1

Cruising back to calm waters:

The Holland America Line Case

Estafeta ConsultantsJuana - Alejandro – Belén - Gabriel

MandateMandate

2

HALMandate

Short Run Plan

Going Euro?

Conclusion

Appendix

Maintain our global position as a reference in the Premium Cruise Industry by weathering the current crisis through the adaptation of our products and services, following current demand trends, and redefining our strategy to increase our presence in Europe in the next 5 years.

Short Run PlanShort Run Plan

3

Profit:$ 22,907,402.01

Allow and encourage payments in installments

Incentive travel agencies

Boost on-board spending

Focus on bolsteringone-week cruise sales

HALMandate

Short Run Plan

Going Euro?

Conclusion

Appendix

Incentive travel agencies

Immediate ActionImmediate Action

4

• 2 months, 3 equal installments• Through Travel Agents or “click

option” on Web• Cancellation Fees apply

• $50 per passenger in Casino chips

• 3 x 2 in Spas and Massage

• “Windfall bonus” incentive scheme

• $1,000 per 50 bookings for a limited time

Boost on-board spending

Allow & encourage payments in installments

1 2 3

HALMandate

Short Run Plan

Going Euro?

Conclusion

Appendix

“Trends”“Trends”

5

Campaign:

“You deserve a break. You deserve a vacation.”

Price “reduction” without extremely compromising margin

Redistribute ships:

-Increase Caribbean & Mexico during colder months- Alaska – Bermuda

Bolster One-Week Cruise Sales

HALMandate

Short Run Plan

Going Euro?

Conclusion

Appendix

How long will the slide last?How long will the slide last?

2009 Going on 2010Contraction in demand and increased uncertainty

-30% in price of luxury/leisure products

Risk FactorsPrice of Oil

Lagged Crisis

Creating Precedents with Price Discounts

CAPEX Burden

In our favor: solid balance sheet of CCLDec 2008, liquidity of US$1.3bn of cash availability under revolving credit facilities.

All the company’s credit facility matures in 2012

6

HALMandate

Short Run Plan

Going Euro?

Conclusion

Appendix

Constraints that we will solve…

The European growth potential is significant and represent and important opportunity for the future

The European growth potential is significant and represent and important opportunity for the future

The EU market has still a lot to catch up…

Million Passenger in 2007

10,2

3,5

USEurope

2.9x

3.5% of total population

0.5% of total population

185

90Europe

US

… and to there is room for more players

Number of ships

263

128

US

Europe

Number of berths (000s)

HALMandate

Short Run Plan

Going Euro?

Conclusion

Appendix

Why has been the European market so far underpenetrated?Why has been the European market so far underpenetrated?

More negative impact on the perception of Europeans and

foreigners than in North America

Limited number of destinations and poor logistics to serve certain ports due to high number of Inland population

1

Low quality of the service and not adapted to European tastes

Weather conditions in certain areas do not allow full coverage during the year

2

3

Constraints that we will solve…HALMandate

Short Run Plan

Going Euro?

Conclusion

Appendix

9

Snapshot of the regional diversity of EuropeSnapshot of the regional diversity of Europe

Norwegian Fjords

Norther

n Euro

pe

Black Sea & Mediterranean East

Baltic

Mediterranean West

45

158

TripsLinesPorts

32

1610

Ports TripsLines84

1410

Lines TripsPorts

1955

Ports Lines

228

Trips

20

28

20

Ports Lines Trips

HALMandate

Short Run Plan

Going Euro?

Conclusion

Appendix

Dealing with the Euro ZoneDealing with the Euro Zone

10

Region Ports Cruise Lines

Carnival Brands

Total Trips

Trips/ Cities

Norwegian Fjords

8 15 4 45 5,63

Baltics 10 16 4 32 3,20

Northern Europe

10 14 4 84 8,40

Mediterranean West

55 19 6 228 4,15

Black Sea & Med. East

28 20 6 20 0,71

Baltics and Mediterranean East & Black Sea present an underpenetration compared to the northern regions

HALMandate

Short Run Plan

Going Euro?

