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Investments to transform Crystal from cruise to lifestyle company

  • Written by Kari Reinikainen

Crystal Cruises, the luxury cruise brand in the Genting Hong Kong group, will retain its existing two ships as it embarks on a growth programme that will transform it to a lifestyle company, company officials said.

Crystal has invested so much money in upgrades of the 1995 built Crystal Symphony and the 2003 built Crystal Serenade that selling them is not an option, said Claudius Dockekal, vp deployment. The introduction of a series of newbuildings of about 100,000 gross tons that will accommodate 1,000 passengers will create a new upper echelon for the Crystal's ocean cruise operation, he said on board Crystal Symphony on Monday.

The planned new vessels that will be built at Lloyd Werft in Germany will have significantly larger cabins than those on the existing two ships and they will have one crew member for each passenger, said Paul M. Garcia, director of public relations at Los Angeles based Crystal Cruises.

He said that the all suite stateroom accommodation will also have higher ceilings, about 8.2 feet, to add to the feeling of luxury and spaciousness.

Expansion of Crystal in river cruising - it is building two river yachts - follows an explosion-like increase in the demand for cruising in Western European inland waterways, Dockekal said. However, the ability of the waterways and port facilities to accommodate a growing number of river cruise vessels is a major concern. Many operators rush their ships from one city to another, but this will not be the approach of Crystal: its river yachts will spend extended periods in ports of call to allow passengers to immerse themselves with each destination.

Expansion into river cruises was the most popular suggestion that Crystal's customers made to the company, he added.

Celebrity Esprit, the former MegaStar Taurus, which will be converted into 62 passenger yacht to launch Crystal Yacht Cruises, will also be used on the charter market as groups of wealthy individuals could charter it for their private use rather than to sail on an advertised itinerary, Garcia stated.

The company will also introduce a Boeing Dreamliner passenger jet, which will be operated on e.g. 28 night trips around the world. The itineraries will be design so that visit to destinations should coincide with a major event there. The plane will be operated and managed by a third party but marketed under the Crystal brand by the company itself.

Finally, the new ocean going ships will also have up to 48 private residences, although the actual number will depend of the demand, which again decides the size of the various apartments that will be built. Together with their own restaurant and other facilities, this section will occupy an entire deck on each ship. The residence customers will have access to use the other facilities on board.

"We are changing from a cruise company to a lifestyle company," Garcia described the outcome of the planned investment.

TUI AG remains upbeat of performance of its cruise brands

  • Written by Kari Reinikainen

TUI AG, the Hannover bawd travel group whose shares are main listed in London, retains an upbeat outlook of its cruise shipping activities.

The company owns 50% of the premium market TUI Cruises unit that caters for the German market, plus 100% of Hapag-Lloyd Kreuzfahrten.

"In Cruises, TUI Cruises underlying EBITA grew by €11m in the quarter, reflecting the full year benefit of Mein Schiff 3 (launched June 2014) and the launch of Mein Schiff 4 (launched June 2015),” the company said in its none month to 30 june interim result statement.

In addition, the continued turnaround of Hapag-Lloyd Kreuzfahrten and €4m benefit from the refinancing of Europa 2 meant that Cruises delivered a €21m increase in underlying EBITA.

“TUI Cruises operates in the high growth, underpenetrated premium German market. We have a strong competitive advantage, having secured additional capacity. In June 2015, TUI Cruises launched Mein Schiff 4 and announced that it will add two further ships (Mein Schiff 7 & 8) in 2018 and 2019, with Mein Schiff 1 and Mein Schiff 2 to be redeployed to Thomson Cruises as it modernises its fleet,” TUI said.

With Hapag-Lloyd Kreuzfahrten, we continue to focus on luxury and expedition cruises. The successful repositioning of the brand has been completed and the turnaround is on-track for this year.

The Supervisory Board of TUI AG and the Board of Royal Caribbean Cruises have decided in May to convert the purchase options for Mein Schiff 7 and Mein Schiff 8 into firm orders as the German cruise market is enjoying further growth. The ships are expected to be delivered in 2018 and 2019.

The new cruise liners will be slightly bigger than their predecessors, having 2,860 lower berth each. Both ships will be built by Meyer Turku (Finland) as all new TUI Cruises ships. The purchase will be financed within the TUI Cruises Joint Venture without further contribution from TUI AG and Royal Caribbean Cruises Ltd, (RCCL), which owns the other 50% of TUI Cruises.

“In the framework of exercising our purchase option it was agreed that Mein Schiff 1 and Mein Schiff 2 will be moved to Thomson Cruises in the next few years in order to continue the modernisation of the UK cruise operations. These two steps will complete our growth and modernisation roadmap in the cruise segment,” TUI said.

CLIA President & CEO resigns

  • Written by Teijo Niemelä

Cruise Lines International Association (CLIA) today announced that Thomas P. Ostebo who recently joined CLIA as President and CEO has stepped down from the position immediately, due to personal reasons.

In the interim, Cindy D'Aoust, Executive Vice President of Membership and Operations, will assume the role of acting CEO and oversee the management of global operations and the CLIA leadership teams until CLIA appoints a permanent CEO.

