CBR-Odo Commentary: Acquisitions, ship sales indicate growing cruise industry dynamism

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Written by Kari Reinikainen Kari Reinikainen

Category: Top Headlines Top Headlines

Published: 03 March 2015 03 March 2015

Recent corporate acquisition and ship sale news suggest that the cruise industry is entering a period of growing dynamism after a number of years when weak earnings plagued it.

This morning's news that Genting Hong Kong, owner of Asia focused Star Cruises, has acquired Crystal Cruises, the Los Angeles based luxury market operator, from Nippon Yusen Kaisha (NYK) for $550 million, significantly raises the profile of Genting in the cruise industry.

It acquired Norwegian Cruise Line in 1999-2000, but over the years it has gradually reduced its stake: Norwegian is now a listed company and Genting's remaining stake cannot be seen as a strategic asset.

Genting has two 150,000 gross ton ships on order at Meyer Werft for Star Cruises, a move that reversed decline in the group's interest in cruising. Genting has also pledged to order a newbuilding for Crystal.

Norwegian's acquisition of Prestige gave it strong foothold on the premium market with Oceania Cruises and also on the luxury market with Regent Seven Seas Cruises. Norwegian Cruise Line is not, as yet, present in the Far East, but senior executives have indicated that this could be on the cards as new ships join the company's fleet.

To sum up, the acquisition of Prestige gave Norwegian group strong foothold in the market segments where it had no presence, while Norwegian Cruise Line's organic growth may soon bring to the Far East.

The picture is far less straightforward with Genting: Star Cruises is an Asia focused contemporary market brand, while Crystal Cruises has its focus on the top end of the US source market. The synergies are less clear here than in the case of Norwegian-Prestige.

Meanwhile, TUI AG's announcement on 02 March that its Hamburg based TUI Cruises joint venture with Royal Caribbean Cruises Ltd. (RCCL) has acquired the 69,130 gross ton Splendour of the Seas from RCCL marks a change in TUI Cruises' strategy. So far, it has operated ships solely under its own brand, but Splendour of the Seas will, after being renamed, join the fleet of TUI's UK based Thomson Cruises operation.

TUI has said that it wants to bring the TUI Cruises and Thomson Cruises operations closer to each other and that Thomson, which charters four of its five ships from third parties, could use owned tonnage in the future. The 1996 built Splendour of the Seas is a Vision class ship and given the fact that Thomson needs to move away from its mainly 1980s vintage tonnage, further transfers of these ships to the UK brand may well be on the cards. The fact that TUI Cruises owns the newly acquired vessel of Thomson Cruises brings this operation closer to the sphere of influence of RCCL.

Genting Hong Kong acquires Crystal Cruises

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Written by Teijo Niemelä Teijo Niemelä

Category: Top Headlines Top Headlines

Published: 03 March 2015 03 March 2015

Today, Nippon Yusen Kabushiki Kaisha (NYK), Crystal Cruises’ parent company since its inception in 1988, announced it has entered into an agreement with Genting Hong Kong (GHK), under which Crystal Cruises will be acquired by GHK. The acquisition is expected to close in the second quarter of 2015.

With the support of GHK’s financial strength and expertise in ship design, Crystal Cruises’ fleet size will expand with a new ship, elevating the standard of luxury cruising and luxury cruise ships. Crystal’s fleet currently features Crystal Symphony and Crystal Serenity.

“After 25 successful years with NYK, we are excited to have Genting Hong Kong as the new owner of Crystal Cruises,” said Edie Rodriguez, President and COO of Crystal Cruises.  “The proposed expansion of our fleet will present our loyal Crystal Society members and new luxury cruise guests with more itinerary options, accommodation choices and exceptional vacation experiences, as we continue to position Crystal as the innovative leader in global luxury cruising. Additionally, Crystal’s veteran leadership, management and crew will continue to focus on our award-winning guest service and our strong partnership with the travel agent community - which now has a greater opportunity to grow their business with a larger menu of Crystal product offerings.”

Established in 1993, GHK is part of the Genting Group, a global hospitality and leisure company with business in over 20 countries, including the United States in New York, Florida and Nevada. GHK wholly owns Star Cruises, Asia’s leading cruise line, and is a major shareholder of Norwegian Cruise Line. It is a public company primarily listed on the Hong Kong Stock Exchange and secondarily on the Singapore Stock Exchange.

“Crystal Cruises offers the epitome of luxury cruising and the service standard which all other cruise lines aspire to,” said Tan Sri Lim Kok Thay, Chairman, CEO and Acting President of GHK. “The current management team and crew will continue to lead Crystal Cruises. Genting will provide financial resources and proven expertise in innovative ship design to build a new ship that will set the highest standard in luxury cruise ships. This new ship, together with Crystal’s legendary six-star service, will reinforce Crystal Cruises’ reputation as the world’s leading luxury cruise line for decades to come.”

Under the terms of the agreement, GHK will acquire Crystal Cruises for US$550 million in cash which is subject to certain adjustment items to be ascertained after the closing.  Crystal Cruises’ two ships have approximately 1,992 lower berths and the consideration has been determined on a cash-free and debt-free basis, translating into an enterprise value to lower berth ratio of approximately US$276,000.