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TUI AG’s cruise bookings at higher prices but suffer from short lead times

Details: Written by Kari Reinikainen Kari Reinikainen; Category: More News More News; Published: 11 May 2022 11 May 2022

TUI AG, the German tour operator that operates a fleet of 16 ships, said that its bookings are running at higher prices to prior years, but noted that the recovery of the sector would be slower than the wider tourism sector as a result of short lead times of bookings.

“Since the beginning of April, all 16 ships across our three brands are back in operation. Compared to our other segments, Cruises recovery is expected to be slower with short-term bookings continue to represent a large share of overall bookings. We see H2 2022 calendar year building steadily. Bookings are currently trending at higher rates for all three cruise brands, in comparison to prior years,” the company said in a statement.

In three months to 31 March, it reported an underlying EBIT negative by €73.5 million, much deeper than the €55.0 million figure for the same period a year earlier. In the six months to the same date that is the first half of its financial year, the figure however, improved to negative by €105.3 million from €153.5 million.

The group’s cruises segment comprises the joint venture TUI Cruises, which operates cruise ships under the brands Mein Schiff and Hapag-Lloyd Cruises, and Marella Cruises.

In the six month period, cruises revenue, reflecting Marella Cruises solely (TUI Cruises consisting of Mein Schiff and Hapag-Lloyd Cruises is equity accounted) grew to €75.5 million, an improvement of €74.0 million year-on-year, reflecting the more normalised pre-pandemic travel environment, versus the prior year when Marella’s operations were sus-pended in line with UK government travel advice.

Second quarter revenue for Marella Cruises that operates in the UK grew to €41.3m respectively, improving €40.3m year-on-year. “Q2 underlying EBIT loss (including equity result for TUI Cruises) increased by €18.5m to €-73.5m loss due to Omicron restrictions introduced at the end of Q1 2022, which resulted in operational disruption costs for all three brands throughout January and February,” the company said.

Mein Schiff that operates on the German market saw January in particular impacted by short-term Omicron-related amendments, resulting in the cancellation of itineraries and a temporary operational pause for part of the fleet.

Four ships out of seven operated in January, five ships operated in February, returning to six ships from March as Omicron-related travel restrictions eased during the quarter. (Mein Schiff 5 already in use as a vaccination hub until February and Mein Schiff Herz in pre-planned lay-up until April),” TUI AG said

“Occupancy of the operated fleet in the second quarter was 51% as a result (Q2 2021: 34%). Q2 average daily rate of operated fleet was €138, up 55% versus prior year (Q2 2021: €89), with cruises operated in the Canaries, the Mediterranean, Caribbean, and United Arab Emirates during the second quarter, versus shorter average duration “Blue Cruises” operated in the prior year,” it added.

Hapag-Lloyd Cruises saw the same short-term Omicron-related amendments, resulting in the cancellation of itineraries and temporary operational pause of two ships, with three out of five operated in January and February, returning to full fleet of five from March as Omicron-related restrictions eased during the quarter.

“Q2 average daily rate of operated fleet was €606, an increase of 61% on prior year (Q2 2021: €376), re- flecting the resumption of worldwide itineraries versus European cruises in the prior year. Q2 occupancy of the operated fleet was 29% (Q2 2021 Q2: 29%), reflecting the previously discussed factors,” TUI AG said.

Similarly to Mein Schiff and Hapag-Lloyd Cruises, Marella operated a partial fleet throughout the second quarter, with just one ship out of four in operation in January, two in February and three in March as Omicron-related restrictions eased. “Q2 average daily rate of was £156 and occupancy was 53%, versus a previous Q2 which saw operations suspended in line with UK government travel advice,” TUI AG concluded.

Second quarter loss looms as bookings remain below pre-Covid but at higher prices, NCLH says

Details: Written by Kari Reinikainen Kari Reinikainen; Category: More News More News; Published: 11 May 2022 11 May 2022

Norwegian Cruise Line Holdings (NCLH), the world’s third largest listed cruise shipping company, said it expects to report a loss for the second quarter despite strong pricing as booking volumes remain below pre-Covid 19 levels.

