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Seatrade Europe coverage - Appetite for financing ocean and river cruises has returned

Details: Written by Teijo Niemelä Teijo Niemelä; Category: Top Headlines Top Headlines; Published: 15 September 2015 15 September 2015

Alan Lam reporting from Hamburg

During the session on finance for ocean and river cruises at this year’s Seatrade Europe, held in Hamburg, the panellists from various leading maritime finance institutions and consultancies in Europe declared that appetites for financing cruise shipping had returned after the recent financial meltdown.

The funds for financing newbuildings and new companies are once again in place. Not only there are a number of ways of financing a new cruise enterprise or initiative, there are plenty of private and public investors interested in and willing to investing in the sector, which is no longer deemed as a “grey” investment, but a “white” one; by this it means that the industry is now a reliable and established business for investors who can legitimately expect healthy returns.

The money is there, we are told, and there is plenty of it. “Banks are ready to finance shipping again,” said Dr. Dieter E. Jansen of Dr. Jansen Newsmedia AG & EXXECNews. “Unbelievable amount of money is deposited in private bank accounts from which they generate no return. They [the account holders] are looking for investment opportunities. They are hungry for return. Anything more than 0% is a big deal today.”

The traditionally popular oil and gas market is not performing well either. Investors are now eager to put money elsewhere, such as in cruise businesses.

The financing options seem limitless, too. Besides bonds and shares issues, there are other tools like exports credits, direct state lending, combine bank and public financing, direct and indirect financing. In the USA, SPACs (Special Purpose Acquisition Companies) have emerged and available to finance cruise enterprises.

Banks are more willing to take risks in cruise enterprises, which are now considered to be a more stable industry. They continue to form consortium, often made up of 10-15 banks, to finance bigger and bigger projects. The German bank KfW, for example, is currently financing 47 newbuildings on Viking River Cruises.

As a tribute to the efforts made by the industry in recent years in promoting the economic and social benefits of cruise business, there is now also a growing appetite among governments to finance cruise shipping. There are a handful of 100% state financed projects currently underway in various parts of the world.

This is an immense opportunity on offer for the sector at the moment. While major cruise lines can relay on their own liquidity and shareholders to fund their schemes, smaller companies and new start-ups can rely on public and private financing.

Seatrade Europe addressing multiple issues

Details: Written by Teijo Niemelä Teijo Niemelä; Category: Top Headlines Top Headlines; Published: 10 September 2015 10 September 2015

Seatrade Europe, the bi-annual cruise industry gathering in Hamburg, was kicked off this morning (9 September) with the State of the Industry address by the eloquent Pierfrancesco Vago, Chairman, CLIA Europe & Executive Chairman, MSC Cruises. He sounded a positive note by highlighting the immense growth that had been achieved by the cruise industry in Europe. But the growth has been faltering in the last two years due to a number issues.

The pressing issue

The most pressing issue is finding a way of reversing the slowdown in European cruise business. Only 0.5% growth in passenger numbers and 2% increase in revenue were recorded between 2013 and 2014. A lot of this, according to Pierfrancesco Vago, was due to the 11.2% reduction in capacity deployed in the Mediterranean, which, in turn, was due to geopolitical issues and the unfavourable exchange rates.

In his view, Europe could return to the golden years of growth if all the necessary frameworks were in place and the issues plaguing the industry were properly addressed. These issues included patchwork applications of the EU Sulphur Directive and the inadequacy of port reception facilities. “How can we grow if we have only a handful of ports that can discharge waste water?” he asked.

The industry also needed to source passengers from outside of Europe. This suggestion once again brought to fore the stringent visa policy exercised by the Schengen member states. Visa reform was not happening quick enough, according to Dominic Paul, SVP International, Royal Caribbean International, Celebrity Cruises & Azamara Club Cruises, and Managing Director, RCL Cruises Ltd., who cited a survey suggesting that about 20% of Asians were dissuaded from coming to Europe during the visa application process. 

But Michael Thamm, CEO, Costa Group, looked at the visa issue from another angle. “Is visa really our number one priority?” he asked. “What about the low penetration rate? Only 1% of the population in Europe is cruising. We ought to look at the potentials closer to home.” Europe certain has no shortage of opportunities when it comes to growth.

The geopolitical issue

The cruise industry seemed to have learned to cope with geopolitical conflicts better in recent years, to the point that it no longer sees them as an issue. “We have been able to absorb the fallout from Tunisia,” said David Dingle, Chairman, Carnival UK & Vice Chairman, CLIA Europe. “The industry is getting more used to geopolitical conflicts. We are now very good at finding alternatives; we are good at opening up new ports; and we are also good at encouraging Europeans to cruise beyond Europe.”

