Viking Cruises – Empty Refunds – Customer Expectations

[theremin]

This post is rather long for which I apologize.

 

Currently, there is strong commentary about the way Viking Ocean Cruises compensates for failure in delivery of contracted carriage and associated service levels. They offer credit vouchers (not actually refunding anything and forcing customers to do business with Viking in the future) or they give back as little cash as possible and take a long time doing that. Although, this is a recurring narrative across all Viking operations, it is nearing crescendo on the ocean cruise side.

 

Those who have dealt with other cruise lines or travel companies, see this as outrageously insensitive in a customer-driven market. Most customer expectations are based on past experience or common decency. Why is Viking’s compensation so different from their customers’ expectations? It is money . . . pure and simple

 

Viking’s own finance scheme mandates they keep lots of cash on hand to help manage the credit rating assigned to their corporate bonds (i.e., keep their borrowing costs down). They already pay high interest and a credit downgrade would worsen things. The information below provides some insight into the situation.

 

New York, May 05, 2015 -- Moody's Investors Service today assigned a B3 rating to Viking Cruises, Ltd. proposed $250 million senior unsecured notes due 2025.

 

Please note the ‘B3’ rating isn’t the worst junk, but it is considered speculative (i.e., fair likelihood of default) and further downgrades would likely scare off many investors.

 

Below are selected discussion points (for the full rating see this link: https://www.moodys.com/research/Moodys-assigns-a-B3-rating-to-Viking-Cruises-new-250--PR_324517)

 

The growth in the river cruise market is expected to notably slow in 2015.

 

Viking is facing pricing pressure in 2015 as reflected by an expected decline in net cruise revenue per passenger cruise day

 

However, the slowdown in growth at the river cruise subsidiary will be partially offset by the launch of Viking's first ocean cruise in April 2015 which already is 92% booked for 2015

 

If Viking does not continue to maintain available cash balances above $300 million, ratings could also be downgraded . . .

 

Per the credit rating, the ocean cruises were supposed to bolster their accounts. Instead, Viking is being asked to refund a lot of money which puts them in a bind. Of course, this does offer visibility into Viking’s unique requirement for full cruise payment far in advance (sometimes years in advance). Our money is used as collateral for their loans.

 

CC posts from cruisers who have traveled Viking Ocean Cruises to date chronicle everything from the sublime to the ridiculous. I trust them at their word. Their journals indicate two scenarios:

 

1) When things are good, Viking is great (predominantly things aboard ship).

 

2) When things go south, Viking tends to follow (things requiring corporate intervention).

 

Given the corporate financial situation, there is no rational reason to expect change.

 

The folks who have completed their cruises or have fully paid their bookings had every reason to enter their engagements with very high expectations of performance or, if warranted, equitable compensation. I wish them success pursuing those outcomes. For the rest of us, however, we can no longer claim ignorance or surprise.

 

What should we do given our current knowledge?

 

Factor it into our risk assessment when selecting a cruise and cruise line.

What is the likelihood of satisfactory reimbursement

for cruise cancellation, disruption, or general quality failures?

If Viking is selected,

we need to base our expectations on demonstrated reality rather than comparative industry norms.

 

I pondered well into the night about whether to do this post, but believe it is useful information to assist each of us trying to make informed decisions when choosing our next cruise.

 

Thom

[Mammacat]

Thank you so much for your post. It was more info then I would ever have received from Viking.

[coco-girl]

This post is rather long for which I apologize.

 

Currently, there is strong commentary about the way Viking Ocean Cruises compensates for failure in delivery of contracted carriage and associated service levels. They offer credit vouchers (not actually refunding anything and forcing customers to do business with Viking in the future) or they give back as little cash as possible and take a long time doing that. Although, this is a recurring narrative across all Viking operations, it is nearing crescendo on the ocean cruise side.

 

Those who have dealt with other cruise lines or travel companies, see this as outrageously insensitive in a customer-driven market. Most customer expectations are based on past experience or common decency. Why is Viking’s compensation so different from their customers’ expectations? It is money . . . pure and simple

 

Viking’s own finance scheme mandates they keep lots of cash on hand to help manage the credit rating assigned to their corporate bonds (i.e., keep their borrowing costs down). They already pay high interest and a credit downgrade would worsen things. The information below provides some insight into the situation.