“As a result of the COVID-19 pandemic, most recently fueled by the Omicron variant and the effects of the Russia-Ukraine conflict, while the Company cannot estimate the impact on its business, financial condition or near- or longer-term financial or operational results with certainty, it will report a net loss for the second quarter of 2022,” the company said in a statement.

NCLH dis not provide estimated future results on a GAAP basis because it is unable to predict, with reasonable certainty, the future movement of foreign exchange rates or the future impact of certain gains and charges. “These items are uncertain and will depend on several factors, including industry conditions, and could be material to the Company’s results computed in accordance with GAAP,” it said in a statement.

As a result of the temporary setbacks from Omicron and the Russia-Ukraine conflict, NCLH’s current cumulative booked position for the second half of 2022 is below the comparable 2019 period but at meaningfully higher pricing even when including the dilutive impact of future cruise credits (“FCCs”).

The booked position improves throughout the year with the fourth quarter of 2022 in line with the comparable 2019 period and at meaningfully higher prices. “Booking trends for 2023 continue to be positive with both booked position and pricing significantly higher and at record levels when compared to bookings for 2019 and pre-pandemic 2020 at a comparable point in the booking curve,” NCLH stated.

NCLH’s advance ticket sales balance, including the long-term portion, increased $418 million in the quarter to $2.2 billion as of March 31, 2022. This includes approximately $0.6 billion of FCCs or 27% of the total deposit balance. Gross advance ticket sales build was approximately $1.1 billion during the quarter, the highest level since the start of the pandemic, it said.

NCLH cuts first quarter loss as bookings stage strong recovery

Details: Written by Kari Reinikainen Kari Reinikainen; Category: More News More News; Published: 11 May 2022 11 May 2022

Norwegian Cruise Line Holdings (NCLH), the world’s third largest listed cruise shipping company, has significantly reduced its losses in the first quarter from the same period a year earlier as bookings staged a strong recovery after a soft period at the start of the year, the company said in a statement.

“The quarter began with net bookings, particularly for close-in voyages, negatively impacted by the Omicron surge, which began to improve in mid-January. This momentum was temporarily disrupted as the Company experienced elevated cancellations, primarily for itineraries in the Baltic region, in the immediate weeks following the start of the Russia-Ukraine conflict,” NCLH said.

However, this impact was short-lived and net booking volumes have since shown sequential improvement, not only rebounding back to pre-Omicron levels but also now approaching the booking pace needed to consistently sail at historical load factor levels.

Total cruise operating expense increased 266.1% in 2022 compared to 2021, primarily due to the resumption of cruise voyages. The increase reflects higher payroll, fuel, and direct variable costs of fully operating ships. “Cost for certain items such as food, fuel and logistics also increased due to inflation. Additionally, in 2022, there was an increase in repair and maintenance costs, including planned dry-docks,” the company stated.

Fuel price per metric ton, net of hedges, increased to $724 from $590 in 2021. The company reported fuel expense of $135.5 million in the period. Interest expense, net was $327.7 million in 2022 compared to $824.4 million in 2021. “The decrease in interest expense reflects lower losses from extinguishment of debt and debt modification costs, which were $188 million in 2022 compared to $674 million in 2021. The decrease in interest expense also reflects lower interest expense in connection with the recent refinancing, partially offset by higher debt balances and higher LIBOR rates,” NCLH noted.

SunStone Ships moves on to new class after Chinese yard walks away from Infinity contract

Details: Written by Kari Reinikainen Kari Reinikainen; Category: More News More News; Published: 11 May 2022 11 May 2022

SunStone Ships, the Miami based expedition cruise ship tonnage provider, has decided to move to a new class of newbuildings after the Chinese yard that as been building Infinity class ship for the company walked out of the contract, said Niels- Erik Lund, CEO of the company.

