In this episode, we catch up with the CEO of MSC Explora Journeys, Michael Ungerer. MSC Explora Journeys is a new luxury cruise line operated by the Mediterranean Shipping Company (MSC).
MSC Explora's first cruise is expected to take place in May 2023. Mr Ungerer talks to us about the challenges of starting a luxury cruise line in the heat of the pandemic, hiring online, and his views on the future of the luxury hospitality sector.
Like MSC, Explora Journeys is owned by the Aponte family. The family has a rich seafaring history that goes all the way back to 1765 when the felucca named Giovannina plied routes in Italian waters (Naples, Castellamare, Calabria, and Sicily).
Fast forward to 1970 when Gianluigi Aponte founded the Mediterranean Shipping Company with one ship. Today, MSC is a global shipping powerhouse that's now diversifying into luxury cruises through Explora Journeys.
Having plied the ocean for 300+ years, seafaring is part of the Aponte family's DNA. Michael says this long family tradition is important because it provides a wealth of experience to draw from. For example, it has shaped their long-term thinking, as Michael says:
We take a very long-term view of things. We don't think in (sic) quarter to quarter or from one year to the next but in generations. In this business, once you order ships, they're there for 20 to 30 years or longer, so you better have a long-term view."
Another example is how the company approaches sustainability. Now that MSC is diversifying into luxury cruises, it's particularly important to preserve the ocean in all its beauty and diversity.
These values are embedded into the company's mission and culture, and we too can learn how to shape our thinking and values to reflect long-term strategic planning.
By 2018, Explora Journeys had already committed €2 billion to its first series of four ships. By the time Michael Ungerer took over as CEO in 2019 and the pandemic hit in 2020, the ships were under construction.
The company was still new by this point—just a name on official papers. Michael first hired the head of IT, but the company also invested a lot of money in conducting research on the prospective market. He says they surveyed about 20,000 guests in the luxury segment around the world.
This data-backed go-to-market strategy was a wise step. Even though the company was still young, it provide precious insights that helped Explora Journeys align itself in the highly competitive market. As Michael says later in the podcast,
"Luxury today is not about abundance and material (sic) things anymore because, in that segment, everyone is able to afford whatever they like. So they're searching for meaningful choices and experiences."
Through the research, Michael says that the luxury market is quite homogenous in various geographic locations, from Western Europe to the US, Canada, Asia, and Australia. For these people, the biggest luxury is time and space, and these are the things the Explora Journeys brand is built around.
And then the pandemic hit.
At first, Explora Journeys was primarily a B2B brand leveraging the luxury travel market. Initial plans were to launch the brand in 2020, but that had to change many times. With no experience dealing with a situation like the pandemic, Michael and his growing team had to be agile and keep adjusting to the rapidly changing business environment.
Like many other companies, Explora Journeys turned to online productivity tools like Microsoft Teams during the pandemic. Recruiting, hiring, and onboarding all had to be done remotely.
Most of the work was also remote which, as you can imagine, was strange for a business that primarily relies on human interaction and engagement.
Although It was a novel experience for Michael, he says that he's happy with the people he hired after meeting them in 2022. In fact, he thinks it was a huge advantage because he could take full advantage of the diversity and talent in the market.
Michael says that one of his biggest advantages was that he was not bound to any sort of box or structure where he had to fill certain positions or tick certain boxes on a chart. Instead, he focused on talent, skills, professional background and attitude. He says he looked for people not just in shipping or luxury cruises, but in the wider hospitality and luxury goods industries.
The result was a diverse, global team of 45 employees from 23 different nationalities. Michael explains that despite this mix of diversity, he looks for one main thing: a passionate attitude for dealing with people.
He's right in saying that the luxury cruise industry (and hospitality in general) is all about passion. Professional experience can be gained, but character traits and attitudes are impossible to teach.
This is particularly important for young people in the hospitality industry today. Not many leaders are as bold as Mr Ungerer to say what they really look for. In this industry, it's important for young people to remain positive and passionate even when working long hours with a diverse range of people.
In a previous podcast, one of Mr McKay's guests who heads one of the wealthiest Swiss banking families said that those who are well-off were not as badly hit by the economic effects of the pandemic. Mr Ungerer agrees that the luxury market that Explora Journey targets are more resilient to economic downturns.
However, the cruise industry stopped in early 2020. The people who were taking these cruise vacations couldn't do so even though they could afford them, so there was a lot of pent-up demand when restrictions were lifted in 2021. People couldn't wait to book their cruise again, but it would take months before the industry was fully back on its feet.
The luxury industry is known to have a long lead time. This is an advantage for Explora Journeys, which expects to have its first cruise in the second quarter of 2023. Michael says that they're already experiencing a lot of interest for 2023 and beyond, showing that the market is still going strong.
As a company that makes a living off the oceans, Explora Journeys and MSC as a whole must work hard to be sustainable. Michael says they've taken several steps towards this already.
For starters, the company has joined the UN Net Zero Coalition, which is made up of countries, cities, businesses, and various institutions that have pledged to achieve net zero carbon emissions by 2050. By comparison, the International Maritime Organisation aims to cut carbon emissions by at least 50% by 2050.
Explora Journeys has been exploring several technological solutions in partnership with other stakeholders. These include the use of liquified natural gas (LNG) as fuel as well as powering ships with hydrogen cells, electric batteries or other forms of green energy when they're docked.
Micheal agrees that, like in the aviation industry, net-zero emissions will only be possible if all stakeholders, including the government, work together.
Explora Journeys is also working to restore the environment. Michael says the Aponte family, through the MSC Foundation, has purchased an island in the Bahamas that was once an industrial wasteland left over from sand mining operations.
The Foundation has since restored the island and built a marine conservation centre to grow super corals. Less than a year after restoration, marine life is already flourishing, with corals, fishes and sharks coming back to the island's waters.
Micheal reiterates the importance of long-term thinking to the company, and part of that is thinking about the clients and employees of tomorrow. The luxury cruise segment only makes up 3–4% of the luxury travel segment, so Explora Journeys needs to look at the bigger picture from a market and people perspective. They call that next-gen luxury travelers and hospitality employees.
Michael says the company takes an active role in promoting this agenda. In addition to being part of the EHL Alliance, the company has been taking on interns, some of whom are already full-time employees. Explora Journeys believes in offering these opportunities to young people as part of its mission to promote young talent.
Michael also believes that education is vital in developing a career in hospitality. Drawing from his own life experience, he says that although it might be good to explore other industries as well, hospitality is rewarding to those who further their studies and career in the industry.
The company also did a student project with EHL in 2022. A group of students was asked to think about new ideas for the luxury cruise industry as part of their final school project. Some of the most interesting proposals include a fragrance bar, spiceology and stargazing as part of luxury cruise offerings.
Michael is proud of his background in hospitality. He grew up in Austria and later moved to the US, where his family opened a restaurant. He also worked in a few restaurants there before getting involved in cruise lines.
Michael had dropped out of the university while in Austria, but he went back to school in between work and got his degree in hospitality. He later attended the London Business School where he got his MBA.
That's certainly an unconventional career path, but it was the perfect blend he needed to prepare him for the opportunity of a lifetime in starting a luxury cruise company from scratch. We can certainly learn a lot from his wealth of knowledge and experience as we watch MSC Explora Journeys conquer the oceans.