Cruise lines ‘to return to Turkey this year’

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A Busy Cruise port in Turkey

Cruise lines plan a return to Turkey this year following a period of uncertainty due to terrorism and political upheaval.

Ports operator Global Ports Holdings today signalled a possible recovery after reporting a 6.3% slump in overall cruise revenue to $50.3 million last year over 2016.

Earnings [Ebitda] from cruise fell by 12.7% to $32.2 million as the company reported an annual loss of $14.1 million from a profit of $4.4 million the previous year.

This came despite the company’s ports outside Turkey, including Barcelona, Malaga and Valletta, recording 2017 passenger growth of almost 26%

The company’s ports handled more than 2,801 cruise ship calls and 4.1 million passengers.

However, cruise calls to Ege port in Kusadasi in Turkey fell by 53% with passenger numbers down by 66% to 118,954 year-on-year. The company also runs the Turkish ports of Bodrum and Antalya.

“Current trading in our cruise segment in our non-Turkish based ports remains strong. The weakness in Turkish cruise ports is expected to continue into 2018, although passengers and revenue are expected to stabilise compared to the decline experienced in 2017,” GPH said.

“A number of cruise lines have begun to communicate their plans to visit our Turkish ports in 2018, which we see as a good sign of a possible recovery.”

The company added: “Transit passengers recorded a 20.3% increase in 2017, while the expansion of more profitable turnaround passengers was relatively lower at 8%, resulting in two percentage point decrease in the share of turnaround passengers.”

Chairman and co-founder Mehmet Kutman said: “In May 2017 we listed on the London Stock Exchange. Despite the geopolitical challenges in Turkey since then, we have been able to deliver stable revenues and underlying profits, achieve strong operating cash flow and attractive dividends.

“Operating profit was down year on year mainly reflecting the costs of the IPO. Delivering shareholder value remains a key priority for the group as we look to the year ahead.”

Chief executive Emre Sayın added: “Our 2017 financial performance reflects the importance of our diversified business, with robust contributions from our commercial operations and strong performance in our cruise ports outside Turkey, where the geopolitical situation continues to be challenging.

“We are making progress with our strategy set out at the IPO to expand our global footprint of cruise ports, also reducing the significance of Turkey on our overall business.

“M&A [merger and acquisitions] discussions both in and outside Europe are progressing well and we have strengthened our global team as we pursue the next phase of growth. We feel good about 2018 as it starts growing again.”


Cruise cools to China

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By Tom Stieghorst
The cruise industry’s gold rush to China, if not over, has entered a new phase: For the first time in at least four years, cruise capacity in China will not grow in 2018.

That means that the focus and management attention that has been lavished on the world’s most populous country may now be turning elsewhere.

To hear evidence of that, listen to the list of places that Norwegian Cruise Line Holdings CEO Frank Del Rio reeled off when asked if he’s ready to put the second ship in China.

“We have many other either unserved or underserved markets that we would also consider in the mix, should ships become available to us,” Del Rio said in response to a question from a Wells Fargo analyst. “We don’t have a presence in the mid-Atlantic states. We’re not in Baltimore. We’re not in Charleston. We don’t have a presence at all in the world’s second-largest port, which is Fort Lauderdale. We don’t have a presence in the Gulf States of Texas or Alabama. We don’t have a year-round presence in Tampa or New Orleans or in Los Angeles.”

Del Rio went on to say that the Norwegian Cruise Line brand will have three ships in Alaska this summer, where some competitors have as many as eight.

“So, given our fleet size today and the fact that we will only be taking one ship per year, it could be a couple of years before we consider adding more tonnage to China, if the conditions in the rest of the world remain as robust as they are today,” Del Rio said.

The Chinese boom really got going in 2014 when Royal Caribbean Cruises Ltd. announced it would devote its brand-new Quantum of the Seas, the first of a new class of ship, to the Chinese market.

In a world full of supposedly bold moves, that one really was. And it prompted other lines for the first time to put brand new ships in China, as everyone feared being left behind in the scramble to impress the Chinese.

Being the preferred brand in a market that was projected to be the biggest in the world in a decade or so was worth the gamble of putting brand new tonnage in an unproven and opaque market.

So when Princess Cruises sent the Majestic Princess to Shanghai last year and Norwegian sent the Norwegian Joy, in addition to the Quantum and ships from Costa Cruises and others, the result was a crowded field.

Throw into the mix the spat between China and South Korea that limited itineraries out of northern China, and China became a much weaker cruise market last year.

While cruise lines insist that they’re in it for the long haul, and even in the short term it has been profitable, the sense that China is going to deliver a big increase in global cruise revenues has been tempered.

Already Norwegian’s focus for 2018 has turned to introducing Norwegian Bliss to the North American market, and in particular the U.S. West Coast. Who knows where else in the U.S. Norwegian ships might be coming next?

Cruise Lines Agree: Europe Is Back

The downturn in the European cruise market is history as leaders from Carnival Corporation, Royal Caribbean Cruises and Norwegian Cruise Line Holdings painted a picture of a strong and robust European cruise environment on year-end earnings calls.

Capacity in the Mediterranean will be up significantly this summer, and the same goes for Northern Europe.

“You will recall that successive geopolitical events through the summer of 2016 resulted in a noted depressed demand environment for European sailings. 2017, however, saw an unprecedented turnaround in demand for Europe voyages from our core North American customer, particularly for the brands that were disproportionately negatively impacted in 2016,” said Frank del Rio, president and CEO of Norwegian Cruise Line Holdings, on the company’s year-end earnings call.  “The strength and speed of this turnaround was faster than anticipated, taking only one year for European itinerary pricing to recover and surpass 2015 prior peak levels.”

Royal Caribbean Cruises will position its newest hardware in the Mediterranean, with the Symphony of the Seas this summer followed by the Celebrity Edge’s 2019 summer program in the Mediterranean,.

The Britanna and Costa Magic (Photo: Sergio Ferreira)

“Recent trends have been particularly strong for North America, Europe and Asia Pacific itineraries,” said Richard Fain, chairman and CEO of Royal Caribbean Cruises.

CFO Jason Liberty added:  “Demand for both Mediterranean and Northern Europe sailings has consistently surpassed our expectations with all key source markets booked nicely ahead of last year in both rate and volume.”

At Carnival Corporation, CFO David Bernstein said on the company’s December earnings call that its seasonal Europe program was considerably ahead of the prior year on both occupancy and pricing.

“For our EAA (Europe, Asia, Australia) brands, for European deployment, occupancy is nicely ahead at higher prices,” he said.

“We don’t go into details by brands, but a number of times we have talked about seeing an improving economy in the southern part of Europe for a long time. We had talked about it bouncing along the bottom, but we have started to see some improvement, and we have seen that Costa has done very well in 2017, and we expect it to do well in 2018,” Bernstein continued. “So, we are comfortable and very confident and happy to see the improvement in that part of the world.”