TUI / Royal Caribbean JV expansion

TUI Cruises takes over Hapag-Lloyd Cruises for luxury growth

The Europa 2 is one of Hapag Lloyd Cruises' five-star plus luxury ships
Hapag Lloyd Cruises
The Europa 2 is one of Hapag Lloyd Cruises' five-star plus luxury ships

TUI and longstanding partner Royal Caribbean Cruises are expanding their TUI Cruises joint venture with the takeover of Hapag-Lloyd Cruises to speed up growth in the luxury holidays market.

TUI Cruises, created back in 2008, will acquire the luxury cruises operator, which has been valued at €1.2 billion, from TUI Group in a move freeing up the German group’s balance sheet. TUI explained that the transaction is in line with its previously stated objective to deliver additional profitable growth at a lower level of capital intensity.

Hapag-Lloyd Cruises will be integrated into TUI Cruises and expanded to attract new customer segments for luxury, expedition and premium cruises. The merger will create "a leading European cruise company" with a current combined fleet of twelve ships.

Hapag-Lloyd Cruises, seen as the leading provider of luxury and expedition cruises in German-speaking markets, currently has a fleet of two luxury ships within the five star plus category and three expedition cruise ships. A further expedition cruise ship has been ordered and will be added to Hapag-Lloyd Cruises' fleet in 2021 to replace MS Bremen. In light of the transaction it is possible that the luxury and expedition fleet will grow in the coming years.

"Products and brands such as MS Europa and MS 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. TUI and Royal Caribbean Cruises have developed the joint venture company on the basis of a strong partnership over the past ten years. The expansion decision is the next big step of growth for us – from a strategic and a commercial perspective," said TUI CEO Fritz Joussen.

In future, TUI Cruises and Hapag-Lloyd Cruises will continue to operate their successful product concepts. TUI Cruises will continue to cater to the premium German-speaking segment while Hapag-Lloyd Cruises will continue to have an exclusive presence in the luxury and expedition ship segment.

"The ships' identities, service, quality and customer experience will remain as individual and unique as they are today. This will create significant advantages for the group, for our expansion and for our investments," explained Joussen.

TUI Group will use the transaction proceeds to strengthen its balance sheet and to drive its transformation into a digital organisation.