 

New York, May 05, 2015 -- Moody's Investors Service today assigned a B3 rating to Viking Cruises, Ltd. proposed $250 million senior unsecured notes due 2025.

 

Please note the ‘B3’ rating isn’t the worst junk, but it is considered speculative (i.e., fair likelihood of default) and further downgrades would likely scare off many investors.

 

Below are selected discussion points (for the full rating see this link: https://www.moodys.com/research/Moodys-assigns-a-B3-rating-to-Viking-Cruises-new-250--PR_324517)

 

The growth in the river cruise market is expected to notably slow in 2015.

 

Viking is facing pricing pressure in 2015 as reflected by an expected decline in net cruise revenue per passenger cruise day

 

However, the slowdown in growth at the river cruise subsidiary will be partially offset by the launch of Viking's first ocean cruise in April 2015 which already is 92% booked for 2015

 

If Viking does not continue to maintain available cash balances above $300 million, ratings could also be downgraded . . .

 

Per the credit rating, the ocean cruises were supposed to bolster their accounts. Instead, Viking is being asked to refund a lot of money which puts them in a bind. Of course, this does offer visibility into Viking’s unique requirement for full cruise payment far in advance (sometimes years in advance). Our money is used as collateral for their loans.

 

CC posts from cruisers who have traveled Viking Ocean Cruises to date chronicle everything from the sublime to the ridiculous. I trust them at their word. Their journals indicate two scenarios:

 

1) When things are good, Viking is great (predominantly things aboard ship).

 

2) When things go south, Viking tends to follow (things requiring corporate intervention).

 

Given the corporate financial situation, there is no rational reason to expect change.

 

The folks who have completed their cruises or have fully paid their bookings had every reason to enter their engagements with very high expectations of performance or, if warranted, equitable compensation. I wish them success pursuing those outcomes. For the rest of us, however, we can no longer claim ignorance or surprise.

 

What should we do given our current knowledge?

 

Factor it into our risk assessment when selecting a cruise and cruise line.

What is the likelihood of satisfactory reimbursement

for cruise cancellation, disruption, or general quality failures?

If Viking is selected,

we need to base our expectations on demonstrated reality rather than comparative industry norms.

 

I pondered well into the night about whether to do this post, but believe it is useful information to assist each of us trying to make informed decisions when choosing our next cruise.

 

Thom

 

"Like" :D

 

Coco x

[ducklite]

Check your travel insurance. It very likely does not cover default. I learned this the hard way with a Travelgard insured trip after the provider went belly up. I don't believe other carriers would have covered it either. Because I had paid a year earlier, my credit card wouldn't intervene.

Edited August 16, 2015 by ducklite

[Traveler103]

Check your travel insurance. It very likely does not cover default. I learned this the hard way with a Travelgard insured trip after the provider went belly up. I don't believe other carriers would have covered it either. Because I had paid a year earlier, my credit card wouldn't intervene.

 

Caveat emptor. I recommend checking your policy as well - you have a grace period after buying it to cancel if it does not cover what you need. From the separate policy I purchased for our upcoming Viking Cruise, Under Other benefits for which you will be compensated:

 

"Bankruptcy or Default of an airline, cruise line, tour operator or other travel provider (other than the Travel Supplier, tour operator, travel agency, organization or firm from whom You purchased Your Travel Arrangements) causing a complete cessation of travel services more than 14 days following Your Effective Date."

 

and

 

“Bankruptcy or Default” means the total cessation of operations due to insolvency, with or without the filing of a bankruptcy petition by an airline, cruise line, tour operator or other travel provider provided the Bankruptcy or Default occurs more than 14 days following Your Effective Date for the Trip Cancellation Benefits. "

 

The effective date is based on when you buy the policy. As many travel writers have noted in publications, the insurance you buy from most cruise lines is not insurance but a credit to book with them later on another cruise. That is why the cruise line calls it a Travel Protection Plan, not travel insurance. It as a cancel-for-any-reason plan but does not cover if they cease operations due to bankruptcy or default. That is also why their "plan" is cheaper.

 

I still plan on traveling on Viking Oceans as I think they have a good product and a good chance of being a game changer in ocean travel and I feel protected because I buy my own insurance, not theirs.

