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Articles from 2005 In January


Europe, Alaska strong for RCCL

Europe, Alaska strong for RCCL

Higher demand meant the company started 2005 with less inventory to sell than in 2004.

Williams described overall pricing as 'solid' and 'consistently above the same time last year' in today's earnings call with analysts. Net pricing is especially strong in Europe and Alaska.

Europe accounts for 11% of the company's total capacity, a 35% increase. Booked load factor is 'much higher' year over year, with pricing 'slightly ahead.' Europe is so important that Royal Caribbean is looking to boost capacity there again in 2006, Williams said. Good yield improvement is expected this year in Alaska, 7% of total capacity, a 5% increase over last year.

The core seven-night Caribbean product is 38% of total capacity in 2005, 5% lower year over year. Booked loads are 'well ahead' of last year at this time and pricing is higher. Royal Caribbean has slightly more capacity in the short Caribbean market during 2005 and sees a 'somewhat flat to modest yield increase.' In Bermuda, capacity is higher (9%), and Williams described the program as 'really strong so far.' Panama Canal capacity is up (12%) and a 'very strong' performance is also seen there. Eleven percent less capacity is deployed in Mexico, where yields are 'flat to modestly up.'

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Controlling costs

Controlling costs

Not surprising as both areas hurt the company's fourth-quarter performance.

An unexpected late-year spike in at-the-pump costs drove fuel up to approximately 7.1% of total revenues. Continuing volatility in fuel prices makes forecasting difficult, but fuel is projected to approximate 5.5% to 6% of revenues during 2005.

On-board revenue underperformed last quarter. Royal Caribbean chairman and ceo Richard Fain explained that it 'continues to be a very successful area for us, so good during the first nine months that we got spoiled ... Our actual numbers turned out to be excellent, not extraordinary.' In recent years, the company has managed to consistently increase passenger spend in areas from spas to shore excursions, so Fain brushed off the casino's underperformance during December as 'an anomaly.'

Looking ahead, sales, general and administrative expenses will go up in the short term, mainly because Royal Caribbean is hiring for brand-dedicated sales teams and beefing up its European sales and marketing presence, partly to support Legend of the Seas' ex-UK deployment. 'They are costs today that should have benefits for the future,' said cfo Luis Leon.

The company's relatively small capacity increase of 1.6% in 2005 means fewer economies of scale to absorb inflationary and other cost pressures. Besides fuel, food costs especially are rising. Leon said Royal Caribbean has targeted $50m in cost-saving initiatives, ranging from sharing best practices fleetwide to reflagging six ships from Norway to the more affordable Bahamas registry.

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Royal Caribbean shares sink

Royal Caribbean shares sink

65, or nearly 7%, closing at $49.35. Shares traded between $49.05 and $51.20.

'They got punished because the fuel came up and bit them so hard after the guidance they gave in October. People wondered why they didn't update guidance given there was a very dramatic change in the quarter,' said Tim Conder, senior leisure analyst with A. G. Edwards. 'Maybe they thought they would get a little change in revenue so that fuel wouldn't make such a difference.

'But to smack the stock 7%? Today's action shows that people are just so focused on the short term,' Conder added. 'Looking at yield, cost and earnings guidance for '05, we believe today's sell off is significantly overdone.'

Royal Caribbean guided 2005 net yield improvement at up 5% to 7%, cost per available lower berth day up 2 to 3 cents and earnings per share in the $2.70 to $2.90 range.

Carnival was dragged down, too, however not so dramatically. CCL lost 87 cents, closing at $56.73.

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New UK appointments at Royal Caribbean... and also at NCL

New UK appointments at Royal Caribbean... and also at NCL

He reports to Susan Hooper svp, md EMEA for RCI and Celebrity.

Jo Rzymowska has been appointed as sales and marketing director UK & Ireland and resumes responsibility for the line's sales force and marketing activity in both the UK and Irish markets. She will have a team of 18 across both divisions. Rymowska has held senior positions with Walt Disney Parks and Resorts, Disneyland Paris, Universal Studios, Thomas Cook and Hertz.

As part of NCL UK's ongoing review of its sales and distribution strategies and relationships with the travel trade Francis Riley, director of sales & revenue management, announced the appointment of five new regional sales managers under the direction of Nick Wilkinson, national sales manager UK & Ireland. The team has a 20% growth target for 2005.

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Letter of intent extension for NCL

Letter of intent extension for NCL

NCL signed the letter of intent with Aker in December. It was due to be firmed by end January and includes an option for a second ship, for delivery in early 2008.

