Royal Caribbean to Buy Majority Stake in Silversea Cruises

June 14, 2018
Silver Spirit Exterior

(Updated 1:17 p.m. EDT) -- Royal Caribbean Cruises Ltd. has agreed to buy a majority 66.7 percent stake in luxury cruise operator Silversea Cruises.

The $1 billion move means Royal Caribbean will tap into the ultra-luxury sector, in line with the two other big cruise conglomerates, Norwegian Cruise Line Holdings and Carnival Corp. & plc. Norwegian, which also oversees Norwegian Cruise Line and Oceania Cruises, bought luxury line Regent Seven Seas Cruises in 2014. Carnival Corp. -- parent company to Carnival Cruise Line, Holland America Line and Princess Cruises, among other brands -- owns luxury line Seabourn.

Silversea also operates four expedition vessels, so the purchase means Royal Caribbean can enter the rapidly-expanding expedition cruise market, as well. In total, Silversea has a fleet of nine ships, with two more due to launch in 2020 and 2021.

"Silversea is a crown jewel and the acknowledged leader in luxury and expedition cruising, two key markets that are poised for growth," said Richard D. Fain, Chairman and CEO of Royal Caribbean Cruises Ltd, on a conference call announcing the purchase. Twenty expedition cruise ships are slated to launch between now and 2021.

"People seek out Silversea because it offers a unique ultra-luxury or expedition-type cruising that they can't get anywhere else," Fain told Cruise Critic in an exclusive interview.

Fain was adamant that Silversea, like the other Royal Caribbean brands, would not change. "Part of the success we've had at Royal Caribbean is that we do operate our brands independently … Our objective is to be at the top end of each of our market segments. Silversea is by far at the top end of its market segment, and that is because of the management team that has gotten it there."

Manfredi Lefebvre, Silversea's executive chairman, will continue to helm the brand. (Lefebvre and Fain also confirmed that Silversea's CEO Roberto Martinoli will continue in his role, working with the existing Silversea management team.) Lefebvre told Cruise Critic during the interview that he expects, through the new partnership and Royal Caribbean's support, that Silversea to continue to grow and reach an even higher standard.

"We still have our own passengers and our own growth, but we have a certain reach which is overlapping with the other brands in Royal Caribbean," said Lefebvre.

Lefebvre added that while Silversea will continue to guarantee the same level of luxury its passengers expect, it will learn from and build upon the other Royal Caribbean brands' breadth of knowledge -- particularly in areas such as innovation.

Fain added: "Each brand does its own thing, and I think that's the right way to do it. When one brand starts to adjust because of another brand in the same company is doing something, we don't get the best out of our management teams."

Royal Caribbean-owned Azamara's chief blogging officer, Bonnie B. MacLaird reiterated on the Cruise Critic forums that the brands would continue to operate on an individual basis. Under the member name BBMacLaird, she said: "This will not impact Azamara. You will continue to receive the same level of service and destination experience that you have come to expect from Azamara."

Added Fain on the conference call: "We wow with the biggest ships in the world for families, such as Symphony of the Seas. And we offered a sophisticated cruising experience, such as Celebrity Edge. And we go to unusual ports with our Azamara brand.

"This purchase gives us a complete and whole rounded spectrum of vacation options. Now we will be able to offer an all-suite, all inclusive, ultra-luxury experience. Ultra-luxury and expedition are gaps in our portfolio. We will be able to build into this market over time with Silversea."

Under the agreement, Royal Caribbean will acquire the equity stake in the line based on an enterprise value (market cap minus debt) of approximately $2 billion.

The deal is expected to be finalized later in the year, subject to customary closing conditions and regulatory approvals.

"One of the things that's most important for both [Royal Caribbean and Silversea] has always been the men and women that work onboard the ships," Fain concluded in the interview. "I think it's that shared value that I would say is the best feature of both of our fleets, and this partnership going forward."

Confused about the cruise company hierarchy? We break it down in our piece on which companies own which cruise lines.

--By Adam Coulter, Managing Editor, UK and Gina Kramer, Editor