The Future of the Cruise Industry with Rick Sasso of MSC Cruises

Wow, hi, that's me.

It's a 52-year-long story, so I'll try and cut it down to just a few minutes. I've been very lucky. I sound like a New Yorker, but I actually graduated from Miami Central High School in 1967. I usually note that to say the year. Then I was lucky as I attended Miami-Dade. I was lucky enough to get a job with British Airways and Bahamas Airways at Miami airport, and I loaded bags and I did all the stuff that you do when you work for an airline at that entry level. Then I was lucky enough to meet my spouse in 1971 and we got married in 1972 in the Church of the Little Flower in Coral Gables, so my Florida heritage is pretty strong. And fortunately, that very same year, 52 years ago, I started with Costa Cruises in the Port of Miami, and I used to come down here every time there was a shipping port, and they were usually ships that only carried 800 passengers, and there were only five terminals: one, three, four, and five. And that job gave me a taste of this industry. My dad was the one who forced me to leave the airline to go to the cruise because he said there's more opportunity in cruise. I said thanks, Dad, and I took the Costa job. And luckily enough, over the years I was able to be part of a team that launched Celebrity Cruises back in 1988. I became the CEO of that company. We sold it to Royal Caribbean in 1997-98, and I retired in 2002. Then Mr. Apon, the owner of MSC, had called me and said, 'I heard you're the Miami cruise line guy, and I'm opening an office in Florida. This was 20 years ago, and we're going to be building a lot of new ships, so I need you to come aboard.' So I accepted that position 20 years ago, and we have had a remarkable 20 years. It's almost staggering. We are the fastest-growing cruise line in the history of cruising. Yes, we are. We have the youngest fleet now in the industry because we started building new ships in 2003 and 2004. So all of a sudden, we invested $20 billion and we made this Florida our home for the cruise division. The cargo division was already here and very successful. We are the largest – the same owner is the largest containership operator in the world with 750 containerships, some of which visit here. So we are that big company that has ferries and things like that, but it's a privately owned company, owned by one family. And I am the chairman of the U.S. region. The owner is the chairman of the world, let's call it. The decisions that are made are so much more efficiently and so much more spontaneously because it's this family company that has this great group of executives including myself, and we are contributing to the vision of this company almost every day. But I can tell you the one shining example is exactly what we're going to be talking about here today, and that's environment and sustainability. It is at the core of everything this company does. And because it's a family-owned company, it's more important to be that aggressive, it's more important to be that focused on that. So communities is the second piece that we love to engage with. We are doing that around the world. I represent the MSC Foundation in this part of the world, and we do a lot of relief efforts. But it's also environment and efficiency of everything we do, whether it's on the cruise ships or on our shore offices, we make sure that the environment is part of our core responsibility. I'll talk more about that in a few minutes. So my career over 50 years allowed me to see some incredible changes, and I want to compliment highly Port Miami because Fred knows we had our operations in Fort Lauderdale for 10 years from 2004 to 2013. Heidi called me every six months and said, 'Rick, why don't you move your ships to Miami?' And I said, 'Look, right now we're settled, our offices are up there, we have the ships at Fort Lauderdale there.' But every six months, as politely as could be, because typically executives are going, 'Oh, geez, she's calling me again,' just the opposite with her. I asked her to explain to me why every time, why should we move there? What's going to happen? She portrayed Miami as this incredible place that we would never not want to be. And finally in 2013, we moved our cruise operations to the Port of Miami. And ever since then, this has been our home port for our cruise division. And it's not just one ship every six months; it's now going to be four ships in a couple of months. And so we're going to be a major contributor to this economy here, and we're going to do as much as we can to make sure we do.

