Travel Agent - August 27, 2007 - (Page 14) Vital Signs Apollo Plans 50 Percent NCL Stake Last week’s announcement that Apollo Management, a large private equity group, will invest $1 billion cash in NCL Corporation (www. ncl.com), operator of Norwegian Cruise Line and NCL America, sent mostly positive ripples through the trade. “Although I was surprised by the announcement at first, I believe this substantial investment by a reputable company like Apollo is a good thing,” says Sylvain Martel, direc- Colin Veitch tor, product development and vendor strategy, Cruise Holidays. “NCL can continue to grow as a dominant player in an industry where balance of power and product options are important. That’s a good thing for both sellers of cruise vacations and consumers.” Frans Hansen, president, The Cruise Web, Washington, D.C., also reacted positively. “We view Apollo Management’s investment in NCL as a significant vote of confidence in the cruise industry and as a very positive development for retailers. We expect the investment to only help strengthen and grow one of the industry’s major brands,” he says. NCL Corp. and three of five board seats. Star Cruises, NCL Corp.’s current owner, also will retain 50 percent ownership. NCL cruises and operations will continue as normal, officials stressed. Cruise analyst Robin Farley of UBS Warburg described the acquisition as “more of a recapitalization than a change of control” and “a vote of confidence in the [cruise] industry.” The deal should foster more competition with the brands of Royal Caribbean Cruises Ltd. and Carnival Corp. “It always helps the industry to have multiple competing strong players that want to gain mindshare of the cruise travel agent community,” says Steve Levich, president of Cruise Holidays of Portland, OR. Apollo’s huge cash investment will pay down debt and strengthen the NCL balance sheet. “To have an investment on this scale by one of the very top names in the private equity world is a huge vote of confidence in the new NCL we have created since Star Cruises became the owner in 2000,” says Colin Veitch, NCL’s president and CEO. News You Can Use The NCL Deal: Who Benefits? I Apollo Management: Gains 50 percent stake and three of five board seats. Cruises: Retains 50 percent of NCL Corp; focuses more on Asia expansion. I Star I NCL Corp: Gains another strong parent, reduces debt, continues fleet growth and becomes a stronger competitor. Trade: Thrives with more cruise industry competition and sees potential for stronger revenues as lines compete for agents’ attention. I The No Major Changes Likely to be completed by year’s end, the deal gives Apollo a 50 percent stake in What to Do About NCL America Apollo stresses that NCL Corp.’s current Unique Vacations Names Director of Advertising Unique Vacations, Inc., the worldwide representative for Sandals Resorts, Beaches Resorts, and Royal Plantation, has named Anna Mirabal director of advertising. Mirabal will oversee the planning, management and execution of all properties’ advertising in the U.S. and U.K. “While the northeast continues to be the Caribbean’s bread basket, we are watching markets such as the Midwest that are strong and growing,” Mirabal told Travel Agent. “Led by our chairman, Sandals Resorts is in the midst of a renaissance that is focused on luxury, service, customization and style. My ultimate goal is to regenerate product awareness that is in keeping with this ‘luxury included’ vision and brand-direction, and continue promoting the evolution of the Sandals product.” — Joe Pike management team, including Veitch, will remain at the helm. Apollo and Star also will work to improve revenues at NCL America. That struggling brand is reducing high crew turnover costs by adding more foreign crew members and reducing capacity in 2008 to bolster pricing (shifting Pride of Hawaii elsewhere). Farley said that if the NCL America turnaround works, Star and Apollo [as part of the investment deal] will jointly contribute $340 million to support future Hawaii operations. “If not, NCL America would be shut down and NCL would pay $180 million to Star Cruises as well as transfer a ship to Star. The remaining NCL America ship would be transferred to NCL’s international fleet,” she says. Apollo also bought Oceania Cruises earlier this year but said it has no plans to combine Oceania and NCL operations. Farley, however, says: “We would expect Apollo to monetize its investment in NCL in the future through an IPO (initial public offering), which could perhaps ultimately combine Oceania and NCL into one company.” For now, though, it’s business as usual at NCL. And for the future, agents relish the thought of NCL Corp. as an even more robust cruise industry competitor. — Susan J. Young 14 TravelAgent August 27, 2007 http://www.ncl.com http://www.ncl.com
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