It was in 1993 that the name of Star Cruises came to public awareness after the Malaysian company had acquired two modern 40,000 gross ton cruise ferries for conversion into cruise ships for use in the Far East.
In the years that followed, the company grew rapidly, mostly through the acquisitions of second hand tonnage, but at the end of the decade, it added two 75,000 gross ton newbuildings from Meyer Werft, SuperStar Virgo and SuperStar Leo.
For quite some time, Star Cruises dominated the Far Eastern source market: other ventures were set up in the region too, but few became a success in the end. Star opted for a strategy to become global in terms of source markets at the turn of the millennium, when it acquired Norwegian Cruise Line (NCL) group.
This, however, meant that the company paid fairly little attention to develop its home turf – in fact, SuperStar Leo became NCL’s Norwegian Spirit in the process of this shift of focus – so that foreign competition could start to establish itself in countries like China, Malaysia and Japan plus Australia, which also had been strongly under the Star Cruises’ radar in the early part of its history.
Today, Star Cruises has five ships, of which the SuperStar Virgo is the largest and newest: it was built in 1999. The company needs to raise its profile in the face of growing competition from the likes of Costa Crociere and Princess Cruises of the carnival group and Royal Caribbean International and Celebrity Cruises of Royal Caribbean Cruises Ltd (RCCL) group that all operate high quality tonnage in the region, at least seasonally.
A contract to build a 150,000 gross ton ship at Meyer Werft, which was announced on Monday, will give Star Cruises the profile lift it needs plus a vessel designed to its needs: a second hand acquisition is always a compromise. With modern design features, it can achieve lower fuel consumption and raft of other advantages, while its huge size will offer economies of scale.
In the long run, the question will probably be how many such vessels can Star Cruises, which is part of Genting Hong Kong group, afford to build. If we look at the business model of both Carnival and RCCL groups, that is based on building large ships that offer economies of scale in the ship level and by building several of these so that economies of scale can be achieved on the brand level.
Star has made a bold move that is probably right. But if competition on the Far Eastern source markets continues to intensify, which appears to be the case, it may have to raise stakes further.
