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Trey Hickey/private equity group pursue Genting HK ships for Asia cruising

For cruise operators who elect to stay in Asia, 'there will be five years of limited competition and a very healthy commercial environment,' Trey Hickey said
One of the parties pursuing Global Dream before Disney Cruise Line emerged involves Asia cruise expert Trey Hickey and a private equity group of former KKR people.

The group raised more than $250m in committed operating capital and submitted a combined bid for Global Dream and World Dream one month ago. Hickey declined to disclose the amount of the bid but said it was viewed as 'satisfactory' (not rejected). 

Now the Disney prospect has surfaced.

Disney expected to get the ship

While Hickey thinks Disney likely will get Global Dream and operate it in the US — not Asia, as has been speculated — he still hopes his group will be able to acquire another former Genting Hong Kong ship, World Dream, at auction in Singapore. And they even have their eyes on Genting Dream, currently sailing for Resorts World Cruises on lease from a consortium of Chinese banks, as well as two new (existing) expedition ships.

The four ships would operate in Asia, with Hickey envisioning World Dream and Genting Dream potentially under one brand and the two expedition ships another.

Hickey was SVP international for Princess Cruises and Carnival plc, chief representative officer of Carnival China and president of Carnival Japan. He sits on the board of Blue World Acquisition Corp., a SPAC that raised $100m and is pursuing opportunities in the cruise industry but is separate from this strategy he outlined at length to Seatrade Cruise News.

Current Asia backdrop

Hickey sees Asia as particularly ripe for cruise development now because there's a void of operators.

Genting Hong Kong collapsed, and Resorts World Cruises currently sails just the one leased ship.

Carnival Corp. & plc has its joint venture with CSSC, CSSC Carnival Cruise Shipping, to build for the Chinese market. But Costa Cruises and Princess Cruises, formerly prominent regional players, have exited for now.

Norwegian Cruise Line Holdings came and went.

Hickey sees Royal Caribbean International and MSC Cruises as committed to Asia, where he predicts they'll field very large ships — leaving a window for an operator with slightly smaller vessels, viable for wider deployment with more itinerary options and multinational sourcing.

'A wholesale withdrawal from Asia will take at least five years to wind back up. For those who elect to stay, there will be five years of limited competition and a very healthy commercial environment,' Hickey said.

Disney reportedly has two-month option for Global Dream

Hickey's group was among those bidding for the 9,000-passenger, 208,000gt Global Dream that sits unfinished at MV Werften.

According to Hickey, KfW IPEX-Bank and export credit agency Euler Hermes have given Disney a two-month exclusive option, and he expects the German authorities will choose Disney as the operator in a plan where Meyer Werft — which builds for DCL at Papenburg — would manage the completion of that vessel at MV Werften Wismar.

Disney has not commented about Global Dream, and MV Werften insolvency administrator Christoph Morgen told Seatrade Cruise News he's working on 'various options' for Global One and in negotiations with 'various interested parties.' No binding contracts have been concluded.

Morgen confirmed completion in Wismar is the preferred solution.

Ship's configuration would work for Disney

Many parties reportedly looked at Global Dream but opted out, in part due to its special configuration of quad cabins, many connecting, a design suited to Asian family travelers. Pointing to Disney's family market and ships with many connecting rooms, Hickey thinks Global Dream would work well for Disney.

And he'd expect the ship to be based in the US since, in Asia, 'the only place you could put that ship and expect to fill it with 9,000 people is Shanghai.' There are many 'unknown risks deploying ships in China now,' he added. Disney lacks a distribution structure there, and he's not sure about synergies with Shanghai Disney Resort.

While Disney also has theme parks in Hong Kong and Tokyo, deployment from Tokyo would mean a longer cruise itinerary, not feasible for such a large vessel, and he doesn't see Hong Kong working either.

'Political football' in Germany

Whether all the issues with Global Dream's completion, for any operator, can be worked out remains to be seen. The ship has been described as a 'political football' in Germany.

The pressure for a solution is buildng since MV Werften's Wismar yard with its gigantic covered building dock was acquired by Thyssenkrupp Marine Systems in June, with plans to convert the facility for submarine production and perhaps naval surface vessels. 

World Dream

As for Hickey's group, though they'd hoped to secure Global Dream and World Dream in a joint deal, even if Global is off the table they're still keen on World Dream. This former Genting HK ship operated for Dream Cruises until its arrest in Singapore by KfW IPEX-Bank in March.

Hickey doubts Disney is interested in World Dream, and he sees few other viable suitors for the 150,695gt ship delivered in 2017.

It remains anchored off Singapore, with auction pending. In Hickey's view, something will happen with World Dream before year's end as it's scheduled for drydock maintenance in late December. A new owner/operator could take advantage of that to make any changes needed to bring World Dream into service in early 2023.

Genting Dream

KT Lim's new company, Resorts World Cruises, began operating Genting Dream from Singapore in June. That 2016-built ship has been owned by a group of Chinese banks since 2020 and previously was leased to Dream Cruises, so it was not part of the Genting HK insolvency.

According to Hickey, Resorts World is committed to two years of operations from Singapore with Genting Dream.

However, he thinks the owning Chinese banks are open to other potential operating scenarios for the ship.

China potential

Hickey believes oversupply crushed the nascent Chinese cruise market prior to the pandemic shutdown.

'It's not that that market is inherently flawed ... It was oversupplied and overhyped,' he said. 'Supply crushed it. There was never a demand problem.'

When China reopens, he thinks Royal Caribbean and MSC Cruises will do well operating their biggest and best new ships — one each — from Shanghai. The destinations for very big ships on shorter cruises from there, though, are limited: Cheju, South Korea, and Fukuoka, Japan.

Hickey called Royal Caribbean a 'very experienced, stable, healthy competitor. They're not disruptive, they're constructive. Other brands can compete with them and do well,' adding: 'MSC will come in with new hardware and I believe they'd be a rational competitor in that market.'

Multifacted sourcing, deployment plan

Hickey's group, if it can secure slightly smaller ships like World Dream, envisions richer, more varied itineraries and multifacted customer sourcing including North Asia markets like China, Taiwan and Japan.

Hickey said Taiwan generated impressive yields when Majestic Princess operated there, and it was a good market for Star Cruises and, more recently, Dream Cruises.

He was instrumental in developing the Princess and Carnival plc market in Japan so he knows it well.

Expedition ships

Pre-pandemic, Chinese were the fastest growing source market for Antarctica. Yet expedition lines have not created products specifically/exclusively for Chinese travelers or for Japanese.

Hickey said two new expedition ships are available and his group is considering the possibilities.