Conclusion

Appendix

11

Existing mechanism to attract costumersExisting mechanism to attract costumers

Web Site

The company has a very professional web site where customers can choose their destinations and packages

×Maturation of internet in long term (≥ 10years?)

×No real interaction with the seller

Tour Operator

Major channel of distribution engaged by regional partners based on commission (13%):

× Outsourcing of a major component of the business

25%30%

50%

70%

85%

Airplane Hotelscruises CarsAll tour Packages

HALMandate

Short Run Plan

Going Euro?

Conclusion

Appendix

Screening the tour operator universeScreening the tour operator universe

12

TOTAL AVERAGE

Product Offering (30%)

All Leisure

Group Plc

.30 .55 .95

DistributionChannels (30%)

OperatingRegions (15%)

Sales Volume (15%)

Salamis Tours

Public Ltd.

Western & Oriental

plc.Criteria

Brand Recognition (10%)

.30

Amathus Public Ltd.

.75

Travelzest plc.

Unfavorable FavorableHALMandate

Short Run Plan

Going Euro?

Conclusion

Appendix

13

Acquiring a pan european tour operator to enhance customer captation

Acquiring a pan european tour operator to enhance customer captation

Operating performance

0102030405060708090

100110

-10,0%

4,0%

2012

76,7

-3,8%

34,5

2007

-2,9%

62,7

2008

0,3%

65,0

2009

3,0%

68,7

2010

3,5%

72,6

2011

EBITDA MarginSales

+17%

0,0%

10,0%

Valuation

£19m of Enterprise Value of the company

£8m of current net debt

Wacc: 12% assuming a conservative scenario

15% premium over EV

Bid price of £22m

Returns from acquisition

W & O is expected to sell over 150.000 trips over the next 4 years where 80% are cruise trips

Will facilitate transfer of clients from different regions

Decrease of number of commission fees (10-13% of the price!)

HALMandate

Short Run Plan

Going Euro?

Conclusion

Appendix

Adapting to european tastesAdapting to european tastes

14

European food and products1

Important chefs on board

Typical food of the countries / cities that we visit

Cultural packages of the visited places - -Videos- - Books- - Guides

Payment facilities

2

3

4

5

Tailoring the product will help to meet the tastes of European

consumers

The cultural aspect of a trip is important for an european tourist

Payment facilities will always help to attract

clients

The industry has not made a good job in the past adapting to European eating habits.

HALMandate

Short Run Plan

Going Euro?

Conclusion

Appendix

What’s NextWhat’s Next

15Now

Sho

rt Run

Long

Run

Europe

Tailoring our products to the current demand trends

Maintaining our short-term revenue

• Commissions

• Flexible paying conditions

• Increasing yield on board

• Increase our short duration cruisers

• Target the workforce

• Adapting to the European demand

• Acquiring an European tour operator

Horizon 11 month

Horizon 23-5 months

Horizon 35-10 years

+ Am

erica

n sta

ndar

ds -

HALMandate

Short Run Plan

Going Euro?

Conclusion

Appendix

16

Cruising in troubled waters:

The Holland America Line Case

Estafeta ConsultantsJuana - Alejandro – Belén - Gabriel

Thank You for Your Time. Questions?Thank You for Your Time. Questions?

Appendix: Target Market Population

Appendix: Ships and Passenger Capacity

Appendix: Itineraries Offered

Appendix: 7D-Route Trips by Ships

Appendix: Average Ticket Revenue

Appendix: Marginal Revenue Calculations

Appendix: Marginal Cost Calculation

Appendix: Have We Hit Bottom?

Appendix: Expectations of Cruise Industry

Appendix: CAPEX Burdens

Appendix: Risk Factors

Appendix: Impact of Economic Downturn

Appendix: Vacation Average

Appendix: Customizing Our Services

Appendix: Country Operator Analysis

Appendix: DCF Backup

Appendix: Tour Operator Explanation

Appendix: Key ideas

17

Mandate

Short Run Plan

Immediate Action

Trends

How long will the slide last?

Why has been the European market so far underpenetrated?

