Archive for May, 2001

Posted on May 2, 2001 - by Ralph Grizzle

Cruise Analysis: Crystal Competitively Challenged?

For the past five years, Crystal Cruises has won top awards in the luxury, large ship category in both Conde Nast Traveler and Travel & Leisure. Their ships were basically running unopposed, but now they’ve got major competition.

This year, Radisson’s Seven Seas Mariner will vie with Crystal for the coveted Conde Nast Traveler Readers Choice Awards. The upscale travel publication positions ships carrying more than 400 passengers in its “large ship” category, according to a spokesperson for the magazine. Until now, the only other luxury ship that truly qualified for that category was the Seabourn Sun, which steps down to the premium market next June when it is transferred to Holland America Line.

(Arguably, Radisson’s 490-passenger Seven Seas Navigator, which entered service in 1999, competes in the large ship category, but Lauren Kaufman, spokesperson for Radisson Seven Seas Cruises, says the Navigator still has a “small ship” feel, raising questions about what constitutes large and small ships in the Conde Nast annual awards race. With the addition of the 700-passenger Mariner, however, “we truly can no longer call ourselves a small ship line,” Kaufman says.)

Clearly a formidable competitor, Radisson appears to be taking square aim at Crystal. The story with the Mariner is that Radisson developed a Crystal ship one step better.

The 50,000 gross-registered-ton Mariner does equal the individual GRTs of the Crystal Harmony and its sister ship, Crystal Symphony. But Mariner carries 240 fewer passengers than either Crystal ship, giving the all-suite, all-balcony Mariner a decidedly advantageous 71.4 space-ratio compared to space ratios in the low 50s for the two Crystal ships.

Neither company would have a great deal of trouble in learning the battle tactics of the other: Radisson CEO & President Mark Conroy is the husband of Crystal Cruises Vice President of National Accounts and Director of Sales for the Eastern Region, Marilyn Richardson-Conroy.

How has Century City, California-based Crystal responded to Radisson’s attack? A new ship is on the drawing board. Called C3, Crystal’s third ship will be larger than, but similar to, the Harmony and Symphony – and with greater (63) space ratio. C3 will feature more outside staterooms with verandas than on Crystal’s other ships. Due out in late June 2003, C3 will also feature a spa that is 40 percent larger than that of the Symphony’s, paralleling recent trends on new luxury ships.

But bucking industry trends, a number of the new ship’s staterooms will feature large picture windows, and there are, surprisingly, still a few inside cabins. In defense of these seemingly antiquated accommodation configurations Crystal [now former] President and CEO Joseph Watters says, “Our clients appreciate the flexibility that having more than one type of stateroom provides.”

Moreover, Crystal maintains that C3 is not a response to Mariner’s entry into the marketplace or Radisson’s rocketing success. While certainly aware of Radisson’s presence, Crystal says it is not feeling the bite of the competition. “Even with the launch of Mariner, the demand for Crystal has been strong,” says Mimi Weisband, Crystal’s spokesperson. “Even with the Mariner spending an inaugural season in Alaska, we’re doing very well there.”

And while it may be too early to gauge Mariner’s impact on Crystal’s market share, Crystal continues to do well on the balance sheets. The company historically has grown its revenue by an average of 3.5 percent annually, according to Weisband. Owned by Japan’s Nippon Yusen Kaisha, Crystal is not required to make public specific revenue figures, but Weisband says the company is achieving an 8 percent growth rate in gross operating profit – with no increase in capacity.

Crystal says its new ship, rather than being a response to Radisson, is a response to the marketplace. C3 will allow the company to expand itinerary selections, particularly important to the 200,000 repeat passengers that make up the company’s loyalty program, Crystal Society.

Crystal needs to offer a broader roster of itineraries. The company is handicapped by the fact that one ship is out on a world cruise every year, leaving the other to do such itineraries as the Panama Canal,. That does not satisfy repeat cruisers who have already seen the Canal.

Moreover, C3 gives the appearance that Crystal is not remaining stagnant in a time when almost all cruise lines have new ships on order. For Crystal to remain the darling of Conde Nast Traveler, the company needs a new ship. Crystal can not expect to hang its reputation on a ship that is six (Symphony) or 11 (Harmony) years old and to compete head-to-head with brand new luxury ships.

Crystal also should consider making on-board changes to put the company on equal footing with competitors. Some bemoan the fact that Crystal charges for bottled water and soft drinks, while Radisson and Silversea even provide the first bar for free. Though not exorbitant, the cost of a Coke aboard Crystal ships is $1.50 plus 15 percent gratuity. The gratuity is also added to all bar drinks, wines and sodas, including those served in guest staterooms.

Crystal responds that the soft drink issue is one that the company has frequently considered. “But our guests – and particularly Crystal Society guests — haven’t given us conclusive feedback on this,” Weisband says.

In effect, she adds, on ships where various amenities are provided on a complimentary basis, all guests are subsidizing the costs. “Like in land-based restaurants, not everyone requests bottled water or soda with their meals,” she says. “Our product is personalized, not collective, and not subsidized by someone else.”

On a broader level, Crystal’s philosophy and operating procedures appear to be succeeding amazingly well. Crystal Society members represent one of the strongest affinity programs in the marketplace, with some members having repeated more than 70 cruises with Crystal

The reason for such success may be because Crystal’s are probably the friendliest ships out there, and the attitude of the crew is the friendliest around. The company also enjoys one of the industry’s highest staff retention rates. About 70 percent of Crystal’s officers, staff and crew renew their contract and return year after year, according to Weisband.

And while Mariner’s hardware components may indeed be the equivalent of a Crystal ship one step better, it is Crystal’s service, attitude and philosophy that has kept it steps ahead of its competition, as indicated not only by the readers of Conde Nast Traveler but also by the loyalty of Crystal’s repeat guests.

Crystal Society arguably boasts the most devoted alumni of all guest loyalty programs in the cruise industry. Their devotion to Crystal could not be better illustrated than by the day 21-time Crystal cruiser Star Angert stepped off the Crystal Symphony at the end of her world cruise.

Crystal’s Joe Watters walked up to Angert and asked what her favorite port of call had been. As she had traversed the Indian Ocean, sailed Europe, the Med, Asia and the Pacific, her reply was unexpected. “The Crystal Symphony,” she said with no hint of irony.