Viking Bonds highly speculative; how do you protect your vacation?

[TravelerThom]

From comments here on CC, it seems that Viking River Cruises is pretty insistent at demanding full payment well in advance of the cruise. Just out of curiosity I looked at Viking's parent MISA Investments Limited's credit rating. Moody's rates MISA as B1 "highly speculative", and Viking's 8.5% senior unsecured notes are rated as B3, even worse "highly speculative" junk bonds. https://www.moodys.com/research/Moodys-affirms-MISAs-B1-CFR-assigns-a-B3-rating-to--PR_303988

 

I am not a financial annalist, but I think bond holders are paid prior to future passengers if the company defaults. So how are people protecting themselves? Quoting http://www.tripmate.com/wpA425V/why : "Viking Cruises’s Travel Protection Plan protects your travel investment if your Trip is canceled or interrupted for a covered reason such as injury, illness or death of you, a Family Member or a Traveling Companion." I note that it does not list corporate bankruptcy among the covered reasons; maybe it is covered, but I couldn't find it.

 

Thom

[Coral]

Several years ago, I took a trip with Amadeus which is the line now called AMA Waterways. I usually buy my insurance through Allianz but they did not cover Amadeus if the company went bankrupt. I purchased insurance through Travelex which did cover financial default for AMA/Amadeus.

 

I often think the best plan is 3rd party insurance and not getting it directly from the line you are sailing.

 

This is how I dealt with the issue. I called both 3rd party insurance companies and asked specifically about this. It was weird as one had a list of companies they included/covered and one had a list of companies that they would not cover. They both looked at the situation differently.

 

I haven't looked into this recently to see what lines are now covered.

Edited June 3, 2015 by Coral

[pacmom]

Leuftner cruise line owns Amadeus fleet--AMA chartered ships from them before they built their own. AMA was never Amadeus and Amadeus was never ANA--just a charter agreement.

Edited June 3, 2015 by pacmom

[Coral]

Leuftner cruise line owns Amadeus fleet--AMA chartered ships from them before they built their own. AMA was never Amadeus and Amadeus was never ANA--just a charter agreement.

 

I think this is confusing as there was another Amadeus line not associated with this line as this line was Amadeus Waterways. I think this is the Amadeus Luftner Cruises that you refer to. My guess is this confusion is why they changed the name. Maybe I missing something.

 

When I sailed with them, they owned a few of the fleet listed below but leased our Russian ship. It seems most lines lease their ships in Russia except for Viking who does own theirs. Leuftner was never associated with what I took.

 

http://www.amawaterways.com/resources/2008/AMAnamechange_6_9_08.pdf

 

AMADEUS WATERWAYS BECOMES AMA WATERWAYS

(Chatsworth, CA) Amadeus Waterways has changed its name to AMA Waterways. The award-winning European river cruise line has taken this step to align the company’s name with its highly-rated fleet of “AMA” vessels operating on the Continent’s legendary rivers. Beginning with the 2006 launch of the MS Amadagio, the line has steadily expanded its “AMA” fleet to include the MS Amalegro (2007), MS Amacello (2008) and MS Amadante (2008). The MS Amalyra and MS Amadolce will join the fleet in 2009, while another two “AMA” vessels are scheduled to debut in 2010.

 

The newest and most state-of-the-art fleet in Europe, the innovative “AMA” ships carry 148 passengers in unequaled luxury, comfort and style. Features include the most spacious cabins on the rivers; French balconies; plush bedding with down duvets; flat-screen TVs; Infotainment system with complimentary internet access; fluffy terry bathrobes and slippers; spa-quality bath amenities and marble-appointed bathrooms. Each vessel offers complimentary Wi-Fi in the public lounges; complimentary specialty coffees and free-flowing complimentary wine at dinner. The ships also include a fitness center, beauty salon, whirlpool, walking track on the Sun Deck and a fleet of bicycles for passenger use. Each AMA Waterways cruise is accompanied by an elite cruise director, and expert local guides conduct complimentary city tours at each destination.

Edited June 3, 2015 by Coral

[DrivesLikeMario]

The best way to protect yourself is to buy outside independent insurance. Allianz is a very solid company, as well as others. If you buy directly from the cruise line itself, your chances of compensation if the company goes belly up are slim.

Edited June 4, 2015 by DrivesLikeMario

[Host Jazzbeau]

The best way to protect yourself is to buy outside independent insurance. Allianz is a very solid company, as well as others. If you buy directly from the cruise line itself, your chances of compensation if the company goes belly up are slim

--to none. Edited June 4, 2015 by Host Jazzbeau

[joanne2]

A friend was booked on a Tom Harper cruise set to leave May 31. On May 21 they found out the company was bankrupt. Had outside travel insurance and got a full refund.

