Crystal Cruises Slows Its Tempo – Other Cruise News: Dream Cruises’ First New Ship – Genting Malaysia Shares To Golden Hope
by Kevin Griffin
Over the past few weeks has come news that the various arms of Crystal Cruises are incurring delays or postponements in the delivery of new ships from what was originally announced. Now part of cruise operator Genting Hong Kong, Crystal shares quarters with Dream Cruises and Star Cruises in the pantheon of Genting cruise products. Dream Cruises’ first new ship delivers in Germany this Wednesday. And out of Malaysia comes news of Golden Hope taking its interest in Genting Hong Kong up to 64%.
THIS WEEK’S STORY
Crystal Cruises Slows Its Tempo
The Daily Mirror’s Captain Greybeard, otherwise known as John Honeywell, seems to have been the first to have noticed that Crystal Cruises’ ambitious expansion plans are being slowed down.
Crystal River Cruises was the first to delay its launch in France with Crystal Debussy and Crystal Ravel, which were originally due to travel the Seine, Rhone and Dordogne beginning in June and August 2017. Instead, there will now be four newly-built river yachts on the Danube, Main and Rhine.
The change means a redesign for the yachts that were intended for France. The increased length will allow for the addition of a swimming pool with a sliding glass roof and more of the ship’s larger suites, which range in size up to 759 sq ft.
Crystal Bach and Crystal Mahler, in the line’s 106-guest Rhine-class series, are due to enter service June 18 and August 29 2017 respectively. Crystal Debussy and Crystal Ravel will now follow in April 2018 and May 2018.
While work progresses on what will be six new river ships, he arrival of the line’s first new expedition ship and the first 1,000-passenger Exclusive-class ship have been also deferred.
Polar expedition ship Crystal Endeavour was scheduled for August 2018 but will not now appear until 2019. Meanwhile, there are hints that Endeavour will be joined by another expedition vessel.
The Exclusive class ship has already been postponed by a year from late 2018 and has now been put back two more years, to 2021, and there is no word on when her promised two sister ships will be completed.
The announcement was made by Colin Au, founding president of Genting HK, which bought Crystal in 2014, during a visit to the German shipyards bought by the company to carry out the Crystal expansion and to build vessels for China-based Dream Cruises.
Plans for Crystal Luxury Air have also been pared back, and the order for a Boeing 787 Dreamliner to carry 100 guests in first-class luxury has been cancelled.
But designs for the surviving Boeing 777, expected to take to the skies in 12 months’ time, show a restaurant area complete with dining tables separate from the accommodation. The 777 will carry 84 guests on round-the-world air cruises of 14, 21, or 28 days.
Elsewhere in the Genting empire, its casinos in Asia are not minting as much money due to an economic slowdown in the region and increased measures by the Chinese government to prevent money laundering. Its main casinos in Malaysia and the Philippines have also suffered from large falls in the local currencies.
Genting Hong Kong meanwhile also has to pay for two large and expensive Dream class cruise ships and two more Star ships. These will enter an increasingly uncertain Chinese cruise market, where, a flood of new ships being built for the market is pushing the pricing levels downwards.
Genting is wise to be cautious however. Although the terrorist attacks of 2001 are usually blamed for its demise, American Classic Voyages failed in part because of an overly ambitious expansion plan that involved two new cruise ships for Hawaii, a new coastal cruise line and a second cruise line for Hawaii.
Others who grew too quickly were Fearnley & Eger (Renaissance 1) and Renaissance Cruises (Renaissance 2), which each introduced eight new ships into the market in rapid succession.
And closer to home there was Genting’s own massive expansion of Norwegian Cruise Line post-acquisition that saw the company load up with debt levels that resulted in them selling the controlling interest of the company at a 50% discount to Apollo and the new owners having to re-capitalise to the tune of $1 billion.
According to one observer, the price tag for Crystal’s expansion plus the cost of acquisition has now passed the $4 billion mark.
OTHER CRUISE NEWS
Dream Cruises’ First New Ship
Genting Hong Kong will meanwhile take delivery this Wednesday of its 3,400-berth Genting Dream, which will and usher in its new brand in November, with a premium cruise product on a 150,000-ton ship.
Genting has engaged brand-specific executives for Dream and the product experience, but is also relying on existing infrastructure and operational support from its Star Cruises operation. This includes functions such as procurement, human resources, IT, marine and entertainment departments that can be shared between Star and Dream Cruises.
One key target for Dream Cruises is groups of seven passengers, consisting of two sets of grandparents, a mother and father, typically born in the 1980s, and a single child. There is also a quickly growing affluent market in China and by 2020 the number of affluent householders in China is expected to double to 100 million.
Genting Dream will make her way to her home port of Guangzhou, China, where she is expected to arrive on November 13.
Genting Malaysia Shares To Golden Hope
Genting Malaysia’s indirect unit Resorts World Ltd has disposed of its 16.87% stake in cruise operator Genting Hong Kong Ltd, although the transaction was made at the lowest price permitted under the disposal mandate given by its shareholders at an Executive General Meeting this June.
Resorts World has agreed to sell 1.43 billion Genting Hong Kong shares to Golden Hope Ltd for US$415mil (RM1.71bil) in cash, or 29 cents per Genting Hong Kong share.
Resorts World said the price represented an 8.2% premium to the five-day volume weighted average market price of Genting Hong Kong shares up to and including September 29 of US $0.268.
Under the original mandate which expired on July 1, the minimum disposal price allowed had been higher, at 33 US cents. The original cost of investment had been US$604.1mil (RM2.49bil), or an average of 42 US cents per share.
Golden Hope Ltd is the trustee of Golden Hope Unit Trust which is ultimately owned by a discretionary trust in which Genting Malaysia chairman and chief executive Tan Sri Lim Kok Thay, his son Lim Keong Hui and other family members are beneficiaries.
Golden Hope Ltd already held a 47.22% equity interest in Genting Hong Kong prior to Friday’s purchase, with this now rising to a 64% interest in the cruise company.
The share disposal is expected to take place on October 21.
(Kevin Griffin is managing director of specialist cruise agency The Cruise People Ltd in London, England. For further information concerning cruises mentioned in this article readers can visit his blog)