 

IMPORTANT NOTE: Insurance is regulated at the state level. I am in Florida. Your state requirements and policy may be different from what I see here.

Edited August 16, 2015 by Traveler103

[Traveler103]

This post is rather long for which I apologize.

 

Currently, there is strong commentary about the way Viking Ocean Cruises compensates for failure in delivery of contracted carriage and associated service levels. They offer credit vouchers (not actually refunding anything and forcing customers to do business with Viking in the future) or they give back as little cash as possible and take a long time doing that. Although, this is a recurring narrative across all Viking operations, it is nearing crescendo on the ocean cruise side.

 

Those who have dealt with other cruise lines or travel companies, see this as outrageously insensitive in a customer-driven market. Most customer expectations are based on past experience or common decency. Why is Viking’s compensation so different from their customers’ expectations? It is money . . . pure and simple

 

 

 

Viking’s own finance scheme mandates they keep lots of cash on hand to help manage the credit rating assigned to their corporate bonds (i.e., keep their borrowing costs down). They already pay high interest and a credit downgrade would worsen things. The information below provides some insight into the situation.

 

New York, May 05, 2015 -- Moody's Investors Service today assigned a B3 rating to Viking Cruises, Ltd. proposed $250 million senior unsecured notes due 2025.

 

Please note the ‘B3’ rating isn’t the worst junk, but it is considered speculative (i.e., fair likelihood of default) and further downgrades would likely scare off many investors.

 

Below are selected discussion points (for the full rating see this link: https://www.moodys.com/research/Moodys-assigns-a-B3-rating-to-Viking-Cruises-new-250--PR_324517)

 

The growth in the river cruise market is expected to notably slow in 2015.

 

Viking is facing pricing pressure in 2015 as reflected by an expected decline in net cruise revenue per passenger cruise day

 

However, the slowdown in growth at the river cruise subsidiary will be partially offset by the launch of Viking's first ocean cruise in April 2015 which already is 92% booked for 2015

 

If Viking does not continue to maintain available cash balances above $300 million, ratings could also be downgraded . . .

 

Per the credit rating, the ocean cruises were supposed to bolster their accounts. Instead, Viking is being asked to refund a lot of money which puts them in a bind. Of course, this does offer visibility into Viking’s unique requirement for full cruise payment far in advance (sometimes years in advance). Our money is used as collateral for their loans.

 

CC posts from cruisers who have traveled Viking Ocean Cruises to date chronicle everything from the sublime to the ridiculous. I trust them at their word. Their journals indicate two scenarios:

 

1) When things are good, Viking is great (predominantly things aboard ship).

 

2) When things go south, Viking tends to follow (things requiring corporate intervention).

 

Given the corporate financial situation, there is no rational reason to expect change.

 

The folks who have completed their cruises or have fully paid their bookings had every reason to enter their engagements with very high expectations of performance or, if warranted, equitable compensation. I wish them success pursuing those outcomes. For the rest of us, however, we can no longer claim ignorance or surprise.

 

What should we do given our current knowledge?

 

Factor it into our risk assessment when selecting a cruise and cruise line.

What is the likelihood of satisfactory reimbursement

for cruise cancellation, disruption, or general quality failures?

If Viking is selected,

we need to base our expectations on demonstrated reality rather than comparative industry norms.

 

I pondered well into the night about whether to do this post, but believe it is useful information to assist each of us trying to make informed decisions when choosing our next cruise.

 

Thom

 

I read the Moody's article in its entirety and believe your comments are overly alarmist. I recommend anyone so inclined read the article for your self and draw your own conclusions. There is a later article as well to look at:

 

https://www.moodys.com/research/Moodys-Publishes-Covenant-Quality-Assessment-for-Viking-Cruises-Ltd-Bond--PR_327413

 

In summary:

"New York, June 09, 2015 -- Moody's Investors Service has assigned an overall covenant quality score of 2.96 to Viking Cruises Ltd's $250m 6.250% Senior Notes due 2025. Subscribers can read the full report at: http://www.moodys.com/viewresearchdoc.aspx?docid=PBC_1005487.

 

Moody's scores covenant protections on a five-point scale, with 1.0 denoting the strongest covenant protections for investors and 5.0, the weakest. Viking Cruises Ltd's score compares with the US average of 3.62 and the peer group average of 3.17."

