Royal Olympic Cruise Lines Inc.

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Royal Olympic Cruise Lines Inc.

Akti Miaouli 87
18538 Piraeus
Telephone: ( + 30) 1-429-1000
Fax: ( + 30) 1-429-0862
Web site:

Public Company
Sales: $128.8 million (2001)
Stock Exchanges: NASDAQ
Ticker Symbol: ROCLF
NAIC: 483112 Deep Sea Passenger Transportation; 483114 Coastal and Great Lakes Passenger Transportation

Royal Olympic Cruise Lines Inc. (ROC) is a leading operator of cruise ships and tours in the Mediterranean Seathe Greek company is the number one cruise ship operator in the eastern Mediterranean market with a market share of about 55 percent, and the second largest in the entire Mediterranean market with more than 9 percent of the total market. The company owns and operates a fleet of eight cruise ships for overnight cruises, and an additional ship used for one-day cruises. Most of the companys business takes place during the months of March through November, during which time the company concentrates on the Eastern Mediterranean, particularly destinations to the Greek islands and neighboring countries. During the December to April off-season, ROC turns to the North and South American markets, operating two cruise ships to such destinations as the Amazon and Orinoco Rivers. ROC also charters out one of its ships to another tour operator during the winter season. Although most of the companys fleet is made up of secondhand vessels, some of which date back to the late 1950s and early 1960s, ROC has begun a fleet expansion at the dawn of the 21st century, taking delivery of two high-speed cruise ships, capable of top speeds up to 33 knots, in 2000 and 2002. Like the rest of the companys fleet, the new vessels are relatively small, offering space for up to 800 passengers. All of the companys vessels sail under the Greek flag. The company is traded on the NASDAQ stock exchange, but is majority held by ROC Holdings, which itself is jointly owned by the founding Potamianos family and Cyprus tour and cruise operator Louis Tourist Agency.

Cruising into the 1950s

Royal Olympic Cruise Lines was created in 1995 following the merger of two well-established, family-owned cruise ship operators, Epirotiki and Sun Line. Both companies had begun cruise operations in the Greek islands during the 1950s, at a time when Greece began developing itself as a modern tourist destination in the postwar era. Epirotikis operations stretched back to 1830, when it was founded as a shipping company by George Potamianos, making it one of the worlds oldest continuously operating shipping lines. Epirotiki went on to develop a leading position in the Greek cargo and passenger transportation trade, and began operating cruises among the Greek islands in the 1930s. In the 1950s, Potamianoss grandson, Anastassios, took over the direction of the company and focused it entirely on the cruise ship market, which was then undergoing a transformation from being a privilege of the wealthy to becoming a common vacation option affordable to the larger, middle-class traveling public.

Epirotiki partnered with the Hellenic National Tourist Office to launch the first Aegean Sea cruises in 1954. In the 1960s, Epirotiki began expanding its offerings, adding a number of Caribbean destinations, enabling the company to complement the off-season in Greece with winter itineraries elsewhere. The company tapped into the growing American tourism market, serving ports in Florida, Texas, and elsewhere. Epirotiki also became one of the first cruise ship companies to begin cruise services to Alaska.

By the end of the 1980s, Epirotiki, now headed by the great-grandsons of the companys founder, brothers Andreas and George Potamianos, was operating a fleet of 12 vessels, most of which were relatively small-sized, with its largest ship offering passenger capacity of only some 800 passengers. As competitors, including fast-rising Carnival Cruise Lines, began adding larger and larger ships, Epirotiki remained committed to its smaller-size format, emphasizing more personalized service than that available on the larger cruise liners.

The end of the 1980s and the beginning of the 1990s brought choppy waters for Epirotiki, however. Fears of terrorism cut deeply into the tourist market, and particularly scared passengers off of cruise ships in the late 1980s. In 1988, one of the companys cruise ships, the Jupiter, was hit by a freighter near the companys Piraeus home port, sinking the Jupiter and causing the drowning deaths of two passengers. The following year, a passenger was killed by an unsecured hatch on another cruise ship, the Neptune; that year, as well, another boat, the Odysseus, was forced to harbor in Portugal after it began taking on water. In 1991, two more ships in Epirotikis fleet were out of commission, after an explosion on the companys flagship, the Pegasus, in the Venice harbor, and the sinking of another ship, the Océanos, off the South African coast. The latter disaster was followed by severe criticism of the company, specifically complaints that the ships captain and crew had abandoned the ship ahead of its passengers. Nonetheless, all of the passengers aboard were safely rescued.

