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Key Concepts

• Delivering the WOW: Richard Feain's new book, focusing on building a strong company culture.
• Transformational Change: The core strategy at Royal Caribbean under Feain's leadership, applied to ships, financing, and operations.
• Best Vacation Provider: The shift in vision from being the "best cruise line" to the "best vacation provider, land or sea."
• Continuous Improvement: A philosophy of always striving to be better than the previous day and year.
• Quest for Excellence: The driving force behind expanding ship size and amenities to offer more choice and excitement.
• Perfect Day: Royal Caribbean's private island destinations, designed to be exceptional experiences.
• Culture of Passion and Obsession: The underlying element that fuels innovation and success.
• Crisis Leadership: Strategies employed during the COVID-19 pandemic, emphasizing communication and a strong, forward-looking message.
• Travel Advisors: The evolving role of travel agents in the modern travel industry.

Summary

This episode of the Opening Bid Unfiltered podcast features an interview with Richard Feain, former CEO and current Chairman of Royal Caribbean. Brian Sazy, Yahoo Finance Executive Editor, discusses Feain's 33-year tenure at the company, his new book "Delivering the WOW," and the strategies that led to Royal Caribbean's significant growth and success.

Royal Caribbean's Transformation and Growth

Feain attributes his long tenure and the company's success to building a culture that fosters transformational change. He highlights a pivotal shift in vision early in his career: moving from aiming to be the "best cruise line" to becoming the "best vacation provider, land or sea." This "northstar" guided the company's decisions and led to unprecedented growth. When Feain joined in 1988, Royal Caribbean was valued at $550 million; today, its market cap exceeds $80 billion, significantly larger than competitors like Norwegian Cruise Line ($10.5 billion) and Carnival Cruise Line ($37 billion).

The Strategy of Larger Ships and Enhanced Amenities

A key aspect of Royal Caribbean's strategy under Feain was the development of larger ships, which he describes not as an end in themselves, but as a means to provide more choice and excitement to guests. These larger vessels allowed for a greater variety of dining options (e.g., 28 restaurants instead of one), entertainment venues, and innovative onboard activities. Feain cites examples like skydiving, surf simulators, and ice skating rinks as ways to overcome the old perception of cruising as sedentary. He emphasizes that this "quest for excellence" also applied to smaller ships, though they received less publicity. The decision-making process for these ambitious projects involved a strong alignment between the board, management, and operating teams, fostering confidence in making significant, long-term investments, such as ordering multiple $2 billion ships at a time.

The "Perfect Day" Concept and Private Destinations

Royal Caribbean's expansion into private island destinations, starting with Perfect Day at Coco Cay in 2019, is another significant development. Feain explains that while ships have become destinations in themselves, land-based experiences are crucial to the overall vacation. The "Perfect Day" brand signifies an unwavering commitment to creating exceptional, flawless experiences, exemplified by features like the tallest water slide in North America on their private islands. The company is now developing Perfect Day Mexico, which is noted to be physically larger than Disney World.

Navigating the COVID-19 Pandemic

The COVID-19 pandemic presented an unprecedented crisis for the cruise industry. Feain describes the period as one of the worst in his life, marked by the challenge of operating with zero revenue and the devastating realization that crew members were being trapped on ships. However, the company's mantra became: "We are not going to be victims here. We are going to come out of this strong." This focus on emerging stronger guided every decision. Feain recounts a particularly poignant moment upon returning to a ship in the U.S. after the pandemic, where he was overwhelmed by the crew's emotional reunion and joy, despite the preceding hardships. He expresses unwavering confidence in the company's ability to weather the storm, citing strong relationships with banks, a deep understanding of guest desires, and the loyalty of the crew.

Crisis Leadership and Communication

Feain outlines his crisis leadership playbook, emphasizing communication as paramount. He stresses the importance of showing confidence, even when it's difficult, and maintaining a consistent message of resilience and future strength. Despite personal challenges, like needing to loosen his belt due to stress-induced eating, the leadership team remained steadfast in their belief that the cruise industry would rebound and that Royal Caribbean would emerge stronger.

Busting Cruise Myths and the Future of Travel

Feain addresses common cruise myths, particularly the idea that cruising is not for everyone or is too sophisticated for some. He asserts that there is a cruise for every individual, regardless of their background or financial status. He also touches on the trend of people retiring on cruise ships, mentioning "Super Mario" Salceto, who has lived on a Royal Caribbean ship for 25 years. While acknowledging a few exceptions, Feain clarifies that the primary focus is on providing "a lifetime of vacations" for millions of regular cruisers.

Regarding the future of travel, Feain highlights the evolving role of travel advisors (formerly travel agents). He acknowledges the impact of technology and AI but stresses the continued importance of the human touch provided by these advisors, who remain crucial to the company's growth and success, especially in the post-pandemic era.

Conclusion

Richard Feain's leadership at Royal Caribbean is characterized by a relentless pursuit of excellence, a culture of innovation driven by passion and obsession, and a clear vision of being the best vacation provider. His insights underscore the importance of a strong organizational culture, strategic long-term planning, and resilient leadership in navigating both immense growth and unprecedented crises. The book "Delivering the WOW" aims to share these principles for broader application.