Royal Caribbean & Silversea : The perfect match?
The ultra luxury cruise market is booming, if it wasn’t there would be no logic in Royal Caribbean’s acquisition of Silversea for $1 billion, even less when it has only acquired 67% of it.
Founded in 1994, by the former co-owners of Sitmar Cruises, to operate in the ultra luxury segment with a fleet of small, all suite ships. Silver Cloud, the first vessel in the fleet, entered service in April 1994 followed by Silver Wind in January 1995. Now made up of a fleet of nine ships, the most recent of which was Silver Muse delivered from Fincantieri in 2017.
Royal Caribbean has paid 14 times EBITDA for Silversea to join a family of cruise brands – Azamara Club Cruises, Celebrity Cruises,namesake Royal Caribbean Cruises and investments in TUI Cruises and Pullmantur Cruises. At $700,000 per berth this acquisition is significantly higher than Genting’s purchase of Crystal Cruises in 2015 which is believed to be around $250,000.
In return for it’s significant investment Royal Caribbean gains an ultra luxury cruise line, tapping into a market that Norwegian and Carnival have occupied through Regent Seven Seas Cruises and Seabourn respectively.
In comparison to Royal Caribbean, Silversea is a totally different kind of cruise line, its largest ship being Silver Spirit with a capacity of just 608. Royal Caribbean’s largest ship Symphony of the Seas has a capacity eleven times higher.
The line has also diversified, acquiring a fleet of expedition ships, which gives Royal Caribbean access to another high growth cruise market, interesting one that competitors, such as Carnival and Norwegian, are currently not in. Royal Caribbean’s Celebrity division operates three Xpedition cruise ships and it would be interesting to see if the Silversea purchases changes the companies direction in this market.
Royal Caribbean has been very vocal about the management staying the same at Silversea and this is no doubt to sooth concerns of the Silversea clientele that Royal Caribbean will be playing with the product.
How do you think the acquisition will work out? Will you be cruising on either line soon?
Thanks & Regards,