Palm Beach Cruises With Latest Investment –

In light of today’s record-high fuel costs, many vacationers are reportedly seeking alternatives to piling into the family minivan for that long, expensive drive to the beach, lake, mountains, etc.-a factor that may inadvertently help Palm Beach Capital’s recent investment in Cruise Planners Inc.

Cruise Planners is a travel agency network, which exclusively coordinates cruise vacations. The Coral Springs, Fla.-based company has more than 500 franchisees in 42 states, all of which generated north of $85 million in bookings during 2004. While specific terms of the transaction were not disclosed, HSBC has been identified as the deal’s debt financier, and the equity portion from Palm Beach likely fell between $2 million and $15 million.

Though Palm Beach did not factor into its investment thesis the short-term affects of fuel costs on today’s vacationers, Shaun McGruder, a principal at the firm, said the additional upside would certainly be welcome. He noted that the real growth potential for Cruise Planners, however, resides in two actualities: Only about 15% of Americans have ever vacationed on a cruise; and cruise vacations are generally cheaper than their land-based counterparts.

Moreover, “We like the fact, from a demographic standpoint, that the baby boomers like to cruise,” McGruder said. “These days, when people tend to stay closer to home, it’s easier and less stressful for them to just fly down to Miami and hop on a cruise than it is for them to plan out and execute a long-term traditional vacation” with cars, hotels, restaurants, activities, etc.

This is especially true when one considers that there are more and more cruise venues hitting the market specifically intent on converting a more heterogeneous crowd of potential end-users. Blanket generalizations, such as passing the days gorging on all-you-can-eat buffets and playing shuffleboard, do not hold water when one considers today’s cruise liner fleets, McGruder said. Today one can book a cruise with an itinerary that includes scuba diving, snorkeling, glacier-climbing, and day-long hiking and biking excursions. But if the former is what you prefer, rest assured that the relaxing, romantic getaways (think “The Love Boat”) are still setting sail, too.

“From a travel standpoint, cruises are not a commodity. Making a reservation for a cruise is not as simple as buying an airline ticket where basically all you have to do is choose your destination and seat number,” McGruder said. “In the cruise world, every ship has a different character. Some are geared toward older people, younger people, families, couples, etc. There are so many questions to ask and so few places to get insightful answers, which is one reason this is a strong investment.”

The market’s overall potential, and Cruise Planners’ ability to exploit it, is evidenced in the fact that the company has experienced year-over-year growth of 20% or more for the last eight years, McGruder said. And that pace of growth is something that Palm Beach intends to keep up. “Internally we will help Cruise Planners grow the approximately 500 franchises it has today to over 600 by the end of this year,” McGruder said, adding that the firm will also keep and eye open for acquisition opportunities a little further down the road.

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