It's actually a beautiful story. The Magic City, I guess it's called the cruise capital of the world, which it is, and we're going to make sure it never changes that it's always going to be a Magic City because we'll contribute to that, and we're also going to make sure it maintains its strength as the cruise capital of the world. But that takes a lot of investment and a lot of courage because you have to also economically fill the ships every week. And so I think Miami – and again, I'm homegrown, high school and everything – so I love Miami. I lived here for most of my 52 years. I'm in Palm Beach now as I got a little older. I'll be 75 on Saturday. I don't know when I got that. I look pretty good on that one. I thank Sidney for that; she made good job. So Miami has a special place in my heart. Obviously, what do you see when you see what's happened here? I think this is the best way to describe it. If I go back all those years, one thing that's significant is there would not be 32 million housing if it wasn't for the cruise industry building ships. If we didn't build all those ships, there would only be 8 million cruising, and this port maybe would have half of the 7 million that you have. And the thing that the cruise industry has done by building those ships, we also know that the port itself – and I look at ports all around the world; I have to go to the Caribbean and look at advanced strategies, I have to go to California and see what's going on. When this port did that – sorry, from where it was in 1972 to where it is today took investment and it took vision, and it's the Heids of the world and the commissioners, the visionaries, the Beacon Council, the community itself. And Ron and I had a chat earlier before we came out here, and I think that the one signal that makes this Magic City so successful is that everyone got together: the commissioners, the mayor, the port, the airport – we meet with airport people because we're flying in tens of thousands of people into airports. The trucks that need ships – all those things have to be coordinated, and we did it as a group. So there isn't any one person or any one company that should take the accolade; it's all of us. And because of that, we built the ships, and you made sure the port had enough space for us to bring them here. That's a relationship of profound importance because we know we can count on you tomorrow too. We're going to keep building more ships, but we know we can count on the port being aggressive and proactive. Look at the thing we're building here in the port – it's three terminals in one. So that vision and that cooperation is what makes it successful. So we're very pleased to be part of that Miami component.

Yeah, MSC, we don't stop either; we keep looking at the future. I use a phrase with Rod earlier today. There was a phrase that when I grew up it said, 'If it's not broken, don't fix it.' We've all heard that, but we grew down: 'If it's not broken, you've got to make it better.' That's what Port Miami has done, that's what the city of Miami has done, that's what the communities in this area have done, because you can't just sit back and say, 'Oh, it's okay, everything's great,' because if we did that, the ships would... and we kept making them better. So given that, this terminal here will be the largest cruise terminal in the world. It cost a few months, but we got the mayor and the county and everybody else to agree to how we would do this. But it will take three ships on the same day – two of them will be MSC ships on the same day. It can handle 36,000 people in one day turnaround – 36,000 in one terminal, one building, one garage, one everything. But the arena and the team working on that were great. We took more than two years to figure this out, and you have to do it right because it's going to be there for 50 years or more. So we were smart about it, we engaged the right people for it, we had the community working with it, and now in the not too distant future, in a few months, it will be serving the great cruise guests that we will bring here. So that alone kind of puts – and I use this phrase often – this is going to be an iconic port. It already is the Magic City and the biggest port, all that. But I think there will be airplanes flying over those two or three terminals there, particularly the one we're building, and taking pictures. Like in Sydney, people take pictures of that. I think this is going to help make us even more of an icon in this part of the world. So that will help. Now, when you build like this, because that's quite a bit of money to build, but we're also investing in our human resources. We're going to be building right here in Overtown – Sandy Way 55 block, I call it block 55. We'll be in there by next year, and there'll be 660 employees as part of that indirect and direct. There'll be $65 million of economic impact for the area every year. And we need to make sure that the community respects not just our sustainability – because we're going to make sure – I sent the mayor a 108-page report about our sustainability every year. We produce it: 108 pages about what we have done as a company for sustainability. So people will start to recognize who MSC is because of the terminal, because of big ships will be there, and because our infrastructure will have to grow with it. So this new office building will house MSC Cruises, MSC Cargo, and MSC Explorer Journeys, which is our luxury brand. So it's going to be a place where we can feel like we're at home, really with roots in the ground, and will make this terminal and that office building part of our contribution.

There has to be. One, the economic impact for jobs is also related to everybody else that serves the four ships that we're going to have there, so the traffic of that is very useful in terms of economics. The employee base, we always love to have the local be part of that. We also must have the top quality people. And the reason why I mentioned to you earlier is that our industry has great ships and cruises are great, and everybody is applauding our industry for how we deliver a product. But the real essence of a cruise line is not me; it's those employees that are answering the phone and the ones that are serving the people on the ships. Those are the ones that make it or break it for us. So no matter what we do, we can spend a billion dollars for one of those ships – a billion bucks – but without those people on the shore answering the phones properly and without the people on board doing the job they need to do, it's a bad investment. We think it's a good investment to the way we've managed it. So local employees, they should start coming towards us, and we will screen them and we will hire as many as we can. And I think South Florida, certainly Miami at large, Dade County at large, will have a significant number of those 660 plus.

