Genting HK Expects Challenging Cruise Business Since Coronovirus Virus

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

With the public health threat originated in mainland China’s Hubei province, the Hong Kong-listed company in a Friday filing said: “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.”

Last week, Genting Hong Kong reported that one of its units, the Genting Cruise Lines, was cutting wages for its senior employees by between 20 and 50 percent due to the negative effect of the novel coronavirus Covid-19 on the company. Genting Cruise Lines runs a trio of distinct holiday brands focused on ships-Star Cruises, Dream Cruises and Crystal Cruises.

The company Dream Cruises has cancelled several of its scheduled travels for the coming weeks. Last week, the company said it would voluntarily suspend Genting Dream’s sailing from Singapore starting on Sunday, February 23 “to help curtail the spread of Covid-19 and because of tightening travel restrictions by various countries”. As of March 27 Genting Dream will resume operations in Singapore, the company added.

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”.

Earlier this month the Dream Cruises company had already announced that all its cruise ship calls to Taiwanese ports would be cancelled “until further notice.”

Genting Hong Kong said in the filing of Friday that the “material impact” on the results of the company 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.

It added that it was“proactively responding to the challenges to ensure the overall progress of its business operations is not derailed beyond temporary inconvenience”.

The 2020 outlook of Genting Hong Kong was included in a filing announcing the sale of one of its under-construction vessels intended for its Crystal Cruises business, totalling EUR 350 million (US$ 378.6 million). The number-part of a December signed contract-includes the ship’s leaseback.

Crystal Endeavor SAS, a Genting Hong Kong indirect subsidiary incorporated in France, is selling the vessel to be named Crystal Endeavor. The liner will be a luxury cruise ship able to accommodate up to approximately 200 passengers. The ship’s building is scheduled to be completed in early 2020, with delivery of the ship estimated to be in May 2020, Genting Hong Kong said.

Under the contract, Crystal Endeavor SAS will provide the seller with a loan to fund the acquisition of up to EUR300 million–with an interest rate of 7.0 percent per year.

Genting Hong Kong said in January that one of its other subsidiaries had completed the sale and lease-back of the Genting Dream ship, one of the Dream Cruises category vessels.

Genting Hong Kong has sought funds to finance the expansion of its cruise operations. The company has developed a three-brand cruise portfolio with a focus on several different market segments: Crystal Cruises as the ultra-luxury segment, Dream Cruises as the premium segment, and Star Cruises as the contemporary segment.

The Hong Kong-listed company reported in August that it would sell up to 35 percent of the equity interest in its Dream Cruises Holding Ltd subsidiary for up to US$ 489 million.