Louis Ltd. has joined a consortium short-listed to develop and operate a new cruise terminal at Marseilles at a time when its other joint venture to develop the Larnaca marina and port area has hit a snag.
The CSE-listed travel giant and parent company of Louis Cruise Lines, has been chosen as a preferred bidder together with Carnival Cruises’ Italian subsidiary Costa Cruises and Italy’s cargo and cruise shipping giant MSC, to undertake the “L’eon Gourret” cruise terminal at the port of Marseille, among the busiest in Europe and one of seven seaports under reform in France.
The decision is expected to be taken at the end of September by which time Louis will have some indication if it is going ahead with other partners in the Zenon Consortium to transform Larnaca’s port into a cruise hub, marina and superyacht facility in a EUR 1 bln mega project.
The other two unsuccessful bidders have challenged the Tenders Board decision and are suing the Ministry of Transport. DJ Karapatakis & Sons Consortium filed an objection on August 1, followed five days later by a similar objection from the other bidder, A. Vouros Investments.
Louis is the biggest shareholders in Zenon Consortium, controlling 22% of the bid that has valued the whole waterfront development project at about EUR 1 bln. Costa Cruises is also a partner with a 10% stake. The others include French construction giant Bouyges Batiment International with a 17.5% stake and local builders Iacovou Brothers (17.5%), both partners in the Hermes Airports consortium that is building and operating the new airports in Larnaca and Paphos.
Other Zenon partners include Amsterdam Logistics Group B.V. and Lievense Consulting Engineers (operators of Amsterdam port, 2%), Marinaman (8,5%), local fuels company Petrolina Holdings Public (17,5%) and the General Construction Company (5%).
The A. Vouros Investments consortium comprises Singapore Cruise Center Pte, DP Architects Pte, Ioannou & Paraskevaides Ltd, J&P – AVAX S.A., Ioannou & Paraskevaides (Overseas), Ariadne Australia Ltd and Cybarco Plc.
The DJ Karapatakis & Sons consortium includes Camper & Nicholsons Marinas, Wimberly Allison Tong & Goo Inc, ERA, Spanopoulos Group of Companies, Parsons International, Odell International, G.A.P. Vassilopoulos Public, SFS Group Public Co., A. Panayides Contracting Public, Sigan Management and Viset Malta Plc.
Improve image
“This is an enormous prospect for Louis as it tries to improve its image as a cruise operator, recently buying new ships and new-buildings,” said Mike Hood, editor of the industry newsletter Off Radar.
“Around the world and not just in the Mediterranean, cruise companies are building their own terminals as a ‘branded product’. But port management is far different from operating terminals as competing cruise companies should not be discouraged from using Larnaca, where I understand priority slots and berth allocation will be on a case-by-case basis,” Hood added.
A senior Louis executive told the Financial Mirror that the biggest return from the company is expected to come from the Larnaca project as it includes services that could also be supplied by Group companies.
“It could also benefit our future cash flow, while our equity investment will probably be secured through finance and not from own funds,” the executive said, explaining that the benefit impact on the stock will not be felt for a long time.
“Our benefit from the Marseilles investment will be sooner, but that is just securing us dock space that will help our operation far more,” he added.
East-west Med hubs
Both new ventures aim to widen Louis’ activities beyond the traditional cruising, hotels and airport services by deploying port management services and utilizing other ports-of-call for its cruise ships.
The joint bid in which Louis has a 20% stake aims to transform Marseille into the cruising hub of the western Mediterranean, just as Louis and Costa want to transform Larnaca into the eastern Mediterranean’s leading cruising hub.
This partnership could also expand to Greece where the port of Volos and two Adriatic coast ports hope to develop cruise terminals, as Greek companies plan to invest EUR 12 bln in new cruise ships to be delivered over the next three years.
Greece aims to take a big part of the cruise business that has more than doubled from 5.7 mln passengers in 1995 to 14.4 mln in 2005, of whom 3.3 mln were Europeans, a number that is expected to rise to 4 mln by the end of the decade and 5 mln by the end of 2015. In all, the European cruise market accounted for 2.6 mln passengers in 2005, with an individual spend of EUR 50-100 per person per port of call.
Britain continues to provide the biggest group of cruise tourists, accounting for 1 mln passengers, followed by Germany (640,000), Italy (512,000), Spain (380,000) and France (235,000). The European market is expected to grow by at least 1 mln more passengers by 2010, with more American tourists choosing cruises, on board EU-owned liners or the new category of megaships.
French reform
On July 4, the French government announced its long-awaited reform to restore the competitiveness of its seaports from their current state by redefining the role of the autonomous ports (ports autonomes), renaming the major seaports (grands ports maritimes), and regrouping all terminal operations that could be exercised by independent port operators.
Until now, French seaports did not benefit from the sharp rise in international container traffic as a means to enhance their commercial positioning. The autonomous ports (public undertakings with a dual public and private nature) created by a law in 1965, suffered from inefficient governance. In addition, recurrent strikes since the early 1990s undermined the credibility of the French ports and the shipping lines' trust in them.
The seven major ports of Dunkirk, Le Havre, Rouen, Nantes-Saint-Nazaire, La Rochelle, Bordeaux and Marseilles will transfer port domain ownership to the major seaports, except the natural maritime public domain which will remain the property of the state.