Thank you for bringing it up because there are two positives. I always say in every adversity there's equal or greater opportunity, right? The great dark cloud and all that stuff. There's actually some incredible opportunities that came out of COVID as serious as that was. It was painful for all of us in every respect. But MSC – and I'm going to say this as if I'm bragging, but it's a fact – when COVID hit, our owner and our management group decided immediately to engage every scientist, every doctor, every medical group, every community, particularly in Europe, all of the European medical authorities. We engaged all of them in March of 2020, and we said we want to find out what we're going to have to do to make every one of our ships incredibly safe – more safe than you going into Publix. And that was a good note – we didn't use Publix as the comment, but going into the cafeteria in your hometown. We did that over a few months. By August 2020, we launched our first ship with all the COVID protocols you could possibly think of. There wasn't anything we left out. If it was 75 protocols, we made sure it was 150. And all of the science and all of the medical authorities endorsed it, and they said, 'Boy, you guys did something incredible. You guys have every step covered.' We were testing the crew members before they left their hometown, and they had to quarantine for two weeks before they were serving somebody on board a ship, and they had to be tested again PCR tested again before we allowed them to work. We did that with every crew member. Every guest was tested; we didn't let anybody on. We had the most sterilized operation in the world. There wasn't any place on the planet that was probably more sterile than our ships. And we proved it by operating August, September, October, November, December. We added another ship in January, February. All of a sudden, all of our ships were at sea and we had zero incidents. Yeah, some people were getting the flu, and if somebody tested positive for COVID, they were immediately quarantined, all that kind of stuff went on. We never had an outbreak – that didn't even happen with norovirus, and here it was COVID. So the industry as well got together and we did the same kind of research, and the industry finally by July I think in 2021 started to regain itself. I will point out one fact that nobody realizes: there were only about five ships that were part of this COVID experience that turned our industry upside down – five ships out of 230. So technically, we weren't really this incubator, but we were portrayed as it because of the news stories. So we were able to get back on our feet. The second silver lining in the cloud is since COVID, hotels and resorts doubled their prices and people were going crazy, like 'How much am I going to pay now for my Italy vacation or my cruise vacation, my Caribbean resort?' They came into cruising. We never had that group before. There was probably 60% of the population that don't even look at cruising as an alternative, and now all of a sudden a good portion of them are going, 'Oh, I saw that big ship in Port Miami, let me see what that's all about. Oh, it's only $800 for a week? Oh my God, let me try a cruise.' The best news of all is that people who cruise, 90% of them say it's the best experience they ever had on a vacation. So all these new people are becoming this new legacy for us of future growth. So we handled COVID better than most businesses, and MSC handled it better than most cruise lines.

