A tale of two cruise lines

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Two European businessmen created two different cruise lines in the 1990s. Both have been successful in their own terms, but one formula for success has a lot more scale than the other one.

The two lines are Silversea Cruises and MSC Cruises. Silversea was formed in 1994 by building two new ships straight out of the gate for the luxury market. It was marketed primarily, if not exclusively, in North America.

MSC took a different route. Created from the leftovers of the Lauro Lines in 1995, MSC operated used, some would say very used, tonnage. Like Carnival Cruise Line, it deployed its older ships to cater to the mass market. It was marketed primarily to Europeans, with a few winter itineraries in the Caribbean.

Silversea’s first newly built ship, the Silver Cloud, was a thing of beauty. It was instantly competitive with other luxury vessels.

MSC’s first newly built ship didn’t arrive until a decade after the Silver Cloud was delivered and it was a takeover of an option that couldn’t be exercised by the Greek line Festival Cruises when it went into bankruptcy.

Since launching, Silversea has acquired a fleet of nine ships, with two more vessels on order.

With the delivery of the MSC Seaview, MSC has 15 ships in its fleet, with another nine on order through 2026.

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Last week, Silversea and Royal Caribbean announced an agreement in which Royal will get a 67% equity stake for $1 billion. Silversea gives up its autonomy as a private company in exchange for continued growth and investment in its brand.

MSC is investing in its own future with a $10.5 billion newbuild program, and its autonomy is not in doubt.

MSC took a slower, less glamorous route to success but in the end, it is the company that stands independent.

Two major differences steered MSC and Silversea towards different outcomes. The first is that MSC Cruises was a side project for MSC chairman Gianluigi Aponte, whose main business, container shipping, made it easier to secure the financing that kept MSC’s order book growing.

The second is that MSC operates in the low-price, high-profit segment of the cruise business. Catering to the mass market may not be where the glamour is, but it is where the money is. The finances of both MSC and Silversea are private, so it is perhaps unfair to say one is more profitable than the other.

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MSC Seaview Calls in Valletta

Seaview in Valletta

Valletta Cruise Port has welcomed MSC Cruises newest ship, the MSC Seaview, which called for the first time on Wednesday, June 13.

The MSC Seaview, a ship bearing a Maltese flag registration, was named last week and was on its inaugural voyage, according to a statement.

In honour of the maiden call, a special event was held onboard the ship in the presence of the Honourable Prime Minister Joseph Muscat, honourable members of the Cabinet of Malta, local authorities and dignitaries, as well as business and industry leaders.

Prime Minister Joseph Muscat highlighted the significant collaboration between Malta and MSC.

“Thanks to MSC we will see more guests visiting our Islands, wherein 2018, MSC ships will be entering port over 70 times with nearly 300,000 passengers,” he said.

“We are proud to welcome MSC Seaview on her maiden call to Valletta Cruise Port and to be welcoming her on 22 other occasions in our scenic historic port, throughout her inaugural season in the Mediterranean this summer.  It is indeed a pleasure for Valletta Cruise Port to collaborate with MSC Cruises who entered the cruise industry 15 years ago. The company has left an indelible mark on an ever-evolving cruise industry. In the last five years, we have hosted over 880,000 passenger movements in Valletta sailing on MSC vessels. We congratulate MSC Cruises on their achievements and look forward to many more years of fruitful joint cooperation,” commented Valletta Cruise Port’s CEO and Global Ports Holding COO, Stephen Xuereb.

Pierfrancesco Vago, MSC Cruises Executive Chairman added: “Malta has always been important to us and we have been partners for many years. Our first cruise ship to call here was the Melody, back in the late nineties. Today, MSC Seaview, a next-generation cruise ship like no other, featuring some of the best and most innovative maritime and environmental technology at sea, will be calling Malta regularly in 2018”.

He added: “Moreover, MSC Seaview will be our third ship to fly the Maltese flag. And wherever we call, we proudly hoist the Maltese Cross. As such, the Maltese flag also stands for innovation, advanced technology, and maritime excellence. Today, MSC Seaview has for the first time arrived home, in her port of registry and many others ships will follow. All cruise ships that we have on order will also be registered here. In Malta, we have found a home for our new fleet “.

On arrival, the ship and its guests and crew were welcomed with the lively tunes of a traditional village band featuring a number of local favourites, along with international pieces. Prior to departure, guests were treated to a display of local folk dancing by dancers wearing Maltese traditional costumes, courtesy of the Malta Tourism Authority.

MSC Cruises chief warns yields could drop amid mass growth

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MSC Seaview

Cruise line yields could fall in the future due to the volume of new ships entering the market in the next decade, according to the boss of MSC Cruises.

A total of 106 ships are expected to launch between 2017-26, including 12 alone from MSC Cruises. Other mainstream cruise brands such as Royal Caribbean International has six ships on its order books and Norwegian Cruise Line has seven. 48 expedition and luxury ships are also planned.

Asked whether occupancy levels were at risk of falling from so much growth, chief executive Gianni Onorato told delegates at the ITT Conference in Sicily: “No, we are not crazy. But in difficult times it can have an impact on yields more than occupancy. So I think this will be more of an issue than occupancy levels.”

Onorato said the slowdown in cruise bookings last year in the UK was due to a “lack of capacity” in 2017 and said he was very “optimistic” about the British market going forward.

He said the biggest challenge facing cruise lines was future proofing ships which are built to last 20 years.

“Knowing what guests want in 2040 when you’re building them now is very difficult to predict so we need to have a flexible mindset and be able to follow guests’ needs (in terms of technology) but at the same time maintain human contact,” Onorato said.