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CBR Odo Commentary: Revival of second hand market good news

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Written by Kari Reinikainen Kari Reinikainen

Category: Top Headlines Top Headlines

Published: 26 November 2014 26 November 2014

Recent revival of the second hand market for cruise ships is good news for the industry – and more so for the smaller players than the bigger ones.

Norwegian Cruise Line Holding group’s acquisition of Ocean Princess from Princess Cruises, the sale of Costa Celebration to an undisclosed buyer – perhaps HNA in China that acquired its sister ship some years ago – and Cruise & Maritime Voyage (CMV)’s acquisition of Grand Holiday from Costa Crociere have all taken place in a scope of a few weeks. Finally, Celestyal Cruises, part of the Cyprus based Louis Group, has acquired the 2002 built Ocean Explorer of 24,308 gross tons.

While CMV has not said whether it has actually bought or just chartered the 1985 built Grand Holiday that it will introduce as Magellan in March, the legal form of the deal is not the most important aspect here. That is the fact that this company is growing – it will also introduce the 550 passenger Azores in January – and that with Magellan it is ready to move to bigger tonnage than what it so far employs.

Companies like CMV and Fred. Olsen Cruise Lines prefer to use smaller ships. However, now CMV has accepted that there is virtually nothing available on the second hand market in the 600 to 1,000 passenger capacity range that it has preferred so far. Nothing remotely modern, that is, apart from luxury grade vessels that do not fit in its portfolio.

Magellan, of 46,502 gross tons, will offer 1,250 lower berths. Fred. Olsen Cruise Lines made the same move with Balmoral, of some 45,000 gross tons and 1,350 lower berths, way back in 2008.

New life on the second hand market means that downward pressure on asset prices that plagued the sector earlier this year will probably ease. It was felt in the first and second generation category in particular, embracing ships built in the 1970s and 1980s. However, the recent sale for scrap of the 1971 built Discovery by the UK based All Leisure group indicates that these first generation cruise ships only attract demolition buyers.

As the average size of cruise ships continues to grow, we think that companies like CMV, Thomson Cruises and Fred. Olsen in the UK plus Phoenix Seereisen in Germany will have to accept that renewal of their fleets will have to mean bigger ships than so far.

Tonnage will really start to become abundant in the third generation, early 1990s built sector, with the 2,000 passenger capacity, 70,000 gross ton Fantasy class of Carnival Cruise Lines as the most numerous class. We think second tier operators in the UK and in Germany should not shun ships of this size. Fleet renewal will have to be their primary interest in the not too distant future.

Norwegian Cruise Line Holdings acquires Ocean Princess

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Written by Teijo Niemelä Teijo Niemelä

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Published: 25 November 2014 25 November 2014

Norwegian Cruise Line Holdings Ltd. today announced a definitive agreement with Princess Cruises, Ltd. to purchase Ocean Princess for its newly acquired Oceania Cruises brand.  The 684-passenger ship joins Oceania Cruises’ trio of award-winning sister ships Insignia, Regatta and Nautica.  The new addition will be named Sirena.

Upon delivery in March 2016, Sirena will immediately undergo a 35-day, $40 million refurbishment in Marseille, France to elevate the ship to the Oceania Cruises’ standard of elegance. Drawing on the recent transformation of Insignia as inspiration, the ship will feature Oceania Cruises’ renowned specialty dining restaurants, Toscana and Polo Grill, along with more recent additions to the fleet such as Baristas and the cook-to-order grill at Terrace Café.  The ship will welcome her first guests in late April 2016.

The addition of Sirena, along with the recently completed refurbishment of Insignia, Nautica and Regatta, demonstrates Oceania Cruises’ unwavering commitment to mid-size ships and destination orientated cruising.  With Sirena, Oceania Cruises will expand the number and diversity of destination-rich itineraries offered, appealing to both seasoned world travelers and passionate cruisers.

“The acquisition of Sirena provides measured capacity growth based on the proven platform of Oceania Cruises’ highly regarded mid-size ships,” said Kevin Sheehan, president and chief executive officer of Norwegian Cruise Line Holdings Ltd, parent company of Oceania Cruises. “Our belief in the Oceania Cruises brand and our commitment to its growing base of loyal guests were the rationale behind our decision to bring Sirena into the fleet.”

“The addition of Sirena opens up an entire array of new itinerary options for Oceania Cruises as we think about our deployment strategy,” added Kunal S. Kamlani, president and chief operating officer of Oceania Cruises. “The award-winning guest experience delivered on our ships, coupled with a collection of innovative itineraries that cater to new markets, will combine for an alluring siren song for both our current and future guests.”

The inaugural season for Sirena will be released in late February 2015 with reservations opening on March 4, 2015.

Star Cruises to homeport its 2016 new ship in Hong Kong

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Written by Teijo Niemelä Teijo Niemelä

Category: Top Headlines Top Headlines

Published: 23 November 2014 23 November 2014

It has just been revealed that the Asia-focused Star Cruises will homeport its first newbuilding in Hong Kong. Alan Lam reports.

During the session on the state of the cruise industry in Asia at this year’s Cruise Shipping Asia-Pacific, Michael Hackman, Star Cruises’ EVP, Marine Operations and New Shipbuilding, divulged that the line’s 3,364-lower berth and 150,000-gross tonne new ship, currently on order at Meyer Werft in Germany, will be homeporting at Hong Kong’s Kai Tak International Cruise Terminal.
The ship is due for delivery in 2016.

Although no firm decision has been made yet, Hackman also disclosed that it was likely that the second newbuilding, due for delivery a year later in 2017, would also be operating from the same terminal.

This revelation came as welcoming news for Kai Tak, which will enjoy a more than doubled number of cruise calls next year and hopes that its troubled days will soon be behind it.

Michael Hackman underlined that Star Cruises was totally committed to Asia and it had no ambition of going elsewhere in the immediate future. The line currently operates two vessels, SuperStar Virgo and Star Pisces, from Hong Kong’s Ocean terminal.

Royal Caribbean Cruises Ltd. and Ctrip forms a joint venture

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Written by Teijo Niemelä Teijo Niemelä

Category: Top Headlines Top Headlines

Published: 21 November 2014 21 November 2014

Royal Caribbean Cruises Ltd. and Ctrip.com International Ltd. today announced that they have agreed to form a strategic partnership through SkySea Cruises, a joint venture which is designed to serve the Chinese cruise market. Royal Caribbean and Ctrip will each own 35% of the new company, with the balance being owned by SkySea management and a private equity fund. The transaction is expected to close before the end of November.

"We look forward to working with Ctrip, a Chinese travel leader, to build a national cruise line for China," said Richard D. Fain, chairman and chief executive officer of Royal Caribbean Cruises Ltd. "SkySea Cruises represents an important strategic milestone in our expansion efforts in the Chinese market."

"Our partnership with Royal Caribbean Cruises Ltd. will allow us to bring the very best cruise vacations tailor-made for Chinese travelers," said Min Fan, chairman and chief executive officer of SkySea Cruises. "We expect SkySea cruises to be an integral part of China's fast growing cruise market."

The new cruise line will begin service in the middle of 2015 and will operate with one ship. The venture anticipates the potential for additional vessels to be added over time. Sales and marketing activities have commenced.