"CLIA's current leadership team is doing an outstanding job supporting our membership and driving the vision of the organization globally, even during this time of transition," said Global CLIA Chairman Adam M. Goldstein, President and COO of Royal Caribbean Cruises Ltd. "While it is unfortunate that Tom is departing CLIA, his desire to put his family first is a testament to his character, and we wish him the best in all his future endeavors."

Port of Seattle signs 15-year lease with Norwegian Cruise Line Holdings

  • Written by Teijo Niemelä

The Port of Seattle signed a historic 15-year lease yesterday with Norwegian Cruise Line Holdings, parent company of Norwegian Cruise Line, Oceania Cruises and Regent Seven Seas Cruises.  The deal secures NCLH ships in Seattle for the full term of the lease and provides passenger volume guarantees estimated to bring $73 million dollars of revenue to the port.

“We thank Norwegian Cruise Line for their commitment to Seattle and the Alaska cruise business,” said Commissioner John Creighton. “Cruise in Seattle means $440 million in annual economic impact for this region.  This deal means more growth, which means more jobs.”

“Alaska is a favorite cruise destination for guests on all three of our brands and Seattle, with its incredible culinary offerings, luxurious accommodations and outstanding attractions, makes for an ideal homeport,” shared Frank Del Rio, chief executive officer for Norwegian Cruise Line Holdings Ltd.  “With primary use of the world-class facilities at Pier 66, we can further customize our guests’ pre- and post-cruise experience and better align it with the superior service levels offered by our three award-winning brands.”   

“This is a historic deal for the Port of Seattle,” said Port of Seattle CEO Ted Fick. “A 15-year lease for a cruise terminal is unprecedented on the West Coast. Norwegian Cruise Line is showing real vision by investing in the economic growth of this region.”

In addition NCLH will make tenant improvements to the Bell Street Cruise Terminal estimated at $30 million which will significantly expand the portion of the P66 facilities used for processing cruise passengers. Under the new lease NCLH will manage the cruise operations at P66 and will have priority rights to the cruise vessel berth during the cruise season. The port will operate the facilities outside the cruise season. The capital investment to complete the terminal improvements will be shared between the Port and NCLH. The 15-year business commitment is estimated to generate over $2 billion in total business revenue for the region, nearly 900 jobs, and over $65 million in state and local taxes.

The agreement also includes language that will establish a Project Labor Agreement (PLA) between the tenant’s general contractor and the building trades.

"We commend the Port of Seattle for their expansion of Project Labor Agreements." said Monty Anderson of the Seattle Building Trades. “This not only insures quality construction, this expansion opens the door for local residents to join apprenticeship programs that lead into great paying construction careers.”  

Seattle’s cruise business—currently leading all cruise homeports on the U.S. west coast in passenger volume—is responsible for over 3,600 jobs, $441 million in annual business revenue, and $17.2 million annually in state and local tax revenues.  Each homeport vessel call generates $2.5 million for the local economy.

Lacking investment, British market appears to fall even further behind Germany

  • Written by Kari Reinikainen

An anaemic British cruise market appears to be unable to benefit from the country’s strong economy and to fall even further behind Germany due to lack of investment and exodus of ships.

The British market is poised to lose two high profile ships next year while there are no newbuildings on order to specially target it, while a total of eight new ships are on order to serve the German market.

As reported earlier, Royal Caribbean International will not bring back Anthem of the Seas that was completed in April next year following the ship’s initial season from Southampton. It will be replaced by the 2008 built Independence of the Seas that has served the British market earlier – initially year-round, but lately for just part of the year.

Princess Cruises will not bring back the Royal Princess that has sailed from the same port for the past two season – again, an older and smaller vessel will take its place.

Furthermore, Holland America Line will not have a ship in the UK in 2016 after Ryndam that has served from there for many years will be transferred to P&O Cruises Australia. Carnival Cruise Line, Norwegian Cruise Line and Costa Crociere have all ceased to base ships in British ports earlier, although all lines continue to sell fly cruises in the country.

The only addition to the British market known at the moment involves Thomson Cruises, which  is due to receive Royal Caribbean International’s 1996 built Splendour of the Seas next year to replace the 1982 built Island Escape, which will be withdrawn from service with the company.

In 2014, the British source market contracted by 4.8% to 1.64 million passengers, while the German market expanded by 5% to 1.77 million and overtook Britain as the world’s second largest source market, according to Cruise Line’s International Association (CLIA) figures. Cruise line executives and CLIA have said the contraction of the British market was due to reduced capacity on the said market.

However, they have not elaborated on why the supply side has been reduced in Britain. Usually, the yield that ships are expected to obtain is a significant factor in allotment of capacity.

The loss of momentum of the industry in Britain becomes even more striking when one looks at the performance of the two economies. Gross domestic product (GDP) in the UK grew by 3.2% in 2014, twice the 1.6% growth rate of Germany.

CBR 2/2015 contents

CBR 1/2015 contents

CBR 3/2014 contents