GGRAsia – GEN HK cautious over cruise biz outlook, cancels voyages

GEN HK cautious over cruise biz outlook, cancels voyages

Feb 24, 2020 Newsdesk Latest News, Rest of Asia, Top of the deck

Genting Hong Kong Ltd, an operator of casino cruise ships and an investor in Asian land-based casinos, says the cruise business environment in 2020 “will continue to be challenging” due to the coronavirus crisis.

“The ultimate economic damage from this ongoing epidemic in the People’s Republic of China is still under assessment, but efforts have been made to mitigate the impact to the group,” said the Hong Kong-listed company in a Friday filing. The public health threat originated in mainland China’s Hubei province.

Genting Hong Kong confirmed to GGRAsia last week that one of its units – Genting Cruise Lines – was cutting salaries for its senior staff by between 20 percent and 50 percent because of the negative impact on business of the novel coronavirus Covid-19. Genting Cruise Lines operates three distinct ship-based holiday brands – Star Cruises, Dream Cruises and Crystal Cruises.

The Dream Cruises brand has cancelled a number of its scheduled voyages for the coming weeks. The brand said last week it would voluntarily suspend Genting Dream’s sailings from Singapore starting Sunday (February 23) “to help curtail the spread of Covid-19 and because of tightening travel restrictions by various countries”. Genting Dream will resume operations in Singapore from March 27, added the company.

Dream Cruises president Michael Goh was quoted as saying in a statement that guests who had booked on any of the cancelled itineraries would be “contacted and provided with a variety of compensation options including to defer their cruise to a future sailing or, if needed, to cancel their cruise for a full refund”.

The Dream Cruises business had already announced earlier this month that all of its cruise ship calls to Taiwanese ports would be cancelled “until further notice”.

In Friday’s filing, Genting Hong Kong said the “material impact” on the group’s performance in 2020 remained “uncertain as the magnitude of the effects from this virus outbreak is still unknown”.

“However, the group is confident and committed to long-term growth in the Asian cruise market – which it has been operating in for more than 26 years,” stated the company, adding that it was“proactively responding to the challenges to ensure the overall progress of its business operations is not derailed beyond temporary inconvenience”.

Genting Hong Kong’s 2020 outlook was included in a filing confirming the sale of one of its under-construction vessels intended for its Crystal Cruises business, for a total consideration of EUR350 million (US$378.6 million). That figure – part of a deal flagged in December – includes the leaseback of the ship.

Crystal Endeavor SAS, an indirect subsidiary of Genting Hong Kong incorporated in France, is selling the vessel, to be named Crystal Endeavor. The liner will be a luxury passenger cruise ship accommodating a maximum of about 200 passengers. Construction of the ship is expected to be completed in early 2020, with delivery of the vessel expected to be in May 2020, added Genting Hong Kong.

Under the deal, Crystal Endeavor SAS will be providing a loan of up to EUR300 million – with a 7.0-percent interest rate per year – to the purchaser to finance the acquisition.

In January, Genting Hong Kong said one of its other units had completed the sale and lease back of the Genting Dream ship, one of the vessels of the Dream Cruises segment.

Genting Hong Kong has been seeking funds to finance the expansion of its cruise business. The company has developed a three-brand cruise portfolio with focus on several different market segments: Crystal Cruises for what it terms the ultra-luxury segment; Dream Cruises for what it describes as the premium segment; and Star Cruises for what it defines as the contemporary segment.

In August, the Hong Kong-listed company had announced the sale of up to 35 percent of the equity interest in its unit Dream Cruises Holding Ltd for up to US$489 million.