We've been in the marine business as a family for 300 years. We have all of our assets are basically marine-related: cruise ships, luxury cruise ships, cargo ships, ferries, you name it. We're in the marine business, and the owner started out as a marine captain in 1970 and he built this enormous enterprise over the last 50 years. So I think that we have a lot at stake. And when you have a lot at stake and you're private, you're going to make sure you're above and beyond on compliance. That is a theme. And when you talk about values, we have core values that start from the owner all the way down to the last person on board. And those core values have two specific engines: one is sustainability and environment, and the other is community – that we have to be engaged with communities. I call myself a relationship engineer, I'm not a chairman. Chairman what does a chairman do? Basically nothing. I have relationship engineering skills let's say, where I want to engage everyone face to face like a meeting like this where we can talk about common problems and common solutions and how we're going to go about doing this. And MSC has that from the owner – that we're in the community. He says we're going to take care of communities, we're going to make sure we engage with them, we're going to make sure our foundation supports them. The MSC Foundation, we do that through relief efforts as I mentioned earlier, but we also do it through other proactive events and things like that. So we know that we have those two core values. When it comes to – I'll give you an example, a couple examples because you made a few but there are more, and again it's 108 pages so I'll give you another minute's worth. We're not even allowed to throw our little coffee things – you know the little coffee things you do? We're not allowed to throw them in a garbage bin; they have to be in a recycle bin. We have no single-use plastics. We have new technology that allows us – like the propellers on a ship that reduces noise, that helps the marine environment. We use shore power now wherever it is. All of our ships that are being built, including the World America that's coming here in April, shore power. We know that that's important. There are not many places on the planet that allow it, that can offer it, but we know that we're going to need it and our growth will not stop. We have 22 new ships, a couple new luxury ships, and all these cargo. We're still growing. This port will see more of MSC – that's why we thought three terminals or three berths were important because we know what we're doing in South Florida and in Miami. So our vision says we're going to keep growing, we're going to keep needing more support, and sustainability – and I teach my grandkids – it's a joke but I ask my two young grandkids, they're five and six, 'What's your favorite color?' One of them says yellow and the other says purple. And I say, 'From now on say green.' And they say to me, 'Why?' And I say, 'Because that's going to be the most commonly used word in our language for the next 30 or 40 years, so say green.' So we are green. We are investing – and you talk about it's a lot of money? Yes, but we have no choice. We want to keep growing, we want to make sure we're safe, we want to make sure the customer knows what we do and how safe we are, because that's going to be a component for people to buy a brand. They're going to say, 'How sustainable? What's this environmental rule?' The owner says it's the most important thing. My boss does not start a meeting without first saying, 'What have we done for sustainability this week?' He doesn't start a meeting. It's the first thing we talk about as an executive group. So we know that it's at the core and it trickles down. Everybody gets it and we're all part of it. I say this and I'll close this part with this: There are three types of companies or people in the world. The first is people that could give a damn about the environment and they do nothing. There are a lot of those around. The second is the group that only does what they have to do because they know they're going to get in trouble if they don't. The third is the ones that do it because they know it's their responsibility. They know they have to do it and they're willing to invest whatever it takes to make sure they keep that track to be above and beyond compliance. So I won't be around in 2050 probably, but I want to make sure that whatever we do to get to that net zero and all the things that may change along the way – we know what it is today, but some things could change to make it more difficult – but we have to have the money ready, we have to engage with scientists and technology experts to make sure that these engines are the best performing, that the fuels we may use in the future are the safest fuels. So all of that takes a lot of money, but it takes a vision and a commitment, and that's what MSC does.

It's about $400 million. By the way, this building here was $100 million for us to do that, so we again have the resources, we're successful, we want to keep making sure we keep investing in the community. The marine reserve was a dream of the owner a number of years ago that destinations needed also a place to show off sustainability and environment. And we took an industrial wasteland – it was a sand excavation island, 95 acres or so, and all was steel and stuff under the ocean, and it was deserted and it was horrible. And we said we're going to create a marine reserve and an environmental showpiece on this territory, on that footprint. And we did. We took all traditional foliage, we did all excavation, we took out so much steel, we're planting now coral restoration, trees, and we have a marine reserve center on the island that is going to be opening soon where college students and scientists will come. We are going to make sure we create a super coral. That's one of the keys. The super coral is for us to find a way to get coral to resist temperature rising of the oceans, because at a rate of 50%, coral is dying – it's just dying. And that's not good. Why? Because 25% of all ecosystem of marine life depends on that coral – 25% around the world. It's only a footprint of 3% the coral, but if that goes away by 1%, all of a sudden marine life will not survive. So we're investing heavily into creating a super coral that will sustain itself and not bleach and not die from these environmental exposures. And we are really on our way to doing it. So there'll be a significant kind of revelation of how we can save coral, even around the world, not just in the Bahamas. So that investment has more of giving our guests an exposure to that. They'll see this marine center, they'll see what we're doing with the coral, they can take diving trips to see it, they will be able to see how we've kept it pristine. So all the green stuff is also being invested there – solar panels and all that stuff. We want it to become the footprint that says you can almost get to zero by just doing the right thing. I think that's what the marine reserve will do.