The European growth potential

Snapshot of the regional diversity of Europe

Dealing with the Euro Zone

Screening the tour operator universe

Existing mechanism to attract costumers

Acquiring a pan European tour operator to enhance customer captation

Adapting to European tastes

What’s Next

HALMandate

Short Run Plan

Going Euro?

Conclusion

Appendix

18

Appendix: Target Market PopulationAppendix: Target Market Population

TARGET MARKET US: 13,397,817

Age Distribution of Upper 10 percentile of US Income Distribution

Type of Vacationers per Age Group

45 - 54 35.00% 1,071,8254.23

55 - 64 20.00% 6,124,716.7

65 - 74 5.00% 1,531,179.18

Age Cruisers Vacationers Non-Vacationers

45 - 54 27.00% 46.00% 27.00%

55 - 64 24.00% 47.00% 29.00%

65 - 74 19.00% 61.00% 20.00%

United States Population 306.235.835

% Pop. with Income > 92k 10%

HALMandate

Short Run Plan

Going Euro?

Conclusion

Appendix

Appendix: Target Market PopulationAppendix: Target Market Population

19

HALMandate

Short Run Plan

Going Euro?

Conclusion

Appendix

Appendix: Ships and Passenger CapacityAppendix: Ships and Passenger Capacity

20

HAL Ships Passenger Capacity

MS Eurodam (2008) 2,044

MS Noordam (2006) 1,918

MS Westerdam (2004) 1,916

MS Oosterdam (2003) 1,848

MS Zuiderdam (2002) 1,848

MS Prinsendam (2002) 793

MS Amsterdam (2000) 1,380

MS Rotterdam (1997) 1,316

MS Zaandam (2000) 1,440

MS Volendam (1999) 1,440

MS Veendam (1996) 1,266

MS Ryndam (1994) 1,266

MS Maasdam (1993) 1,266

MS Statendam (1993) 1,266

HALMandate

Short Run Plan

Going Euro?

Conclusion

Appendix

Appendix: Itineraries OfferedAppendix: Itineraries Offered

0-5 days: 19 itineraries (5%), 5 cruises (2%)

6-8 days: 64 itineraries (16%), 213 cruises (70%)

9-16 days: 138 itineraries (34%), 64 cruises (21%)

17 + days: 184 itineraries (45%), 26 cruises (8%)

21

405 Itineraries offered by Holland America Lines*

* source: Holland America Lines

HALMandate

Short Run Plan

Going Euro?

Conclusion

Appendix

Appendix: 7D-Route Trips by ShipsAppendix: 7D-Route Trips by Ships

ALASKA

8 ships and 30 cruises average per month

BERMUDA (starting 2010)

22

May, 09 June, 09 July, 09 August, 09 September, 09

Ryndam 4 4 5 4 3

Veendam 3 4 4 5 2

Statendam 4 4 4 5 3

Zaandam 4 4 4 3 4

Zuiderdam 4 4 4 5 3

Amsterdam 4 4 3 5 3

Westerdam 4 4 4 4 3

Volendam 2 4 5 4 3

TOTAL 29 32 33 35 24

May, 10 June, 10 July, 10 August, 10 September, 10

Veendam 5 4 4 1 4

HALMandate

Short Run Plan

Going Euro?

Conclusion

Appendix

Appendix: 7D-Route Trips by ShipsAppendix: 7D-Route Trips by Ships

CARIBBEAN

4 ships and 30 cruises average per month

MEXICAN RIVIERA

1 ship and 3 cruises average per month

23

October, 09 November, 09 December, 09 January, 10 February, 10

Eurodam 4 3 4 4 3

Ryndam 1 5 4 1 1

Westerdam 2 4 4 4 3

Noordam 0 0 2 0 0

TOTAL 7 12 14 9 7

October, 09 November, 09 December, 09 January, 10 March, 10

Veendam 3 0 0 0 0

Oosterdam 2 4 3 4

HALMandate

Short Run Plan

Going Euro?

