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TUI boosts jv with Royal Caribbean, adding Hapag Lloyd Cruises

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In light of the transaction Hapag Lloyd Cruises' luxury and expedition fleet is likely to expand
TUI and Royal Caribbean are significantly enlarging their TUI Cruises joint venture to accelerate growth of luxury brand Hapag-Lloyd Cruises.

TUI Group and its longstanding partner Royal Caribbean Cruises Ltd. are planning to expand their luxury, expedition and premium cruise segment and to attract new target audiences for luxury cruise products.

The expansion of the Hapag-Lloyd Cruises brand will be at the core of this strategy.

The former TUI Group subsidiary will be integrated into the TUI Cruises joint venture, a successful structure having been established by TUI and Royal Caribbean since 2008.

Hapag-Lloyd valued at €1.2bn

A contract signed in Hamburg Friday values Hapag-Lloyd Cruises at €1.2bn.

‘We’re changing the ownership structure behind the brand to facilitate stronger, faster and capital-light growth. At the same time, we use the proceeds to drive TUI’s digital transformation,' TUI CEO Fritz Joussen said.

The transaction is expected to close this summer.

Under the joint venture profit-sharing agreement TUI will report 50% of Hapag-Lloyd Cruises’ earnings.

The merger of TUI Cruises and Hapag-Lloyd Cruises under the umbrella of the joint venture will create a combined fleet of 12 ships.

TUI Cruises’ Mein Schiff fleet has three newbuilds on order for delivery in 2023, 2024 and 2026.

A fleet of 12 ships

Hapag-Lloyd Cruises has two luxury ships and three expedition cruise ships. A further expedition cruise ship has been ordered and will be added in 2021 to replace Bremen.

The integration of Hapag-Lloyd Cruises in the joint venture will allow TUI to participate in global cruise industry growth at a low level of capital expenditure, noted TUI in a statement.

TUI Cruises will continue to cater to the premium German-speaking segment and Hapag-Lloyd Cruises will continue to have a presence in the luxury and expedition ship segment.

Capital-light approach to financing

‘Products and brands such as Europa and Europa 2 have international potential and appeal. Going forward, this will enable us as shareholders to take a capital-light approach to financing the ships and international growth within a joint venture framework,’ said Joussen.

TUI and Royal Caribbean have developed the joint venture company on the basis of a strong partnership over the past 10 years. ‘The expansion decision is the next big step of growth for us – from a strategic and a commercial perspective,’ said Joussen.

Each partner will continue to leverage its core strengths: TUI’s strong brand and selling power combined with Royal Caribbean’s shipbuilding, operational and digital expertise.