How Crystal Cruises Pulled Off Its Massive Expansion

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This week’s jaw dropping announcement by Crystal Cruises that in one fell swoop it is expanding into river cruising, offering a yacht product, operating its own private jet tours and selling 144 multi-million dollar residences aboard three new build cruise ships was part of a vision President and CEO Edie Rodriguez had in mind when she joined the line in October 2013. However, it wasn’t until this May, when the company was acquired by Genting Hong Kong, the dream began to take hold. She tells Forbes.com, more significant initiatives will be unveiled in the next six months.

For industry observers, joining Crystal may have seemed a surprising move for Rodriguez, even if it was for the top job. A 34-year industry veteran, who started as a travel agent, she served in senior leadership positions at Carnival Corporation’s Carnival Cruise Lines, Cunard and Seabourn, as well as most recently senior vice president of sales and marketing at RCCL’s Azamara Club Cruises. She also spent over a decade with travel technology provider Amadeus IT Group SA. The commonality of all her stops was innovation and transformation, and each of her former employers was heavily focused on growth. During her time with Amadeus from 1987 to 2000, the division she ran enabled cruise lines to leap into the electronic future by automating cruise bookings with air bookings, saving countless hours of manual labor and telephone time. She gained 90 percent market share for her group, while at the same time delivering the highest profits in the company. At Azamara, she was teamed with CEO Larry Pimentel, taking two struggling ships that didn’t fit into an existing segment, creating a niche for customers who wanted destination intensive itineraries with overnight shore stays so they could dive into the local culture.

Rodriguez, say people who know her, is a hard charging New Yorker who doesn’t mind direct conversations, is constantly on the move, spends time talking to customers, both consumer and trade and exudes energy. Crystal, on the other hand, was founded in 1988 by Nippon Yusen Kabushiki Kaisha (NYK), a Japanese company that can trace its history back to 1870, and is one of the world’s largest operators of container ships. Crystal’s headquarters was established in Los Angeles’ Century City, far from the epicenter of the industry in Miami, located in a pristine office tower, miles from the water, populated by law firms, where one can hear a cough or a sneeze at the opposite end of the wide hallways. With overflowing shelves of awards, Crystal is a revered brand in the travel industry. Its level of service is considered the gold standard. “Anyone can build a hard product with lots of money. Nobody has matched Crystal’s service,” says Mary Jean Tully, a top seller of luxury cruises. Yet, in over two decades under NYK, as a business, the line remained stuck in neutral as a two-ship entity, the last one delivered a dozen years ago. Matthew Upchurch, CEO of Virtuoso, a network of luxury travel advisors, explains why perhaps there wasn’t more growth. ”I have all the respect in the world for NYK. We’ve been involved with them since before the launch, and we were on the pre-inaugural.crystal ship

But they are so large, Crystal wasn’t even a rounding error,” he says. And while he points to innovations such as bringing Nobu onboard long before celebrity chef driven restaurants were an industry trend, competition in the luxury sector increased from all angles, with more lines, different concepts and increasingly lavish suites from the big ship companies. “Our guests were telling us they wanted to give all their vacation spending to Crystal, so they (would) come on a cruise and the next year they would have loved to do something with Crystal, but they wanted to go on a river cruise, or they wanted to try a flight trip or rent a yacht in the Med,” Rodriguez said during an interview at The Lamb’s Club in New York, before picking up an award from Travel + Leisure.

“So many of (our customers) were saying the same thing, we said, ‘There’s a market here for it.’ We host 50,000 guests a year. To fill 60 seats on plane 12 times a year will not be hard.”Of course, getting the green light wasn’t easy. Before joining, the CEO notes, “They were wooing me for 10 months. During the interview process, and when I got there I was pushing my Japanese board very heavily (telling them) you don’t understand the power of this brand equity. We have to grow it, because you have to grow or die in business,” she says.After delivering the fourth and fifth most profitable years in company history, she says NYK told her, “We realize it’s going to take billions of dollars to deliver what you want. We want to divest from anything outside our core business, and in doing so we want to sell (Crystal).” Not one to mince words, Rodriguez notes, “I said to every bidder, ‘don’t buy us if you aren’t going to grow us.’” Her wish came true when it was announced in May Genting Hong Kong (GHK) had spent $550 million to acquire the line. It is part of Genting Group, a global conglomerate with ownership and investments in everything from palm oil plantations to real estate and casinos, as well as through GHK, Asia’s Star Cruises and Norwegian Cruise Line.

In May, its Resorts World brand broke ground in Las Vegas on a multi-billion dollar Chinese themed resort complex. Tully, Founder and CEO of Tully Luxury Travel, wasn’t sure Rodriguez would be a fit at Crystal when they first met, but she has been won over. “She thinks like a consumer. She knows her stuff. She has an amazing work ethic,” Tully says, adding, “Everyone knew (Crystal) needed to do something. Genting has the money, and this is exactly what they needed to do.” Upchurch notes the morning after making the dramatic announcement aboard one of her ships, Rodriguez was on a live webinar speaking to Virtuoso agents.Tully likens Crystal’s game plan to her company, which started as a cruise-only agency, but has now expanded into a wide variety of luxury experiences, from safaris to yacht charters and private jet travel. “We have these amazingly wealthy, loyal customers, and they were going to other people to book their safari or to charter a yacht in the Med,” she says.

