Ritz-Carlton plans 8-10 yachts for multiple Marriott brands, IPO

He spoke in France ahead of newbuild Ilma's float-out tonight at Chantiers de l'Atlantique.

'This day is the dawning of a new era for Ritz-Carlton Yacht that has such a promising future and takes the company from a start-up mode with one ship to a growth mode and operationalizes a company that's established a platform for rapid, sustainable growth into the future,' Murren said in a one-to-one interview.

Expedition maybe

'We already have plans under way for ships four and five, to be built on a different platform, to be disclosed, and beyond that we're looking into maybe getting into the expedition space and other yacht types, to get our fleet up to eight to 10 yachts within the next several years,' Murren said.

Working with Marriott International, the company has 'multiple opportunities to match the right brand to the right product.'

Though there's ample potential to continue growing the Ritz-Carlton brand beyond the three vessels, Murren said his company and Marriott are 'very open' to branching out, and 'We believe this will be a company with multiple brands.'

Seeking to raise up to $400m

Murren confirmed The Ritz-Carlton Yacht Collection is looking to raise $200m to $400m to finance the fourth and fifth newbuilds, reportedly working with Citigroup, though he did not go into specifics and the company declined to comment on that.

Ilma and Luminara, fully financed, are due for delivery in July 2024 and fall 2025. The next newbuild could come in 2027 or 2028.

'The new-platform ships will be very different in feel and design and operation than Ilma and Luminara,' Murren disclosed, however, they'll be superyachts with likely not more than 450 or so berths. 'We want to have a strong and growing balance sheet and believe after ships four and five, we'll be able to self-fund our fleet going forward on cash flows generated from the existing yachts, and all that works on a common purpose: to be a successful company in the luxury cruise market.'

Strong ownership, powerful partner

The Ritz-Carlton Yacht Collection is owned by Oaktree Capital Management, with a 55% stake, the Scheinberg family's Mohari Hospitality (30%) and the government of Singapore (15%).

Murren called it 'an incredibly strong ownership group' for a start-up, which also has a powerful partner in Marriott International, with its 177m Bonvoy loyalty members. This, he said, is larger than the entire cruise industry's database combined. Perhaps a 25m chunk of those members are luxury customers, making a 'huge competitive advantage.'

So far, 75% of The Ritz-Carlton Yacht Collection's customers are Bonvoy members and about half those are new to cruise.

That means the company is growing the pie for the cruise industry. After Ritz-Carlton launched, newcomers Four Seasons, Aman and Orient Express came in with yacht concepts also likely to entice non-cruisers.

'We believe this market is vast, about a $5b ultra-luxury cruise market,' Murren said. 'There can't possibly be enough supply to serve that demand over the next decade.'

He credited founding CEO Doug Prothero, now a board member, and the Marriott team for their vision to create a new cruise market.

Challenging start and recovery

The Ritz-Carlton Yacht Collection didn't have an easy start, with a shipyard bankruptcy, multiple delivery delays, design issues and the pandemic.

Murren — the former CEO of MGM Resorts International, who became chief executive in April — indicated things are now on an even keel. Cancellations are way down, on par or below the industry average, and some of Evrima's highest guest satisfaction scores emerged from recent cruises.

The Ritz-Carlton Yacht Collection's intent to recommend scores are some of the highest across the Marriott family.

Already, the brand has chalked up a 15% repeat factor in the first year and has a database of 470,000 emailable names which Murren considers 'remarkable,' a number that typically would take a hotel property a decade to amass. More than half of bookings are direct.

Ilma differences

Ilma, whose 2024 Mediterranean cruises have been open to book for a short while, is 'selling very well.' Its advantage over Evrima is a higher mix of suites. There are also grander public spaces, more spacious pool and sun decks with added shade areas, an expanded spa and a more contemporary feel overall.

An RFP for a featured restaurant partner has been honed to three noted names, with news coming in the next month.

Evrima improvements in store

Evrima's Mediterranean season sold out, and bookings are good for the Caribbean. Murren said all the Med itineraries resonate, with The Ritz-Carlton Yacht Collection drawing younger passengers there, average age 53 with many still working so summer is the typical vacation period. In the Caribbean, guests are a bit older.

When Evrima redeploys to the Caribbean, it will deadhead with a Chantiers-led project team and subcontractors aboard to make front and back of house enhancements. Those include more crew cabins, to accommodate 10 more crew, the implementation of Starlink Wi-Fi and upgraded technology.

Future Asia-Pacific deployment

With a three-ship fleet, Ritz-Carlton will stick to Mediterranean-Caribbean deployment and continuously tweak itineraries to ensure the most appealing yacht harbors and land experiences.

Murren said the deployment would likely go beyond the Med-Caribbean with the fourth or fifth vessel probably adding Asia Pacific.

Chantiers focus

He's full of praise for the 'exceptional' execution of the Chantiers de l'Atlantique and Ritz-Carlton newbuild teams with Ilma, which 'gives our owners and our lenders great confidence we can grow this company rapidly.'

Chantiers de l'Atlantique laid Ilma's keel in March and executed 'exceptionally' well, according to Jim Murren

In its newbuild discussions, the company is focused so far on Chantiers de l'Atlantique, which Murren believes has the innovative mindset to develop and deliver new designs. It's not decided whether the next generation yachts will be LNG-powered like Ilma and Luminara or possibly employ methanol, sails or some other type of propulsion technology.

Everything's still on the table.

Team members and new hires

Since Murren took over, some key management were moved around or promoted, including Kristian Anderson to SVP global sales, Carolina Acero to VP finance, Tobias King to VP newbuild and CFO Ernesto Fara adding the president title. And several key hires were identified.

Rachel Moosa just joined as chief people officer, bringing vast international experience from Accor and Fairmont Hotels & Resorts. Two other C-suite positions, in marketing and IT operations, are being recruited. One will join in the next couple weeks and the other, hopefully by Thanksgiving.

Murren sees one of Ritz-Carlton's greatest strengths as not recycling people in the cruise industry but deliberately seeking talent from diverse industries to forge a 'stronger, more dynamic management team.'

The company's Fort Lauderdale office is expanding, and Murren is relocating from Las Vegas to Florida. To prepare for additional capacity, the team has staffed up to 75 reservations agents, with plans to increase to 135 by January. Fara is based in Monaco, where the finance team is located, while Malta, where the ships are flagged, houses the marine operations team.

The entire senior leadership team is in Saint-Nazaire today for the float-out, giving an opportunity to build camaraderie and present the company's strategic plan over the next couple days.

Strategic vision and NYSE listing

Summing up his strategy, Murren's vision is 'to be the most expert, highest-execution organization in the luxury yachting cruise market. We want to be innovators, blazing a new trail into this new category.

'We want to be the employer of choice, creating the best possible experiences for the men and women who work for Ritz-Carlton Yacht. We want to be environmentally sensitive, creating the best product that is sensitive to the environment.

'We want technology that creates "wow" moments for guests and ease of operation for our employees. We're looking to innovate on the shipbuilding side to create new types of products on new platforms that anticipate what customers are going to be looking for five to 10 years into the future.'

He expects the company to become a public enterprise over the next three to four years with The Ritz-Carlton Yacht Collection likely to seek a listing on the New York Stock Exchange.

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