Lisa Bauer on Royal Caribbean Strategy

"Royal Enhancements" puts Royal Caribbean is on a hot streak, and Senior VP Lisa Bauer fills us in on their strategy.

Lisa Bauer is the Senior Vice President, Hotel Operations for Royal Caribbean International. We just had a chance to chat about the new initiative to upgrade the Royal Caribbean fleet called "Royal Advantages." The idea is to incorporate the best new ideas from its current ships into future ships and existing ones as they go into dry dock for upgrades.

The new program, designed to last for the next few years, starts with planned upgrades to four ships, Oasis of the Seas; Freedom, Radiance and Splendour of the Seas and will taken the more ships in the fleet with an ongoing evaluation process. The process of upgrading has been dubbed "Oasistization," referring to using the successful new megaship as a model for what works and should be included in future ships and upgrades to existing ships. But to be clear (although I did not try to correct Lisa), a more accurate term would be Allurization since it is Oasis that will be receiving some of the new ideas already baked into Allure of the Seas.

Here is our conversation.

PM: Lisa - one of the first ships for which Royal Caribbean is now planning upgrades is Radiance of the Seas, a smaller ship built in 2001. We just learned that Royal Caribbean will be building staterooms specifically for singles for the first time with no singles supplement charges.

LB: That's right, we will only have three of them on Radiance, but we like the idea and in fact we are looking for space to add even more singles staterooms on upcoming upgrades to other ships in the fleet.

PM: Does this mean Royal Caribbean is thinking of creating a complete singles program with a dedicated area similar to what NCL did on Norwegian Epic?

LB: Obviously we see singles as a very strong market and yes, I think NCL has done a terrific job with the singles program on Norwegian Epic. As far as our plans go, we are still exploring options, but we are planning to add three singles cabins to Radiance and possibly more to Splendor when it goes into dry dock, but we have not yet determined how many because it is a matter of space availability.

PM: What about for the new ships?

LB: Yes, we are also definitely considering a larger singles program for the new ships.

PM: What else can we expect from the Royal Advantage program?

One primary area that has been receiving a lot of rave reviews from guests - specialty restaurants, both with service charges and included in the cruise fare. We will be adding Sambas, the Brazilian churrascaria that is so popular on Allure of the Seas, to all of the ships. Other restaurants we plan include Rita's Cantina (Mexican), Isume (Japanese) and a cucina similar to Giovanni's Table. We also have found the pubs found in the Royal Promenades on the larger ships to be very popular, so those will be included on all ships as well.

PM: Can I ask about some of the sports deck items? Is rock climbing really that popular or important to Royal Caribbean ships?

LB: Believe it or not, the sports deck activities rate second highest on the list of items for drawing power for our ships. Mainly, we have found them to be a strong and valuable brand identifiers, as in "we want the ship that has the Flo-Rider." Which can only be Royal Caribbean, so, yes, these things will continue.

PM: Where is else is Royal Advantage going?

LB: Entertainment is a big item, especially our affiliation with DreamWorks Animation. So far we only have DreamWorks on Allure of the Seas, but it will be rolled out to the other three ships very soon, on Oasis in February and Freedom in March. For the people who have not yet seen Allure, DreamWorks is going to be a much bigger addition than most people realize. It includes shows in the AquaTheater and Ice Shows as well as 3-D movies, character breakfasts and other character experiences. Best of all these activities are all free of charge.

PM: In addition to the Royal Promenade parades, AquaTheater and Ice Rink shows - are you also going to add DreamWorks production shows?

LB: No, that is not in the cards. We are focusing on Broadway style shows in the main theaters, such as Hairspray on Oasis, Chicago the Musical on Allure and Saturday Night Fever coming to Freedom of the Seas very soon.

We want to have DreamWorks for the people who want it, but we don't want it to dominate the experience of the people who are not interested in it. However, I will say that one thing we have noticed is that when we offer photo opportunities with DreamWorks characters it is mostly the adults who want them.

PM: But do they buy the photos?

LB: Yes!

Another "Royal Advantage" we want to expand is our onboard technology - this is one area where we can offer guest convenience, especially for road warriors who want to stay connected on their vacation, we will have full Wi-Fi available on all of our upgraded ships.

There are other areas for efficiency here; for example the Digital Signage we have on Oasis and Allure will be "rolled back" (meaning "added") to the older ships. These interactive workstations, in all of the main stairways on every floor, will make it possible for people to make show, restaurant and shore excursion reservations without talking to anyone - just a swipe of your cruise card and that's it.

PM: Isn't this similar to what you already offer on your stateroom TVs on Oasis? In truth, I found that system to be a little clumsy, especially with the keyboard.

LB: Yes, we have worked on that system, and using the mouse now makes it a lot more efficient. You shouldn't have any problems. All of these reservations are already available online pre-cruise as well, and we plan to make that system even more complete - including the one-time waiver form for sports activities.

