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Italian cruise line takes on the Big 2
BY AMY MARTINEZ
November 21, 2005

After a decade of consolidation, the cruise ship business looks a lot like a duopoly, with Carnival Corp. and Royal Caribbean controlling 76 percent of the North American cruising market.

But that's not stopping an Italian line, backed by deep pockets, from taking them on.

MSC Cruises of Naples, Italy, a privately-owned component of the Mediterranean Shipping Co., last week proclaimed itself the world's fastest-growing cruise line.

It did so after putting two more ships on order for $1.2 billion, bringing its total under construction to four. By 2009, its fleet will increase to 11 ships, all but three less than a decade old.

MSC remains a relative unknown in North America even as it has become a fixture of the European cruising market. For the past six years, MSC has set sail from just one North American location -- Port Everglades -- and only then for several months of the year.

But MSC says it's negotiating with ports in the Northeast and will soon announce plans for year-round sailings, possibly from New York or New Jersey. It also expects to add a third ship to its North American fleet. The Musica, now under construction, is set to arrive in Port Everglades at the end of 2006, joining the Lirica and Opera.

''Everyone in Italy knows who MSC is,'' said Richard Sasso, a 33-year industry veteran who took the helm of MSC's Fort Lauderdale-based marketing arm in April 2004. ``Now, we're going to do that in North America.''

Sasso said his goal as president and chief executive of MSC Cruises USA is two-fold -- to make MSC's ships more attractive to North American passengers and to build relations with travel agents, who despite the advent of booking over the Internet, still deliver nine of every 10 passengers to the cruise lines.

Sasso, 56, said he often spends three days a week meeting with travel agents. ''They know me and trust me, and they need to know more about MSC, so who better to tell them than me?'' he said.

MSC ingratiates itself with travel agents by prohibiting passengers from booking cruises on its website. Also, MSC pays commissions up to 16 percent of ticket prices. That's typical of cruise lines, but what's not so typical is that MSC includes fees and taxes in the pricing, significantly boosting payouts.

''MSC is very financially stable, but because some travel agents have no clue who they are, there's a reluctance to sell them,'' said Sylvia Berman, president of Post Haste Travel in Hollywood. ``So MSC is providing a higher commission rate as an incentive, and then they're paying travel agents promptly to give them that comfort level.

''I think they're doing all the right things,'' Berman said.

MSC seeks to distinguish itself among cruisers as an Italian-owned line. It hires Italian chefs and Italian waiters, a draw for those who like Italian cuisine served up with Italian accents. But Sasso, a third-generation Italian American from Long Island, said it was clear MSC also needed to Americanize its ships.

Shortly after joining MSC, Sasso made the dining rooms off limits to smokers and put omelets and bagels on the breakfast menu. He instructed crew members to be more chatty with passengers and implemented a program to teach them English.

''You can have a steak and potato every night for dinner,'' he said. ``But you can also have a different risotto every night.''

Feedback on MSC has been positive, said Marvin Davis, president and CEO of Coral Springs-based Cruise Planners, which handles marketing and advertising for about 600 travel agents.

''Each line has its own personality, and of course, they're Italian, so they have a continental flare,'' Davis said. ``It's like taking a European cruise, only here.''

Sasso's involvement in the cruise industry dates back to 1972, when he was sales manager for Costa Cruises. He helped start Celebrity Cruises in 1988 and rose to president and chief executive officer in 1995. Royal Caribbean, which bought Celebrity two years later, eliminated Sasso's position in 2002 after combining the two companies under a single president.

Sasso was thinking of starting his own cruise line when Pierfrancesco Vago, CEO of MSC Cruises, flew to Miami and took him to dinner in March 2004. Sasso and Vago finalized a deal two weeks later at Mediterranean Shipping's headquarters in Geneva, Switzerland.

Sasso has since recruited former colleagues from Celebrity to help him run MSC's Fort Lauderdale office, which now has 50 employees. Under Sasso, MSC took up temporary digs for about nine months before settling into its permanent address near Cypress Creek Road and Interstate 95.

MSC plans to introduce a new advertising campaign next year featuring the Italian actress Sophia Loren.

The Miami Herald

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Very good to see a cruise line supporting TAs!

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Who would have guessed that MSC would join the big boys? I might have expected to see more of the Carnival brands or even NCL join the mega-ship game, but I would not have put my money on MSC. This is very exciting news. The more challenges we have to the 'big two', the better for everyone, as far as I’m concerned.

I hope it won't be too much, so the company can keep its own character, instead of a homogenized sanitized blend.

MSC has lots of reserves, as it is one of thebiggest shipping companies in the world.

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Malcolm wrote:
...MSC are not so much 'supporting' the Travel Agents, they NEED them on their side to support MSC.

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Agreed.

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MSC ingratiates itself with travel agents by prohibiting passengers from booking cruises on its website.

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Is MSC the only major cruise line to do this?

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Originally posted by Johan:
I hope it won't be too much, so the company can keep its own character, instead of a homogenized sanitized blend.

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With all due respect to our American friends, the American cruising public can be very demanding in terms of what they like and what they don’t. If a cruise line gets the number of ice cubes in a drink wrong and undercooks the bacon (by American standards) those could be a major gripe for the American passengers . (Personally ice cubes and how bacon is cooked is almost irrelevant to my overall cruise experience).

Cunard for example, who are very popular with Americans, provides a very Anglo-American experience and not a pure British experience.

I would imagine the American customers will demand American dishes such as ‘Shrimp’ and ‘Prime Rib’ and will expect Broadway type shows etc. Surely, this can only dilute the Italian experience?

