Fincantieri and TUI Agree to First Newbuilds for Group’s UK Cruise Business

Days after confirming that it was considering newbuilds for its UK cruise operation known as Marella Cruises, Germany’s TUI Group has entered into an agreement with Fincantieri for two cruise ships. They would mark the first newbuilds for the company’s UK operation and expand a relationship started with the Italian shipbuilder for the group’s Germany cruise joint venture Mein Schiff.

The group said it had entered into a Memorandum of Agreement for the two new cruise ships based on Fincantieri confirming building slots with tentative delivery dates in 2030 and 2032. Fincantieri reports the value of the order exceeds €2 billion (nearly US$2.2 billion). The deal is subject to financing and completion of binding shipbuilding contracts.

No details were announced on the size of the planned cruise ships. They noted the ships would be customized to the UK cruise market and continue the premium positioning of the brand.

Last week, TUI outlined opportunities for its investors highlighting the UK cruise market as a growing segment of the business. The group said it expects the market will grow by 9 percent per year until 2030. In today’s announcement of the shipbuilding plan, the parent company TUI AG said the business case points to an EBIT of between €130 and €150 million (US$140 to $162 million) per ship per year and a Return on Invested Capital of 11 to 12 percent.

The cruise line started in the 1970s when Thomson, a UK tour operator, chartered an older ship for cruises. TUI restarted the operation in the 1990s based on the success of competing tour operators with the burgeoning cruise market in the UK. In October 2017, the operation was rebranded Marella Cruises. Its marketing is entirely in the UK and through a series of efforts it has been positioned in the premium segment of the market.

Marella currently operates five cruise ships, between 70,000 and 77,000 gross tons each, with accommodations for approximately 2,000 passengers per ship built between 1995 and 1997. Two of the ships, operating as Marella Discovery and Marella Discovery 2, were acquired in 2016 and 2017 from Royal Caribbean Group which is TUI’s partner for the German cruise operations. Two more ships were acquired for Royal Caribbean’s Celebrity Cruises in 2018 and 2019 and operate as Marella Explorer and Marella Explorer 2. The final ship, Marella Voyager, was added to the brand in 2023 coming from Mein Schiff, and built for Celebrity Cruises.

TUI’s executives highlighted the challenges the brand faced with older ships that are also smaller versus competitors. Carnival’s P&O Cruises is the UK’s largest brand and has added new, large cruise ships, while Saga Cruises, a UK niche brand built two new ships. Fred. Olsen upgraded its fleet with second-hand ships acquired from Carnival’s Holland America Cruises during the pandemic.

Marella said given the aging of its fleet it was exploring “re-fleeting” and was in discussions to secure newbuilding slots. It noted that Europe’s cruise shipbuilders are all fully committed till 2030. Cruise ship construction is specialized due to the vast network of subcontractors and suppliers involved in the projects and the complexity of the hotel operations integrated into the vessel.

TUI has been working to rebuild the profitability of the group but emphasizes the strength of the UK cruise market. The group said in its release that it would also “continue to explore partnership options.” Mein Schiff was launched as a joint venture with Royal Caribbean and in 2020 the group sold Hapag-Lloyd Cruises to the joint venture.

Fincantieri highlights the addition of another brand to its orderbook, while it is completing the second cruise ship for TUI, Mein Schiff Flow, which will deliver in 2026. The shipyards also have large orders from Carnival Corporation, Norwegian Cruise Line, Oceania Cruises, Regent Seven Seas, Crystal Cruises, and Viking, as well as small, luxury ships for Four Seasons.