Epirotiki fought back by rebuilding its fleet, debuting four newly acquired ships for the 1992 season, including two vessels with capacity of more than 700 vessels. By 1993, however, the company seemed unable to resist the prevailing mood of consolidation sweeping the cruise ship industrywhich was hard hit again by the global recession and by the collapse of the tourist industry following the outbreak of the Persian Gulf War. While rumors suggested that Epirotiki would pursue a marriage with domestic rival Sun Line, the company instead turned toward a partnership with industry heavyweight Carnival Cruise Lines.

Merging to Mediterranean Leadership in the 1990s

In 1993, Carnival agreed to sell one of its ships to Epirotiki in exchange for a 17 percent stake in the Greek company. That agreement was meant as the first phase of a multistep transaction that would eventually give control of Epirotiki to Carnival. In 1994, the two companies carried out the second phase of the deal, transferring a second Carnival vessel to Epirotiki, and bringing Carnivals shareholders position up to 43 percent. At that point, Epirotiki restructured its management, appointing the Potamianos brothers cochairmen, and bringing in a new CEO, Pam Conover, who had formerly headed up Citicorps shipping operations. But Conovers management style quickly clashed with that of the Potamianos family. Conover was briefly removed from her position at Epirotiki, but at the beginning of 1995, Carnival stepped up its position, increasing its holding to 49 percent. Although 51 percent remained with Epirotiki, a significant part of that stake was in fact held by Carnival ally Paris Katsoufis, a Greek-born American citizen, who now took on the position as chairman of the boardrelegating the Potamianos brothers to the honorary positions of chairman emeriti.

By mid-1995, however, the Carnival-Epirotiki construction had collapsed in the face of Greek cabotage rules. These stated that only ships flying the Greek flags were allowed to provide full-scale operations among the Greek islands. Moreover, in order to qualify to fly the Greek flag, cruise ships must be significantly owned by Greek citizens and staffed by Greek sailors. When the government refused to recognize Katsoufiss Greek citizenship, the Potamianos family once again regained control of their company.

Instead, in August 1995, Epirotiki agreed to merge its operations with its chief rival, Sun Line, creating a new company, Royal Olympic Cruise Lines, or ROC. Sun Line was another family-owned company, founded in 1958 by Charalambos and Isabella Keusseoglou as a luxury cruise operator on the Aegean Sea. Like Epirotiki, Sun Line had expanded beyond Greece in the 1960s, adding Caribbean destinations. In 1975, Sun Line added the South American continent, with trips to Mayan sites, then added cruises up the Amazon River in the 1980s. Sun Line remained a far smaller operation than Epirotiki, with just three cruise ships in operation at the time of the ROC merger.

Operated as a joint venture between the two families, ROC initially maintained its two brand names, with Sun Line oriented toward a more affluent, older, and primarily American customer base, and Epirotiki attracting a younger, more diversified passenger list. In 1997, ROC began planning a public offering in part to prepare the company for the expected end of cabotage rules in 1999. The company restructured its holdings, creating a new entity, Royal Olympic Cruise Lines, and listed on the NASDAQ stock exchange in 1998, raising some $91 million. The founding families nonetheless retained a controlling share of more than 51 percent in the company through their privately held ROC Holdings vehicle. The company then launched a new drive to add to its fleet, acquiring two former North Atlantic ocean lines. The company also announced that it had orderedfor the first timetwo newbuild cruise ships from Germanys Blohn & Voss shipyards. The new ships were designed as fast cruise ships, with cruising speeds of 27 knots and top speeds up to 33 knots.

By 1999, however, ROC was once again in trouble, as the war in nearby Kosovo caused a collapse in the Greek tourism market. The floundering company, which saw its stock price drop from a high of $15 per share to just $2 per share, was once again the center of takeover interest by other cruise operators eager to break into the Greek cruise market. By the end of the year, ROC had found its suitor, in the form of Cyprus-based Louis Cruise Lines, which acquired 70 percent of ROC Holdingsincluding the Keusseoglou familys 50 percent stakewhich gave it a 40 percent share of the ROC cruise line operation. Louis immediately injected some $5 million in cash to shore up ROC s operation.

Company Perspectives:

Welcome Aboard: From classical treasures to exotic grandeur, Royal Olympic presents innovative itineraries to the Greek Isles, Eastern and Western Europe, Central and South America, and the Caribbean. We invite you to take a look at why Royal Olympic is different from the rest and why you should sail with us on your next vacation.

