Another small cruise line is bankrupt in wake of pandemic struggles

Make that 12 cruise brands that have shut down since the start of the COVID-19 pandemic.

Boston-based Vantage Deluxe World Travel, a small cruise company that mostly catered to seniors, filed for bankruptcy Thursday after laying off nearly all of its 70 shoreside employees and stopping all its sailings.

As of Thursday, the company retained just five employees, according to the bankruptcy filing.

In a motion submitted as part of the bankruptcy filing, which was reviewed by TPG, the 40-year-old company blamed a sharp drop in revenue after COVID-19 began for its downfall.

As part of its bankruptcy filing, the company said revenue plunged from $132 million in 2019 to just over $10 million in 2020 — a decline of more than 92% — even as it continued to pay for employee costs and other expenses. The differential between revenue and costs resulted in a $29 million loss in 2020 alone.

"While revenue rebounded somewhat in subsequent years, it remained well below ... pre-pandemic levels, resulting in continuing losses despite [our] attempts to down-size operations and reduce costs," the company said in the filing.

All major cruise lines around the world paused sailings for many months at the start of the pandemic and only slowly returned to normal operations, resulting in enormous quarterly losses that only recently have begun to moderate. The brands that have stayed in business have been forced to take on massive amounts of debt to survive.

Vantage is just the latest in a string of 12 mostly small cruise operators around the world to shut down operations since the start of the COVID-19 pandemic in 2020.

Other cruise brands that have shut down over the past four years, almost all citing the financial effects of the pandemic, include luxury line Crystal Cruises and its two Asia-based sister brands, Dream Cruises and Star Cruises; Japan-based Venus Cruises; India-based Jalesh Cruises; Swedish-based Birka Cruises; U.S.-based small-ship specialist Blount Small Ship Adventures; and U.K.-based Cruise & Maritime Voyages.

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Related: Luxury line Crystal faces liquidation as cash runs out

Cruise & Maritime Voyages was the second-largest cruise brand in the U.K. before collapsing in July 2020.

German-based FTI Cruises and Spain-based Pullmantur Cruises also ceased operations during the pandemic. Pullmantur, which was partly owned by Royal Caribbean Group, the parent company of Royal Caribbean, was the first cruise company to collapse during the pandemic, just three months after cruise ships stopped sailing in 2020.

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Also shutting down in 2021 was Caribbean-focused Sail Windjammer, which operated a historic sailing vessel once owned by the American financier E. F. Hutton and his wife, Marjorie Merriweather Post.

That said, at least one of the brands — luxury line Crystal — is in the midst of making a comeback under new owners.

The high-end travel company A&K Travel Group bought Crystal's brand name and two biggest oceangoing ships, Crystal Serenity and Crystal Symphony, out of bankruptcy last year and plans to relaunch the brand next month.

A possible new owner

A similar fate is possible for Vantage. In its bankruptcy filing, the company asked for court permission to sell substantially all its assets, including its brand name and its passenger lists, to an affiliate of Heritage Expeditions and Nordic Hamburg for $1 million.

Heritage Expeditions is a small, New Zealand-based expedition cruise company. Nordic Hamburg is a ship management company.

Vantage told the court it hoped to complete the sale by Aug. 11 and suggested the transaction could allow Vantage sailings to restart under the new owners.

"Faced with a rapidly deteriorating financial situation, [Vantage] has determined to sell its assets in order to facilitate continued operations by a better-capitalized buyer able to manage its business without interruption," the company said in the filing.

Should the asset sale go through and cruises under the Vantage name restart, it wouldn't necessarily mean that current Vantage customers who have paid for future trips would get to experience them.

In the filing, the company suggested the new owners would extend at least partial credits to current customers who had paid for future cruises, but only if the customers booked a new voyage with the new owners.

The credits would be limited to 20% of the cost of the new trips.

Related: What happens if my cruise line goes bankrupt or shuts down?

In the filing, Vantage said that as of Thursday its customers had paid it approximately $80.3 million for future trips that had not taken place. In addition, it was facing $32 million in claims for refunds from customers and another $5.4 million in insurance claims from customers — the latter through a self-funded trip insurance program that it offered.

In other words, the company's customers are currently out about $118 million.

TPG in recent months has been deluged with frantic emails from many of these customers. Many said they had paid $10,000 or more for trips that hadn't taken place and feared they would never get their money back. The emails came both from customers who had trips canceled during the pandemic and never received a refund and customers with future bookings who heard the company was in trouble.

Vantage also owes money to a long list of business partners and vendors. They include SunStone Maritime Group, which owns two of the ships that Vantage used in its operations, the 134-passenger Ocean Odyssey and 134-passenger Ocean Explorer. The filing suggested that Vantage owed two entities of SunStone $3.6 million and $3.2 million, respectively, for the chartering of the two ships.

Vantage also owed a river cruise management company $2.2 million and a cruise fuel company $1.3 million.

Customers become unsecured creditors

In the filing, the company checked a box that read it had between 10,001 and 25,000 creditors. It also checked a box that read it would have no funds available for unsecured creditors after administrative expenses were paid.

Customers trying to get back money they have paid for trips that have not taken place are considered unsecured creditors.

Vantage said in the filing that it would classify customer deposits up to a maximum of $3,350 per person as well as some other obligations it owed to unsecured creditors (such as backpay to employees) as "priority claims" to be paid back during the bankruptcy process. But it acknowledged that there was little value left in the company to pay such claims.

"It is extremely unlikely that there will be assets available to pay even a fraction of these priority claims," the company said.

Vantage said that, as of Thursday, it had estimated assets of just $1 million to $10 million that were offset by liabilities of $100 million to $500 million.

The Chapter 11-type bankruptcy was filed in the U.S. Bankruptcy Court for the District of Massachusetts.

Vantage was founded in 1983. At its height, it offered 65 different itineraries with 500 departures annually, according to the bankruptcy filing. It offered river and ocean cruises on ships it chartered from other companies such as SunStone as well as some land-based tours booked through separate companies.

The company was one of the smallest players in the North American cruise market. Its river cruise business, for instance, accounted for just 1% of the river cruises taken by North Americans, according to a competitor analysis done by river cruise giant Viking that was shared with TPG. Viking, which controls about half of the market for river cruises taken by North Americans, estimates that about 700,000 Americans take a river cruise each year.

That would put Vantage's river cruise customer base at around 7,000 people a year.

In its bankruptcy filing, Vantage said it had provided vacations to 500,000 people in total over its 40-year history — an average of about 12,500 a year.

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