DISSERTATION UNIVERSITY OF AEGEAN DEPARTMENT OF SHIPPING, TRADE AND TRANSPORT FINANCING ON THE THREE BIGGEST CRUISE COMPANIES KOLLAROU ELENI A.M.:2212016063 TABLE OF CONTENTS • Chapter 1 : Introduction-History of Cruise Ship…………………………1 • Chapter 2 : Companies General information ………………………………2 • Royal Caribbean • Carnival Corporation & plc • Norwegian Cruise Line Holdings • Chapter 3 : Introduction to financing in the cruising industry………8 • Chapter 4 : Royal Caribbean Cruises Ltd Financing……………………12 • Chapter 5 : Carnival Corporation & plc Financing……………………13 • Chapter 6 : Norwegian Cruise Line Holdings Financing………………15 • Chapter 7 : The Coronavirus impact……………………………………………16 • Conclusion…………………………………………………………………………………17 • Bibliography…………………………………………………………………………18 INTRODUCTION This introduction describes the rationale for and the scope of a study to examine the financing of the three most developed cruise companies, as of today, Royal Caribbean, Norwegian Cruise Line and Carnival Corporation & plc. Most of the cruise companies have gained their clienteles trust and have a prominent place at the cruise industry. The majority of them were founded in the second half of the 20th century, and specifically for cruising, some other were founded over 100 years ago as cargo shipping lines. After many failures and mergers in the 1990s , many companies that were used as company brands, within the big corporations came to rise through the constant support of their customers and the loyalty that they provided. Due to the constant changes in the industry, ship owners are always on the hunt in order to keep their vessels updated, by renaming, renovating or even selling them from time to time .The main purpose of a cruise company in general, is to provide to their customers leisure travel, cruise tours, and entertainment and many more amenities, in order to differ from their competitors. According to the quality and the price of every trip there is a classification of the lines. There are four classifications, the cheapest, the budget, the luxury and the all-inclusive brands. There is a wide range of special activities to every vessel, but also off board like many different land tours, custom made to every place.Due to the increased popularity of cruises during the years there is a huge variety of activities to choose from. Some of these amenities include dance clubs, water parks, casinos, great restaurants, gym, theater and many more. There always something for everyone, despite the age or the ethnicity, just because cruise companies have all different kinds of activities and use many formulas just to get everything right. Due to the high demand and continuous growth of the clientele of the cruise lines, there has been a huge increase of the cruise ships the past twenty years. This is why the cruise companies try to find but also invent many new ways to fund their companies, with the goal of the maximum revenue. 1 HISTORY OF THE CRUISE SHIP Until the 19th century the main purpose of the ships was the transportation of goods from one place to another .The first ship to ever be identified as a cruise ship was Francesco I. Francesco I was built in 1831, having the flag of the Kingdom of the two Sicilies. It’s first trip was in 1833, stopping in Taormina, Catania, Syracuse, Malta, Corfu, Patras, Delphi, Zante, Athens Smyrna and Constantinople, sailing from Naples. The cruise offered some great amenities as dancing floors, guided tours of most of the destinations and many parties. The first company to ever introduce a trip as a form of cruising was P&O in 1844. Their main advertisement was sea tours of Gibraltar, Malta and Athens. It sailed from Southampton, England this trip was a first of its kind, that’s why P&O is called the forerunner of the modern cruise holidays we know today. Also, in the 19th century, in Europe due to political tensions, they were many people who wanted to flee from Europe to the USA, which ended up in an increase of the transatlantic crossings by ship. This way many companies took notice and started invest in biggest ships, with the sole purpose of passenger transportation. In the 1960s, with the rapid development of air transportations, cruise companies had to find a way to rise to the occasion, as the jet liners were more efficient. To remold their high profile, cruise lines opened their doors to the lower class, with the motive of getting more people on board. Since 1995, many smaller companies rose, creating a constant competition, to which shipping company will take on the largest vessel in the sea. COMPANIES INFORMATION ROYAL CARIBBEAN CRUISES Royal Caribbean Cruises is a $4 billion company that is based in Miami, Florida. As of today Royal Caribbean is controlling five brands and a total of 42 ships, making it the second largest cruise line in the market. Despite the fact that they have their headquarters in Miami, their company has succeeded