Ultra-luxury cruise company Silversea is seeing no sign of any slowdown in demand as its wealthy clientele weather a souring global economy and “revenge travel” continues to drive demand.
The company returned to Australasia during summer with the biggest deployment in its history and its new boss, Barbara Muckermann, says one of the world’s most revolutionary cruise ships will be heading this way. The Silver Nova will be here next year. It has a battery hybrid system and is the first luxury ship to be powered by liquefied natural gas.
In a wide-ranging interview with the Business Herald, Muckermann said that during summer the company had scoped new Antarctic destinations for exploration cruising and she was proud that its ship - one of its “babies” - had passed tough biosecurity rules and had been able to cruise New Zealand waters.
And she welcomes the extra competition from big hotel brands which are now launching boutique cruise ships.
Late last year, Muckeman was appointed president and chief executive of Silversea. She first joined the company in 2001 and has worked there in executive roles for most of the past 22 years.
She also sits on the executive of its owner, Royal Caribbean, the world’s biggest listed cruise company.
Silversea has a 10-strong fleet of smaller classic luxury and expedition vessels, attracting guests who can pay up to $4000 a day. All rooms are served by butlers. Muckermann said the luxury travel market was showing its characteristic resilience in the face of worsening global economic conditions.
“Most of our guests are retired and are more susceptible to changes in the value of their portfolio versus a general economic downturn. They don’t have a mortgage, they’ve already paid for their homes and they already own most of the durable goods they want,” she said.
“So if you have a big crash on the stock market, the retired community feels it but otherwise they’re incredibly resilient, and they’re really out there to travel.”
Demand for round-the-world journeys was strong.
“We’ve got more world voyages and if you want a top suite, you really have to wait until 2025, because everything is booked.”
Prices for a 132-night world cruise start around $120,000 for the all-inclusive journey.
The boom in the high-net-worth market is reinforced by a survey last year by Bain & Company, which showed a 20 per cent increase in spending on luxury goods and experiences.
Another study at the end of last year, by affluent market research specialist Altiant, found 57 per cent of those surveyed planned to spend more this year, with only 10 per cent cutting back. The survey of 1200 high-net-worth individuals from 14 countries found slow travel was on the rise and the wealthy were looking for more memorable trips.
An Auckland travel agent sees a similar pattern among Kiwis. Trish Ryder, director of You Travel Manly, sells ultra-luxury cruise holidays, including Silversea, and says in spite of house prices falling and bad news in the construction sector, there is no sign of big spending slowing.
”It’s a bucket list thing,” she said. “Post-Covid, our sales have really increased on the smaller luxury ships. I think it is the whole thing about being locked down and they’re thinking ‘bugger it, we’re just going to spend it’,” said Ryder.
Kiwis liked the all-inclusive nature of Silversea and they were interested in expedition-style cruising.
Mary Buckley, managing director of Shore Travel, said more people were ticking off their bucket lists after Covid.
“As a result, we are seeing many customers upgrade their travel style. For example, from premium economy to business, or business to first class air travel. In cruising, we are seeing the same. Our large ship cruise traveller is now selecting luxury smaller ship brands such as Silversea.”
Muckermann said passengers were taking longer trips and revenge travel continued to surge, although booking windows were still unpredictable.
She said this region was growing in importance for the company.
“We want the Asia-Pacific region to become our second largest market globally. The average booking length, the interest in expedition, the interest in faraway places really make it an ideal sourcing market for a product like Silversea.”
One impediment when it comes to flying guests in and out is the shortage of premium capacity on aircraft serving Australasia and South America. Most guests flew in business class and airlines are struggling to restore capacity to pre-pandemic levels. “One of the limitations to our growth right now is maybe the lack of front-of-the-cabin seats because a Silversea guest is really not travelling economy.”
The company cruises to more than 900 destinations and during summer had been exploring more places to visit in Antarctica with a research vessel. The aim is to cruise pristine destinations where other companies don’t visit. More destinations were being scoped in French Polynesia and South Africa, and Muckermann said Silversea would do more Arctic cruising around Greenland - which is on her personal bucket list.
