As Royal Caribbean International gears up for the launch of the first of its 10 ships on order, president and chief executive Michael Bayley meets Sophie Griffiths to talk gratuities, staff bonuses and going digital.
The prospect of a significant increase in capacity over the next five years would understandably fill most company bosses with apprehension. Especially when that company is Royal Caribbean International and the capacity stems from an order book comprising two 6,000-passenger Oasis-class ships, two 4,000-passenger Quantum-class ships and two 5,000-passenger Icon-class ships – and that’s just for the first six years. But the line’s president and chief executive, Michael Bayley, is looking remarkably relaxed.
This could be because when we meet it is the day of the line’s first land consumer experience, called Symphony of the Senses, designed to showcase some of Royal Caribbean’s onboard experiences to new-to-cruisers – something that clearly appealed to customers, as all 300 free tickets were snapped up within 10 hours.
Bayley’s upbeat demeanour could also be something to do with the fact that two weeks ago parent company Royal Caribbean Cruises Ltd posted record profits, so much so that chairman Richard Fain decided to award all 73,270 employees with a staff bonus in the form of shares in the US-listed company over the next three years.
It’s a move which Bayley is clearly proud of. “It’s for every employee in every location in every part of the ship,” he explains. “From the entry-level crew members to the cooks and the cleaners. It’s everyone up to the corporate office officers [who are excluded].” He’s not shy about revealing how much the move will cost the line – around $80 million. But Bayley says it is the staff, and the service they provide, which make a Royal Caribbean cruise “exceptional”.
“We offer really wonderful vacations and we try our absolute best to deliver these holidays. Part of this is driven by the service provided and the reward received”
And this is why he admits to struggling with the pushback in some markets against having to pay onboard gratuities – especially in light of last month’s decision by Royal Caribbean and sister line Celebrity Cruises to increase their gratuities by 7%. I ask how the move has gone down in the UK market. “This question is with us forever,” he sighs. “We offer really wonderful vacations and we try our absolute best to deliver these incredible holidays. Part of this is driven by the service provided and the reward received… If you don’t like it then go somewhere else.
“If you go to other countries to vacation then you experience a different culture... It’s the same with cruise ships – they have a different culture to what some customers may be used to.”
It is paramount of course, that Royal keeps its staff happy so they continue to deliver such “incredible holidays”, especially given that both repeat and new customers will be key to filling the vast capacity coming into the market over the next decade.
And it is equally important that Royal is effective in attracting the much coveted new-to-cruise customers. Symphony of the Senses is designed to do just that, offering would-be cruisers the chance to experience the upcoming Symphony of the Seas’ onboard activities.
Mirroring features that will be onboard the 6,870-passenger Symphony when it launches in April, the event, which took place in London last week, saw guests journey from room-to-room – including running through LED-lit tunnels reminiscent of the line’s Ultimate Abyss slide.
Targeted at new-to-cruise and millennial customers, Bayley explains the move is part of a wider strategy to attract customers who are new to Royal. “We’re talking more about it as a holiday option [rather than a cruise],” he says. And it’s a move which seems to be working – when the newly refurbished Mariner of the Seas sets sail again in June, the line is anticipating that more than 40% of passengers will be new-to-cruise. In fact, Bayley says Royal Caribbean is seeing a “shift in new-to-cruise coming to the business” across the fleet.
“About three years ago we saw that number increase, and it’s been steady since then,” he says.
The reason, Bayley explains, is a change in how Royal approaches its marketing. “In the last three years we’ve shifted from traditional to digital channels – 70% of our total marketing budget is digital in the UK.”
Royal’s focus on digital is not just limited to its marketing. The company has also invested “hundreds of millions of dollars into the Excalibur programme” – a new app, which is designed to simplify customer experiences, both prior to boarding and once they’re on the ship. “We want to convert the customer guest experience into a digital universe,” Bayley says. “Customers will board the ship and the technology will recognise their face and their phone in their pocket. They’ll be able to arrange their entire schedule on their phone.”
Guests will be given a flavour of the new technology next month, Bayley says, with facial recognition debuting on Symphony of the Seas. “Everything is going online,” he adds. “When we complete the Excalibur programme by the end of 2018, 50% of RCCL ships will be transformed.”
“In the last three years we’ve shifted from traditional to digital channels – 70% of our total marketing budget is digital in the UK”
I ask if the move is in response to Medallion, the wearable onboard technology introduced by rival Carnival Corp last year. Bayley smiles in response, saying only: “If we want to remain relevant to customers of today and the future then you have to move the entire business to the platform that customers feel comfortable with. Any business needs to be at the forefront of that.”
But is there a danger Royal could risk alienating older clients?
“We’re mindful of the older generation”, Bayley insists. “And they don’t have to do the facial recognition if they don’t want to. They can be as digital as their hearts desire, and for those that don’t want to even pick up a device, well that’s fine too.”
With Royal’s move to pre-booking onboard experiences, I ask Bayley whether the line might ever consider following Thomas Cook in allowing customers to pre-book sunbeds. He chuckles. “We’d always look at these ideas but the Royal ships are awfully big, and they’ve got an awful lot of things to do. I can see such a scheme working on more traditional ships perhaps, but it’s not something that’s right for us.”
Something else which Bayley insists isn’t right for Royal is a move to all-inclusive sailings. With Norwegian Cruise Line claiming the move has proved popular in its European markets, I question whether Royal might consider a similar move. Bayley won’t comment on NCL, but he acknowledges: “We’re always watching and monitoring what our competitors do.
“I would say though that our proposition is truly exceptional.” So is that a no then? “I don’t think we would look at all-inclusive,” he smiles, and adds: “Also, it can be a false economy – by bundling everything together, you take away the choice of options that people like to have.”
And certainly in the UK at least, it seems Royal is performing strongly enough as it is. Bayley says Harmony of the Seas, which launched last year, was the best booked shop prior to its launch – and Symphony of the Seas has now surpassed this, with the UK the number two market after the US.
“The UK is performing really well, and Independence of the Seas [which relaunches in May after its refurbishment] is also doing great,” Bayley says, adding that some 1,500 agents will be invited onboard during its relaunch in May.
And despite the uncertainty surrounding Brexit, and its impact on currency, Bayley insists he is upbeat about Royal’s future in the UK. “The UK is key” he concludes. “Aside from the political and commercial concerns of Brexit, we will always maintain a long-term approach to the UK.”