Conclusion

Appendix

Appendix: Average Ticket RevenueAppendix: Average Ticket Revenue

Weighted Avge. Price 1W: $991

StateroomsPenthouse Suite:

PS

Deluxe Veranda Suite: S

Veranda Suite: A, B, BA, BB

Large Outside Staterooms: C, D, DA, DD, E, EE, F, FF, G H

Large Inside Staterooms: I, J, K, L, M, MM, N, NN

24

Total Price p. Person

PS 1 $5,625.00S 28 $2,459.00A 20 $1,519.00B 48 $1,425.00BA 40 $1,353.00BB 8 $1,257.00BC 4 $1,169.01C 64 $861.00D 48 $824.00DA 48 $786.00DD 20 $749.00E 68 $711.00EE 26 $673.00F 30 $696.84FF 12 $662.00G 10 $624.00H 10 $585.00HH 16 $585.00I 9 $585.00J 9 $566.00K 44 $547.00L 29 $528.00M 26 $508.00MM 8 $489.00N 2 $489.00NN 3 $489.00Source: Holland America Lines

HALMandate

Short Run Plan

Going Euro?

Conclusion

Appendix

Appendix: Marginal Revenue CalculationsAppendix: Marginal Revenue Calculations

Projected Increases in Passenger Volume

Cruise < 8 days: 5% / avge price $991

Cruise 8-16 days: 3.7% / avge price $1,696.68

Cruise 17+ days: 1.67% / avge price $3,634.69

Total Incremental Profits: $2,870,592.41

25

Total Cruises p. Year Incr. Profit per Cruise Total Incr. Profit per Cruise per Year

Total 5 Day Cruises p. Year 2.5 $ 7,097.14 $ 17,742.86

Total One Week Cruises p. Year 213 $ 9,936.00 $2,116,368.00

Total 2 Week Cruises p. Year 38.5 $ 136.91 $ 5,271.01

Total 3 Week Cruises p. Year 49.725 $ 14,705.09 $ 731,210.54

HALMandate

Short Run Plan

Going Euro?

Conclusion

Appendix

Appendix: Marginal Revenue CalculationsAppendix: Marginal Revenue Calculations

26Source: Holland America Line

HALMandate

Short Run Plan

Going Euro?

Conclusion

Appendix

Appendix: Marginal Cost CalculationAppendix: Marginal Cost Calculation

On-board Spending Boost profits: $20,872,500

Installment Payments Cost: $6,036.90

Publicity Campaign: $450,110

Windfall Commissions: $379,543.50 27

Total Cruise p. Itineraries OCC per Cruise Total OCC

One Week 230 $ 17.78 $ 4,089.65

Two Weeks 38.5 $ 22.50 $ 866.30

Three Weeks 49.725 $ 21.74 $ 1,080.95

Total 318.225 $ 6,036.90

Per Passenger Passenger Per Cruise Total Cruises Total Cost

$50 1380 302.5 $20,872,500

NYT Magazine Fireplace Ad $ 95,110.00

30 sec. National TV Commercial $350,000.00

Magazine (ie Vogue) - per issue $ 5,000.00

HALMandate

Short Run Plan

Going Euro?

Conclusion

Appendix

Appendix: Have We Hit Bottom?Appendix: Have We Hit Bottom?

28

YES we have NO we haven’tInstitute of Supply Management’s index of American manufacturing has rebounded from 32.9 to 36

Capital Economics' (consultancy) recovery index suggests probability that American recession has ended is less than 10%

S&P/Case-Shiller 20-city index: house prices through January were down 29% from their all-time peak.

Standard & Poor’s: many commercial mortgage-backed securities are highly susceptible to downgrades

House sales rose unexpectedly in February. 45% of existing homes sold were “distressed” properties (estimated)

The fundamentals in terms of corporate profits, house prices and bank lending have not yet bottomed; valuations are not yet at fire-sale levels

March: factory purchasing managers their least gloomy about new orders since last August. Vehicle sales rose 8% from February & new claims for unemployment insurance have stopped rising

March witnessed 35 defaults, the largest number of non-payers in a single month since the Depression, according to Moody’s. The default rate is now 7%, up from 1.5% a year ago

Gross domestic product, which shrank at a 6.3% annual rate in the fourth quarter, but by sinking output as businesses sought to bring inventories into line with lower sales

Dysfunctional financial system: credit markets have not reflected the optimism of stocks.