Finally - for families Royal Advantage will also include the nurseries we have on Oasis, going down to age six months. This will be rolled out to the entire fleet soon.

Keep in mind, however, that all of these changes are a continuing work in process. Nothing is completely finalized in Royal Advantage yet. The four ships we plan to upgrade now are still test cases and we remain in a discovery process. Only the changes that resonate with our guests will remain part of the formula going forward.

PM: RCL is obviously doing very well according to your last earnings report, are you taking market share from other companies, or are you finding new customers?

LB: In fact, we are finding new customers mostly in the international market, and what is interesting about that is that we are doing it by offering a consistent brand worldwide. Our ships are all "Royal Caribbean-style" ships no matter where they are deployed and we don't really change our style for all of these these diverse international markets. They like our ships just the way they are. We have ships in South America, Mexico, Europe and Asia but we still conduct our cruises primarily in English and offer the same basic cuisine and entertainment throughout the world. Our formula is translating to other cultures surprisingly well.

PM: Since the Oasis-class is undoubtedly a huge success - why are there no plans to build more?

LB: Well, we did, we built Allure of the Seas. But beyond that, well, they do cost $1.4 billion dollars. Anyway, never say never; we just need to see where these ships are headed in the next few years.

PM: These are huge ships. I sometimes wonder what will happen if the premium pricing that Oasis commands now ever starts to wane as the newness wears off, will it become much harder to maintain these ships in the manner to which they have become accustomed?

LB: Actually, Oasis and Allure are incredibly efficient ships, and as we work on finding new efficiencies, which is now our primary focus, without hurting the customer experience, we feel they will become even more profitable.

PM: Finding new efficiencies - especially reducing fuel consumption per passenger, is a prospect with limitations. Does it mean smaller itineraries in the future?

LB: No, not necessarily. We know that the number one reason people book a specific cruise is "where does it go?" But we are looking for wiggle room. Engines burn more fuel at top speeds, so if we find that only five percent of our guests care about arriving at a certain destination at 7:00 a.m. we might slow down and arrive at 8:00. It makes a big difference, but no, you won't find us slowing down to a crawl just to save fuel.

Anyway, fuel is not the only place to find efficiency although it is an important one. There are also human staffing efficiencies.

We are looking at building materials and practices that enable our staff to accomplish more with less effort. For example, if a room steward can clean a certain surface in far less time they can clean more staterooms per person. Better kitchen practices and equipment allow us to use fewer cooks without reducing the quality of the food. There are better window locks and thermostats to save on air conditioning and new hull paints to reduce drag. It all factors in.

PM: Speaking of human efficiencies, Royal Caribbean has alluded to a whole new class of ship to be announced as new builds very soon. CEO Richard Fain described them as "innovative spirit in an efficient package." Obviously, efficiency comes from more passengers in a smaller space and this is the direction other cruise lines are heading. The last two Solstice-class ships, Silhouette and Reflection, for example, pack more people into a slightly larger space than the first three Solstice-class ships. Are we looking at tighter passenger consolidation on newer ships.

LB: That is the direction things are going, true.

PM: So, where will the new Royal Caribbean ships be deployed? Will they be on shorter itineraries and possibly replace some of the older tonnage?

LB: Honestly, we don't know yet. Such planning is always done on a case by case basis and so we plan to put them where we think they will work best when they arrive. Such decisions are always subject to change and we really have not decided yet. For example, we thought Mariner of the Seas, would be a great ship on the West Coast and it just didn't work out that way.

PM: So, the new ships will have more passengers per square foot. How are you going to maintain the service standards of Royal Caribbean when you have to deal with more people per staff member?

LB: It comes from the spirit of our crewmembers. We have found our crewmembers to be one of our highest rated assets, especially when they do something special for a guest.

PM: Interesting, because I don't necessarily think of Royal Caribbean as being a line known for crewmember interaction in the same way that, say, Carnival is known as "The Fun Ships" with singing waiters and so on. I see Royal Caribbean crewmembers as being known more for efficiency than personality.

LB: You're right. I am referring to more quiet responsiveness to the guest; finding little ways for a crewmember to make each guests experience special; remembering their preferences at dinner or in the stateroom. We get far more comments that single out individual crewmembers as special than anything other kind. We want to enable our staff to offer that special kind of service as much as possible.

PM:'t Mariner work out in California?"

LB: There is no one reason; the redundancy of Mexico itineraries, the bad California economy, violence in Mexico. By all expectations it should have worked out great, but it just didn't.

PM: I agree based on the idea that the sameness of the Mexico itinerary calls for a "shipboard experience" and Mariner was the most amenity filled ship in the region. Logically, it should have worked out well, but the demand just wasn't there.

LB: Well, we could be back there someday, you never know. Things change all the time and that is the beauty of ships - so they are so easily relocated.

PM: Thank you, Lisa, it was a pleasure talking to you.

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