A new, strong destination-oriented cruise line is seen by industry analysts as emerging from Paquet Cruises’ acquisition of Ocean Cruise Lines and Pearl Cruises from the 2000 Corporation of Switzerland.

Paquet is said to have paid close to $100 million for the two-ship operation which includes the 12,200-ton, 460-passenger Ocean Princess and the 12,456-ton, 480-passenger Ocean Pearl. Meanwhile, Ocean Cruise Lines has been seeking to sell a third ship, the 5,000-ton, 250-passenger Ocean Islander, for a reported asking price of $15.5 million.

Last fall, Ocean announced that it was negotiating a $100 million newbuilding with Italian yards but was later said to have abandoned the project because of escalating building costs.

Paquet operates the 13,800-ton, 530-passenger Mermoz. But while Ocean/Pearl caters mainly to American passengers, Paquet markets its cruises mainly in Europe and mainly in the French market.

Paquet was in the U.S. market with a two ship operation as late as 1986/87 before it sold one of its ships and refocused its efforts in France. It has since been building a successful operation. According to Thierry de la Tour d’Artaise, President of Paquet, last year the Mermoz achieved an average load factor of 85 percent and net per diems of $180 from gross per diems of $250.

Paquet’s Chairman, Benjamin Cohen, and de la Tour d’Artaise will form the new executive team, along with Gerry Herrod, Chairman of Ocean Cruise Lines/Pearl Cruises. It is also believed that Bob Iversen, President, Ocean/Pearl, will continue to lead the company in the United States.

Acquisition Cost

Based on an acquisition cost just under $100 million, Paquet has paid just under $100,000 per berth. In contrast, the 600-passenger newbuilding, which Ocean announced late last year, would cost more than $160,000 per berth at the $100 million building cost that was quoted.

(Last year, Kloster Cruise paid approximately $149,000 per berth for Royal Cruise Line; Carnival Cruise Lines acquired Holland America Line at approximately $137,000 per berth; the Royal Caribbean purchase in the fall of 1988 was estimated at $126,700 per berth; and Princess Cruises’ acquisition of Sitmar in late summer of 1988 was estimated at $69,000 per berth.

Iversen said that negotiations for the new vessel were not finalized when the Italian government put its subsidy program on hold, reevaluating the building of cruise ships versus the growing demand for oil tankers.

Complimentary Products

De la Tour d’Artaise said that the cruise lines compliment each other with strong destination oriented products in different parts of the world. He said that the new company will be the major cruise operator in Northern Europe this year with the Mermoz and the Ocean Princess: the Mermoz will be sailing mainly from Bergen to the Norwegian fjords and Spitzbergen while the Ocean Princess will be sailing mainly Baltic cruises from Copenhagen. Both ships will operate in South America in the winter. The Mermoz and the Ocean Princess will also offer several cruises in the Mediterranean, with the Mermoz also sailing in the Indian Ocean. Pearl Cruises sails year-round in the Orient, mostly from Hong Kong and Singapore, but also to East Africa.

“There is so much offered in the Caribbean that it is not a viable market for us, except for eight weeks during the winter when the Mermoz sails from Pointe-a-Pitre in Guadeloupe mainly with French passengers,” de la Tour d’Artaise said.

While the new three-ship operation will give the owners a larger revenue base from which to promote, worldwide operations with three ships under three different company names will still require a hefty marketing outlay thus necessitating higher per diems.

Iversen said that there really are two separate products under one umbrella: Paquet, which he said was clearly for the French market, and Ocean/Pearl, which he said was for the non-French markets.

He said that Ocean/Pearl however, will be marketing Paquet’s cruises in the United States. He also said that 75 percent of Ocean/Pearl’s passengers came from the United States and the remaining 25 percent from the “rest of the world” including Australia, France and England.

De la Tour d’Artaise said that while the first objective now is to consolidate, in due time the company will also be looking at the newbuilding project that Ocean announced last year. First, he said, Paquet’s offices in Palm Beach would be merged into Ocean’s facilities in Fort Lauderdale. De la Tour d’Artaise said he expected most of the staff to move with the company. In the meantime, he said that they were also giving some thought to whether to operate under three different company names or seek a common name. He emphasized that he did not expect that an answer would be found in the near future.


In addition, de la Tour d’Artaise explained that the French Accor Group, which owns 50 percent of Paquet as well as some 850 hotels worldwide, is developing its tourism division and that he expected synergy effects from its hotel and tour operations. De la Tour d’Artaise also said that Accor has advanced reservations systems and would be able to develop similar systems for the cruise operations.

Paquet, which can trace its passenger shipping history some 130 years back, is jointly owned by the Accor Group, which reported gross revenues of some $3.5 billion in 1989, and Chargeurs S.A., a publicly held $2 billion French company, involved in transportation, motion picture production, and more.

Paquet made its major entry into the North American market in 1966 with the Renaissance. Specialty cruising, such as the now famous “music festivals at sea,” became its trademark. In 1980, it introduced the Mermoz and in 1982 the Rhapsody. But its fortunes changed and by 1986/87, on the verge of bankruptcy, Paquet withdrew from the U.S. market to concentrate what had become a one-ship operation in the French market.

Ocean Cruise Line was formed in 1983 to fill what the then owners of Travelers International saw as a need – more first class ships to sail in the Mediterranean. Under the leadership of Herrod, Ocean purchased two ships, the City of Andros, built in 1956, renaming her the Ocean Islander, and Costa Cruises’ Italia, built in 1969, renaming her the Ocean Princess. Both were rebuilt in 1984.

In 1987, Ocean acquired Pearl Cruises of Scandinavia and its one ship, the Pearl of Scandinavia, formerly the Finlanda, built in 1967, and rebuilt her in 1988 for a sleeker outwards appearance and more glamorous interior.

Bob Iverson was brought onboard in 1987 to accelerate the company’s growth, replacing Rick Williams, who had been President since 1984.

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