Things started looking up for ROC again at the beginning of the 21st century, as it took delivery on the first of its new cruise ships in 2000. The Olympic Voyager gave the company a new, four-star brand. The vessels industry-leading speed also allowed ROC to offer more extensive itineraries, enabling the company to pack in additional port stops to please the traveling public. ROC looked forward to expanding its Olympic brand with the delivery of the Voyagers sister ship, to be named Explorer and scheduled to set sail in May 2001. Delivery ofthat ship, however, was delayed, as ROC and B lohn & Voss began a dispute over possible defects in the Explorers construction. The Explorer at last set sail in June 2002 and was greeted enthusiastically by the tourist industry. The new vessels were featured at the center of the companys itinerary plans for the 2002-03 season. The company was especially eager to introduce the new, faster ships to the American markets, where the greater distances between port destinations had long been a stumbling block for expanded cruise itineraries.

The Potamianos family, which had retained a 15 percent share of the company indirectly through a holding in Louis, returned to a more prominent position in ROC s shareholding in 2002, when it bought back a stake in ROC from Louis. That transaction gave both the Potamianos family and their Cyprus-based partner a 50 percent stake in the company. With more than 170 years of shipping history, Royal Olympic Cruise Lines remained a force in its Mediterranean base, and a growing presence in the worldwide cruise industry.

Principal Subsidiaries

Athena 2004 S.A. (Liberia; 80%); Bare Boat Chartering Company; Caroline Shipping Inc. (Liberia); East Ocean Shipping Corporation (Liberia; 80%); Eurocroisieres Sari (France); Freewind Shipping Company (Liberia; 80%); Gallery Navigation Ltd. (Liberia); Grammon S.A.; Icarus Travel Limited (U.K.); Ocean Quest Sea Carriers Ltd. (Liberia; 80%); Olympic World Cruises Inc. (Liberia; 80%); ROC Lines Limited (U.K.); RO Cruises, Inc. (U.S.A.); Royal Olympic Cruises Ltd. (Liberia; 80%); Royal World Cruises Inc. (Liberia; 80%); Simpson Navigation Ltd. (Liberia; 80%); Solar Navigation Corporation (Liberia; 80%); Valentine Oceanic Trading Inc. (Liberia).

Principal Competitors

TUI AG; Carlson Companies Inc.; My Travel Group PLC; Carnival Corporation; Hapag-Lloyd AG; Royal Caribbean Cruises Ltd.; P and O Australia Ltd.; Société Louis-Dreyfus et Cie; Seabourn Cruise Line; Norwegian Cruise Line Ltd.; NCL Holding ASA; Wan Hai Lines Company Inc.; Stena Line Scandinavia AB; Bakri Trading Co.; Shipping Corporation of India Ltd.; Holland America Line Westours Inc.; Korea Line Corp.; Sovkomflot Joint Stock Shipping Co.; China Shipping Development Company Ltd.; Scandlines Deutschland GmbH; Viking Line Ab; Andrew Weir and Co. Ltd.

Key Dates:

Epirotiki is founded by George Potamianos as a cargo and passenger shipping company in Greece.
Epirotiki begins operating a cruise liner service.
Epirotiki focuses operations on cruise services and begins cruise liner operations on the Aegean Sea.
Sun Lines is founded as a luxury cruise operator on the Aegean Sea by Charalambos and Isabella Keusseoglou.
Carnival Cruise Lines gains a controlling share of Epirotiki.
The Potamianos family regains control of Epirotiki and forms the Royal Olympic Cruise (ROC) joint venture with Sun Line.
Royal Olympic Cruise Lines goes public with a listing on the NASDAQ stock exchange.
Louis Cruise Lines of Cyprus acquires a controlling stake in ROC.
ROC takes delivery of its first high-speed cruise ship, Olympic Voyager.
ROC takes delivery of its second high-speed cruise ship, Olympic Explorer; the Potamianos family rebuilds its stake in the company to 50 percent.

Further Reading

Blum, Ernest, High-Speed Olympic Voyager to Chart New Waters, Travel Weekly, August 3, 2000, p. C4.

Cyprus Louis Cruise Buys Stake in Royal Olympic, Reuters, October 29, 1999.

Lincoln, Lori, Sun Line, Epirotiki Merge with Eye to Growth, Travel Weekly, October 16, 1995, p. 15.

Lowry, Nigel, Cruise: Louis Snares Royal Olympic, Lloyds List, October 22, 1999.

, Lifeline for Royal Olympic, Lloyds List, November 11, 1999.

Royal Olympic Charts Course with New Voyages: Aboard Olympia Explorer, Olympia Voyager, Travel Weekly, December 3, 2001, p. C6.

Royal Olympic Expands, Travel Trade Gazette UK & Ireland, February 26, 2001, p. 26.

Savvides, Nick, Greek Shipping Falls to US Methods, European, February 10, 1995, p. 32.

Tobin, Rebecca, After Delays, Olympia Explorer Makes Debut, Travel Weekly, June 3, 2002, p. C8.

M.L. Cohen

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Royal Olympic Cruise Lines Inc.

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