 

My observation: So Moody's gives Viking a quality score higher than the US average and higher than its peer group average?

 

Oh, and the Viking corporate overall is rated B1.

Edited August 16, 2015 by Traveler103

[buggins0402]

I read the Moody's article in its entirety and believe your comments are overly alarmist. I recommend anyone so inclined read the article for your self and draw your own conclusions. There is a later article as well to look at:

 

https://www.moodys.com/research/Moodys-Publishes-Covenant-Quality-Assessment-for-Viking-Cruises-Ltd-Bond--PR_327413

 

In summary:

"New York, June 09, 2015 -- Moody's Investors Service has assigned an overall covenant quality score of 2.96 to Viking Cruises Ltd's $250m 6.250% Senior Notes due 2025. Subscribers can read the full report at: http://www.moodys.com/viewresearchdoc.aspx?docid=PBC_1005487.

 

Moody's scores covenant protections on a five-point scale, with 1.0 denoting the strongest covenant protections for investors and 5.0, the weakest. Viking Cruises Ltd's score compares with the US average of 3.62 and the peer group average of 3.17."

 

My observation: So Moody's gives Viking a quality score higher than the US average and higher than its peer group average?

 

Oh, and the Viking corporate overall is rated B1.

 

The score was for covenant protection...something that is document/ security specific. Not a quality score on Vikings financial condition. B1 is not stunning.

 

I just question a company's wherewithal that has to pull revenue and cash flow two years forward to support its working capital.

Edited August 16, 2015 by buggins0402

[sammiedawg]

I've read and heard speculation that Viking is heavily leveraged. Their venture into ocean cruising is off to the rockiest start imaginable. Their European River cruises are impacted significantly by low water levels. They have honed a ship switching system but some recent River cruises have been canceled.

[theremin]

It seems some of us may be laboring under a misconception. Hopefully, this will clarify my original post.

 

First: I did not mention or allude to a pending bankruptcy. That notwithstanding, Viking needs >$300M cash on hand to maintain their current credit rating.

 

Second: The need to maintain large reserves will be a factor in Viking business decisions regarding cash refunds versus future cruise credit.

 

Third: On CC we've just seen several real examples of how this is materializing.

 

BOTTOM LINE: If a customer selects Viking for their cruise, there should be no reason to expect significant cash refunds in the event of cancellation or unsatisfactory performance.

 

Nothing more, nothing less . . .

 

Ahhhh . . . now we know why I was hesitant to make the post in the first place :D

[Traveler103]

Not surprised on the leverage. Moody's article points that out. When they wanted payment for the cruise so far in advance, I assumed they were highly leveraged. How else would a relatively small company like Viking pay for building 3 new large ships? Certainly not out of cash flow only, they had to borrow.

 

I really like their ships and their approach to ocean cruising and hope they succeed. But I also buy trip insurance to protect our finances. There are many unknowns and uncertainties in cruising coupled with the economic and political conditions of the world.

[Traveler103]

It seems some of us may be laboring under a misconception. Hopefully, this will clarify my original post.

 

 

Nothing more, nothing less . . .

 

Ahhhh . . . now we know why I was hesitant to make the post in the first place :D

 

Thank you. I like the simplification and agree with you. I would add, buy proper insurance if you are worried about Viking.

[kathy9]

Never buy your travel insurance from your cruse line.....

[ducklite]

IMPORTANT NOTE: Insurance is regulated at the state level. I am in Florida. Your state requirements and policy may be different from what I see here.

 

I am in Florida as well. Do not be so sure that you will be protected. They find loopholes as they did with our cruise. Our insurance was NOT purchased through the line--those who purchased that way were no better off. At least we hadn't purchased air fare yet.

Edited August 17, 2015 by ducklite

[kathy9]

You really have to read these travel policies very carefully before buying ( just like any other insurance) much is not covered.

Then when you make a claim be ready to supply documentation, names, dates etc. and don't give up!

[Mammacat]

Someone posted to their local paper about that ill fated cruise.