Geopolitics has also become less of an issue for the industry’s customers. “People are well informed of the reality,” said Manfredi Lefebvre d’Ovidio, Chairman, Silversea Cruises. “They still go to France, for example, despite what happened there recently.”

“We have not noticed any of our passengers cancelling for geopolitical reasons,” said Wybcke Meier, CEO, TUI Cruises GmbH. “Our passengers depend on us and trust us to keep them safe.”

“One of the big advantage of our industry is that we are able to re-group and re-deploy,” said Karl J. Pojer, CEO, Hapag-Lloyd Cruises. “We think very carefully what we do. Our passengers are becoming more and more informed. They follow world affairs and they know what is going on.”

Driving the objectives

Various suggestions were put forward in an effort to address other issues, such as port congestions, logistics, local resistance to cruise business and environmental protections. “Much depends on the level of engagement we have with ports and help them understand the value of cruise industry,” said David Dingle. “The onus is on the cruise industry to drive its objectives harder.”

Cooperation and dialogue were again highlighted as the way forward for the cruise industry in Europe. “Only by working together can Europe remain a cruise powerhouse,” said Pierfrancesco Vago. “We face some big challenges; CLIA and the cruise industry will do whatever is necessary to overcome them.”

“There is a fundamental issue here in Europe,” concluded David Dingle, “that is, Europe is very good at regulating, but not good at spotting opportunities. CLIA will engage and address this issue through dialogues between all interested parties.”

The conference continues …

Carnival Liberty to return back to San Juan

Details: Written by Teijo Niemelä Teijo Niemelä; Category: Top Headlines Top Headlines; Published: 09 September 2015 09 September 2015

The Carnival Liberty continues to remain in St. Thomas following an engine fire that occurred yesterday while the ship was docked there during a scheduled port of call visit. The ship’s command is presently awaiting permission from authorities to sail.

Once the vessel departs, it is scheduled to return to its homeport of San Juan. Guests will have the option of remaining on board through the rest of the week and exploring San Juan or disembarking and traveling home. If clearance to depart St. Thomas is not received by later this evening, the company will move forward with arrangements to fly all guests home from St. Thomas.

All guests are being provided with a full refund of their cruise as well as a 50 percent discount on a future cruise. This is in addition to a $150 per person credit that has already been applied to guests’ shipboard accounts.

There were no injuries to guests or crew as a result of the fire which was extinguished by the ship’s automated suppression system. All hotel services including air conditioning, elevators, toilets, galleys, etc. are fully functional and the ship’s normal array of activities, entertainment, dining options and programming are being offered.

We apologize to our guests for this unexpected disruption to their vacation and the inconvenience they are experiencing.

Carnival Liberty departed San Juan on Sunday for a seven-day Caribbean cruise with 3,346 guests and 1,150 crew on board.

Carnival Liberty suffers engine room fire while docked in St. Thomas

Details: Written by Teijo Niemelä Teijo Niemelä; Category: Top Headlines Top Headlines; Published: 07 September 2015 07 September 2015

Carnival Cruise Line has issued a statement on Monday's engine room fire on the Carnival Liberty:

"Earlier today, while the Carnival Liberty was docked in St. Thomas, there was a fire in the ship's engine room. There were no reported injuries to guests or crew. The fire has been extinguished by the ship's automated suppression system and crew have confirmed the fire is out. The cause of the fire has yet to be determined.

All guests are safely ashore in St. Thomas where Carnival personnel have been providing refreshments and updates. At this time, we are offering guests the opportunity to relax in a reception area of a nearby hotel while we await for the ship to receive clearance from the authorities.

We apologize to our guests for the inconvenience and we look forward to welcoming them back onboard later this evening. The ship is expected to sail no earlier than 8:00 PM.

Updates will be provided as additional information becomes available.

Carnival Liberty is on the second day of a 7-night Caribbean cruise that departed San Juan yesterday."

New delivery schedule for AIDAprima

Details: Written by Teijo Niemelä Teijo Niemelä; Category: Top Headlines Top Headlines; Published: 03 September 2015 03 September 2015

Earlier last month Mitsubishi Heavy Industries, Ltd. (MHI) announced a delay in delivery of its first large-sized next-generation cruise ship to AIDA Cruises currently under construction at the company's Nagasaki Shipyard & Machinery Works in Nagasaki, which had been scheduled for delivery in September. Now MHI has agreed with AIDA Cruises to set December as the new handover schedule of the first ship. The new schedule was decided working closely with AIDA Cruises to ensure delivery of a first-class passenger ship of the very highest levels of quality, comfort and entertainment.

MHI is constructing two new-generation cruise ships for AIDA Cruises, bringing together its full complement of shipbuilding technologies accumulated to date.

Going forward the company will continue its marketing activities to attract orders for large-size ships equipped with leading-edge technologies to reduce fuel consumption, ease environmental impact, and provide the highest levels of comfort and entertainment features.