NYK outlines strategy changes to grow cruise business

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Written by Kari Reinikainen Kari Reinikainen

Category: Top Headlines Top Headlines

Published: 07 August 2013 07 August 2013

NipponYusen Kabushiki Kaisha (NYK), the Japanese shipping giant that owns NYK Cruises that focuses on the luxury market in Japan and Crystal Cruises that caters for the international luxury market, has revised its strategy to grow its cruise brands, while arrival of Princess Cruises on the Japanese market does not scare the company, says Masahiro Samitsu Chief Executive of Cruise Headquarters Director, Managing Corporate Officer.

However, he would like to see Japanese registered cruise ships to “enjoy level playing field” with non-Japanese ships in terms of cost base.

“Serving Japan’s market, NYK Cruises Co. Ltd. has seen a shift in sentiment thanks partly to recoveries in the domestic stock market and economy as the yen weakens. In fiscal 2012, reservations were brisk. Moreover, since the beginning of 2013 the pace at which we are receiving reservations has definitely picked up even further, “ Samitsu said in NYK’s annual report published in early August.

“Meanwhile, our subsidiary operating in overseas markets, Crystal Cruises Inc., has also seen reservations trend upward. In fiscal 2012, the repercussions of a cruise ship running aground in Italy dealt a severe and unexpected blow to Mediterranean cruises, which had been the subsidiary’s revenues mainstay. However, we have been receiving reservations for all our products at an unprecedented rate since the beginning of 2013.”

The group has revised its sales strategy in two respects. “First, we have changed pricing. We lowered the launch prices of all the cruise products Crystal Cruises offers. And, we adopted a system of reviewing these prices every two months. We raise the prices of products for which reservations are favourable every two months while keeping products with soft reservations at their launch prices. This produces a synergy benefit that steadily boosts reservations for initially sluggish products because their prices appear increasingly reasonable as the prices of popular products rise,” Samitsu explained

“Further, we are setting prices to reflect the value of each product. For example, our new, attractively priced shorter cruises that offer the same service quality as our other cruises have become popular with customers.”

“The other important change in our sales strategy is a renewed emphasis on expanding sales channels. In the United States, we are expanding our network with a view to having more travel agents carry the products of Crystal Cruises. Also, in Japan we are urging travel agents that sell our Asuka II cruises to increase the numbers of agencies carrying the cruises and dedicated personnel. Already, this strategy is helping boost reservations.”

In Japan, Princess Cruises has entered the market there for the first time and operates Sun Princess in the country and another vessel will join it in 2014. “Because we offer products for the luxury market, I do not think its entry will mean major competition for us. On the contrary, we hope this new development will broaden our customer base,” Samitsu commented.

 The cruise market in the United States accounts for roughly 10 million people, or about 3% of its population. By contrast, Japan’s market only represents 0.2% of the population. “The U.S. market has matured to this extent because the participation of a variety of cruise ships has formed the market. I believe the opening of Japan’s market for the first time to cruise ships targeting the general public could popularise reasonably priced cruises, which in the long term will have the beneficial effect of creating demand for luxury cruises.”

“On the other hand, Japanese cruise ships have less cost- competitiveness than their non-Japanese counterparts. This is because Japanese cruise ships are subject to strict regulations under Japanese law requiring annual vessel inspections, while non-Japanese cruise ships are inspected twice every five years. Furthermore, regulations limit the number of non-Japanese crew members permitted to work on Japanese cruise ships. Therefore, we want authorities to ease regulations so that Japanese cruise ships can compete on a level playing field with non-Japanese cruise ships,” Samitsu pointed out

Costa Concordia to cost insurance industry more than $1.1 billion

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Written by Kari Reinikainen Kari Reinikainen

Category: Top Headlines Top Headlines

Published: 06 August 2013 06 August 2013

Insurance industry payouts related to sinking of cruise liner Costa Concordia on 13 January last year have continued to rise and are likely to top $1.1 billion as salvaging of the wreck continues, reinsurer Munich Re was cited by the Reuters new agency as saying on Tuesday.

The ship itself was covered by Hull & Machinery insurance that valued it at $500 million. Liability cover, including removal of the wreck, is covered by Protection & Indemnity insurance that is provided by P&I clubs, which are mutual institutions. In the case of a major shipping accident, parts of both covers will end up on the reinsurance market.

The 114,137 gross ton Costa Concordia hit rocks on the west coast of Italy and capsized later. Its half submerged wreck is being removed by salvage contractors. The accident claimed 32 lives, but more than 4,000 persons were evacuated from the ship alive.

On 20 July, two officers, the helmsman, the head of cabin service and the head of the crisis team were given up to two years and 10 months in jail for multiple manslaughter, negligence and shipwreck. Francesco Schettino, master of the vessel, is facing a separate trial.