Carnival in Talks on Possible Sale of Seabourn Brand

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Carnival Corporation is in talks with a Saudi investment fund to sell its ultra-luxury cruise brand Seabourn. That same investment fund, the Saudi sovereign wealth fund, already has a stake of 5.1% in Carnival Corporation, which it purchased during the height of the pandemic. 

There had been rumors that Carnival Corporation would be looking at selling its smallest brand last year together with Cunard.

However, those rumors were quickly denied by Carnival Corporation. The news comes just a week after Carnival went to the debt market to raise $1b at a 10% yield, which would tie into the sale of the seven Seabourn Cruise ships. 

Carnival looking To Offload Seabourn

A report from CNBC Global Markets Reporter Seema Mody broke late yesterday stating that Carnival Corporation, the biggest cruise company worldwide, is looking to offload its ultra-luxury cruise brand Seabourn Cruise Line.

The reported buyer for the cruise line would be the Public Investment Fund, or Saudi Sovereign wealth fund, a public investment fund that purchased a 5.1% share in Carnival Corporation in 2020. The reports do not come as a surprise. Last year Cruise Hive reported that Carnival had been looking to sell Seabourn Cruise Line and Cunard. 

Although the corporation quickly dismissed those rumors, the current situation seems to be very realistic. The talks to sell Seabourn comes less than a week after Carnival raised over $1 billion in the debt market at a yield of 10%.

With Carnival Corporation losing nearly 40% of its stock value in the last three months, CEO Arnold Donald wants to inject some much-needed cash into the company.

While Carnival Corporation said it would not react to speculation and rumors, the Saudi investment fund did not respond. However, buying the luxury cruise line would fit into the country’s drive to modernize its economy as it moves away from fossil fuels.

It would also give it a foothold in the cruise industry, where Saudi Arabia has increased interest in the last couple of years. 

The price tag for Seabourn Cruise Line is unknown at this time. The company operates six ships, with the seventh on the way. 

Seabourn Cruise Line and Carnival Corporation

Luxury cruise operator Seabourn has been a part of Carnival Corporation since 1991 when the company purchased a 25% stake. Through the ’90s, Carnival Corp. steadily increased its share to full ownership in 2001. Over the years, Seabourn built a name for itself as the best cruise line globally. 

Since the company moved to Seattle and the daily operations turned over to Holland America Line, Seabourn Cruise Line is becoming a mere shell of its former self.

Seabourn Ovation Cruise Ship
Photo Courtesy: Seabourn

Seabourn has always prided itself on the quality of the team, both onboard and ashore. But corporate changes, especially oversight from Holland America and Princess Cruises, have seen many of its most valued people leaving Seabourn. 

As Eric Goldring, a long-term Seabourn travel agent, states“Almost all of the longtime Executives and many of the top hotel staff have left Seabourn; mostly for other cruise lines. The consistent issue expressed is the corporate culture and the failure to treat them as valued and knowledgeable humans. The failure to retain those who are most committed to, and familiar with, a brand is not a sign of stability or focus on the future.”

Those in charge of protecting the company’s culture and values, such as the current Windstar President and former VP for Seabourn Christopher Prelog and former corporate Hotel Manager Guenter Steinbrunner, now the Corporate Hotel General Manager at Windstar Cruises, and many more have all left Seabourn in recent years. 

What Does The Future Hold For Seabourn?

Although Seabourn has two new expedition ships on the way, no investments into new luxury ships have been announced, which brings the news that Carnival Corporation might sell the cruise line in a new light. 

If Seabourn Cruise Line wants to compete with companies such as Regent Seven Seas and Silverseas, significant investments need to be made into new ships. 

Seabourn Odyssey in Caribbean
Photo Courtesy: Seabourn

The current three Odyssey-class ships, Quest, Sojourn, and Odyssey, are already showing their age at 11, 12, and 13 years old, and Seabourn Ovation and Seabourn Encore are overshadowed by ships such as the $450 million Regent Seven Seas Explorer.

As it stands now, Carnival Corporation cannot compete with the hundreds of millions of $ that Norwegian Cruise Line Holdings is investing in Regent, and Royal Caribbean is investing in Silverseas.

“What it means is that I believe Seabourn is for sale and that nothing could be better for the brand than it being sold. I stated my real concerns back when Seabourn was merged with Holland America and pretty much every concern I had has come to pass. And when the two of them were merged with Princess, it became clear that the focus was not on “product” but “profit”. And when the “profit” wasn’t forthcoming…here we are,” Goldring continues.

Perhaps the ultra-rich Public Investment Fund, the largest sovereign wealth fund in the world with total estimated assets of $600 billion, will be able to bring Seabourn back to its place in the industry, that of the best cruise line in the world. If so, a move away from Carnival Corporation could be the best thing for Seabourn in the last decade. 

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