“Travelling is in my blood. That’s the most amazing thing about being able to serve this brand. I went to Antarctica in November for the opening of the Silver Endeavor. We (her husband is former Silversea boss Roberto Martinoli) are going back to the Galapagos this year. You can never have enough of the Galapagos.”
Her working life is spent mainly between Monaco and Miami.
Launched in 1994 as the world’s first all-inclusive, ultra-luxury global cruise line, Silversea officially became part of the Royal Caribbean Group in July 2018 when the group bought two-thirds of the cruise line’s shares, subsequently acquiring the remaining shares in July 2020.
It promotes itself as providing one of the most inclusive offerings in ultra-luxury cruising and laying on the trimmings, with butler service in every suite category and complimentary (sustainable) caviar on demand around the clock.
It is now facing competition from massive hotel groups, something Muckermann welcomes as a way of spreading the word about luxury cruising.
During the past two years the Ritz-Carlton has announced a superyacht and Four Seasons has divulged its own move into the small ship market with three yachts worth $2b.
The first 190-passenger ship, its lines reportedly inspired by Aristotle Onassis’s classic Christina O, is due to launch in 2025. Saudi-backed hotel group Aman also has plans for a 200m megayacht with just 50 suites.
“We are facing a pivotal moment for luxury cruising because of the hotel brands entering into our space,” said Muckermann. “I think it will be much easier to explain the incredible value proposition of cruising in general and luxury cruising in particular, to the world.”
There is room for growth for all players.
She said the luxury travel market was worth up to $160b a year, with luxury cruise revenues worth about $6.4b.
“We will benefit from any new entrants because we are the ones that have the largest geographical footprint. We have more ships than anybody else [and] because there is such loyalty in the programme, we will benefit from it.”
Silversea will soon launch the first of its hybrid-power Evolution class, Silver Nova. Muckermann said the ship, scheduled for launch last year, has been built at Meyer Werft in Papenburg, Germany, but would be worth the wait.
She has recently visited the shipyard for the keel laying of its sister ship, Silver Ray, and said the layout of the ship was revolutionary. It is chubbier to accommodate its sustainable power systems and the asymetrical design allows passengers to more easily look out to sea or at the land from a new-style pool deck. As well, its height between some decks was greater, giving a more spacious feel.
“The whole sense of volume that you have on the ship is unprecedented for the brand. This is also allowing us to create new categories of suites which are in the aft part of the ship.”
The 54,000 tonne Silver Nova will be the biggest in the Silversea fleet, capable of carrying 728 guests. By comparison, Royal Caribbean’s Wonder of the Seas, the world’s biggest cruise ship, is 236,000 tonnes and can carry nearly 7000 passengers.
It is estimated the new ship will cost close to $US600m ($1b) to build.
Silver Nova will use hybrid power sources with liquefied natural gas (LNG) as its main fuel, which will be complemented by fuel cells and batteries. It will also use traditional marine fuel.
Emissions per passenger could be 40 per cent lower than earlier classes of vessels. The ship can be emissions-free in port, by using onshore power supplies where they are available. More places are demanding cruise ships quit burning fuel while in port.
Muckemann said sustainability was a key part of the Royal Caribbean strategy and it had committed to being carbon-neutral by 2035.
“That means that we need to figure it out, and that’s where Silversea, as the smaller ships brand, is really an enabler. We’re very privileged to be the guinea pig to trial these new technologies,” she said.
“As an industry, the only thing we can do is experiment, invest in a lot of different technologies to get the right set of combinations.”
The survey of the wealthy by Altiant found consumer sentiment continues to move in a more environmentally-friendly direction and companies are under increasing pressure to play their part.
Just on 45 per cent of wealthy global travellers now say that they are planning to take more sustainable/eco-friendly holidays in the future, the research found. And You Travel Manly’s Ryder said some Kiwis were starting to ask about the environmental credentials of cruises, as they had for some time with airlines.
Muckermann said Silversea had to build its Evolution class with more volume to accommodate different power plants and fuel sources.
‘‘Flexibility is really the objective that you need to make the journey towards being more green. There’s not a magic wand, that’s the reality.”
Rates for hotels have soared in one tourist hotspot while others have suffered.