Perhaps least surprising of the recent reveals was the commissioning of two river cruise ships. The category has been sizzling for over a decade with Viking River Cruises, having grown from humble beginnings in 1997, catering to Russian tourists with four ships. Today, its fleet of 60 boats mainly serves well heeled guests from the U.S. Uniworld was acquired by The Travel Corporation, a major operator of escorted tours under brands such as Trafalagar, Insight and Contiki, and owner of five-star The Red Carnation Hotel Group. The new parent launched new ships, but also went upmarket with bigger cabins, plush accommodations and fine dining. Tauck Tours, better know for its luxury offerings on land, also hit the rivers, and since beginning in 2002, AmaWaterways has grown to nearly 20 river ships. Meanwhile, Abercrombie & Kent and Belmond (nee Orient Express) offer mini-luxe experiences with river barges. While the concept has expanded to waterways in Asia, South America and even here in North America, Crystal’s debut will be in the traditional European theatre, says Rodriguez.She believes there is pent-up demand for anything Crystal, noting, when it opened sales two years in advance for a new Northwest Passage itinerary that won’t take place until next year, it sold out right away. What’s more, she is holding over 700 deposits for people on the wait list. ”She’s unlocked the brand’s potential,” adds Upchurch.crystal serenity

Getting into the yacht segment, with the 62-passenger Crystal Esprit, was directly related to the Genting acquisition. On a visit to its chairman Tan Sri Lim Kok Thay in Singapore, he offered her the dry docked Megastar Taurus, originally built in 1989 to compete in the then new small ship luxury segment. At 272-feet in length, today it is an average size yacht for a billionaire. “He didn’t have to offer twice. I said, yes right away,” she says. The vessel, which will be marketed under the banner of Crystal Yacht Cruises, is undergoing an extensive refit, and when it debuts in December flying the Crystal flag, will offer many of the same toys your favorite moguls have, including a private submarine where Rodriguez plans to offer underwater wedding ceremonies. On the surface, water skis, wake boards, kayaks, jet skis, fishing, scuba and snorkel equipment will accompany four 10-passenger zodiacs and a Wider 32-foot super yacht tender for “special boating adventures.” If Esprit is a success, a sister ship, the Taipan could be a candidate for quick expansion. It currently operates full ship charters for Star. Adding a second ship to the division makes sense, Tully says. She points to SeaDream Yacht Club, which has two slightly bigger vessels, often used for full-ship takeovers. Having a sister vessel makes for an easy transfer of guest reservations when one ship is chartered. While declining to comment directly, Rodriguez does add, “Suffice to say, we are open to adding more ships for our yacht (group).” On its debut Esprit will offer seven-day itineraries to the Seychelles Islands, the Persian Gulf and the Eastern Med.

The three new yet-to-be-named large ships, dubbed “Crystal Exclusive Class,” each at 1,000 guests, will start to arrive in 2018 and feature all-balcony accommodations, weighing in at over 100,000 tons. They will be designed to sail on “expedition” cruises, meaning through heavy ice. However, the most interesting twist may be that each will have 48 residences for sale, starting in the “multiple millions” and going up. Units will range in size from 600 sq. ft. to over 4,000 sq. ft., and Rodriguez says, she is already getting enquiries from buyers. Purchasers will own the apartments for the life of the ship with contractual elements being worked out, paying an annual maintenance fee. Early buyers will be able to combine multiple units, and there will be a variety of interiors owners can choose from. The concept is not new. The World Residences at Sea pioneered it in 2002, but has received mixed reviews. With just 165 units, Tully notes one of her customers reported under 40 people were aboard on his cruise last year. Rodriguez thinks by having the units separate, but as part of the larger 1,000 person vessel, she’s solved the dilemma. “It’s like if you own an apartment at the Baccarat here in New York. You can stay in your apartment, or you can come into the hotel and mix with the guests, and you of course have an entire city,” she says. Still to be worked out is if there will be a rental pool for the units and the precise amenities. Right now, she is planning to handle sales directly, without brokers. While Crystal is joining TCS, Travcoa, Abercrombie & Kent, Four Seasons and others in the crowding skies of private jet tours, it is doing so with a different twist.

In the other cases, existing narrowbody Boeing 757s are chartered and were reconfigured. Crystal Luxury Air will be taking delivery of its own brand new Boeing 787-800, configured with 60 seats that convert to flat beds, and there will several lounges. Rodriguez doesn’t rule out amenities such as onboard showers. Besides offering a state-of-the-art widebody aircraft, a Genting owned company will likely be operating the plane, although full details aren’t available. The parent already has at least one flight department. Under Genting USA, Resorts World Aviation is based at Miami Opa-Locka Executive Airport. In April, the company set up a new Bermuda-based wholly owned subsidiary, RWB Aviation. Either way, upon delivery of its tripped out Dreamliner in 2017, the first of each month will mark takeoff for a new itinerary running approximately 28 days with 10 to 12 stops.Perhaps most poignantly, Rodriguez notes when the new Exclusive Class ships join, they will be in addition to Symphony and Serenity, which accommodate 922 and 1,070 guests, respectively, bringing its fleet of larger ships to five. In 2006, the line’s original ship, the Harmony was transferred to parent NYK, once again leaving Crystal as a two-ship operation.

With its new boss and a new parent, there is hope this time things will be different, except of course, for the steady stream of awards. Upchurch says, “It’s great to have ownership that sees the value of the brand.” He points out under Rodriguez, the company has opened a satellite office in Miami to attract talent that doesn’t want to relocate to California. For Crystal’s customers, loyalty runs deep. The CEO tells the story of one regular who takes several generations of his family on a voyage by the line each year. In his will, he has reserved money and put in a provision to keep the tradition going even after he passes.

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Source : Forbes

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