IT has been nine months since Genting Hong Kong Ltd, which operates Genting Cruise Lines, was delisted from the Singapore Exchange in April last year to focus on a single primary listing on Hong Kong Exchanges and Clearing Ltd.
The then dual-listed Genting HK said the move was in line with its strategic focus on businesses in Asia, in particular North Asia, as the group continued to undertake initiatives to tap China’s burgeoning growth potential.
Genting HK, in which gaming tycoon Tan Sri Lim Kok Thay has a controlling 75.55% stake, operates Star Cruises, premium Dream Cruises and the ultra-luxury Crystal Cruises. The three cruise brands are now collectively known as Genting Cruise Lines. The group also owns Zouk club in Singapore.
According to Genting HK group president Colin Au Fook Yew, Genting Cruise Lines aspires to introduce to its passengers a new generation of world-class cruise ships designed for the Asian market.
“We are following where the Asians are going. Last year, about 150 million Asians were travelling all over the world. If we could capture 2% of those travelling Asians, we are talking about three million cruising passengers,” he told reporters at a special event held on board the Genting Dream in Singapore last month.
He said he hoped to see the millions of Indian and mainland Chinese tourists who travel to Australia, Europe and the US emulate the Americans by going on cruises.
“I see more Asians taking five-night or seven-night cruises just like the Americans within the next five years. In another 10 years, we will see more Asians going for 12-night cruises. And then they will move on to 14 nights or even 21 nights,” said Au, who has been with Genting Group for four decades and has served it in various capacities in Malaysia, Australia, Singapore, Hong Kong, New York, Miami and Germany.
“Cruising is sold as an alternative to land vacations. It is very comfortable. You don’t have to check in or check out. You don’t have to fly, you don’t have to take a car or bus. As people slow down in life and have more time and money, they will start realising the beauty of cruising.”
Genting Cruise Lines celebrated its silver anniversary on Dec 14 last year, commemorating the day Langkapuri Star Aquarius set sail from Singapore in 1993.
As a pioneer in the region’s cruise industry, Genting HK took a bold step to make Asia-Pacific an international cruise destination with the founding of Star Cruises in 1993.
Today, Star Cruises has five ships in its fleet, namely SuperStar Virgo, SuperStar Gemini, SuperStar Aquarius, Star Pisces and The Taipan, offering various cruise itineraries in Asia.
In 2015, in an effort to further expand its cruise portfolio in the region, Genting HK launched Dream Cruises to cater for a fast-growing Asian market.
To date, Dream Cruises has two ships, namely Genting Dream and World Dream. The former debuted in November 2016 and the latter a year later.
The acquisition of Crystal Cruises in 2015 also helped Genting HK capitalise on the growing global demand in the luxury cruise market.
In September 2015, after being told of a 10-year wait for new ships, Lim acquired a stake in German shipyard Lloyd Werft in Bremerhaven.
In March 2016, Genting HK completed its €230.6 million acquisition of Nordic Yard’s three shipyards in Wismar, Warnemunde and Stralsund in Germany, which were eventually merged under Lloyd Werft.
On top of investing €100 million in upgrades, Genting HK formally signed with Lloyd Werft a €3.5 billion order for 10 ships to be delivered from 2019 to 2022.
Lim reportedly said the advantage of having their own shipyard meant Genting HK could be more creative in building the ships. “Yes, it would be a bit of a gamble but I think if one can catch the right trend, which is possible if you were to look at what’s happening in the US or the European markets, one can have a fairly good idea of where the trend of cruising is going,” he said.
Recall that Genting Malaysia Bhd had owned a 16.87% stake in Genting HK but had sold it to the Lim family in 2016, pocketing a whopping divestment gain of RM1.71 billion.
In hindsight, the disposal by Genting Malaysia was perfectly timed as Genting HK has been in the red since.
In its financial year ended Dec 31, 2016 (FY2016), Genting HK posted a net loss of US$504.23 million, ending six consecutive years (from FY2010 to FY2015) of net profit.
The group reported a net loss of US$244.28 million in FY2017 and US$141.27 million in the six months ended June 30, 2018 (6MFY2018).
The losses were attributed mainly to the start-up cost of Dream Cruises’ new liner World Dream and the repositioning of Genting Dream from its home port in Hong Kong to Singapore in November 2017 as well as Crystal Cruises’ expansion into river cruises and the launch of AirCruises — its brand of luxury air travel.
Also, the newer and larger ships of competitors led to the smaller and older ships encroaching on ports where Star Cruises had established itself, squeezing occupancy and yields.
Au declined to forecast when Genting HK would return to profitability but he noted that huge investments are expected in the coming years, considering that each new ship costs about €1.5 billion or close to US$1.8 billion.
“The global-class ships are being built at the moment with delivery expected in the first quarter of 2021 and 2022, but their deployment has yet to be determined as we assess the market conditions. The two big global ships could possibly be deployed in China but during winter, we will come down to Singapore, Hong Kong or somewhere in the region,” he said.
Developed specifically for the Chinese and Asian market, Dream Cruises aims to be a pacesetter in the region’s cruise industry, meeting the needs of the emerging generation of confident, independent-minded and upwardly mobile Asian travellers, he added.
“Dream Cruises will also follow the Asians. This is the mass market, the contemporary, premium sector. The Indonesians, Indians and Chinese, they love to cruise with us. We benchmark ourselves against all the other big international cruise lines,” Au said, adding that once the global-class ships arrive, Dream Cruises might sail to the Baltic region as well.
He pointed out that Asians were already travelling to the Baltic region but they had to travel a long way before boarding a ship.
“There is nothing better than to be on a cruise ship. Every morning you wake up, there is a new town. When you add up the air fare and transport and accommodation charges, you will find that cruising is cheaper and more convenient,” he concluded.