[Host Jazzbeau]

A friend was booked on a Tom Harper cruise set to leave May 31. On May 21 they found out the company was bankrupt. Had outside travel insurance and got a full refund.

 

That's good to hear, since Tom Harper was never listed as a covered company. Your friend had good coverage.

[Coral]

A friend was booked on a Tom Harper cruise set to leave May 31. On May 21 they found out the company was bankrupt. Had outside travel insurance and got a full refund.

 

Wow - I missed that. Thanks. Good example!

 

Allianz, Travelex and TravelGuard are 3 companies I have dealt with for insurance. I have direct experience with Allianz and claims and they were great.

[notamermaid]

I am not sure what to call this, but some years ago there was a major disruption in the travel and tourism industry in Europe, especially Germany, when companies went into insolvency and people got stuck in airports on Spanish islands because nobody was willing to fly them home as the companies had not paid the airlines. The basic story from my recollection. It caused changes in consumer protection and now there are bodies / authorities / insurances that step in, much more than they used to. Many, many companies for example are registered with ABTA in the UK.

 

In German it is called a "Reiseveranstalter-Insolvenzversicherung". Implemented by law, by the way.

 

Anything like that available in North-America?

 

notamermaid

[notamermaid]

As I have mentioned in a thread in 2014 asking for full payment one year in advance for a standard river cruise is not standard practice in the industry in Europe. The first time I heard about such a practice was in connection with Viking. Even Arosa, when booked through their US agent, complies with the standard European terms of deposit when booking and full payment due no later than 60 days before departure. The terms and conditions are available to download online.

 

These conditions do not apply to special promotion packages, of course. Then they are amended.

 

TravelerThom, your post has really made me think (even more) about this early payment practice.

 

Thank you for posting.

 

notamermaid

Edited June 4, 2015 by notamermaid

[biker1972]

Perhaps asking for full payment a year prior to a cruise is not the standard, but it should be noted that airfare is paid when booked, up to 330 days prior to a flight. Vantage is now offering a 10% discount if they receive payment in full shortly after booking. The river cruise lines also offer incentives to use an e-check which has none of the protections that a credit card offers. Do any of these business models help or hurt the consumer? They certainly are in place because the cruise line found them valuable. It is wise to plan travel with both eyes wide open and be aware of possible problems, some of which can be insured against.

[caviargal]

Perhaps asking for full payment a year prior to a cruise is not the standard, but it should be noted that airfare is paid when booked, up to 330 days prior to a flight. Vantage is now offering a 10% discount if they receive payment in full shortly after booking. The river cruise lines also offer incentives to use an e-check which has none of the protections that a credit card offers. Do any of these business models help or hurt the consumer? They certainly are in place because the cruise line found them valuable. It is wise to plan travel with both eyes wide open and be aware of possible problems, some of which can be insured against.

 

There is a big difference IMO between offering a discount for upfront final payment and REQUIRING it. I will not deal with a line that requires it upfront.

 

Also, it is the industry standard with the airlines but far from it with river cruise lines.

 

I say buyer beware.

[Mark_T]

As I have mentioned in a thread in 2014 asking for full payment one year in advance for a standard river cruise is not standard practice in the industry in Europe. The first time I heard about such a practice was in connection with Viking.

 

It isn't standard practice for Viking in Europe either, from memory they expect payment about 10 weeks before departure.

 

It seems to be a uniquely North American practice for some reason and even there we have seem reports on this forum that they will not insist on it if pushed on that point so I'd say everyone should keep pushing back until it goes away.

[Francis M]

Here is a more up to date Moody's assessment of Viking's debt .

https://www.moodys.com/research/Moodys-assigns-a-B3-rating-to-Viking-Cruises-new-250--PR_324517

About half way down the page the section Ratings Rationale is interesting reading relative to both Viking and the financial services industry thinking on river cruising.

Viking chose to fund its expansion in both river and ocean cruising with debt. The fact that Moody's rates this debt as speculative puts it in the high yield category, junk bonds if you must. If you invest in that debt you'll get a much higher rate of return.

To associate a Moody's debt rating with bankruptcy speculation is not warranted in my opinion. Moody's calls the overall outlook stable and notes the very high cash flows and forward certainty of the business.

Vikings business model of collecting it's fares up front is a key element in maintaining not only extraordinary liquidity but also certain knowledge of short term future performance. GM would love to know for dead certain how many cars they'll sell in 2016. As Viking is approaching a 50% market share in the river cruise business, I wouldn't look for any changes in the near future.

I'm looking forward to our upcoming Rhine Getaway in August. I was happy to pay in January when I made the booking and have hardly missed the $3.27 that money would have earned in my money market account.

