Cruiseships have held their value over the years in a sector that has broken one earnings record after another amid booming demand for affordable escapes to paradise.
That is until several weeks ago, when the multibillion-dollar sector careened into the coronavirus pandemic and found itself reeling amid onboard outbreaks and cancelled voyages.
Valuations were hit particularly hard two weeks ago when two-thirds of the world's fleet — at least 230 vessels — left the market as Carnival Corp and other owners shut down to help contain the virus.
The total value of the entire fleet of 483 active and on-order ships has fallen $4bn to $167bn since 1 January, according to London-based VesselsValue.
"If there are an increasing number of vessels laid up or at sea with no passengers on board, as is the case today with Covid-19, it is an indicator the market is becoming worse, owners and stakeholders are losing money and therefore the assets are less desirable," VesselsValue chief commercial officer Matthew Freeman told TradeWinds.
"If the fleet is working at full capacity it is the opposite and so on."
VesselsValue, which has been tracking asset values across various shipping sectors for subscribers since 2011, will begin offering cruiseship valuations on 27 March.
The new feature categorises cruiseships into six asset classes: mega, standard, small, luxury, expedition and luxury expedition. Mega ships weigh at least 200,000 gt, while standard units come in at 100,000 gt.
Values for 2020-built mega ships have declined 2.4% to $1.01bn as a result of the coronavirus overhang, while newbuilding standard-ship values have slipped 1.6% to $754m.
VesselsValue data shows mega ships built in 2015 slid 5.9% to $840m, while standard-ship values of the same age declined 5.1% to $624m.
Mega and standard-size vessels built in 2010 have fallen 5.6% and 4.8%, respectively, while those delivered in 2005 had respective declines of 2.7% and 1.9%.
"Some of these billion-dollar assets have become financial liabilities with several high- priced vessels now laid up and not working," Freeman said. "Carnival Corp, the world largest owner, has just had to secure a $3bn loan to cope with the crisis."
Niklas Carlen, research director at London-based maritime forecasting and advisory firm Maritime Strategies International, said passengership values may fall even further as cruise outfits sell ships at distressed levels in a desperate move to raise cash.
"Given the sector is normally very illiquid and market sales often involve transactions between related parties/brands within a larger group, any genuine transactions with third parties in the current market are likely to be distress transactions at a considerable discount to fair market value," he told TradeWinds.
A 231,000-gt ship set for delivery to Royal Caribbean Cruises in 2023 is the highest-valued vessel ever tracked by VesselsValue, which declined to disclose valuations for other asset classes.
The ship, being constructed at French shipyard Chantiers de l'Atlantique, is valued at $1.31bn.
"Individual assets can be worth in excess of $1bn each, which is a first for the online platform and makes cruiseships one of the most expensive maritime assets in the world today," Freeman said.
However, he added that the coronavirus pandemic may further pull down valuations by discouraging asset play within the sector.
For example, Dream Cruises' 150,000-gt Genting Dream (built 2016) was sold for $900m in January to a Chinese leasing company in a 12-year sale-and-leaseback deal. Its value has since fallen to $777m.
"The sale-and-purchase market has come to a halt, with the only real transactions concluded on a sale-and-leaseback basis," Freeman said.
