WOW!... l never knew cruising was so profitable.

[Jaffa]

I was bored this week so set myself a little task that some here may find interesting.

 

I was confused with the fact that the publicly listed cruiselines or their parent companys

this year are all still showing huge profits. This is despite the fact they are crying poor to customers and cutting services, food, drink quality ect.

So are the cruiselines really doing it tough?? or are they shedding crocodile tears and simply maintaining growth in big profits by offering less.

 

 

I selected an average 7 day Med Cruise on the Wind off peak.

Silverwind voyage 2127 24th Sept 2011.

 

Owners 2 bed Per Person $13923 Per suite $27846 Mult by 2 suites =Total $55692

 

Grand 2 bed Per person $13383 Per suite $26766 Mult by 2 suites = Total $55532

 

Royal 2 bed Per person $12843 Per suite $25686 Mult by 2 suites Total $51372

 

Silver 1 bed Per person $8793 Per suite $17586 Mult by 3 suites Total $52758

 

Medalion 1 bed Per person $7668 Per suite $15336 Mult by 5 suites Total $76680

 

Mid Ship V 1 bed Per person $5148 Per suite $10296 Mult by 38 suites Total $391'248

 

Veranda 1 bed Per person $4878 Per suite $9756 Mult by 56 suites Total $546'336

 

Vista 1 bed Per person $3753 Per suite $7506 Mult by 27 suites Total $202'662

 

 

Now this Total does not reflect a 3rd person in a suite

or more than 2 people in a 2 bed suite ie owners ect

TOTAL Rev, full cap $1'432'280.00

 

We know that on average Silversea pay's 13% commission

- Comm $186'196.00 Total $1'246'084.00

 

Of course that is assuming every berth is sold

by a travel agent and not by Silversea direct

which would save commissions.

 

Now lets multiply out this 7 day cruise annually.

52 7 day cruises

at same revenue Total $64'796'368.00

 

So at full cap the Winds revenue annually is just below 65 million

 

We know the Wind was built in 94 so the ship has been cruising

for 17 years. If l remove say 1 year for refits, breakdowns ect

and Multiply this out by 16years the total would now be Total $1'036'741'888.00

 

Yep the total is just over 1 billion dollars in revenue.

 

Now lets look at the numbers if the Wind only sailed at 75% cap over its lifetime.

 

The example cruise above $1'074'210.00

less commission $ 934'562.70

Multiply by 52 weeks $48'597'206.00

Multiply by 16 years $777'556'166

 

Now we know the Silverwind cost 125 million to build in 94

so it does not matter how you look at the numbers, cruising is a very lucrative and profitable industry. Even today in this ecconomic climate.

 

We know that fuel for a 7 night Med cruise breaks down to about $450-$700 per person on a ship the size of the Wind.

This post may interest some re fuel.

http://boards.cruisecritic.com/showthread.php?t=759005

 

So then comes labor costs:

The following helps to broadly break this down.

However not all of the below is directly relevant to Silversea.

 

All of the following are monthly salary ranges.

Shore Excursion Manager: $2500 - $3500

Shore Excursion Staff: $1500 - $3000

 

Gift Shop Manager: $2500 - $5000

Gift Shop Staff: $1000 - $3000

 

Art Sales Associate: $2500 - $10000

 

Captain: $6000 - $10000

Higher striped officers: $4000 - 7000

Deck Officer: $1500 - $3000

Engineer: $1500 - $4000

Cruise Director: $5,000 - $10,000

Assistant Cruise Director: $3000 - $5000

Host/Hostess: $800 - $2000

Youth Counseler: $1000 - $2500

 

Dancer: $1900 - $3000

Musician: $1600 - $3000

Lead Technician: $2500 - $4000

Broadcast & AV Technician: $1300 - $3000

 

Guest Entertainer: $4000 - $10000

 

Bar & Wait Staff: $500 - $2000

 

In general higher end cruise lines pay much more as they also demand a higher standard of employee, while Carnival, for example would have more jobs available, but at a lower wage.

 

Now keep in mind too, that cruise lines do pay their crew in cash. That's right a stack of $100's every month paid out to each crewmember. Many of the crew don't have to claim taxes. This is a big plus as tax free earnings lure many to a shipboard life.