in expanding their business all 2 over the world by landing cruises that reach pretty much every existing port out there .During the first years after its establishment, Royal Caribbean’s growth was favored by the general financial situation of the blooming economy after the war. Later, while the industry was recovering from the consequences of the Cold War, the rapid technological evolution came to play a vital role in the cruising industry’s resurgence. The military market created during the Vietnam War and the recession that followed as a result, led the company to differentiate its priorities and objectives, benefitting the private sector. Using the strategy of innovation and the increasingly lavish offerings, they have managed to have a net income over $1.8 billion for the year of 2019.Royal Caribbean, as one of the leading companies at its field, owns five cruise brands and a big percentage of ownership to others. Despite the fact that the each try to pursue a different market, all of the monthly financial statements are are reported together. Its brand has its own marketing and assets in order to approach more customers, these brands are: Royal Caribbean International This cruise line was established in 1968 in Norway and it is under Royal Caribbean Group’s name since 1997. Royal Caribbean has eight classes of ships : - Empress class : this class has a single ship built in 1990, originally named Nordic Empress, but now renamed as Empress of the Seas. - Sovereign class : this class also has one ship, named Majesty of the Seas. - Vision class: consists of four ships, Grandeur of the Seas, Rhapsody of the Seas, Enchantment of the Seas and Vision of the Seas. - Voyager class: has five ships, Voyager of the Seas, Explorer of the Seas, Adventure of the Seas, Navigator of the Seas and mariner of the Seas. - Radiance class: is composed of four ships, Radiance of the Seas, Brilliance of the Seas, Serenade of the Seas and Jewel of the Seas. - Freedom class: has a total of three ships, Freedom of the Seas, Liberty of the Seas and Independence of the Seas. - Oasis class: comprised of four ships, Oasis of the Seas, Allure of the Seas, Harmony of the Seas and Symphony of the Seas. - Quantum class: constituted of four ships , Quantum of the Seas, Anthem of the Seas, Ovation of the Seas and Spectrum of the Seas. 3 Royal Caribbean International has also ordered six new ships, which will be all added to the fleet by the end of 2025. Celebrity Cruises As the rest of Royal Caribbean’s subsidiaries, Celebrity Cruises has also its headquarters in Miami, Florida. Originally founded in 1988, by the Greece-based Chardris Group, Celebrity Cruises falls in the premium class of cruises. By being inserted in this category, Celebrity Cruises has some of the amenities of the more luxurious cruises while retaining some mass features like their low-cost facilities that could make experience look and feel even more luxurious. Celebrity’s signature logo is an ‘X’, which symbolizes the letter ‘chi’, meaning the first letter of Chandri’s name. Celebrity has four classes of ships, Millennium class, Solstice class, Edge class and Expedition vessels, with a total of fourteen ships. -Millennium class : Celebrity Millennium, Celebrity Infinity, Celebrity Summit, Celebrity Constellation. - Solstice class: Celebrity Solstice, Celebrity Equinox, Celebrity Eclipse, Celebrity Silhouette and Celebrity Reflection. - Edge class: Celebrity Edge and Celebrity Apex. - Expedition vessels : Celebrity Xpedition, Celebrity Xploration and Celebrity Flora. Some of Celebrity Cruises future fleet includes Celebrity Beyond, which will be delivered by Fall of 2021 and two more ships that will be ready by Fall 2024. Azamara Azamara Club Cruises is quite known for their offers of cruise itineraries ,ranging from 3 up to 21 nights, that serves the up-market segment of the North American, the United Kingdom, as well as the Australian markets. 4 CARNIVAL CORPORATION & PLC Carnival Corporation &plc is currently the most successful and prominent American cruise line .Founded in 1972 by Ted Arison, an Israeli immigrant who after serving in World War II. Arison took on the opportunity to run American International Travel Service(AITS),a travel agency ,with his schoolmate Meshulam Riklis. Later on they decided to create Carnival Cruise as a subsidiary of AITS. In 1974 Arison succeeded in buying Rikli’s stakes in Carnival making him the sole owner of the company. Carnival took on many challenges over the years but rose to the occasion, as in 2003 Carnival controlled more than 43 percent of the $11 billion cruise market. In 2005 the results were even more impressive the revenues were as high as $8,7 billion. Currently, the company’s portfolio includes multiple brands : Carnival Cruise Line, Princess Cruises, Holland America Line, Seabourn, P&O Cruises(Australia), Costa Cruises, AIDA Cruises, P&O Cruises(UK) and Cunard.