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German cruise market expected to reach 2.0 million next year; 2.5 million in 2020

The German source market for cruises, which is among the fastest growing ones in the world, is anticipated to reach 2.0 million passengers next year and 2.5 million in 2015, Hamburg Cruise Center  (HCC) said in a statement.

“Experts forecast up to 2.0 million German ocean cruise passengers in 2015 and 2.5 million by 2020. This growth will further benefit the cruise hub Hamburg, which has to date 186 cruise calls scheduled for the 2014 season. As such, the number of passengers is due to increase to over 600,000 (+ 8%),” HCC said.

The year 2015 will see Hamburg take its next major step forward as a cruise destination, with the scheduled completion of the third cruise terminal and the positioning of the AIDAprima, which is planned to begin and end its cruises in Hamburg every seven days over 52 weeks of the year.

“Just in time, the new berth will go into operation. The location is across the river from Hamburg's current terminals, fewer than two kilometers away from many of the main sights in the center and a short ride by ferry. Traveling time to the international airport will be about half an hour,” the port said.

The facility will be constructed on a plot measuring approximately 20 hectares and comprise two terminal buildings (for incoming and outgoing passengers), a 1,800-square-meter baggage hall, vast quay space and parking for coaches and up to 1,546 cars. A separate landing stage will be built for local passenger ferries that will link the facility to the city center. This third terminal plans to open by June 2015, which will handle 6,000 to 8,000 passengers during a full 10-hour turnaround.

The cruise industry is a significant economic factor, justifying new infrastructure projects. The Chamber of Commerce has now for the second time presented accounts for the value creation of the cruise industry in Hamburg, based on the 2013 figures.

The total value creation resulting from cruise ships’ in port added up to nearly 25 million euros. This is supplemented by the value creation generated by cruise passengers and the ships’ crews. In total their spending is 21 million euros. But passengers are not the only ones to leave money behind them in the city – there are also day tourists who travel to Hamburg for ship’s christenings, Cruise Days and other events.

The value creation resulting from visits to the city by this category of person is around €32 million in the past year. As the fourth and last area, the study investigates the effects of the cruise industry on other industrial sectors. The value creation of all these associated with the cruise industry is around 192 million euros. All together this sector earns €270 million for the city.

AIDA Cruises reports 20% rise in 2013 passenger volume to 763,700

AIDAbella 565px

AIDA Cruises, the German unit in Carnival Corp & plc group, said it carried 763,700 passengers last year, an increase of 20% on 2012. "This means that the cruise company has grown twice as fast as the market as a whole. A new study by the CLIA (Cruise Lines International Association) and the DRV (German Travel Association) shows that the German market for ocean cruises grew by 9.2 percent in 2013 to 1.69 million passengers," the company said in a statement.

"Interest in ocean cruises remains high. Since we offer exceptional value for money, the best service, and innovative product ideas, we are consistently able to persuade new target groups to take a cruise with AIDA, without losing sight of our regular guests," said Michael Ungerer, President of AIDA Cruises, on the occasion of the world’'s leading tourism fair, ITB, in Berlin. "This success would not be possible without our many partners in the travel agency business. I thank all of them for our excellent working relationship."

The cruise company is also set for further growth in the coming years. The AIDA fleet – one of the most modern and energy efficient in the world – will increase in size from its current ten vessels to twelve by 2016. The first ship of the new AIDA Generation, AIDAprima, will be inaugurated and put into service in 2015.

AIDAprima’'s maiden voyage will take place from March 22 – June 16, 2015, taking it on a unique 86-night journey from Yokohama, Japan to Hamburg. AIDA guests will have a chance to visit 39 ports in 22 countries on three continents. From June 20, 2015, the port of Hamburg will be the start and end point for AIDAprima'’s 7-night round trips to the metropolises of Western Europe.

Cruise Business Commentary - Next few weeks in Ukraine hold key to Black Sea season

The cruise industry is waiting on its toes to see what way events in the Ukraine will develop and the next few weeks in the region will play a decisive role for the cruise season in the Black Sea, an industry expert says.

"So far, the events (in Ukraine) haven't had an impact, because the cruise season hasn't started yet. The next few weeks will be decisive," said Peter Wild, head of G.P. Wild (International), the UK based consultancy company.

"I am fairly sure that cruise lines are reviewing their itineraries," he told Cruise Business.

