Making Waves

 

By Stephanie Forshee – San Fernando Valley Business Journal – Monday, August 25, 2014

Valencia offices playing key role in resurgent Cunard Line

At the Helm: Stanley Birge, vice president North American operations, at local headquarters. Photo by Photo by David Sprague

When the Cunard Line heads to Hamburg, Germany, freeway signs across the city read “Cruise in Town” so that tens of thousands of onlookers can head to the Port of Hamburg to catch a glimpse of the regal cruise liners.

It resembles a sight from the 1800s when a Cunard ship made its first transatlantic crossing from Liverpool to Boston, or more recently when the iconic Queen Mary was docked in Long Beach in 1967.

Indeed, after setting sail for its first time almost 175 years ago, a Cunard Line ship can still draw a crowd that can’t be expected for today’s modern ships from liners such as Holland America or even the high-end Crystal Cruises.

“You just don’t get that with other ships,” said Stanley Birge, vice president of North American operations. “The fact that all of these people just want to say they saw these massive ships – that says something about its specialness.”

And here’s a curious fact many don’t know: The legendary cruise line runs much of its operations out of a suburban office building in Valencia, where Birge and his team handle sales, marketing, public relations and revenue management.

Cunard opened offices next door to sister company Princess Cruises in 2004 after moving its headquarters from Miami – all part of an effort to revive the classic ocean line by parent company Carnival Corp. & plc., the world’s largest cruise operator.

The initiative has been two-pronged. Carnival has invested more than $2 billion on three new ultra luxury ships over the past decade that still make the only routine transatlantic crossings from New York to England.

But Carnival also has updated the Cunard experience, offering other popular destinations such as Australia, Central America, Hawaii, the Middle East, the Caribbean and the Mediterranean. And while legends like Judy Garland, Winston Churchill and Noel Coward have sailed with Cunard on its epic transatlantic crossings, this summer the Queen Mary 2, the first of the new fleet to launch in 2004, welcomed more modern entertainers such as Wes Anderson, Tilda Swinton, George Takei and James Taylor.

Carnival does not breakdown its financials for individual lines, but maintains the line is making money.

Jaime Katz, equity analyst with Morningstar Inc. in Chicago, said that without financial details the best he can tell is that the line seems to be attracting customers.

“With business catering to the high-end consumer rather than the Carnival brand, which is more middle- to low-end, the demand has remained fairly consistent,” she said. “I can’t recall management calling out the brand as problematic in any recent periods, and the brand awareness seems good and positive.”

Royal ships

As is expected for such an old company, Cunard boasts a storied past.

The cruise liner originally set sail in 1839 delivering Royal Mail shipments primarily from the United States and Canada. It carried its first passengers the next year on the Britannia, and it went on to operate many famous ships, such as the Persia, Caledonia and the Carpathia, which came to aid in the rescue of travelers aboard the sinking RMS Titanic.

Cunard’s vessels have even served to carry troops and cargo. Among its most iconic ships was the Lusitania, which was lost during World War I, along with 21 other vessels.

The 1920s and 1930s were the heyday for Cunard’s transatlantic travel when the company’s slogan, “Getting there is half the fun,” became a household phrase. The prestige of Cunard continued until about 1959 when the first jet crossed the Atlantic. From there, the battle for travelers continued between cruise lines and airplanes, with jets ultimately winning out.

Cruise expert Stewart Chiron, founder of CruiseGuy.com, said that Cunard had been troubled for at least a decade prior to Carnival’s takeover.

“Other than having Queen Elizabeth 2, they had nothing else to hold onto. There was nothing glamorous about the line other than the one ship, which was in need of restoration,” he said. “Carnival Corp. essentially resurrected the world’s oldest cruise line from a deep coma and restored it to glory.”

Carnival bought the cruise line in 1998 and originally merged it with Seabourn in Miami. Then six years later, Cunard moved to Valencia to join sister company Princess Cruises, which assumed operational control of Cunard until it became independently operated in 2007.

Carnival invested heavily to renew the Cunard legacy by modernizing the brand. Carnival made waves 10 years ago with the Queen Mary 2, which at the time was the biggest and most expensive ship ever built at $800 million. Three years later, the cruise line giant added the 2,000 passenger Queen Elizabeth, a $630 million ship, and the $650 million Queen Victoria went into service in 2010.

Cunard has retained the aura of glamour in part by maintaining high prices for first-class travel. For example, fares for the eight-day transatlantic cruise with James Taylor top $23,000 for the Queen’s Suites on the Queen Mary 2. By comparison, the company’s 175th anniversary cruises next year are priced with fares starting at $2,699 for 10 days aboard Queen Mary 2 and $4,599 for a 16-day cruise on the Queen Elizabeth.

Carnival spokesman Roger Frizzell said Cunard has played a pivotal role in the company’s corporate goals to provide a positive financial return to investors.

“Our Cunard line is a hallmark in our fleet, especially given its important history in maritime and the vital role it plays today with ships such as the Queen Mary 2,” he said. “We are extremely proud of the accomplishments of our Cunard brand.”

Culture on board

Cunard’s headquarters have moved several times since its founding in Liverpool. It moved to New York in the 1960s and Miami in the 1990s. It eventually returned to its British heritage in 2004 when it moved to Southampton, U.K., where Carnival maintains its dual headquarters along with Miami.

