The world’s largest tourism company, TUI Group, will sell subsidiary company Hapag-Lloyd Cruises to a joint venture with Royal Caribbean.
Valued at €1.2 billion ($2 billion), Hapag-Lloyd Cruises will trade hands to TUI Cruises, a 50:50 joint venture formed between owner TUI Group and Royal Caribbean, the group advised late last week.
Hapag-Lloyd Cruises is part of TUI Group’s cruise businesses, and the leading provider of luxury and expedition cruises in German-speaking markets, according to the group.
Although a big player in the domestic market, Hapag-Lloyd Cruises’ move to TUI Cruises is mainly a means for the group to compete internationally and participate in global cruise industry growth.
The brand joins as the second of TUI Group’s three cruise businesses to fall under the joint venture. UK-focused brand Marella Cruises will remain outside TUI Cruises for the time being.
Under the new agreement, Hapag-Lloyd Cruises’ current fleet of two five-star-plus luxury ships and three expedition cruise ships will expand under the merger to a combined fleet of 12 ships.
“Products and brands such as MS Europa and MS Europa 2 have international potential and appeal,” TUI CEO Fritz Joussen said.
“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,” he said.
The transaction’s value will be put towards TUI Group’s previously announced digital transformation, as well as to strengthen the group’s balance sheet.
Likewise, Hapag-Lloyd Cruises’ fleet could increase soon, with TUI Group’s planned expansion to its cruises business expedited by the transaction. However, due to limited global shipbuilding capacity, TUI Cruises’ Mein Schiff fleet are not scheduled for the next three new build deliveries until 2023, 2024 and 2026.
TUI Group is a multinational travel and tourism company based in Germany, considered to be the world’s largest, and employs more than 71 thousand people. In 2019, the company reported revenue of €18.93 billion ($30.87 billion).