In case that the situation does not calm down, lines may be forced to redeploy vessels at a short notice. This has happened quite a few times in recent years as political unease in Northern Africa, from Tunisia in the west to Egypt in the east, has compromised plans of cruise operators.

A continued turmoil in the Ukraine is unlikely to affect the Mediterranean as such, because the Black Sea is viewed as a separate market. In addition, Turkey remains on the map of international tourism despite political upheavals there too.

The Eastern Mediterranean market continues to suffer from developments in Egypt, whereas the much more violent situation in Syria has not had much of an effect as that country has not been a mainstream destination of cruise lines, Wild pointed out.

The recently concluded winter Olympics in Sochi brought the Black Sea region into the spotlight and several ports in the area have actively promoted themselves as cruise destinations. Yalta in Crimea is one of the marquee ports in the region and it is located in the area affected by current turmoil. Odessa in the Ukraine is another core destination of Black Sea cruise itineraries.

Cruise Business Commentary - FOCL impairment charge highlights valuation concerns

KEY POINTS:

1.Company books NOK411 million impairment charges against fleet of four ships

2. These include 1993 built Braemar and 1988 built Balmoral

The decision of Fred. Olsen Cruise Lines to book an impairment charge against the value of its ships did not come as a surprise after All Leisure group in the UK had earlier this month booked a £6.7 million impairment against the value of its 1972 built Discovery of 20,636 gross tons.

However, what is noteworthy in the decision of Olsen is that it includes two ships that younger than 30 years, which is regarded as the depreciation time of major capital assets like ships. The company has reported losses for some time and as the valuation of any asset is ultimately dependent on its ability to generate profits for its owner, this could be understood.

Furthermore, all ships in the Olsen fleet have received major upgrades in the past decade, the two oldest units have been re-engined, while Braemar and Balmoral have been lengthened. This must have increased their book value.

A question that arises from today's news is whether the book values of third generation cruise ships, such as the Fantasy class of Carnival Cruise Lines and Sovereign class of Royal Caribbean Cruises Ltd. will require an impairment.

These ships that largely lack balcony cabins must obtain markedly lower yields than more modern tonnage that features more balconies. The question of valuation may, therefore, refuse to go away from the agenda.

Fred. Olsen books NOK411 million impairment charge against fleet

Fred. Olsen Cruise Lines (FOCL), which is jointly owned by Olsen family's two listed holding companies Ganger Rolf and Bonheur, has booked an NOK450 million impairment charge against its fleet of four vessels, Ganger Rolf said in a statement, adding that this dragged both the final quarter and full year 2013 results deep to the red.

"After an evaluation of estimated market values versus booked values of the vessels at year-end, FOCL has written down the book values of MV Braemar by NOK 145 million, MV Balmoral NOK 179 million, MV Boudicca NOK 46 million and MV Black Watch NOK 40 million," Ganger Rolf said.

Braemar is of 24,000 gross tons and it was built in 1993, while Balmoral is five years older and measures at 45,000 gross tons. Boudicca and Black Watch are of 28,000 gross tons and date to 1972-73. All ships are operated on the British market.

The news came about a week after All Leisure group, the listed British boutique cruise shippng company, had booked a £6.7 million charge against the 1972 built Discovery of 20,636 gross tons. The company said the values of mature cruise vessels had fallen markedly in recent times.

FOCL operating revenues in the final quarter of 2013 were NOK 349 million (NOK 337 million in 2012), while operating result before depreciation (EBITDA) was NOK - 9 million (NOK 15 million) and net result was NOK - 537 million (NOK -44 million). "Net result in the quarter is significantly influenced by an impairment of NOK 411 million on the cruise vessels," Ganger Rolf said.

For full year 2013,, FOCL had operating revenues of NOK 1,470 million (NOK 1,628 million). EBITDA were NOK 65 million (NOK 193 million) and net result was NOK - 637 million (NOK - 85 million), Ganger Rolf stated.

"The UK cruise market’s difficult economic conditions and overcapacity continued to result in lower sale and occupancy. The number of passenger days totaled 292 542 (301 935) for the quarter. Net ticket income per diem was 1 % lower compared to the corresponding quarter last year. The average spot price of fuel oil in the quarter was in line with 4 quarter 2012" Ganger Rolf commented.

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