Crystal Cruises Left Passengers Out $100 Million. Can That Same Debt Win Them Back?

When American luxury cruise operator Crystal Cruises, owned by Genting Hong Kong, abruptly went down in February of last year, it left customers and travel brokers holding the bag for more than $100 million in reservations. Up until that point, it had drawn some of the most devoted cruisegoers, attracted by amenities like complimentary champagne, renowned luxurious dining options like Nobu, and attentive butler service.

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Crystal Cruises is now making a comeback. Despite the stain left by the bankruptcy, Italian shipping mogul and billionaire Manfredi Lefebvre d'Ovidio decided to revive the name in collaboration with luxury carrier A&K Travel Group, which he co-chairs, despite the potential loss of those customers. More than six months have passed since the re-launch was first planned.

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The 980-passenger, 20-year-old Crystal Serenity as well as the 838-passenger, 28-year-old Crystal Symphony were purchased by the new partners for $128 million in June 2022 and were being sent to Trieste, Italy, for renovation. The continuing upgrades, which are reportedly costing hundreds of millions of dollars, are intended to reduce the passenger count and add larger suites, as well as a shuffleboard court on each ship (Crystal's expedition and canal ships were sold separately). On July 31, 2023, the Crystal Serenity will set sail from Marseilles for a 12-night trip, with prices beginning at $9,700 per person. This will be the company's inaugural voyage.

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Fans have been divided since the start of sales in February. "Let's give them a try since we love Crystal," says Jack Ross, a Crystal supporter from Miami who participates in discussion forums and message boards with a business theme. "Others say screw them, Crystal got my money, and I'm not booking anyone who has that name," one person said.

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So, in an unusual initiative to boost revenue, Crystal is using the hundreds of millions of dollars that consumers lost when the line collapsed as a hook to bring back passengers. The new Crystal hopes that this action, which they are not required by law to take, would restore goodwill and generate a large number of bookings.

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This is how the "Exceptional Initiative" payback strategy will operate. If you didn't win a cruise, you'll be given credits equal to your Crystal Cruise balance that you can use toward five other vacations. Hence, if all five cruises are priced similarly, there will be about 20% savings. The problem is that you must act quickly and commit to that much cruising in order to get your money's worth. Customers must spend all of their credits on sailings departing by December 31, 2025, and book the first of the discounted trips before July 1, 2023.

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To put it another way, in order for Crystal to refund your money, you must agree to invest much more money—and time—on its ships.

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The amount each customer receives back takes into account not only how much money those who had parked to Crystal at the time of the initial company's abrupt demise, but also any amount they have or will receive from credit card reserves or disputes, insurance companies, or other sources. Michael Moecker & Associates of Fort Lauderdale, the insolvency company, keeps track of all of these sources. Credits can be divided among five cabins during a single trip or utilized on five different itineraries.

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Cristina Lewis, CEO of A&K Travel Group Ltd., told Trade Algo exclusively from Monaco, "I don't have recall in the industry of anybody who has ever taken over obligations of a past owner without actually knowing the nature of the liabilities." Abercombie & Kent, a deluxe tour operator, is the most well-known operation of A&K.

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Because Moecker is still assessing how much money can be repaid in cash via insurer and credit card companies and sorting over open reimbursement claims, the magnitude of the liabilities is uncertain. By the end of the summer, it anticipates that process to be finished and payments to start. Both businesses anticipate tens of millions to also be left on the table and moved into the credit program, even though the exact amount of refund is still unknown.

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Although it may seem like a shoddy ploy to boost sales, higher-ups at the bankruptcy agency have a different take. According to Mark Healy, executive vice president of Moecker, "What Crystal has opted to do with this gesture is extraordinary partially because they had no [legal] responsibility to do it, but largely because it gives customers another chance to recoup cash lost in the shut down."

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Lewis considers it to be a historically rare act of goodwill. As she explains, "Crystal passengers have incorrectly asked us to return their money since they thought that when we bought the ships and the brand, we also bought the bank accounts and everything that goes with it. "We never had interaction with the old Crystal's customers' money. Nothing about the bank accounts is visible to us.

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Ross, a Miami-based sailor who owed the new Crystal more than $2,000, decided to give it a shot and booked an Alaskan cruise for 2024 with his wife Vicki. He will be able to retrospectively apply his 20% discount to the booking, which may just be a wonderful surprise and be another act of generosity.