IAG March 2016 - page 8

Cover Story
Arival executivecalls StarCruises
“a casino company that happens to be
on ships.” Star is a division of Genting
Hong Kong, part of Genting Group, the
conglomerate that includes the global
ResortsWorld casino brand stretching from
Singapore to New York to the UK. Unique
among cruise lines, Star’s revenue mix is
dominated by casino revenue. Above this,
however, it isAsia’s leading cruise company,
fightinghardanddreamingbig todefend that
position amid the growth of international
cruise lines in its homewaters.
Star currently has six vessels in the
region, including two it moved to home
ports in China during the past year.
SuperStar Libra relocated from Penang in
Malaysia to Xiamen in Fujian Province last
July for cruises toHalongBay andDanang in
Vietnam. The vessel, with a capacity of 1,338
passengers, then transferred to Haikou on
Hainan Island for its annual fivemonth stay
to the endofMarch.
In January, Star’s largest cruise liner
SuperStar Virgo moved up the coast from
Hong Kong to Nansha in Guangzhou,
whereStarwill helpdevelop an international
cruise terminal as part of China’s plan of
becoming a global cruising center. Virgo,
with a passenger capacity of 1,870, sails on
two night cruises to Hong Kong each week
and then five night itineraries to Halong
Bay, Danang and Sanya on China’s Hainan
Island. Star Pisces is the line’s third Hong
Kong-based ship, with a capacity of 1,009
passengers. Itsailsononenightcruises,with
published rates as low as HK$520 (US$67)
per person, basedondoubleoccupancy.
From Singapore, where the group’s
Genting Singapore unit operates Resorts
World Sentosa, SuperStar Gemini cruises
from two to five nights to destinations in
Malaysia and the high seas, carrying up to
1,530 passengers. Based in Taipei’s port of
Keelung, SuperStarAquariusmakes twoand
three night cruises to Japan for up to 1,511
customers. Lastly, Taipan in Penang targets
private parties and MICE events for up to
130 passengers, featuring amini-submarine
to explore the briny deep.
Star’s ships are smaller than those of
global cruise lines and its prices tend to
MostChinese travelersarenotprimarily looking forgaming, butmanydowantavacation
experience that includes casinosamongotherentertainmentand leisureoptions.That
putsMacau casinooperatorsona collision coursewith theonboardgamblingofferedby
the international cruiseoperators thatare steaming full speedahead intoAsia.
be lower, but that alone doesn’t explain the
discrepancy in its revenue streams. While
global cruise lines get about three-quarters
of their revenue from passenger tickets,
Star’s ticket revenue typically accounts for
less than 30% of its cruise revenue. The
rest comes from so-called onboard revenue,
mainly gaming inStar’s case.
Genting Hong Kong, listed in Hong
Kongand initiallynamedStarCruises, broke
out Star’s gaming revenue until last year,
but now adds it toonboard revenue figures,
following cruise industry practice. In 2014,
Star’s gaming revenue was US$349million
and accounted for 63% of its total cruise
revenue, up from 58% of US$316 million
the year before. For thefirst half of 2015, the
onboard revenue category, which includes
income from retail, alcohol, internet usage
and other extras plus gaming, was US$166
million, compared with US$187 million
in 2014 (with $167 million from gaming
alone). Full year results will be released in
theweeks ahead.
Anoverhaul of Star’s cruisebusiness that
changed the company’s structure resulted in
record profits of US$2.2 billion for the first
halfof lastyear.GentingHongKong,apartner
in Travellers International Hotel Group that
been selling down its interest in Norwegian
Cruise Lines sinceNorwegian’s January 2013
IPO, from 50% to 18%, after a 10 million
share sale last May. The disposal triggered
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