, companies and gov-
ernments, have felt that we
need to ask our guests to
share part of our fuel costs.
We hope the price doesn’t
go higher, and we hope we
don’t have to raise it higher.
But we do need to balance
our cost structure so that
we can continue to deliver
these great vacations to our Adam Goldstein
TC found out that it’s because the 5,400-passenger
Oasis of the Seas apparently dominates the skyline in
Turku, Finland, where it’s under construction. As the
massive vessel takes shape, photos of its superstructure
have been hitting the Internet. And with all the guessing about what might be what, Royal Caribbean has decided to let out details as they become visible.
Q: Have you thought of other ways to
recoup the cost of fuel, like the airlines
Goldstein: We think of a million ways
to save energy. That’s probably the
most important thing we
can work on to do what we
do. We certainly are in the
business of commanding
the highest price that we
can for our product. But
there are very significant
differences between our industry and the airline industry. They are taking people
from point A to point B. We
have people living with us
on vacation. The quality of our products and service ... is of paramount
TC hears that ever since pro-Tibet demonstrators
successfully interrupted the Olympic torch relay in
France, relations between France and China have been
strained. Consequently, China has unofficially canceled
Chinese tour groups to France, giving the explanation
that China’s feelings have been hurt over the matter.
While Naples, Italy, grapples with garbage and how to
get rid of it, Venice launched a campaign urging thirsty
tourists and residents to stop swigging from disposable
plastic bottles of water and to use the city’s drinking
Visitors are now handed a kit with an empty plastic
bottle and a map showing the locations of 122 drinking fountains where they can fill and refill their bottles
from the city’s aqueducts. The bottles are labeled with
a chemical analysis of the water that gushes from the
fountains, which authorities describe as “super safe.”
Q: It seems like you are making it
very Vegas-like by re-creating existing
Fain: We’d say it’s a natural extension
of what we’ve been doing. The key
word is choice. People want to do what
they feel like doing at the time. Free-
dom offered people
an amazing array of
choices unlike any-
thing they’d had be-
fore. But when we
were designing Oasis,
the platform was so
large it allowed them
to take that concept a quantum step
beyond, and you’ve seen the results.
Q: Is there a point where it deters peo-
‘The large platform of Oasis of the Seas opened up
ple from taking a cruise?
Goldstein: Any escalation in cost has
some supply-and-demand effect.
We’re fortunate that our product rep-
resents great value and that people
architectural opportunities that nobody had
imagined before.’ — Richard Fain, Royal Caribbean Cruises
Q: So far the ship is very outdoor-focused. Should we not expect to see it
sailing in Northern Europe?
Goldstein: We don’t have preconcep-
respond to it at any level of economic
conditions and want to be onboard our
Fain: Anything that raises the cost of
our vacation or any other vacation is
unfortunate. But I think it’s also im-
portant to recognize that in difficult
Q: : Are you guys concerned about
your stock price?
Fain: Obviously, no
company management ever thinks that
they’re fully appreciated by the stock
market. But I think
the market is concerned about what is
happening or could happen with the
price of oil and the economy. We as an
industry have held up remarkably well
despite the economy, but think of how
much better we’d be in a more balanced economy.
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Friends & Colleagues
Radius, a global network of
corporate travel agencies,
has named Christopher
Vasiliou CEO and president,
effective July 14.
Vasiliou has held various
leadership positions at Sabre Holdings; most recently
he managed strategy, joint
ventures, alliances and direct distribution for Sabre’s
Asia Pacific division.
Radius’ interim CEO,
Allan Slan, will return to his
role as executive vice president. Slan filled in for Tony
Hughes, who resigned as
CEO in November.
Carlson Wagonlit Travel
named Marc Karako to the
position of executive vice
president and CFO, effective July 1. Karako has broad
experience in finance, strategy and investor relations.
In his most recent position,
he headed up the finance
practice at Resources Global
Professionals, a management consulting firm and a
former division of Deloitte.
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