“They have informed us that they will not be building ship seven. We do not know why, and are not happy about this,” Lund told CruiseBusiness.com. China Merchants group has built six 8,200 gross ton Infinity class ships for SunStone Ships and the seventh vessel, which had been intended to be called Ocean Discoverer, was due for delivery next year. However, it will not be built now.

SunStone Ships would now switch its focus to order ships of the boundless class that it has been developing for some time. The projected ships would be larger than the Infinity class, with a gross tonnage in the region of 12,000 to 13,000 and they would have accommodation for 200 to 300 passengers compared to 140 on the Infinity class vessels

“Our specifications have been finished and we have been negotiating with approx. 20 shipyards, at this time we are down to three shipyards, and hope to finalise a framework agreement very soon,” Lund said.

OSK-ShipTech in Denmark has designed the Boundless class ships, whereas the Infinity class design came from the Ulstein Group in Norway, Lund said.

Accor adds Queen Elizabeth 2 into its portfolio in Dubai

Details: Written by Teijo Niemelä Teijo Niemelä; Category: More News More News; Published: 10 May 2022 10 May 2022

Accor, a world-leading hospitality group with over 400 hotels across India, Middle East, Africa and Turkey is adding the world-renowned liner, Queen Elizabeth 2 (QE2), into its portfolio. Taking over operations from May 2022, the vessel will undergo further upgrades and renovations prior to joining the MGallery Hotel Collection. Once fully rebranded, Queen Elizabeth 2 will undoubtedly become a landmark property for the MGallery brand and Dubai overall.

The group is collaborating with the Ports, Customs and Free Zone Corporation (PCFC) Investments LLC, one of the government organizations under the Dubai government officially established in 2001, and includes a number of entities and authorities operating under its umbrella.

PCFC Investments LLC (PCFCI) is a boutique private equity firm whose principal objective is investment in commercial enterprises and asset management. The company’s business model is focused on investing in, owning, developing and managing commercial real estate assets. PCFC Investments’ strategy is to acquire and expand the company’s commercial portfolio whilst aiming for continuous growth and improvement.

“We are very excited to partner with Accor on this project. We trust the group’s expertise will elevate the QE2 to a new era of operations” states Saeed Al-Bannai, CEO of PCFC investment. “The Queen Elizabeth as we know her, has made history and we are confident that Accor will keep her legacy alive while her strong heritage and notoriety will remain a destination in itself, where guests and visitors alike can enjoy a unique experience."

Situated in Dubai’s Port Rashid, the QE2’s location is in close proximity to Sheikh Zayed Road, providing easy connection to every main attraction the city has to offer. Dubai International Airport, Dubai Mall, Burj Khalifa and La Mer Beach are all located less than 20 minutes away, while the Palm Jumeirah and Mall of the Emirates are located 35 and 29 minutes, respectively.

“This is a great opportunity for Accor to expand its footprint in the UAE with the introduction of a unique project which brings diversity to the portfolio, while expanding the MGallery brand presence in the city” says Mark Willis, CEO of Accor India, Middle East, Africa & Turkey.” Not only are we in charge of the only floating hotel in Dubai, but we are also contributing the Dubai Urban Master plan 2049, with the aim to map out the path for a sustainable urban development while increasing the city attractiveness as a global destination."

Once the renovation is completed, the new MGallery Queen Elizabeth 2 will feature 447 hotel rooms, nine food & beverage outlets, ten meeting rooms, 5,620sqm area for outdoor events, six retail outlets, a swimming pool and a gym.

“We are confident that once finalised, the MGallery Queen Elizabeth 2 will become a true must-visit attraction, sharing her own stories with her guests while offering a truly unforgettable experience on-board”, added Mark Willis.

Accor currently operates 62 properties (18,562 keys) in the UAE with 20 (5,831keys) properties in the pipeline.