Cruise executives are fond of saying they don’t consider each other competition. Rather, they insist, they are fighting for customers who can choose from experiences on land like all-inclusive resorts, boutique hotels, or luxury properties.
One of the newest cruise lines in the industry, still in startup mode, is seeking success through its affiliation with a luxury hotel brand. The Ritz-Carlton Yacht Collection is banking on name recognition and reputation to reach customers — including those who have never before taken a cruise.
Called “cruising yachts” by the company, the fleet of three ships will each have 149 suites, accommodating up to 298 passengers. The first vessel is scheduled to be delivered in late 2019, with its first sailing built around the 2020 Super Bowl in Miami.
Financial details about the line, which was announced in June, 2017, have been kept under wraps. The hotel company said the brand was “created by the Ritz-Carlton and maritime expert Douglas Prothero in collaboration with funds managed by Oaktree Capital Management.” Ritz-Carlton signed a long-term operating agreement and has, Prothero said, been “very involved.”
“We are literally joined at the hip,” said Prothero, who is managing director of the Ritz-Carlton Yacht Collection.
With the ship still under construction, cruises went on sale to Ritz-Carlton and Marriott Rewards loyalty members on May 21. They are open to the general public Monday. Prices start around $4,600 per person for a seven-night Caribbean cruise and $5,600 per person for a seven-night Mediterranean sailing.
“We were expecting it to be good, but it’s been great, let me just say that,” Prothero said. “It’s about double what we expected.”
Skift spoke to Prothero about the customers he is trying to reach for the brand, what parts of cruising he’s trying to avoid, the role of loyalty in the business, and what happens when people call his personal cellphone to try to book a cruise.
This interview has been edited for length and clarity.
Skift: Are you looking right now for people who are fans of the Ritz-Carlton brand, or are you looking for fans of luxury cruises who might want to try a new line? What’s your sweet spot?
Douglas Prothero: Well, I think that the answer is we’re looking for all of those. And what we’re getting is all of those. So, right now because we’re only open to rewards and loyalty, we’re exclusively getting people who are loyal to the brand. Interestingly, what we know from our early research is that folks who are loyal to the brand would be very interested in this and that people who are cruisers … once they cruise, they cruise and go and go and go and go.
And then the really compelling ones, the ones we thought were really interesting, was that our Ritz-Carlton Yacht Collection — the brand, the service IP, and this property type — was attractive to people who do not take a cruise, have never taken a cruise, and never thought about taking a cruise. And that is turning out to be the case. So, all of those things are just proving themselves out. The one that is really exciting is this idea that Ritz Carlton can bring people into cruising who are not in it today and were not interested in it.
Skift: What qualities of Ritz-Carlton as a hotel company are you trying to replicate or carry over into the cruise experience?
Prothero: I think from the property type, this is a more residential design. So, it’s a yacht. It feels more like a Ritz-Carlton resort than it does a cruise ship. And then the backbone of the Ritz-Carlton, the 12 service values — ladies and gentleman serving ladies and gentlemen; the credo; the employee promise. … I was at a European Luxury Advisory Council in Geneva about six weeks ago or so and the main thing that I heard was that people trust the brand. … They have an expectation of what the service standard will be and that’s what we seem to take to sea. So, we’re literally taking this brand to sea.
Skift: What have you learned about the cruise industry and specifically the luxury cruise part of that that you’re trying to avoid? What are the negatives that you want to stay away from?
The whole intent is that the guest experience is anticipated. Anticipatory service is at the heart of the brand and it’s at the heart of this product. So, everything about this product, I can tell you the very technical nature of the team in the shipyard, at the heart of what they do is the guest experience. What is that going to look like? What is that going to feel like? How will that feel for the guest? Everything about it. And so, the product is also about that. The reservation team training is about what will the guest experience be like. The website is what will the guest experience be like. So, when it comes to the ship itself, you want all of those things to remain connected. The guest experience at the airport; the guest experience on arrival, again not joining a line of thousands of people, but arriving in smaller groups that are known and coordinated. Even the arrival area on board the vessel is more like arriving at the most private yacht then it is arriving at a cruise ship.
Skift: When we talk about luxury, we’re hearing a lot — including from Marriott, actually — about how people are looking for transformation and personal fulfillment. It’s not just pampering … So, how do you take that direction that it seems like luxury is going and apply it to what you’re doing?
Prothero: Right, so there’s been a move away from acquisition of material goods to collecting experiences, memories. And so, that’s different for everybody and it’s even different for everybody in a given day. It’s an anticipatory service. The reason it fits so well with the Ritz-Carlton brand is the Ritz-Carlton brand is based, at least partially, on this philosophy of anticipatory service, and so when you build that in to the experience, it creates those opportunities for people to have personal transformational journeys.
So, that is literally about reading the scene. … It’s not simple, but it’s about the art of reading and trying to anticipate what they need and by anticipating them, really creating those opportunities for them to have a … not just a true luxury experience, but a personal transformation.
Skift: How important is itinerary, especially since the size of your ships makes it possible for you go places that obviously big-ship lines can’t go?