[ 11-22-2005: Message edited by: Malcolm @ cruisepage ]

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Originally posted by BR BOB:
[...] Serving coffee with dessert (instead of the European style of leaving the dining room and getting coffee elsewhere on the ship) [...]

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Whatever 'European style' is - there are quite some dramatic differences between European countries!!!!!! - but 'usually' you get coffee after the dessert / cheese - preferably with some small petit fours. Having coffee somewhere else is actually very, very unusual - if you go somewhere after dinner then to a bar to have a cocktail. (be aware that in some European countries dinner is not that rushed but an undertaking of several hours)

[ 11-22-2005: Message edited by: Ernst ]

Also, MSC pays commissions up to 16 percent of ticket prices.

...but not so good news for us.

I am a little worried that they may be overdoing it. The prices for a Suite on the Med. cruises for 2006 have gone up 35% (Swiss Franc Prices)....and that is heavy.

The big plus MSC had was "reasonable" prices against Costa and the others. By hiking prices that much they are now on paar or above Costa.....and even way above the Carnivals and NCL`s coming to Europe in 2006!!

I was hoping that bigger ships with more capacity would bring prices on par with the US. Unfortunately it seems the opposite is happening....

Pity, I enjoyed the MSC Italien experience and they certainly had something going. But......how much $$$`s is it worth??

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Originally posted by Sailor:
I was hoping that bigger ships with more capacity would bring prices on par with the US. Unfortunately it seems the opposite is happening....

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When MSC cruise North American waters they wil HAVE to compete with all the other lines. They will only be able to charge a premium fare if they offer a premium product like Cunard or Celebrity etc.

MSC is a very LARGE company in Europe, Only Mediterranean Shipping Cruises got its start in the shipping business where it is one of the Largest Container shipping companies in the world with 270 container ships operating around the Globe!

So u see MSC is VERY WELL OFF and privately owned with NO shareholders. So LOOK OUT Carnival and RCCL you have a new neighbor lurking in your neighborhood.

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Originally posted by gpcruisedude:
It was only a matter of time before MSC built Big New ships and competing with the big boys...

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It will be interesting to see what kind of job they make of running a mega ship. After all, even Cunard with decades of experience had a lot of staff/food/service problems in the first year of the QM2’s operation.

I also wonder how many American’s would actually book an ‘Italian Experience’ over an ‘American’ one, given how patriotic a nation they are. I appreciate the ‘sophisticates’ may well do, but I’m not sure that MSC could capture the American masses.

Americans please try my poll HERE

[ 11-23-2005: Message edited by: Malcolm @ cruisepage ]

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Dolphins wrote:
...it all depends in how good you look in a toga.

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I think you are referring to Costa, but hey, if you want to wear a bed sheet on a MSC cruise, you are welcome, but don't blame the cruise line if you get funny looks, Gaias Maximus.

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My wife and I like that touch, and it was something we always did in our home, when we entertained. On the MM Ships, at the conclusion of a leisurely dinner, we always went topside to the bar-lounge where demitasse coffee was served, usually with (bar-purchases of) brandy, or similar.

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Originally posted by Cambodge:
Having coffee somewhere else is actually very, very unusual - if you go somewhere after dinner then to a bar to have a cocktail. (

My wife and I like that touch, and it was something we always did in our home, when we entertained. On the MM Ships, at the conclusion of a leisurely dinner, we always went topside to the bar-lounge where demitasse coffee was served, usually with (bar-purchases of) brandy, or similar.

It was a delightfully civilized touch, but could it be done with a few thousand passengers? I doubt it.

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it's very simple, if MSC americanize even a little bit, they will became just like the others compaines, since the unique differences between then is that they have a true Italian Signature. Costa in the beggining was an italian brand, but when Carnival bought her they tried to "americanize" a little bit, and then a little more, and then Costa becames just like Carnival, but with yellow funnels. I think if someone want american style cruises, there is inumerous options for these kind of people, but an italian style companie there is only one, and if they trie to "americanize" MSC too, there will not be any Italian Company again.

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Originally posted by Italianliners:
...it's very simple, if MSC americanize even a little bit, they will became just like the others compaines..

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...and they will appeal to more Americans and make lots of money! After all that is what it is all about.

Otherwise they just get into the price war.

My brother and PamM have comprehensive reviews of the ship and made similar observations. The culture clashes can be rectified without too much pain.

Cunard can satisfy the many cultures that cross simultaneously on the Queens, MSC can do the same.

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Originally posted by Malcolm @ cruisepage:

...and they will appeal to more Americans and make lots of money! After all that is what it is all about.

I do agree though, it's a shame.

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desirod7 wrote:
With many players, I believe that if Carnival, NCL, and RCL zig, than MSC must zag.

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I agree. I think besides the Italian-Americans who are one market there are enough cultured people in North America who would try something different. I know that if MSC came 'down under' they would be successful.

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Originally posted by bulbousbow:

I agree. I think besides the Italian-Americans who are one market there are enough cultured people in North America who would try something different. I know that if MSC came 'down under' they would be successful.

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Cheers

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MSC Cruises is 4% of MSC's revenue and container ships are 96%

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Originally posted by Kevin Griffin, London:
Ernie,

MSC Cruises is 4% of MSC's revenue and container ships are 96%

Kevin

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Good to know Kevin. We need a cruise operator with deep pockets if they are going to take on the big guns.

I have a feeling that cruise to container profit ratio will shift somewhat to cruise in the future.

Anyway, it's a good indication of just how big MSC is.

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Originally posted by Kevin Griffin, London:
MSC Cruises is 4% of MSC's revenue and container ships are 96%

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Interesting, but I would imagine the potential for growth in cruising is much greater than container ships, hence the new focus.