Banks are lining up to repay the money to free themselves from political interference, even though the loss of capital will constrain their lending

Recovery*: 3Q, 09 Recovery: 2Q, 10

Sources: “Whistling in the Dark” – The Economist (April 8 th, 2009) & “A Faint Sound of Applause” - The Economist (April 2nd, 2009)*Source: “Some Forecasters See a Fast Economic Recovery” - NYT.com (January 2nd, 2009)

HALMandate

Short Run Plan

Going Euro?

Conclusion

Appendix

Appendix: Expectations of Cruise IndustryAppendix: Expectations of Cruise Industry

Expected 2009 Net Yield for CCL: -15%

29Source: Goldman Sachs America Leisure Report (January 14th, 2009)

HALMandate

Short Run Plan

Going Euro?

Conclusion

Appendix

Appendix: CAPEX BurdensAppendix: CAPEX Burdens

TBD Pricetag: $425,000,000*

30Source: “Cruise Travel: New Ships” – Cruiserver.net

HALMandate

Short Run Plan

Going Euro?

Conclusion

Appendix

Exposure to Increasing Fuel Prices and EPS sensitivity to price per passenger changes

Appendix: Risk Factors Appendix: Risk Factors

31

HALMandate

Short Run Plan

Going Euro?

Conclusion

Appendix

Appendix: Impact of Economic DownturnAppendix: Impact of Economic Downturn

32

Price Decreases by Cruise Companies

South America -50.00%

Europe -18.00%

Caribbean -12.50%

* Source: GBCC Case 2009

HALMandate

Short Run Plan

Going Euro?

Conclusion

Appendix

Appendix: Vacation AverageAppendix: Vacation Average

33

Appendix: Customizing our servicesAppendix: Customizing our services

34

HALMandate

Short Run Plan

Going Euro?

Conclusion

Appendix

35

TOTAL AVERAGE

Size (40%)

Sea Vacations

Ireland

.45 .50 .65

DistributionChannels (40%)

OperatingRegions (20%)

Cruise Neptune Russia

Sabra Tours Norway

Criteria

.25

Cosmorama Greece

.80

O.F. Gollcher

Malta

Unfavorable Favorable

Appendix: Country Operator AnalysisAppendix: Country Operator Analysis

HALMandate

Short Run Plan

Going Euro?

Conclusion

Appendix

Holland America Line - UK

Un mundo de Cruceros

Spain

Delphi Reiser

SwitzerlandMelair

Portugal

Globetrotter Cruiser Sweden

.90 .10 .70.15 .70

Unfavorable Favorable

TOTAL AVERAGE

Size (40%)

DistributionChannels (40%)

OperatingRegions (20%)

Criteria

Appendix: Country Operator AnalysisAppendix: Country Operator Analysis

HALMandate

Short Run Plan

Going Euro?

Conclusion

Appendix

Appendix: DCF BackupAppendix: DCF Backup

2007A 2008A 2009A 2010A 2011A 2012A TY

Revenues 34.5 62.7 65.0 68.7 72.6 76.7 78.3Growth % 81.7% 3.7% 5.7% 5.7% 5.7% 2.0%

Cost of Services (28.7) (53.0) (55.1) (58.1) (61.4) (64.9) (66.2)Gross Profit 5.8 9.7 9.9 10.6 11.2 11.8 12.1

Margin on Sales % 16.8% 15.5% 15.2% 15.4% 15.4% 15.4% 15.4%

EBITDA -1.3 (1.8) 0.2 1.1 1.7 3.1 2.3Margin on Sales -3.8% -2.9% 0.3% 3.0% 3.5% 4.0% 3.0%

- Unleverd Taxes 0.0 0.0 0.0 0.0 0.0 0.0 0.0%Tax rate 13% 13% 13% 13% 13% 13% 0%

- CAPEX (0.3) (0.3) 0.0 0.0 0.0 0.0

- Change in Net Working Capital 1.7 0.0 0.0 0.0 0.0 0.0Unlevered Free Cash Flow (0.4) (0.1) 1.1 1.7 3.1 2.3

1 2 3 40.9 0.8 0.7 0.6

Present Value of Free Cash Flow (0.1) 0.9 1.2 2.0

DCF Assumptions Terminal Value Assumption Present Value CalculationsWACC 12.0% Perpetuity Growth Rate 2.0% PV of Free Cash Flow 4Valuation Date 31-Dec-87 Terminal Value 23Mid year Convertion No PV of Terminal Value 15Days in Year 365 Entreprise Value ($m) 19

Net debt 8Exit EV / 1989 Operating Profit 11

HALMandate

Short Run Plan

Going Euro?

