It has been quite a decade for MSC Cruises, but sailing has not always been quite so smooth for the Swiss-Italian operator.
Established as Lauro Lines in the late 1960s, the first member of its fleet burnt at port in 1979, although this began to feel like a lucky escape as the trials and tribulations of the company’s sole remaining vessel, Achille Lauro, unfolded: a disastrous fire in 1972; colliding with and sinking a cargo ship in 1975; another fire in 1981; and then, most famously, hijacked by the Palestinian Liberation Front in 1985 – her sinking in the Indian Ocean nine years later brought to a close one of the cruise sector’s more eventful life stories.
Purchased by the Mediterranean Shipping Company in 1989, it was time for a fresh start, and in 1995, MSC Cruises was born. With just three ships in operation, the next few years proved steady but unremarkable – a blessed relief for veterans of the company, one imagines – but everything changed in 2003 with a €6-billion investment programme and, as importantly, the arrival of Pierfrancesco Vago as CEO.
Over the next ten years, Vago would oversee 12 ships entering service, culminating in the launch of flagship vessel MSC Preziosa in 2013. Under his watch, the company grew to employ more than 15,500 people in offices across 45 countries, carrying an estimated 1.7 million passengers a year and making a solid claim to being the world’s third-largest cruise line by capacity. It is one of the great recent success stories of the European tourism industry.
Vago has been instrumental in this accomplishment, an iconic figure within MSC and the continent’s fast-expanding cruise sector. As these years of unprecedented growth drew to a close, however, the decision was made that he step up to the position of executive chairman, taking on responsibilities for the group’s interests in the tourism sector and relinquishing the day-to-day running of the cruise division.
This places a remarkable amount of pressure on his successor – not only in looking to equal Vago’s achievements, but also having to do so under his watchful gaze. Gianni Onorato arrived at MSC’s headquarters to take up the challenge in September 2013, direct from having served as president of Costa Crociere for almost a decade. Far from being intimidated, however, he seems to relish the opportunity to build upon the successes of his predecessor.
"Mr Vago has done a tremendous job getting the company to where it is, and I’m extremely lucky to have his support," the new CEO enthuses.
"The most important thing in ensuring a smooth transition is that people see us working together; it’s a message of continuation rather than revolution or transformation. Of course I’ll bring in some new ways of doing things – everyone has their own leadership style – but we need to stick to the general path that has already been laid out."
Take the helm
Six months into the gig and Onorato insists that he couldn’t be happier with life among what he calls his "big family on the lake". Despite having been at the helm of MSC’s fiercest European rival for the past nine years, he claims to have always enjoyed good relations with the group and believes a shared heritage has eased the transition further.
"Like many of the people working here, I’m a Neapolitan, and that means we already share a specific mentality and approach," he says – MSC founder Gianluigi Aponte is also a son of Naples. "I may have witnessed this growth from the outside, and a competitor’s perspective is always quite different, but I already feel very much at home."
Prior to Onorato’s arrival, it had been decided that, following years of rapid expansion, now was the time for a period of consolidation. There are no new ships currently on order, and, refurbishment programmes aside, leadership focus has switched firmly in the direction of operations and brand positioning.
"We have entered a three-year period of really defining our place in the market, better underlining our strategy and communicating what we have to offer," the CEO explains. "In such a competitive environment – and I’m referring to the tourism world in general, rather than just the cruise sector – we must clearly set out the qualities that differentiate us from what else is available in the marketplace.
"It’s about building identity. We’re Mediterranean people, and that’s where our roots lie – lifestyle, dining, entertainment; a distinctive way of approaching the world."
This is a message being communicated in Europe, where MSC is traditionally strong, and the extremely lucrative US market, where the now Miami-based Divina has recently become the group’s first ship to sail year round from the region. Furthermore, MSC will visit Asia and Australia for the first time in 2015, with Orchestra sailing an all-inclusive voyage from Dubai to Perth.
"We are looking at three years of stable growth, and that means investing in those programmes that are already well established," Onorato explains. "However, in order to keep moving, we must also study the potential of new markets and investigate opportunities.
"MSC is an extremely strong brand in shipping in Asia, and that is something we can build upon. The US cruise sector is 20 years further down the line than in Europe, and we still see a lot of potential for growth over there.
"There remain untapped markets at home also – Russia and Turkey are huge countries undergoing massive economic developments and changes in lifestyle. Even in those countries where cruising already has a significant presence, the UK and Germany for example, it accounts for a very small proportion of the overall holiday spend."
Audience approval
In order to illustrate the need to better communicate the virtues of a cruise vacation to what remains a largely apathetic audience, Onorato reflects on a conversation he has just had this very day.
"I was sat at lunch with some guests earlier, and they were telling me the same thing I’ve been hearing at such lunches for almost 30 years: ‘Oh we’ve never been on a cruise’; ‘That’s more for old people’; ‘We need a holiday that’s family friendly’.
"These people were from France, not some fast-growing economy in the Middle East or Asia, and that is actually music to my ears; it proves how much more space there is for getting our message out there and educating the public. It’s up to us to now think about positioning and promoting the product so that it appeals to a variety of tastes."
But one should not assume that all the talk at the Geneva HQ is of brand repositioning and marketing campaigns. Late last year, MSC announced a €200-million refurbishment programme for its four Lirica-class ships, overhauling on-board technologies, entertainment and retail amenities, as well as adding almost 200 cabins to each vessel.
Furthermore, Onorato is already thinking about how the next class in his fleet might look, going so far as to acknowledge that there have already been discussions with Fincantieri and even early work on a prototype.
"It’s really a new concept," he says. "We’re talking about a large ship, but one that can call at every port and where people can move about easily – not as long perhaps, but wider."
Investment also continues elsewhere across the fleet, particularly in the technology sphere, an area which the CEO believes has possibly transformed the cruise experience more than any other.
"When I started in the industry 27 years ago, people went to sea to escape," he says. "There are certainly aspects and expectations that survive from that time – great food and exceptional service, for example – but guest behaviour is quite different.
"Previously, one’s only communication to the outside world was through telex, but now guests are constantly connected to events back home and around the world. What’s more, their knowledge of the rest of the world is far greater, and that generates different demands.
"But technology can also bring people together. We’ve launched an app on Divina that allows guests to chat with one another and keep up with the whereabouts of the kids or wife. It’s great for a southern Italian like myself, because I get jealous easily," he concludes with a gusty laugh.
Leader of the pack
A number of his rivals must be casting envious glances in Onorato’s direction as he leads an operator on the up, but the CEO also believes there is still a huge amount industry leaders can do in collaboration to further engage with the public and legislators in regards to the virtues and efforts of the sector.
"We are very visible, but this remains a small industry," he begins. "There is a need to educate wherever and whenever the opportunity arises, and many issues are best addressed with one voice. We are still exposed to regulations and legislation – new taxations, port fees, environmental standards – that are not clear and consistent enough, and, in some cases, risk paralysing decisions.
"We’re looking for rules; rules help us operate better, but they need to be applicable. We can sometimes be treated badly by public opinion, not because we don’t want to follow rules, but because we want clarity. Working together, having that single voice and establishing our position can only benefit everyone. CLIA plays a great part in that, but there is always more we can do."
There is little doubt that MSC, with Onorato and Vago at the helm, will help lead these discussions and further establish itself at the cruise industry’s top table. Revisiting the operator’s inauspicious early days should be enough to prevent anyone taking success for granted, but the emphasis now resides on making history, not repeating it.
