Originally from the hospitality industry, Stephen Rey Tagud helped steer a struggling company to new directions.
Originally published by Seafarer Asia Health Issue on July 2016
Founded in 1932, the Negros Navigation Co., Inc. (NENACO) once played a vital role in inter-island travel for Filipinos. It was the first company to operate luxury ships in the Philippines, including the prestigious MV Dona Montserrat, the first ship to ply the archipelago and outlaying Asian countries like Indonesia, Malaysia, and Singapore.
Things changed, however, when the 1979 global oil crisis hit and took away the MV Dona Montserrat from NENACO. While the company continued to fare well in domestic shipping, it was once again wracked with a financial crisis in 1997, prompting it to enter corporate rehabilitation. It was finally in 2008, when a huge chunk of its market had shifted to air travel, that Stephen Rey Tagud—a wild card in maritime—was called in to help the company shape up and recover.
When Tagud first joined the company in 2009 as vice president of Corporate Manning, NENACO’s passenger business was struggling. Hired for his extensive background in the hospitality business, having worked for five-star hotels in the United States, Tagud identified different facets of the business that needed to change.
“When I joined, the ships were older, the food wasn’t good, accommodations were not okay, and sea travel was something to be endured because it was the cheap alternative. It was definitely not going to be an overnight transition,” he shares, admitting he was apprehensive about his role. Coming in at a very challenging phase of the business, however, prompted him to stay because he knew he could use his skills and expertise to turn things around.
Fresh from the 2008 global financial crisis, there were no investments coming into the country. Even for the second largest shipping company, funding was a problem. “The least costly item we could change that would have a big impact was the service,” points out Tagud, who had to personally train the staff proper customer service. He also became very particular about the quality of food onboard. “Just because your market is mass doesn’t mean they deserve not-so-good service and mediocre food,” he says.
When NENACO acquired Aboitiz Transport Corporation in 2010, they began remodeling their ships and revamping the interiors with hotel-like accommodations. “By that time, our food and service had already developed a reputation. People didn’t have to bring their baon (snacks) anymore because the food was good and affordable. We had to make sure those things were met, and then the aesthetics had come in,” he shares, adding their market was responding positively. Publicity also grew through social media and other channels.
Redefining sea travel
In 2012, NENACO retired its flagship brand and become 2GO Travel, currently the largest ferry company in the Philippines. With Stephen Tagud as Senior Vice President and Passage Commercial Officer, it now operates under the 2GO Group, Inc.
Five years since its revamp, 2GO’s market has increased significantly through special events. Eighty percent of its market is domestic. It has increased its offerings to include meetings, conferences, and other activities onboard as well.
In 2015, Tagud hosted a TV show called “Tripinas”, which aired at GMA News TV and with multimedia artist Solenn Heussaff showcasing the country’s many travel destinations. “We’re not just promoting 2GO Travel but also our travel destinations to help our branches as far as their local tourism is concerned,” shares Tagud. To make sea travel more affordable and convenient, 2GO began berthing its ships directly at tourist hotspots like Boracay, which could only be accessed through an expensive flight or a long Ro-Ro trip three years ago.
Partyphiles were also attracted to sea travel when 2GO converted some ships into party boats, hosting a number of parties that hyped on different fiestas and events like Sinulog and LaBoracay. With luxury hotel accommodations, seamless travels, good and affordable food, and taking entertainment a notch higher, the company had redefined domestic sea-travel into “a more intimate way of traveling with friends and families.”
According to Tagud, what the industry really needed was a shift in mindset. When he introduced the concept of revenue management and ricing tickets at a discount for early bookings, people doubted the strategy. Eventually, the market slowly adapted and shippers began booking weeks earlier.
What the industry really needed was a shift in mindset. When Tagud introduced the concept of revenue management and pricing tickets at a discount for early bookings, people doubted the strategy. Eventually, the market slowly adapted and shippers began booking weeks earlier. “People saw it was easier to manage the occupancy of the ship because they would know already, close to the sailing date, how many more they needed to sell,” he explains.
The company now tracks their revenue per ship. Currently, the group plies eight row boats that carry both passengers and cargo, five cargo ships, and six super cats for short distance travel. For row boats, 60 percent of revenue comes from cargo and 40 percent from passengers.
Being the majority player of shipping in the Philippines with 90 percent of the cargo market, Tagud claims that the cabotage law does not significantly affect their fleet. “While it allows foreign shipping lines to come directly to ports, they can’t do inter-country shipping so we still do [it],” he says. Port congestion has been a problem in smaller ports, however, such as those in Caticlan and Iloilo which only have one berthing place and foreign ships are prioritized. This means that delays caused by foreign ships will also be a delay to domestic ships. “I hope that the government can help us remedy the situation with adequate port facilities like in Manila,” says Tagud.
Passion and profession
Aside from Tr!pinoy, 2GO now also publishes Trip!, the first travel-by-the-sea magazine in the Philippines. “It started out as a newsletter onboard that received very good reviews,” shares Tagud, who decided to turn it into a full blown travel magazine that is now being distributed in malls and coffee shops.
Being a trained chef from Les Roches Switzerland, he also hosts a culinary show called “Foodtrip”, as Chef Stefano de Medici, with co-host actress Heart Evangelist. Another of Tagud’s TV stints is “Soundtrip” currently aired on E! Philippines to promote the OPM industry and local artist. Throughout all this, he shares his team always aims to travel and shoot the shows onboard vessels to promote his maritime cause. “I always try to tie it with the producers,” he reveals, adding 2GO had also started a retail brand for travel apparel called 2GO Gears.
With 2GO now growing fast, the creative VP feels the possibilities are limitless. “Everything I do is interconnected,” he says of his roles in and outside shipping. “My corporate job being an executive in a shipping company gives me the drive and passion to change a lot of things in the domestic passenger shipping industry,” he shares.