Conclusion

Appendix

Appendix: Tour Operators ExplanationAppendix: Tour Operators Explanation

38

Company Name Business Description Total Revenue ($mm)Amathus Public Ltd. (CSE:ANC) Amathus Public, Ltd., together with its subsidiaries, engages in the ownership and management of

hotels. It owns and manages Amathus Beach Hotel in Limassol, Paphos Amathus Beach Hotel in Paphos, and the Rodian Amathus Beach Hotel on the island of Rhodes, Greece. The company also offers tour operation and tourism services, including fly-cruise packages, sea packages, and other holiday combinations. In addition, the company provides aviation and travel services comprising air and sea travel and ticketing, cargo, and airport ground handling. It operates in Cyprus, Athens, Rhodes, London, Germany, and Moscow. The company was founded in 1943 and is headquartered in Limassol, Cyprus. Amathus Public, Ltd. is a member of Lanitis Group of Companies.

33

Western & Oriental plc (AIM:WEST) Western & Oriental plc operates as a luxury tour operator and travel agent, as well as operator of conference and incentive businesses. It offers packaged holidays and products to individual and corporate clients operating through various holiday and conference, and incentive brands worldwide. The company provides its services through various brands, including Western & Oriental Travel, Mediterranean Experience, Kids in the Med, Ski Dream, Tropical Locations, Ranch America, South American Experience, Harlequin Holidays, Regent Holidays, Made to Measure Holidays, Key2Holidays, Villa Select, Rainbow Tours, Western & Oriental gmbh, and Galka Golden Tours. Western & Oriental plc is headquartered in London, the United Kingdom.

111,6

Travelzest plc (AIM:TVZ) Travelzest plc, along with its subsidiaries, principally operates as an online travel group in the United Kingdom and internationally. The company’s travel group comprises itravel2000.com, an online travel agent specializing in the sale of travel and travel related products; VFB Holidays, which offers discovery tours, short breaks, character hotels, and river cruises in France, Germany, and Belgium; Best of Morocco that specializes in the tour operation; Fair's Fare, an airfare analyst, provides travel planning service to both private and business clients; and Captivating Cuba, an operator of tailor-made holidays and escorted tours. It also consists of Holiday Express that provides online travel services and sales, as well as sells package holidays, charter flights, and ski booking services; Faraway Holidays, which offers tailor-made holidays to various destinations in the Far East, the Middle East, Indian Ocean, South Pacific, and South America; JMB Travel that specializes in opera holidays offering a range of destinations noted for their operas and music festivals; Peng Travel, a naturist tour operator; Tapestry Collection that showcases the Turkey and Crete; The Wow House Company, which provides a portfolio of prestigious houses to rent for short breaks in the United Kingdom; and The Malaysia Experience that arranges holidays. The company was founded in 1970 and is based in Berkhamsted, the United Kingdom.

71,7

Rainbow Tours S.A. (WSE:RBW) Rainbow Tours S.A. offers travel and tourism services including foreign tourist service sales. Rainbow Tours S.A. was founded in 1990 and is based in Rotterdam, Netherlands.

65,6

Source: Ft.com

HALMandate

Short Run Plan

Going Euro?

Conclusion

Appendix

Appendix: Key ideas to consider for 100-day planningAppendix: Key ideas to consider for 100-day planning

3939

Shorter Trips (less than a week)

Develop the Mediterranean journey vs Nordic Sea

Prepare winter trips to Canary Island, Azores and Africa

Target numerous public holidays in Europe (long weekends)

Decrease seasonality downturn in winter.

Higher possibilities of visits of cities and countries

HALMandate

Short Run Plan

Going Euro?

Conclusion

Appendix