ROC Turnaround

“We hope to turn a profit this year and will definitely (turn a profit) next year,” said Stelios Kiliaris, president and CEO of Royal Olympic Cruises (ROC). “When we can put the results on the table, we will start a campaign to convince investors that ROC is a good company.”

Kiliaris, who is also managing director of Louis Cruise Line, assumed the reigns at ROC after the Cyprus-based Louis Organization acquired majority ownership late last year (1999).

“ROC is a healthy company and will survive, and the shareholders will realize the benefits at a later stage,” Kiliaris said, adding that ROC is on the NASDAQ to stay. In addition, a parallel listing in Greece is a possibility.

Kiliaris explained his turnaround strategy as follows:

“Our first priority was to put a formal management structure in place while we focused on reducing costs at the same time. By taking advantage of the synergies offered by Louis we have been able to achieve significant cost reductions, especially in ship operations. This year, we have reduced ship-operating costs by more than $5 million.

“We have also worked hard to convince the market that ROC is here to stay. Everyone felt the company would go under and people were even placing bets up to the last minute that we would not take delivery of the Olympic Voyager.

“In addition, we have restructured the company’s debt, which was mostly in the form of short-term loans, into medium- and long-term debt,” Kiliaris said.

He explained that the new management has focused “everybody to work for ROC.” Previously, the company consisted of two camps – the former Epirotiki and Sun Line employees – pulling for their own brands and competing internally, rather than working for the common good of the new company. (ROC was formed when Epirotiki and Sun Line were merged in December of 1995.)

Kiliaris said he brought Louis’ business mentality to Piraeus. “We do not run ROC as if the cruise line belonged to a particular person or family,” he underlined. “Louis does not look upon itself as a ‘shipowner.’ Louis is involved in the big picture,” he said, “not in day-to-day details.”

“The traditional Greek shipowner tends to be involved in every detail, while Louis instead has brought a modem corporate business mentality to ROC,” Kiliaris said.

Olympic Voyager

With the introduction of the Olympic Voyager, ROC offers two different cruise products, according to Kiliaris, who said the new fast ship can offer itineraries in a timeframe that no other cruise line can match. In addition, both the new ship and the old ships offer what Kiliaris called the hospitality of smaller ships.

“The onboard environment is the same throughout the ROC fleet,” he said. “We take good care of our passengers (compared to the mega-ships). And the ships are of the right size in proportion to the Greek islands,” he underlined.

While the ships may be relatively small, ROC has economies of scale, with a combined fleet of 24 ships (counting Louis too), according to Kiliaris, who also said that ROC commands good prices for its older ships. His program this year also included special promotional efforts to fill the ships.

“Cruise ships are not like aircraft where newer is better,” he said. “Every ship has a soul; ships are not things, they are living organisms.”

“We have passengers who love each of the ships for its crew and its atmosphere. Each ship has a different character and a loyal following of passengers.”

The Olympic Voyager has lived up to Kiliaris’ expectations. He said that the ship is in fact faster than was expected with a top speed of 32 knots and a service speed of 28 knots. The second vessel, the Olympic Explorer, will have some minor modifications, but will basically be an identical sister ship. ROC also has an option on a third vessel.

The Olympic Voyager has also helped ROC increase its percentage of American passengers carried. “The new ship is attracting mainly North American passengers,” Kiliaris said, adding that overall, ROC is running at a load fact or in the 90 percent range.

Confidence Builder

Looking forward, Kiliaris does not believe that the older ships will necessarily be retired, and said he expected at the very least that the Olympic Countess, the Triton and the World Renaissance would continue to sail for ROC for some time.

Kiliaris said the lifespan of ships is determined by the costs of upgrading and maintenance.

“We will have more new ships,” Kiliaris said. ”but just because we get new ships does not mean we have to get rid of older ones.”

The economic picture of older vessels is completely different than for new vessels, Kiliaris said, noting the depreciation difference between $10 million and $200 million vessels.

Alternative deployments of older ships also include short cruise operations or charters, said Kiliaris, who does not believe older ships will disappear.

In Piraeus, ROC presently employs about 200 people shoreside and has some 2,000 crew on the ships. All ship services are handled in-house except photography and casino operations. All the ships fly the Greek flag and employ Greek deck and engine personnel, while a high proportion of the hotel staff is also Greek.

Looking back on his first year at the helm at ROC, Kiliaris said, “So far, I believe we have succeeded in gaining the confidence of the market. When we say we will sail an itinerary, we sail it. We are honoring our obligations. As we change our image, the investors will subsequently realize our potential,” Kiliaris said.

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