 

TUCSON NEWS 4 KVOA.COM

 

Posted: Aug 17, 2015 12:44 AM EDT

Updated: Aug 17, 2015 12:44 AM EDT

Disappointing cruise costs Saddlebrooke group thousands

[LadyVol1]

The TV broadcast: http://www.kvoa.com/clip/11769310/incomplete-cruise-costs-saddlebrooke-group-thousands

 

The written story: http://www.kvoa.com/story/29799822/disappointing-cruise-costs-saddlebrooke-group-thousands

[palermo22]

I am not saying some of you are alarmists but there are a lot of undocumented facts in your statements above. As a future traveler on Viking Ocean cruises I did my own investigating as to whether paying for a cruise 15 1/2 months was smart (we're scheduled to take the 22 day cruise on Viking Sky on 4/15/17). While that is certainly a longer stretch of time (between full payment and cruise) - it's not two years and it's probably six to nine months longer than other cruise lines (for all I know maybe it's only four months longer). What happened to the cruise line could be termed "bad luck" in that an early cruise had to be terminated. But I guarantee every cruise line out there have horror stories attached to some of their cruises and people have not shied away from those cruise lines. My travel agent (who has been in the industry a long time and has a great reputation) told me two things (in writing) that make me (at this point) not worry about our future cruise: (1) If we cancel prior to 120 days then we're on the hook for $200 (plus what we paid for our insurance policy through Travel Ex) and (2) our insurance policy will reimburse us in full should the company (for any reason) cancel the cruise. He works for a large company and he is our agent - he wouldn't put things like that in writing unless he was 100% sure (because as our agent he is on the hook if the information he gave us was not correct). He said that Viking River Cruises has operated like this for years and folks love their river cruises. So I suggest that everyone booked on a future cruise just relax and don't le the rumor mongrels scare you away.

[AFL Kiwi]

We are in New Zealand. We were fortunate enough to take the Homeland Cruise leaving Bergan on 13th June and had a wonderful time. We have since booked to take a further cruise with Viking leaving 1st April 2017.

 

In both instances we paid our deposit when we booked (Homeland Jan 2014) and were not/are not required to pay the balance due until 120 days before sailing.

[theremin]

I am not saying some of you are alarmists but there are a lot of undocumented facts in your statements above. . . just relax and don't le the rumor mongrels scare you away.

 

I am the OP and don't consider myself a rumor monger (or mongrel, for that matter). I try to be as accurate with facts I present, as possible. Here is my latest check of ocean cruise full payment deadlines:

Holland America 75 days

Princess 75 days

Carnival 75 days

Costa 70 days

Cunard 90 days

MSC 75 days

Norwegian 75 to 90 days (depending on cruise cost)

AVERAGE ~77.5 days

 

Viking 534 days (based on Into the Midnight Sun, 17 Jun 2017 sailing)

Just about 7X the going rate :eek:

 

Finally, and with all due deference to your TA's experience and expertise, what was written to you is not what is materializing in real-time on several threads (encompassing many passengers) in this forum.

 

I have a booking on the Star for the Midnight Sun cruise in 2017, but have no illusions of how things are likely to pan out should the unexpected occur during that cruise. This information isn't intended to frighten anyone. It is a consideration (among several) to support the decisions each of us makes when selecting a cruise.

 

Best regards,

Thom [not the mongrel . . . the other Thom]:D

Edited August 19, 2015 by theremin

[Traveler103]

I have a payment to make for a Viking Ocean cruise for Nov 2016 due end of August 2015, next week. That is about 14 months in advance of sailing. However, in reading the fine print, their terms and conditions actually states the following: "The final balance is due no later than 90 days prior to sailing. All reservations are subject to cancellation if payments are not received by the due date. "

 

In the invoice I received, it is printed "Reservations are subject to cancellation if the payment is not received by the payment due date." That due date is the one next week that I plan on making.

 

Also on the invoice, under Guest Cancellation Schedule,

 

"The following cancellation charges will apply for all cancellations received based on days prior to departure.

121 days or more prior to departure $100 per person"

 

If I read this correctly, I do not have to make payment until 90 days before the sail date. If I do not make the payment before that, Viking can cancel my reservation. Also, if I do not make payment by next week's due date, they can cancel my reservation.

 

But would they really cancel? Has anyone asked to delay that payment schedule or even pay over several months? I guess I could risk it and not pay until sometime before the 90 days before sailing. Is Viking's wording to "encourage" us to pay sooner but not demand it? Anyone have experience here on this issue with Viking?

