In a move that can be called surprising, Royal Caribbean Group has decided to sell its luxury cruise brand Azamara to the New York-based Sycamore Partners.
Sycamore Partners is a private equity firm based in New York. The firm specializes in consumer, distribution, and retail-related investments. The purchase of the small boutique cruise line has been reported to have cost Sycamore Partners $201 million.
Royal Caribbean Shifts Focus
The sale of Azamara will allow Royal Caribbean to focus on its other brands, Royal Caribbean International, Celebrity Cruises, and Silversea. Richard D. Fain, Chairman and Chief Executive Officer of Royal Caribbean Group, noted:
“Our strategy has evolved into placing more of our resources behind three global brands, Royal Caribbean International, Celebrity Cruises, and Silversea, and working to grow them as we emerge from this unprecedented period; even so, Azamara remains a strong brand with its tremendous potential for growth, and Sycamore’s track record demonstrates that they will be good stewards of what the Azamara team has built over the past 13 years.”
The fact that Royal Caribbean acquired a 67% controlling stake in luxury cruise brand Silversea in June 2018 and took full ownership of Silversea in 2020 has always surprised many in the industry. It meant the company had two competing companies under its management.
In an ever stronger luxury cruise market, the sale of the smaller, 3-ship Azamara will allow RCL to shift focus towards managing just Silversea. With Seabourn Cruise Line, Viking Cruises, Crystal Cruises, Hapag Lloyd, and Regent Seven Seas showing considerable growth over the last few years, the company has to focus on one company alone.
Not only that, with newcomers like the Ritz Carlton yacht collection and Scenic Cruises, more competition is on the way. The older ships of Azamara were just not going to cut that.
Three Nice, But Older Ships
Azamara Club Cruises currently sails with three vessels to destinations including Asia, Europe, the Mediterranean, and South America. The Azamara Journey, Azamara Quest, and Azamara Pursuit all measure around 30,277 gross tons, with a total guest capacity of around 680 passengers.
Each vessel has been built around the year 2000 as part of the building boom operated by Renaissance Cruises, which later went bankrupt. To signify how small the cruise world actually is, the executive vice president for Renaissance at the time of bankruptcy was Frank Del Rio, the current President and CEO of RCL competitor Norwegian Cruise Line Holdings.
Azamara was established by Royal Caribbean in 2007 and was by far the smallest of the companies brands, representing only 1.5% of the company’s total operating income.
Although Royal Caribbean does not expect that the three vessels’ sale will have any material effect on the company, there is a 170 million cash impairment that the company has to take. It is another showing of the effects the pandemic is having on all cruise companies.
Earlier last week, Carnival Corporation announced more ships to be sold, increasing the number to 19 vessels that will be sold or scrapped in total.
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