#letsnotsetourhaironfire

FM

[purduemom1]

Here is a more up to date Moody's assessment of Viking's debt .

https://www.moodys.com/research/Moodys-assigns-a-B3-rating-to-Viking-Cruises-new-250--PR_324517

About half way down the page the section Ratings Rationale is interesting reading relative to both Viking and the financial services industry thinking on river cruising.

Viking chose to fund its expansion in both river and ocean cruising with debt. The fact that Moody's rates this debt as speculative puts it in the high yield category, junk bonds if you must. If you invest in that debt you'll get a much higher rate of return.

To associate a Moody's debt rating with bankruptcy speculation is not warranted in my opinion. Moody's calls the overall outlook stable and notes the very high cash flows and forward certainty of the business.

Vikings business model of collecting it's fares up front is a key element in maintaining not only extraordinary liquidity but also certain knowledge of short term future performance. GM would love to know for dead certain how many cars they'll sell in 2016. As Viking is approaching a 50% market share in the river cruise business, I wouldn't look for any changes in the near future.

I'm looking forward to our upcoming Rhine Getaway in August. I was happy to pay in January when I made the booking and have hardly missed the $3.27 that money would have earned in my money market account.

#letsnotsetourhaironfire

FM

 

Good point and another perspective on this subject which actually affects every traveler not just river cruisers. As has been pointed out, purchasing travel insurance independent of the travel provider and making sure that the travel provider is covered for default by your insurance provider is a good decision. May not be the least expensive or easiest but probably the safest.

 

Have a great cruise-would love to do a Rhine cruise!

[sammiedawg]

This is very interesting information. we booked our Viking cruise last minute and got a terrific deal. They unload a fair number of cabins last minute on the river cruises. I do not like the idea of committing so much money a year in advance. We assumed they were heavily leveraged to finance the massive expansion but we didn't know to what degree.

Last summer the European River levels were low, we were onboard and switched River boats halfway through to get around the bottleneck. We heard investors were very nervous about Viking boats having deeper drafts, making them more susceptible to re routings or cancellations.

I'm curious how much repeat business they generate. Viking spends a small fortune on marketing, their cost to acquire a booking is huge compared to the ocean cruise lines. We enjoyed the Grand European trip but a year later I have not decided if we will do another one.

[TravelerThom]

Several years ago, I took a trip with Amadeus which is the line now called AMA Waterways. I usually buy my insurance through Allianz but they did not cover Amadeus if the company went bankrupt. I purchased insurance through Travelex which did cover financial default for AMA/Amadeus.

 

I often think the best plan is 3rd party insurance and not getting it directly from the line you are sailing.

 

This is how I dealt with the issue. I called both 3rd party insurance companies and asked specifically about this. It was weird as one had a list of companies they included/covered and one had a list of companies that they would not cover. They both looked at the situation differently.

 

I haven't looked into this recently to see what lines are now covered.

Can anyone provide links to covered (or conversely not covered) travel companies by specific insurers?

 

THANKS

Thom

[JVilleGal]

You need to inquire with each supplier. If you actually go to

Tripinsurancestore or Insuremytrip call either one and their agents can talk to you about various options and actually email documents and the lists of covered companies.

Both these companies have really knowledgable people and it's so much easier than endlessly searching the Internet. I suspect these lists change on occasion so you would want to make sure you get the most up to date info. That's why I use the two companies above. Great websites too, I just would rather speak to a person....

[No Spin]

The best way to protect yourself is to buy outside independent insurance. Allianz is a very solid company, as well as others. If you buy directly from the cruise line itself, your chances of compensation if the company goes belly up are slim.

 

--to none[/b].

 

Not necessarily. Some lines may sell the insurance and take a commission, but the insurance is underwritten by an actual insurance company. If the cruise line self-insures, then yes that will likely be a problem.

[Host Jazzbeau]

Not necessarily. Some lines may sell the insurance and take a commission, but the insurance is underwritten by an actual insurance company. If the cruise line self-insures, then yes that will likely be a problem.

 

What I was referring to was that policies sold by cruise lines do not include coverage against supplier default.

[JVilleGal]

Well on a happier note it appears I have been "banned" from posting on the Viking Facebook page. How weird is that! My posting have almost always been inviting posters looking to connect with other happy Viking Cruisers on cruise critic!

[JVilleGal]

PS: I have screen shot proof of this ;(

[Host Jazzbeau]

Well on a happier note it appears I have been "banned" from posting on the Viking Facebook page. How weird is that! My posting have almost always been inviting posters looking to connect with other happy Viking Cruisers on cruise critic!

 

We still love you. Stay here with your friends :)

[JVilleGal]

We still love you. Stay here with your friends :)

 

 

Thank you!!!! Apparently Viking does not want their cruisers "referred" to Cruise Critic? I swear all I ever did was answer their "clueless" passengers to meet others sailing on their itinerary.

 

Needless to say " I will say never!!!"