 

As I will pay next week, I made sure to have insurance in place in the event (unlikely in my opinion) Viking is unable to deliver and cannot refund the payments.

Edited August 19, 2015 by Traveler103

[Traveler103]

We are in New Zealand. We were fortunate enough to take the Homeland Cruise leaving Bergan on 13th June and had a wonderful time. We have since booked to take a further cruise with Viking leaving 1st April 2017.

 

In both instances we paid our deposit when we booked (Homeland Jan 2014) and were not/are not required to pay the balance due until 120 days before sailing.

 

Wonder if your situation (payment timing) has to do with NZ laws that may be different than the US?

[palermo22]

I am the OP and don't consider myself a rumor monger (or mongrel, for that matter). I try to be as accurate with facts I present, as possible. Here is my latest check of ocean cruise full payment deadlines:

Holland America 75 days

Princess 75 days

Carnival 75 days

Costa 70 days

Cunard 90 days

MSC 75 days

Norwegian 75 to 90 days (depending on cruise cost)

AVERAGE ~77.5 days

 

Viking 534 days (based on Into the Midnight Sun, 17 Jun 2017 sailing)

Just about 7X the going rate :eek:

 

Finally, and with all due deference to your TA's experience and expertise, what was written to you is not what is materializing in real-time on several threads (encompassing many passengers) in this forum.

 

I have a booking on the Star for the Midnight Sun cruise in 2017, but have no illusions of how things are likely to pan out should the unexpected occur during that cruise. This information isn't intended to frighten anyone. It is a consideration (among several) to support the decisions each of us makes when selecting a cruise.

 

Best regards,

Thom [not the mongrel . . . the other Thom]:D

 

Wasn't trying to start an argument - in fact, I wasn't even pointing you out (just because you started the thread - I wasn't implying you were trying to whip the people into a frenzy) - just wanted to point out that from what I have read this has been standard practice for Viking for a long time and there us no indication that they are about to go under. I could see that if they were rated as junk bonds then it might be time to worry - but I don't get that idea. Anyway, just have your insurance in place and everyone is good to go.

[theremin]

I'd be very interested to hear what you found out (if you've checked into) your payment scenario. I understand your reading of the contract and it matches mine. I truly hope the flexibility is there, but I suspect there could be a catch something like "If you pay on the contract schedule, you get the brochure rate" (i.e., none of the discounts offered). Even though the"brochure rates" could never be sold (way too high), they are still used at the basis for all the Early Booking Discounts (EBD) which seems to be where the weird payment schedules come in.

[palermo22]

I'd be very interested to hear what you found out (if you've checked into) your payment scenario. I understand your reading of the contract and it matches mine. I truly hope the flexibility is there, but I suspect there could be a catch something like "If you pay on the contract schedule, you get the brochure rate" (i.e., none of the discounts offered). Even though the"brochure rates" could never be sold (way too high), they are still used at the basis for all the Early Booking Discounts (EBD) which seems to be where the weird payment schedules come in.

 

I am not a lawyer - I depend on the expertise of people I hire - in this case it's a well-known travel agent and this is not his first rodeo. He wouldn't make statements unless they were factual. If what he stated were not correct then he and his company could be held liable. Here are a few things he has stated to me or to our travel companion:

 

"there is absolutely no reason to worry about Viking as they are a very solvent company. The Travel Ex policy you bought does cover you in case of supplier default or bankruptcy. As far as cancellation you can cancel for a refund of all payments except for $100 p/p up until 120 days prior to sailing. Also you paid by credit card which covers you for supplier default

As for the insurance you can cancel the policy and change the coverage to another trip or get a refund up until the penalty period at 120 days prior. Again I think you should not be concerned about Viking as the insurance companies are still keeping them as a covered supplier. If there was any issue, they would no longer insure for Viking.

 

They have been getting full payments a year in advance for the past 10 years.They are actually very strong financially as all the insurance companies still rate them as a covered supplier for default. Insurance carriers would know if they had issues.

[aqruzer]

We are so glad we are NOT going on the Viking Star. They treated us very poorly when they cancelled our pre-trip. After reading these posts, we are quite relieved that we cancelled our Sept. 15th cruise with Viking Ocean. Also feel lucky to have gotten all our money back.