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Spiking fuel costs widen RCCL Q4 loss

Spiking fuel costs widen RCCL Q4 loss

The company blamed a spike in fuel costs and disappointing on-board revenue.

The quarter, typically the industry's weakest, ended with a net loss of $25.8m on revenues of $964.6m, compared to a year-ago net loss of $20m, or 10 cents per share, on revenues of $878m.

Royal Caribbean finished 2004 with earnings of $2.26 per share, 8 cents below the Street consensus. Net income was $474.7m on revenues of $4.6bn, compared to 2003 net income of $280.7m, or $1.42 per share, on revenues of $3.8bn. Higher capacity and ticket prices drove the revenue increase.

'While the year as a whole has been very gratifying, we are disappointed that fuel and other costs hurt our fourth quarter results so much,' said RCCL chairman and ceo Richard Fain. 'In addition, on-board revenue, while up, did not reach the exceptional performance we had enjoyed during the first three quarters.'

Net yields for the year increased a record 9.2% over 2003. Occupancy reached 105.7%, up from 103.2% in 2003.

Fourth quarter costs climbed more than 6% mainly due to an unexpected spike in at-the-pump fuel costs during November and December. Fuel represented approximately 7.1% of total revenues.

Royal Caribbean has seen strong bookings and pricing during the first weeks of wave season. Consumer demand is healthy across all products and for both brands, the company said, comparing demand characteristics to those seen in the late 1990s.

Royal Caribbean now forecasts net yields for the first quarter will increase by approximately 7% and for the full year by 5% to 7%. The company expects full year 2005 earnings in the range of $2.70 to $2.90, with first quarter earnings in the range of 50 to 55 cents.

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Fain: Norovirus not hurting bookings

Fain: Norovirus not hurting bookings

well into norovirus season, cruise ships are experiencing higher incidences of the common, highly contagious gastrointestinal bug.

But Royal Caribbean chairman and ceo Richard Fain told analysts on today's earnings call that the industry, together with the U.S. Centers for Disease Control and Prevention, has made great strides in educating media about the nature of norovirus and the fact that it is not a 'cruise ship bug.' Fain pointed out that an estimated 23m Americans got norovirus last year. Though the illness is found in schools, hospitals, nursing homes and other environments shoreside, only cruise ships are required to report norovirus outbreaks to the CDC.

Two to four years ago, cruise lines felt some impact on bookings from widespread and often sensational reporting on norovirus at sea. 'Today it's simply a non-issue,' Fain told analysts. 'While it gets peripheral exposure in the press, we don't feel it's having any impact on bookings.'

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Costa US offers savings on parking

Costa US offers savings on parking

S.

The partnership also includes discounted port parking for Costa's cruise-only guests at the Park 'N Fly facility in Fort Lauderdale. The new program will offer savings of up to 40% for air/sea, cruise-only and self-drive customers, Costa said. For example, passengers who use the Park 'N Fly lot at Fort Lauderdale will spend $45/week compared to $84/week at Port Everglades garages.

Passengers can reserve and prepay for their parking by clicking on the Park 'N Fly Network link in the 'Personalize Your Cruise' section of www.costacruises.com.

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Corman takes vp role at Uniworld

Corman takes vp role at Uniworld

During the past year, Corman has been consulting on various projects within the industry. Previously, she held two positions at Oceania Cruises, first as vp passenger services at the company's start-up, and then as vp travel agency sales. Earlier executive roles were at Orient Lines and Silversea Cruises. She started her industry career at Holland America Line.

Corman told Seatrade Insider she looks forward to gaining experience in the growing river-cruise sector. She took a 'Christmas Market' cruise in December and described it as 'just magic. There's a lot to be said for walking off a ship parked in the heart of a town that dates back to the 11th century, and that features a castle or two or three.'

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Zip line, Harley Alaska tours for Princess

Zip line, Harley Alaska tours for Princess

The additions bring the line's total number of Alaska excursions to 137.

All are now available for pre-reservation. Booked passengers can go to the Cruise Personalizer section on www.princess.com to make their choices.

The new offerings include, in Ketchikan, 'Rain Forest Ropes & Zip Line Challenge,' a 'Harley Davidson Motorcyle Tour' and, a Princess exclusive, 'Raptor Exhibition & Native Storytelling.' Among several new Juneau tours are two Princess exclusives, 'Photo Safari by Land & Sea' and 'A Taste of Juneau,' featuring products from the Alaskan Brewing Co. and Taku Smokeries. Further new offerings are provided in Skagway and in Victoria, B.C.

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