Changing of the guard

The new guard: new challenges

FORT LAUDERDALE — When Frank Del Rio, CEO of Norwegian Cruise Line Holdings, walked off the stage after the state of industry panel at Seatrade Cruise Global, it marked the end — and the beginning — of an era.

When next year’s Seatrade panel convenes, two of the four CEOs at the helm of the world’s biggest cruise companies will have been in those roles less than two years, and a third will have been in charge a little more than two years. And while travel industry insiders say the departures of their predecessors will have a profound impact on the industry, they, along with the departing leaders themselves, look forward to the fresh ideas and perspectives their younger successors will bring. 

Richard Fain, Royal Caribbean Group’s CEO of 33 years, said before leaving in late 2021 that he hoped his successor would take the company in a different direction, “because we think one of our success factors has been that we always change.” Carnival Corp.’s former CEO, Arnold Donald, similarly said of his departure last year, “I think it’s important to get the next generation in.”

Alex Sharpe, CEO of Signature Travel Network, said that while it’s sad to see people go who helped build the industry, “the guys who are coming up behind them are lifers as well. There’s no new kids there. They’ve all paid their dues.”

Each new CEO has a deep history with their company and spent large swaths of their careers behind the scenes. But they are also Gen Xers and bring a younger perspective to the industry.

Jason Liberty, 47, took the top job at Royal Caribbean Group in early 2022 after having served in a variety of roles at the company since 2005, most recently as executive vice president and CFO. As CFO, he was the architect of the company’s purchase of Silversea Cruises and its joint venture ownership of German brands TUI and Hapag-Lloyd. 

Josh Weinstein, 49, who took the helm at Carnival Corp. last August, began as an in-house attorney for the company in 2002. He has since served as its treasurer and chief operations officer, and president of Carnival UK. 

Harry Sommer, 55, will become CEO of Norwegian Cruise Line Holdings in July. Sommer, CEO of Norwegian Cruise Line since January 2020, has spent more than 30 years in the cruise industry, most of them alongside Del Rio. Sommer worked under him in revenue management and marketing at the now-defunct Renaissance Cruises in 1993. He took a break to co-found a high-end travel agency specializing in cruises, before joining Del Rio again at Prestige Cruise Holdings and then Norwegian, where he worked in everything from sales and marketing to revenue management and itinerary development.

Christian Sauleau, a former executive vice president of operations for luxury brands including Silversea, Crystal and Regent, said he’s not concerned with the backgrounds of these new CEOs.

“It doesn’t matter if he’s a financial guy, if he’s a marketing guy, an operations guy,” he said. “The important part is good leadership.”

Other industry insiders say that while the previous cruise line leaders had reputations as risk-takers, today’s CEOs have to be more palatable to investors and Wall Street. And these newbies all have backgrounds that prepare them to manage the massive debt their companies took on to survive the pandemic shutdown. 

Mike Estill, COO of the Western Association of Travel Agencies, thinks that will serve the industry well. 

“You don’t win Super Bowls with older quarterbacks,” he said.

Whittling down the debt

Their opponent is formidable, and the stakes are high for this new generation of leadership. The world’s three largest cruise companies have amassed nearly $70 billion in long-term debt between them, almost triple what they carried at the end of 2019. Just one of the three companies, Royal Caribbean, under Liberty, has reported a quarterly profit since the pandemic.

“There’s a daunting task in front of all of them,” said Sharpe. “Unprecedented demand right now, but also incredible scrutiny from Wall Street.” The new CEOs have to figure out not only how to make money again, but be more profitable than they used to be to pay down that debt, he said. 

And the lines have to balance those needs while keeping their guests satisfied, said Michelle Fee, CEO and founder of Cruise Planners. 

“People have an expectation when they step onboard a cruise ship to have exceptional cuisine, amazing entertainment, all while the ships are new and bright and wonderful and cutting edge [with] bells and whistles,” she said. “There’s a cost to all of that.”

The pandemic forced cruising into a new reality, and it makes sense that it has leadership with new perspective, said Vicki Freed, Royal Caribbean International’s senior vice president of sales, trade support and service. Even with its yields and load factors up, she said, the industry at large has never experienced having the massive debt it needs to pay down. 

“Whether they have different [skills] than the previous generation or previous leaders is not as important as the fact that they have to adapt to a different financial model,” Freed said. 

Freed noted that all three of the new executives have faced prior challenges: the drop in travel after 9/11, bumps in the economy and norovirus issues. But never anything like the pause in operations during the pandemic. 

“This is a new challenge, and I think these guys have the smarts, the experience, the knowledge to be able to figure it out,” she said. “And they are figuring it out, which is exciting. I mean, it’s the road to recovery. It’s a fun road to be on.”

Pierfrancesco Vago, executive chairman of MSC Cruises, is the only head of the Big Four cruise companies to not leave his leadership position since the pandemic. And at 61, he looks forward to collaborating with his youthful peers. 

“I’m very happy that there is a new leadership, young leadership, because they actually understand exactly not only all the challenges that we’ve been through but the future challenges, and obviously we are talking a lot about sustainability,” he said. “This is our next task.”

Working on sustainability

Sustainability is one area where all four leaders seem to agree they have to collaborate, especially when it comes to compelling the mass production of biofuels to help CLIA reach its goal of net-zero carbon cruising by 2050. 

“The ability for us to find solutions to truly existential issues that face the industry is something that will benefit all of us if we are working collaboratively,” said Weinstein. 

Liberty agreed, saying that while he is “super competitive,” something the cruise lines don’t compete on is transforming their energy platform. How they collaborate is to be determined. 

“We have to perform while we transform,” he said. 

Sommer’s perspective is that the other cruise lines aren’t his main competition. Speaking at a media breakfast at Seatrade Cruise Global last month, he said his soon-to-be fellow CEOs are smart and passionate people who will do a great job. But he doesn’t view them as competitors, given that cruising makes up what he estimates is 2% of the total travel segment, and instead sees his competition as hotels and resorts. 

Liberty also said that he believes his peers are also focusing on closing the gap with land-based vacations while “delivering the best vacations in the world.”

“I’ve written every strategy for this company since 2009, so I’m somebody who is very strategic,” Liberty said. Self-described as data-driven and good with setting priorities, he added, “I’m very much at the core a dreamer and innovator and wanting to continue to evolve the vacation experience for our guests.” 

Whatever they are facing, Weinstein said that he and his peers will provide a boost of energy for the industry. 

“Any time you get change at the top, there’s going to be a sense of opportunity and possibility,” he said. 

Liberty, Sommer and Weinstein all say they are committed to the trade and call its contributions invaluable to their cruise lines. But their tenures begin with a jolt of direct bookings since the pandemic that shows no signs of stopping, as more people are comfortable making purchases online and travel agencies rebuild their bases. 

Weinstein said that while he’s “not going to pretend” Carnival doesn’t have direct business, he said Carnival “will only be successful if all of our sales channels are successful.”