The collapse of Hebridean International Cruises was no surprise given the weakness of the pound and high cost of running one small ship, according to cruise operators.
Hebridean International Cruises went into administration last week, days after selling its 98-passenger ship Hebridean Spirit for a rumoured £5 million, blaming the move on the weak pound, which had pushed up operational costs.
The cruise line was sold in the UK, which meant its income was in sterling but outgoings, such as fuel and port taxes, were in dollars and euros.
Both costs have escalated as the value of the pound has fallen, said Fred Olsen Cruise Lines marketing director Nigel Lingard.
Fred Olsen’s income is also in sterling but it has to buy fuel in dollars and pay crew in dollars and Norwegian krone. Most port costs have to be paid in euros and the cruiseline has to buy provisions abroad on long cruises.
Lingard said: “The weakness of the pound has really hit us, but we have economies of scale because we have five ships. That gives us some negotiating power.”
Other economies are also being made – its next brochure won’t detail port arrival and departure times so ships can dock later, which is cheaper, and depart earlier so they can cruise more slowly, using less fuel, to the next port.
Lingard said: “It was inevitable Hebridean wouldn’t survive. They had one ship in international waters and would have had to pay top price for everything. I think we will see the collapse of other small cruise companies with high operating costs, maybe not in the UK but around the world.”
P&O Cruises head of brand marketing Philip Price agreed large cruiselines benefit from economies of scale. “With seven ships sailing from Southampton in the summer we benefit from purchasing across the fleet, which enables us to manage our costs more effectively.”
Hebridean’s administrators Ernst & Young is in “exclusive” talks with a potential bidder for the 49-passenger Hebridean Princess with a view to selling it as a going concern.
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