Through dialogue is the first. I mentioned to you earlier, have a meeting once a month or once a quarter with anybody that has a stake in this, that can do something about it, that can contribute an idea, and make sure we all avoid adversity because somebody's making mistakes somewhere, and make sure we all use best practices and make sure we have a dialogue about it. I think that's the most important. But also, I think there's some core – I preach this to the Caribbean destinations, the prime ministers are always asking me this kind of advice, and I tell them the two main things for them is cleanliness and safety. Now I've added environment – they need to jump the gun now because they may not have any plans for it but they need to, because there will be ships that won't call on destinations that don't have this philosophy. So I always preach to them safety and cleanliness. Certainly Miami over the years had the drug things back in the 80s, and there were things with some crime that were national or international news. We need to make sure that we never have a stain, so you have to be proactive in above and beyond safety and above and beyond cleanliness. So people start to say, 'Wow, I just came back from someplace and I won't mention it – well, I will mention it – I was in Portugal for a couple of weeks, it was incredible how clean it was. I noticed it. I walked around to all the restaurants, I noticed how clean they were inside the restaurant, how the streets were clean, how they cared about it.' And that's part of the environmental section too. So the city of Miami and certainly this whole area, we need to make sure we put that above and beyond. There has to be – with social media today, it can be the best thing you've ever done or the worst thing you didn't do, because social media will show pictures of 'look what's happening in San Francisco' – all you see on the news is the homeless people on the streets and all that stuff. So you've got to try and prevent social media from becoming your adversary; they have to become your advocate. So above and beyond cleanliness and safety. Investments – it's hard to ever judge how much money something needs because it's always going to be more than what somebody said. Even building ships, they tell us it's $900 million and then it becomes a billion, so you have to have investors, you need to have people who have financial support, the mechanism that your dreams will then be in this discussion every month. So I think you need to make sure you have a financial strength that allows you to go above and beyond and do the things that maybe other cities are not able to do. So get the right people in the room, ask them the right questions, get more financing and whatever support you need, and make sure you deal with those core challenges.

Fortunately, and again I come from such a historical background of this, 52 years, that I never thought we could get where we are today. I just wouldn't have dreamed about it in 1972, in 1982. I never thought it would be that good. In 1988 when I started Celebrity Cruises with a bunch of guys, I never thought that we would be so successful so quickly, but we were. And the press kept putting microphones underneath me: 'Do you think these new ships can handle the traffic? Do you think they'll be able to find the passengers?' And I kept saying yes, because as we build them, the people are coming. So our investments won't stop even through 2050. Our industry is in the best place it's ever been. And why do I say that? Because I've watched the hills over the last 50 years: Gulf Wars, economic crises, hurricanes, you name it – there were things that got us up and down. COVID as a major example. But since COVID, what I explained earlier about we're getting a new breed of people coming into our category and they love cruising because 90% say they love it. So I think that our industry is now what I call mainstream. For the last 50 years we were a niche – 20% of the people thought that cruise might be for them, the 80% ignored us. Now all of a sudden, these people are looking at our industry through the ship building and the expansion. You can now take a cruise from almost every port in the world. You can start a cruise. We have four ships that are going to be doing four different types of itineraries out of the Port of Miami. And by the way, from an environmental point of view, we have an optic technology we're even making our itineraries the most efficient they can be, so we burn less fuel. Every itinerary is scrutinized about that. So when you think about 2050, I think that our industry may be on top of the world only because what we've seen the last 50 years and what the next 20 or so may be. We are now not a niche; we are mainstream, and we're delivering on our promises to our guests, and we're doing it efficiently, and we're still making profits, and we're going to still build more ships. So I think you're going to see maybe not much bigger than what we're bringing on April next year. We're bringing our biggest and newest ship, the World America, with shore power. It's a magnificent ship. It's going to start its cruising life right here on April 9th. It'll stay here for as long as can be. And we'll keep building more World America ships, and we're looking for more technology for better fuel because sometimes the fuels are not available for us to reduce the carbon, but we're looking for them and we'll find them. So I think our industry will be on top of the world.

6,500 or so. She's 200,000 tons, a couple thousand crew members. But the size – let me give you one example of my experience, what I learned that we did differently that made us better. Years ago, when I talked about those 800-passenger ships, the space ratio was 20 – that meant that there were 20 square whatever for every guest on board. Even though the ships now are five times bigger, the space ratio is 40, meaning we not only built them bigger to carry 6,000, but now each one of those people have twice as much space as they would have had on a ship of a previous generation. That took money. We had to build bigger rooms and bigger lounges and all that stuff. So our investment also had the vision that we needed to give people the most incredible experience in the most incredible environment and give them a type of vacation that doesn't exist anywhere else. And we think MSC is the best place to do that. Thank you very much.