Norwegian Cruise Lines Acquires Prestige, Jumps into Luxury Market

September 2, 2014
Kevin Sheehan and Frank Del Rio after Norwegian-Prestige merger

(Update, 4:40 p.m. EDT) -- In an interview with Cruise Critic, Norwegian Cruise Lines CEO and President Kevin Sheehan said that if the merger goes as planned, “the guests will never notice that we've changed.

“If we do this right, the guest will never even know we had the transaction,” he said, noting that there were no plans to change the headcount for ships on either line, the booking experience or the selling strategy.

There aren't any plans to combine loyalty programs, Sheehan said. “I can see advantages to that and disadvantages,” he said. “I want to keep the integrity of the three brands separate and distinct.”

“This is really putting three successful, smart companies together and having more scale,” he said. Norwegian now, for example, will have access to travel agents who are experts at selling luxury cruises, he said, while a loyal Regent customer who wants to take his children and grandchildren on a family cruise may now be exposed toward Norwegian's family-oriented ships and the Haven.

Regent and Oceania have also done a good job with establishing long booking windows, Sheehan said, as well as drawing international clientele to their diverse world-wide itineraries.

Norwegian will eventually adapt a corporate structure that has a head of each brand reporting to Sheehan; current Prestige president Frank Del Rio will stay on through the end of 2015. Norwegian's new build team will take over that process for Prestige, as that company previously used consultants, Sheehan said.

(9:50 a.m. EDT) -- Norwegian Cruise Lines has acquired Prestige Cruises Holdings, parent company of Oceania and Regent Seven Seas Cruises, a move that gives the Miami-based company a firm foothold in the upscale cruise market.

The transaction, which cost Norwegian $3.025 billion, also solidifies NCL's position to a strong number three within the industry, behind competitors Carnival Corp. and Royal Caribbean Cruise Ltd.

Prestige has eight ships; five under the Oceania banner and three flagged Regent Seven Seas, with another build on the way for summer 2016. Norwegian – known for pioneering Freestyle Dining - already had 15 ships, with four more on the way.

Prestige founder, chairman and CEO Frank Del Rio, an industry veteran who used to run Renaissance Cruises, will stay on as chief executive officer. He declined requests for interviews to Norwegian Cruise Line, but released the following in a statement:

“We are excited to become part of the Norwegian family and start a new chapter for our company. With Oceania and Regent, we have built iconic brands with distinctive product offerings and strong customer loyalty. The combination is very compelling and will allow us to further enhance our renowned guest experience. We are looking forward to joining the Norwegian team and building upon the success that our three brands have already achieved.”

In the company's release, Norwegian Cruise Lines CEO Kevin Sheehan commented that the merger would allow NCL to grab customers at “every stage of their life cycle.” “We are fully committed to retaining the brand propositions, guest experiences and cultures of the Norwegian, Oceania and Regent brands that have allowed each to realize such success.”

The merger is the largest in the industry since Carnival Corp. acquired British P & O Princess Cruises in 2003. It's also a smart business move for all three cruise lines, said Cruise Critic Editor in Chief Carolyn Spencer Brown.

“In this business climate for the cruise industry. you have to get stronger,” she said. “This makes three strong brands even stronger.”

In addition, the move catapults Norwegian into the upscale cruising market, she said. “In terms of luxury, Norwegian has The Haven – and that's it,” she said. “Norwegian overnight went from having a very limited share of the luxury market to 46 percent.”

(For more on what defines a luxury cruise, read our guide to luxury cruising).

Norwegian has also lagged within growing markets in Asia and South Pacific, Spencer Brown said. “This will give Norwegian a lot more reach in terms of global aspect.”

On the Cruise Critic message boards, members loyal to Oceania and Regent worried that the acquisition would adversely affect those ships' luxury atmosphere.

“The smartest thing Norwegian could do is to buy them. The second smartest thing Norwegian could do is not change a thing,” said computerworks. “Just don't cut O's (Oceania's) food budget!” said Arusha.

“This could go either way,” said bbwex. “They could buy Prestige to get the upscale market and be smart enough to know that if they mess around with it, they will lose the value of the purchase. Or they could buy Prestige and cheapen it up. We will have to wait and see if the deal goes through, and what the eventual outcome is.”

Meanwhile, Norwegian aficionados wonder if the new mega-line will have reciprocal loyalty or other benefits. “We have been looking at Oceania for awhile now, and if my Lat(itutde) points were recognized, then that might just be the push that we needed!” said member SissaMomE.

--By Chris Gray Faust, Destinations Editor