Metamorphosis - Cruise Ship Portal

Pull
together
Cruise lines have kept on course through the downturn, but the
industry’s suppliers have had a tougher time. Crystal Cruises’
Bob Koven and Royal Caribbean’s Henry Lopez tell Ian
Duncan how they are working closer with their supply partners.
Last year was difficult for the shoreside
hospitality sector, with
occupancy and rates down
significantly. Starwood, one of the world’s
largest hotel groups, saw its revenue per
available room fall by over a fifth. Industrywide,
the figure stood at 12%. Suppliers, for
whom hotels are their main source of
revenue, suffered greatly as a result, creating
problems down the line for what has
remained a relatively stable cruise industry.
Although there are differences in emphasis
between the cruise lines, their strategies are
similar. The key trend has been a closer
working relationship with suppliers, guiding
them through this difficult period while
keeping a watchful eye for signs they might
falter. Bob Koven, vice-president of
procurement at Crystal Cruises,
acknowledges it has been a difficult time for
some key partners. “Everybody’s uncertain
about their solvency,” he says. “We’re seeing
a lot of bankruptcies; this didn’t happen in
the past when business was slow. Royal
Doulton and Wedgwood went out of
business, which created problems for us. We
use their bone china on our ships, so after
they folded we were putting out fires.” The
situation became so critical that Koven and
his team were forced to scour the internet for
replacement items until a decision could be
taken on a new supplier.
Henry Lopez, AVP, hotel, food and beverage
at Royal Caribbean Lines (RCL), has also been
forced into adopting new measures. “The
economic impact over the last year has
strengthened our relationship with our
suppliers,” he says. “They’ve been under
pressure from other customers, but we’ve
partnered more closely with them to give
guidance on what we expect.”
At a time when stability is at a premium,
operators have been able to negotiate deals
and secure good prices in exchange for
Insight > Operations management
prompt payment. Koven and Lopez
acknowledge that there has also been
a general deflation of prices for goods,
especially luxury items such as
champagne and caviar.
While this helps keep costs under control,
there is also an emphasis on procedure to
avoid mistakes. When problems are
encountered, Koven aims to tackle them in
plenty of time. “We like to have some of our
suppliers cross-check our purchase order with
their invoices so they can identify any
shortages,” he says, “and give us a list of items
they’re not going to be able to deliver, or
substitutions they are going to be able to offer,
at least three days before delivery. Rather than
them making unilateral decisions, we can
correct the problem before the delivery is
made to the ship.”
Koven makes it clear that the downturn
has had a major impact on his work as the
head of procurement. “My role has changed
in the sense that I’m focusing a lot of
attention on avoiding mistakes, on costsaving
initiatives, budget planning and
tracking, and measuring our results without
compromising product delivery.”
Lopez has seen his focus shift as well.
Even during the downturn it was important
for the industry to move forward and he has
been working on delivering a more diverse
experience to guests, creating a need to
find new suppliers. “Certainly it increases
the complexity,” he admits, “but the way
we’ve designed our procurement process
has been with that in mind. The hospitality
area is not a static environment, you have
to build your systems and processes and
the way you source products in a very
dynamic fashion.”
World Cruise Industry Review | www.worldcruiseindustryreview.com 41