 

The Truth shall set you free

And I must bring up another point that is not often addressed and that would be how much crew from 3rd world countries make. You see, passengers often feel sorry for these crew who are away form their families for 10 months at a time, only to make a couple hundo a month that they send home to their families. Heartbraking... I know.

 

Here's the deal

Yes we have all heard the claim that "with exchange rates they are making decent money to live off of". Yes that is true, but even without the exchange rate, they still make good money. The top guys and gals from India, Philippines and Indonesia can make upwards of $2000 per month waiting tables, cleaning rooms and doing some the "lesser jobs" that you probably couldn't be asked to do..

 

Then these crew show you a photo of their kids. I have personally known a couple guys who had pictures of their friends or families kids to help them solicite tips from passengers. And the passengers fall for it everytime. We have seen these same guys going into the gift shops buying a $700 Tissot watch. I guess his family didn't need the money that bad after all.

 

So next time you go on a cruise, be sure to take a look at your room cleaners watch and see if he really is as hard up as he wants you to think.

Cont:

[meow!]

What a marvellous posting! You deserve a heart felt thank you from all of us .. meow!

[Travelcat2]

Thank you for that marvelous post!

[Jaffa]

So now we know that wages for a 7 night cruise are not nearly as large or expensive as one would first think.

 

As to food and beverage l have not been able to establish a cost on this yet, perhaps others may have something to contribute.

 

Some info on the above.

 

The cruise prices l selected were best available direct from Silversea's WebSite and included

all available discounts.

 

I did not take into account OBC as this is new to Silversea over the last 2-3 years and not relevant over the life of the ship.

 

I know that some may think because todays cost dollar is not equal to 16 years ago that my estimates may not equate, but the cost of things like fuel, wages, labor and food and bev were much cheaper in 94 so the balance of profit ratio should still on average be about the same, roughly.

 

As l went through this process, even on average estimates l was astounded just how proifitable cruiselines are.

Even at the Lux level.

 

Silversea could have had effectivley paid off the Wind in total in 2 years if it had wanted to.

 

Naturally my numbers do not include shore-side and onshore services, office's,

company costs/wages, marketing, insurance ect.

 

I found this whole research enlightining and informative,

I hope you find it interesting as well.

 

I would love to read your thoughts and contributions.

 

Cheers

[Jaffa]

Ok,

I have found some info directly relating to food costs that some may find interesting.

 

It seems the average cost for Silversea/Seabourn was $26.00 per day in 2008 per person.

 

Here is an interesting post re the subject.

 

 

The numbers you are looking for are very carefully guarded secrets in the cruise industry. The cruise lines are even reluctant to give them to each other.

 

The numbers do vary quite a bit as well, depending on ship, itinerary, and time of year.

 

Here is a general break-down, per passenger, per day:

 

Seabourn, Silver Sea - $24 - 26 per day

Oceania, Regent - $18 - 20 per day

Celebrity, Princess - $12 - 15 per day

RCCL, HAL - $12 - 13 per day

Carnival - $8 - 10 per day

NCL - $7.50 - 8.50 per day

 

Bear in mind that itinerary has a lot to do with these numbers:

 

Flying tons of food from USA to a ship in Europe is very expensive.

European Cruisers have paid substantially more for a cruise and have higher expectations. Their menus are usually pricier.

 

Caribbean Cruisers generally pay far less for a cruise. Their expectations are generally lower, so menus carry less expensive items. Loading food in the Caribbean is usually far less expensive as well.

 

Alaska Cruises are generally pricier, people eat more there and spend more time in the restaurants. Shipping and loading are more expensive in Alaska. Menus are generally higher cost on these itineraries.

 

Transatlantic cruisers eat far more than those on a "regular" cruise. This pushes costs about 50% higher.

 

Cruises with more sea days have far higher food costs than cruises that are port-intensive. It seems that when cruisers are not going ashore, they are eating, eating, eating.

 

Most passengers gorge themselves for the first 3 or 4 days of their cruise. When they finally realise that they are eating themselves sick, they back off a bit and eat more normally. As a result, food costs on a 3 or 4 day cruise are far higher than on longer cruises.

