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Genting HK orders 10 cruising vessels worth 3.5b euros

The vessels will enable company to provide new products and run new itineraries in underserved cruise market

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Mr Lim hinted that the company may order another 10 boats if Genting Hong Kong’s growth projections pan out.

Kuala Lumpur

GENTING Hong Kong has put in an order for 10 cruising vessels worth 3.5 billion euros (S$5.47 billion) as it seeks to expand its presence in the growing cruise business, particularly in China.

The order book of vessels are scheduled to be delivered over the next six years and were inked on Tuesday with Lloyd Werft group, its shipbuilding unit.

The newbuilds will enable Genting Hong Kong to provide new products and to operate new itineraries to expand in the cruise market, which is relatively unexploited, Genting Hong Kong chairman and chief executive Lim Kok Thay said at a signing ceremony in Wismar, Germany.

The orders are for two mega Global-Class cruise ships of 201,000 gross tonnes with 5,000 lower berths for Star Cruises, and another eight for its luxury segment under Crystal Cruises; Crystal's vessels will comprise six river ships and another two much larger ocean-going ships.

As the luxury cruise shipyards will deliver vessels only after 10 years owing to the huge order books, Genting Hong Kong acquired German shipbuilders Lloyd Werft Group and Nordic Yard for 265 million euros in total, so that Genting Hong Kong can receive its vessels sooner.

The shipyard owned by Lloyd Werft and three others under Nordic Yard have been consolidated under Lloyd Werft.

Mr Lim alluded to the possibility of ordering another 10 boats if growth tracks Genting Hong Kong's projections over the coming years.

At the signing ceremony, he said the acquisition of the shipyards was a "game changer" for both the German state and Genting Hong Kong; it will provide jobs and investments in the state, and for Genting Hong Kong, the capacity to accelerate its business.

Genting Hong Kong's orders are believed to be the biggest, albeit from the parent company to the subsidiary. It will enable the shipyards to build Global-Class ships, which will be designed with "Chinese characteristics" and deployed for the Chinese market.

Delivery of the Global-Class series of vessels will commence between 2019 and 2020, starting with a ship a year and eventually going up to two a year.

"Cruising is still underserved, especially in Asia, and particularly in China," Mr Lim said, and thus has room to grow despite the slowing economy.

Convenience and value for money are reasons people prefer to cruise. In the US and Europe for instance, Crystal Cruises' programmes are so popular that tickets are sold 18 months in advance.

The four Crystal river ships are scheduled to embark in the summer of 2017 and will feature 250 sq ft guest suites with walk-in wardrobes, American king-sized beds and bathrooms with double vanities; its public areas are spacious.

In China, the luxury segment will be marketed under Dream Cruises.

Mr Lim said the 10 ships will be financed via a combination of internally generated funds and borrowings, mainly in the form of project financing, with Genting Hong Kong putting in as little equity as possible.

In addition to making boats for Genting Hong Kong, Lloyd Werth is expected to make ships for others as well, to the projected tune of about two billion euros in annual orders.