Royal Caribbean Offloads Luxury Line to Private Equity

There’s an old saying: “the two happiest days in a boat owner’s life: the day you buy the boat, and the day you sell the boat.” The expression applies neatly to this story.

In an effort to stay afloat during turbulent times, Royal Caribbean is jettisoning a full operating subsidiary – yesterday announcing a deal to sell the “Azamara” cruise line to private equity firm Sycamore Partners for $200 million.

Going Down With The Ship

No need to rehash the recent cruise line narrative. The pandemic pain persists and Royal Caribbean is expected to post a $2 billion loss for the latest quarter.

Deal Drivers: Despite the economic pain, Royal Caribbean Finance Chief Jason Liberty told the WSJ the deal “wasn’t driven by financial reasons.” Instead, Liberty said the deal will help prioritize the “minds and time of management.”

• Royal Caribbean also owns the Celebrity Cruises and Silversea brands, which overlap with the high-end Azamara clientele.
• At just 1.5% of total capacity, Azamara operated just three ships. More of a flotilla than a fleet.

Popular Strategy: Last week Carnival said it was on track to sell 19 older ships representing 13% of its total capacity.

Looking Ahead

Unfortunately, it’s still a long ways off until an all-you-can-drink package leads to a tipsy karaoke rendition of “Livin’ on a Prayer.”

All of Royal Caribbean’s U.S. and most of its global sailings are cancelled until at least April 30.
The return of U.S. cruises will hinge on the U.S. Centers for Disease Control and Prevention, which has told operators they’ll need to apply two months in advance before they want to start passenger trips again.