Crystal Cruises Left Passengers Out $100 Million

When Genting Hong Kong's luxury cruise line Crystal Cruises suddenly ceased operations in February last year, it left both customers and travel agents with over $100 million in unfulfilled bookings. Up until that point, Crystal had offered some of the most loyal passengers in the cruise industry, attracting them with perks like free-flowing champagne, renowned dining experiences such as Nobu, and personalized butler service.

Now, Crystal Cruises is making a comeback. Despite the issues caused by its bankruptcy, the opportunity to regain those loyal customers was enticing enough for Italian billionaire and shipping magnate Manfredi Lefebvre d'Ovidio to revive the brand. Partnering with luxury travel group A&K Travel Group, which he co-chairs, the relaunch has been in progress for more than half a year.

By June 2022, the new owners had paid $128 million for the 980-passenger Crystal Serenity and the 838-passenger Crystal Symphony, both of which were sent to Trieste, Italy, for extensive renovations. (Crystal's expedition and river ships were sold separately.) The ongoing renovations, costing millions of dollars, aim to reduce passenger capacity, add larger suites, and even install pickleball courts on each ship. The first voyage of the revived Crystal Serenity is set to depart from Marseilles on July 31, 2023, for a 12-night cruise starting at $9,700 per person.

Sales began in February, and reactions have been mixed. "Some people say it's a new owner, and we should give them a chance because we love Crystal," says Jack Ross, a Crystal fan from Miami who is active on online forums. "Others are saying they won't book with Crystal again because of the money they lost."

In an effort to win back business, Crystal is taking a bold step: offering compensation to customers who lost money during the collapse, even though they’re not legally obligated to do so. This gesture, known as the "Exceptional Initiative," aims to rebuild goodwill and encourage future bookings.

Here’s how it works: if you lost out on a cruise, you'll be given credits equal to the amount owed, which can be used over five future voyages. Essentially, this offers about 20% off each trip if the values are comparable. However, customers must act quickly, as they need to book their first discounted cruise by July 1, 2023, and use all credits on sailings before December 31, 2025.

In other words, customers can recoup their lost funds, but only if they agree to book more cruises and spend more time aboard Crystal’s ships.

The amount offered to each customer is based on the money they had with Crystal at the time of its abrupt closure, minus any refunds they’ve received through credit card disputes, insurance, or other methods, as tracked by Michael Moecker & Associates of Fort Lauderdale, the bankruptcy administrator. Credits can be used across five different itineraries or spread across five cabins on the same cruise.

"I can’t recall any instance where someone has taken on the liabilities of a former owner without knowing the full extent of those liabilities," says Cristina Levis, CEO of A&K Travel Group Ltd., speaking exclusively to Bloomberg. A&K is best known for operating luxury tour company Abercrombie & Kent.

The total liabilities are still unclear because Moecker is in the final stages of settling outstanding claims and determining how much can be repaid through insurance and credit card companies. The firm is also responsible for settling unpaid wages owed to the crew. While the final amount is uncertain, the companies expect millions to be written off and converted into customer credits.

If this move seems like a ploy to boost sales, officials at the bankruptcy agency see it differently. "What Crystal has decided to do is remarkable, as they had no [legal] obligation to do so, but it offers customers another option to recover funds lost during the shutdown," says Mark Healy, executive vice president of Moecker.

Levis views it as a gesture of goodwill. "Crystal customers mistakenly believed we were responsible for refunding their money because they thought we acquired the old Crystal’s bank accounts along with the ships and the brand," she explains. "But we never had access to those accounts or any customer funds from the previous Crystal."

Ross, the Miami-based cruiser, lost over $2,000 with the old Crystal but decided to give the new company a chance, booking a cruise to Alaska in 2024 with his wife, Vicki. In a further act of goodwill, he’ll be able to retroactively apply his 20% discount to the booking—an unexpected but pleasant surprise.