 

Repositioning cruises usually attract the bargain hunters. The mass market cruise lines just wants to break even on fuel costs to get the ship from the old itinerary to the new one. Most of the higher priced items disappear from these menus to cut costs.

 

By the way, there will be a percentage of readers on this board who will say that these numbers are impossible. Next time you want to complain about food quality on a ship, think about how they are able to sell you such a low priced vacation..................

 

Here is a link to this whole thread:

 

http://boards.cruisecritic.com/showthread.php?t=1096980

 

I don't know about you, but l thought this cost would have been higher per person.

So an average 7 night cruise on Silversea even at $30.00 per person per day would equate to $210 per week.

 

If this is close to accurate, Silversea's buying power serves them very well.

 

Now, i'm on the search for beverage costs.

 

Can anyone help??

[rojaan19]

This will blow a hole in your figures - on our last cruise - Shadow - Incheon to Anchorage May 17 - there were only 94 paying passengers !!!!!!!!!! :D

[Jaffa]

Thanks for that rojaan19,

 

However my stats were only up to Jan this year.

So your occupancy should not make any difference.

I would probally view the 75% occupancy numbers l calculated as a much better representation than full occupancy anyway.

 

A couple of individual differences in a number of small cruises won't effect the numbers much. That is taken over the life of the Wind.

[goose30]

Did I miss food, fuel and port fees in the OP's calculations?

[smoggyboy3]

I'm not sure how the breakdown on all inclusive drink will work out to, but I can safely say that on our next cruise my wife & I will consume above average HIC ! The reasoning behind this is so as not to offend Silversea who have been so gracious in offering it to us !!

[duct tape]

WOW! You really have too much time on your hands. Have fun.

[newlondon]

I have been in the investment management business for over 30 years. I used to cover the cruise industry and Jaffaa you are absolutely right-it is very profitable; but not quite as profitable as you make it. First, revenues vary substantially depending on the economy and second, fuel costs (although they can be surcharged) cut into margins if the environment is rising oil.

To give you an example of profitability, Carnival built the Destiny in the mid-90s for between $500m and $600m. They expected the cash thrown off by operating this ship to have paid for it completely in 2-3 years. Not a bad ROI.

[meow!]

So are you suggesting that those who have the money buy cruise line stocks? Any down side and risks?

[wripro]

Jaffa,

 

Hows about a similar analysis for airlines? Talk about crying poor while making a profit, especially due to baggage fees.

[Host Dan]

Great posts Jaffa!

 

Host Dan

[newlondon]

Meow, It's too complicated to give an easy answer.

[Older Party]

Did I miss food, fuel and port fees in the OP's calculations?

 

What about in room movies and internet? The cruise lines pay millions for both of these services.

[TheSeaAroundUs]

Now, i'm on the search for beverage costs.

 

Can anyone help??

I spoke with one of Regent's executives, and I don't remember the actual figure right now, but he said he gets a one-liter bottle of pretty high-end liquor, i.e. Ketel One vodka, for something absolutely ridiculous, like $10. (It might even have been $7 -- actually, I think it was.) Beer drinkers cost him more than liquor drinkers.

 

Great post!

[oregon50]

Everyone, and I mean EVERYONE sailing as crew with SS is well paid and I'm happy to read Jaffa's last couple paragraphs of his original post.

 

Jaffa, have you noticed the whiskers growing?

 

$32/38 per day is my guess for F&B expense per passenger on SS. I wouldn't begin guessing what the earnings are, nor do I care. More the better for all of us. A fraction of incurred expenses listed.

 

What do you think they have sitting in contingency fund for when things go wrong? And does a day pass when something doesn't go wrong?

[meow!]

Jaffa, have you noticed the whiskers growing?

meow! Our gracious host has the best reply

Great posts Jaffa!

 

Host Dan

[funoton]

The Wind was taken out of service for 18 months sitting in wet dock in Genoa after 9/11.

[Stevanb]

What does it cost on the up keep of the ship and when they put it into dry dock for refit. The ships needs repairs and they are not cheap. If they made that much money cruise ship stock would be a great investment .