Cunard’s U.S. operations occupy space in three buildings near the Valencia Town Center mall and employ about 100 people. The cruise line also has operations in Germany, Australia and Japan.

The Valencia office handles all marketing duties, including maintaining its long-running relationship with the British royal family. In the last century, three queens christened Cunard ships, and in 2010 Queen Elizabeth II christened the Queen Elizabeth ship in Southampton.

Much of the marketing has revolved around how to make the cruise line attractive to the next generation. Birge acknowledged that most passengers skew toward the older side, but the line is targeting affluent travelers of all nationalities and ages with interests in arts and cultural activities.

While the Queen Mary 2¸ for example, offers a de rigueur spa, there is also a planetarium aboard the ship and a series of royal balls – including one masquerade – with performances by a 12-piece orchestra. The Royal Court Theatre presents West End-style musical revues.

“We have to hire a certain caliber of talent designed for the most discerning guests that often travel with Cunard,” said Birge.

Guests can also attend the Cunard Insights series, which hosts guest speakers such as astronauts, socialites and celebrities. Kim Novak headlined a cruise on the Queen Mary 2 that sailed from New York to London last month.

Queen Mary 2 passengers were invited to screen two of the Hollywood actress’ most famous films, “Vertigo” and “Bell, Book and Candle.” Then in a third event, Novak participated in a Q&A session about her career that made her one of the most famous faces in the 1950s and 1960s.

“Those are two of my favorite films I ever did,” Novak told the Business Journal. “It was so nice to answer questions from people who appreciated the films. I’ve been away from Hollywood a long time, so it was such fun to reminisce.”

Novak, 81, had previously only been on one other cruise in the late 1950s when she traveled to the Cannes International Film Festival in France. Now Novak has plans to travel on the Queen Elizabeth for a cruise to New Zealand in February, which offers literary discussions, watercolor lessons, dancing and gambling.

“I had so much fun,” Novak said. “It’s so elegant.”

Transatlantic business

Cunard has added prestige to Carnival’s massive lineup of cruise lines, which includes Carnival Cruise, Holland America, Seabourn, Aida, Costa Cruises, Ibero Cruceros and P&O Cruises. It also has provided another brand name for the company after the Costa Concordia, a Carnival ship, ran aground and foundered off the coast of Italy in 2012.

Still, Chiron, of CruiseGuy.com, pointed out that many competitors are adding new ships that are just as large and expensive as the Queen Mary 2. So that isn’t what will continue to drive Cunard, which he said competes with brands like Crystal Cruises and even Princess Cruises and Holland America to an extent.

“Cunard is still a brand that people aspire toward,” Chiron said. “There are a lot of people that say transatlantic crossings are something they want to at least try once. Cruising is doing very well in general because the people who swore they’d never try a cruise are trying it.”

Earlier this month, Cunard announced a multi-million dollar refit to the seven-year-old Queen Victoria, which will take place at the Blohm & Voss Shipyard GmbH in Hamburg, Germany. The renovations, identical to those just completed on the Queen Elizabeth, will add single staterooms to the ship.

Birge said the 175th anniversary will hold much more news, and it is possible the line could eventually add more ships to its fleet in the future if revenue grows as expected.

“It takes increased revenue to build new ships, so we are certainly hoping for the best based on the growth we’ve seen,” he said.

Through the Centuries

1839 The Cunard Line, or the North American Steam Packet Co., was established by Samuel Cunard to carry Royal Mail to the U.S. and Canada.

1840 Britannia, Acadia, Caledonia and Columbia enter service to carry passengers.

1917 Cunard opens Liverpool headquarters.

1938 Queen Elizabeth, the then largest cruise liner, is launched by Queen Elizabeth II.

1959 The first passenger jet crosses the Atlantic. More people begin to cross the ocean by air than sea.

1967 Queen Elizabeth 2 is launched by Queen Elizabeth II. Cunard relocates its global headquarters to New York City after being based in England for more than 50 years.

1996 Norwegian conglomerate Kvaerner acquires Cunard’s parent company, Trafalgar House, for 904 million pounds, the second major ownership change in its history.

1997 Cunard relocates its global headquarters to Miami.

1998 Carnival Corp. acquires Cunard for $500 million and merges the company with Seabourn Cruise Line.

2001 Cunard has its own management structure established separate from Seabourn in Miami offices.

2004 Sister company Princess Cruises takes over operational control of Cunard. Cunard opens Valencia offices.

2007 Cunard begins operating independently of Princess. Queen Victoria goes into service.

2010 Queen Elizabeth II christens the new Queen Elizabeth in Southampton.

Queen Mary 2

Launched: 2004

Cost: $800 million

Size: 151,400 tons (1,132 feet long, 203 feet tall and

134 feet wide)

Capacity: 2,620 guests and 1,250 crew

Queen Victoria

Launched: 2007

Cost: $650 million

Size: 90,000 tons (965 feet long, 180 feet tall and 105 feet wide)

Capacity: 2,000 guests and 1,000 crew

Queen Elizabeth

Launched: 2010

Cost: $630 million

Size: 90,900 tons (965 feet long, 187 feet tall and 105 feet wide)

Capacity: 2,100 guests and 1,000 crew

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