Genting Hong Kong, majority owned by Malaysia's Lim Kok Thay, announced in March it would buy the luxury cruise line from NYK Group Americas Inc., a unit of Japanese shipping company Nippon Yusen K.K, for $550 million. The deal is due to close by June 30.
The Chinese company, which already owns South Pacific regional operator Star Cruises and Norwegian Cruise Line , pledged at the outset it would invest in a new ship to expand the Crystal Cruises fleet.
That is likely to be the first of many additions according to Crystal Cruises' Chief Operating Officer Edie Rodriguez.
"They don't want to grow us with just one new ship. We will continue to evolve with additional growth beyond that first vessel," Ms. Rodriguez said in an interview.
Worldwide cruise revenue is estimated at $39.6 billion in 2015, up 6.9% from last year, according to industry analytics firm Cruise Market Watch, as the world's biggest cruise companies ramp up capacity to meet rising demand.
Crystal Cruises is targeting 2018 for the launch of the first new ship which will have similar capacity to its existing two vessels Crystal Symphony and Crystal Serenity, which carry 900 to 1,000 guests and were built more than 20 years ago.
"As we acquire additional tonnage we will eventually phase out the other ships one at a time. But not until we have replacement ships and continue to always be at least a three ship operation." Ms. Rodriguez said on her first visit to Hong Kong since taking up her role at the company in October 2013.
"I have always said from day one and my new chairman agrees with my vision of seven ships for seven seas, seven continents. But we are taking it one day at a time and certainly it will never be less than three ships in the future," she said.
Since taking the reins at Crystal Cruises, Ms. Rodriguez has overseen a turnaround in the company's earnings, which swung to a profit in the firm's 2014 financial year from a loss in 2013. In the latest financial year ended March 31, earnings before interest, tax, depreciation, and amortization doubled and Ms. Rodriguez said she recently told her staff to target a repeat performance, through expense management, increased efficiencies and getting customers to spend more.
"What we are planning to do is run a more fiscally responsible company and by that I mean making sure we get three quotes for everything without damaging any of the services. Making sure that on the expense side, we are doing the best we are able, making sure every berth is full every sailing, making sure that people are taking advantage of all of the options on board, whether that is spa and hair treatments, personalized shore excursion experiences or, like me, having a wedding on board."
Current owners NYK have spent $120 million over the last couple of years refurbishing the current ships but weren't willing to fork out the investment required to build a new ship for a unit considered outside their core business of cargo shipping, Ms. Rodriguez said. She said she made plain to her bosses at NYK that "you have to grow or die".
"You have to really advance to the next stage with the new ship build that will harness all of the eco power. I didn't come here just to have the brand stagnating. And they very clearly understood. You have to grow or die. So when they made this decision, they didn't want to make this investment outside of their core business, they decided to sell. And that's how we get to this new owner who is willing to invest."
Ms. Rodriguez said there was a "bidding war" to purchase Crystal Cruises. "I said to every potential investor, if your intention is not to grow this brand with a new ship build then do not waste your time and money investing it," she said.
Source: Wall Street Journal by Rebecca Thurlow
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