Prothero: It’s essential. I would say it’s the places, but its also the number of them that we go to. … In a voyage that has seven days, but it only has four ports of call, that’s not … I hesitate to use what I’m going to say. A lot of the cruise business is like a bus route, you arrive at eight in the morning and leave by four in the afternoon. And everything you do when you’re there, everything that happens when they’re in port tries to squeeze in these things that create whatever the experience is going to be. And, our products turns that on its head and says, “Well why are we going there?” And, let’s make sure what we do while we’re there creates those opportunities for memories. In other words, in the meaningful interface with the destination. And also the destination that’s chosen to make sure the people that don’t want to do anything have a beautiful backdrop.
Skift: How are you looking at loyalty integration? It sounds like you’ve already been thinking about it by giving loyalty members early access to booking, but is there more you can do with integrating Ritz or Marriott loyalty?
Prothero: Yeah, there’s more coming. Once the integration is done between the Starwood SPG, the Marriott Rewards, and the Ritz-Carlton Rewards that’s all getting pushed together. … Once that’s all pushed together later in the summer, then what we’re working on is two things. People will be able to redeem and what we’re saying to people is we will make that retroactive. So, even for bookings that have been made now, wherever we land on redemption we’ll back them into reservations that are made.
And that’s firstly. And the second thing is, on the earning side, we are creating a Ritz- Carlton Yacht Collection Rewards earning program, so … people who are loyal to the Yacht Collection will be able to earn points. They won’t be earning points into their reward, but they’ll be earning points into a cruise-only program, which we’re working on at the moment. We’ll release that at the same time.
Skift: Okay. So, they would be earning only for cruise not necessarily for hotels, but redemption could come from hotel points that they’ve already had. Is that the gist?
Prothero: That’s where we are right now.
Skift: What question are you getting asked most often? What is your top FAQ as you’re talking about this product to people who might be hearing about it for the first time?
Prothero: When can I book?
Skift: Really? That’s not just marketing?
Prothero: Yeah, so people have found our mobile phones. …our VP of Sales and Marketing, Angela [Composto] and I, somehow our mobile phone numbers made it out into the wider world and we get calls all hours from people who are not in either loyalty, rewards, and haven’t received information from us yet except ‘Stand by.’ People are — I would include the travel trade, travel agents — people are very excited and want access.
Skift: What do you tell them when they call you on your personal phone?
Prothero: We take their number and we pass it on to reservations … It’s normally somebody who’s got a connection, obviously, and they somehow found a way. So, it could be a loyalty member who got missed in the mix. … We take down their number and if we’re driving our car, we talk to them for a little bit and then we take down their information and we get reservations to follow up with them. Anybody who went through that kind of trouble, we’re making sure they get taken care of.
Skift: As you’re entering this luxury cruise market, other players are also growing and there are some new luxury-ish players that are growing fast, so I wonder if you feel like you’re entering a crowded market, if you feel any of that pressure from all of the capacity, or do you feel like what you’re doing is different enough that other growth isn’t really affecting you?
Prothero: Yeah, I have two answers. One is I don’t think cruise is crowded. Even with the order book right now. A bunch of the order book right now is catching up for a time when there were no ships ordered, when we had the most recent downturn. The normal pace of the cruise business has been to grow at 8% compound annual growth in the US since 1970, so there is a natural pace of ships getting ordered. And then because there was a time when nobody one ordered, there was literally three years when no ships were ordered. So, some of the drive in ordering is just catch-up, but some of it fleet-driven growth and then some of it is overall growth. So, it’s a combination of things.
26 million people went to San Francisco last year as tourists. 26 million people took a cruise. So, it’s still a pretty small business, there still a lot of room to grow. That’s the broad strokes cruise business, we don’t really see people entering luxury cruise, though. I mean, there’s a bunch of folks building in expedition and they’re building some luxury expeditions. But, that’s not where we are, that’s not our space.
Intrinsically, we don’t think we have have competition in cruise. We’re not very focused on it, to be perfectly honest. We make sure that our pricing is … that we’re not an outlier on pricing, and we’re not. We really think of our competition as a safari or some other boutique resort. Someone might be thinking of a Ritz-Carlton Reserve vacation or the Yacht Collection. We think of that more as another option or another choice that somebody might be looking at.
I guess to actually put another way, we don’t have a lot of people calling us saying, ‘We’re also looking at XX cruise line, tell me about this.’ People are calling us saying, ‘I want to buy what you’re selling. We really like what you’ve built here, walk me through the transaction.’
Skift: Is there any concern about cannibalizing any business from Ritz on land ?
Prothero: I would say the exact opposite of that. This was the largest story in cruise in 2017 and every time that story ran it said Ritz-Carlton, Ritz-Carlton, Ritz-Carlton. I think that everybody in Ritz-Carlton is very excited about the Yacht Collection and all of the things that it means for the brand and also the loyal customers, the loyal guests of the brand. It’s a new offering. It’s taking the property and the flags to places it’s never going to go in most cases. Because they’re more intimate locations where there is not a Ritz- Carlton and then when we are in a place, let’s say we’re in New York or Montreal, where there’s a Ritz-Carlton, the opportunities for the property to have an interface with the yacht collection is an opportunity that makes sense.