Essel Group's Subhash Chandra enters cruise tourism with new firm

With investment of $100-125 mn, Zen Cruises to make maiden journey by 2019

 

After a successful outing in the entertainment business, media baron Subhash Chandra has now set his eyes on the tourism industry, more specifically cruise liners. Essel Group, the promoter of entertainment network Zee Entertainment Enterprises Limited (ZEEL), has launched Zen Cruises Private Limited, which will house Chandra’s cruise tourism business. The services for the cruise liner, which will operate under the brand name Jalesh, will be launched in November.

The company has acquired its first ship from P&O Carnival Australia. The 70,285 tonne ship, called the Pacific Jewel, has a capacity to carry 2,000 passengers. It will be renamed before its maiden journey, in 2019, as part of Jalesh.

Zen Cruises has appointed Jurgen Bailom chief executive officer. He was earlier CEO of Mexican company Grupo Vidanta Cruises.

“We have purchased a vessel from P&O Carnival Australia. It’s very good hardware and fairly expensive. Cruising is an investment heavy business after all. The ship will be sailing very close to the coast around the beginning of 2019 after it has gone through refurbishment or what we call revitalisation. In March, we then put our trained crew on the ship along with entertainment which will be very unique,” he says.

The company has invested close to $100 million towards the acquisition of the ship and will incur a cost of close to $250, 000 to $300,000 every day once it is docked in terms of operation and maintenance cost, taking the total investment to just under $125 million.

Bailom agrees that the business model requires patience since breaking even will take years. “It is not a cheap operation. But then it would not be successful if you have not planned for growth. So we will be looking at more ships eventually. You have to plan for growth to be an interesting financial venture and profitable. In our case, scaling up is required to be profitable,” he explains.

The total investment to be made is estimated at $2 billion over the next few years. While Chandra is investing in the venture in his personal capacity for now, the company has plans for listing in the future.

The company will first focus on educating the consumers about cruises and cruise holidays. Currently, according to global industry estimates, the Indian Ocean route accounts for 1.2 per cent of the world’s cruise traffic. In absolute numbers, close to 209,000 Indians travelled by cruise in 2017, and this number is expected to grow to 296, 000 this year. 

However, the market has the potential to grow to 4 million cruise passengers a year in the near future, provided there are lucrative options and ease of travelling by sea. Currently, the maximum traffic of Indian cruise passengers is those travelling from Singapore to the country.

“Cruising is not a popular mode of vacationing in the country. India has a long coastline, almost 7,000 kilometres, so the scope for developing the industry is massive. We will start will small customised tours starting at, let’s say, two or three days. Then, we can provide options to extend the holiday if they are comfortable. Once the habit is formed, we’re in business. In this sector, it’s about how many people come back to you. If we can get 50 per cent of those who travel with us in the first year to come back, we’re looking at a good future (in the business),” Bailom says.

While the company plans to eventually cater to the international market, it will initially look at domestic destinations. Bailom and team believe that there is a perception that cruise means international travel, and they intend to quash it.