Tui Cruises to expand through £1bn Hapag-Lloyd deal
7 February 2020, 11:04
The holiday company has sold the German-focused cruise arm to its joint venture with Royal Caribbean to help fund the firm’s digital growth.
Holiday giant Tui is set to bank 700 million euros (£593 million) after selling its cruises business to a joint venture it already owns with Royal Caribbean.
The FTSE 100 firm said the deal to essentially roll Hapag-Lloyd Cruises into the joint venture will allow the company to use the cash for improving its online operations and tap further into the luxury cruise market.
Hapag-Lloyd currently sells cruises in German-speaking markets, with two five-star luxury ships and three expedition ships.
But, with the collapse of Thomas Cook, Tui is keen to mop up any extra business boost it can, with UK customers a potential focus.
Bosses said the move will boost profits at a time when the industry is under pressure from the global economic slowdown.
The company is also waiting for the return of the grounded Boeing 737 Max.
Tui chief executive Fritz Joussen said: “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.”
The joint venture – Tui Cruises – was launched alongside Royal Caribbean in 2008.
With an enterprise value of £1 billion, it will now have a fleet of 12 ships across the world.
Mr Joussen added: “Tui and Royal Caribbean Cruises 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.”