Ken at the beach Posted December 1, 2014 #26 Share Posted December 1, 2014 (edited) Did you find that on the website because I found THIS on their website as the first Google hit on "Royal Caribbean Fuel Surcharge", direct from RCI website. We reserve the right to impose on any existing booking or new bookings (whether paid in full or not) a supplement for fuel or other matters without prior notice as provided in our Passenger Ticket Contract. In addition, we reserve the right to pass through any third party imposed fuel or other surcharges, also without prior notice, The guest will remain liable for any applicable taxes, fees or surcharges that may be assessed by any governmental or quasi-governmental agencies. You may also want to know: What does the price of my cruise include? What I found was on their website in the section where you can book a cruise. It used to contain a reference to the surcharge but no longer does. http://www.royalcaribbean.com/findacruise/search/buildAdvancedSearch.do One problem with some google searches is that it can pull up archived pages where current links no longer take you. Edited December 1, 2014 by Ourusualbeach Link to comment Share on other sites More sharing options...
TravelerThom Posted December 1, 2014 #27 Share Posted December 1, 2014 I think what the OP is saying is that if RCCL base the rates of a cruise based on oil at $70 per barrel, Then should RCCL reduce the cruise rate if oil drops to $65.IMHO I think no, As I believe RCCL have it in there contract that they can add a surcharge if oil price is higher than $70 but I don't think they have ever applied the increase. Lower fuel prices will not result in lower cruise fares; lower cruise fares occur solely because of low demand. As long as the company can avoid Bankruptcy liquidation, cruise prices are almost entirely driven by supply and demand, and there is very little relationship between the cost of running the ship and the price one pays for a cruise. Way more than 100% of RCCL's profit comes from on-board sales (eg. bar, shops, spa, photo, tours). If you look at RCL (the stock symbol for Royal Caribbean Cruises Ltd.) 2013 SEC 10-K, you will discover that revenues from on-board sales were $2237 million, while expenses for on-board sales were $569 million, leaving a profit of $1668 million from on-board sales. The net profit of the entire company for 2013 was $474 million, meaning that excluding on-board sales the company LOST $1194 million. Yes, the company took over a billion dollars in loss lead in order to get passengers on-board so they could sell to a captive audience, and in the end they netted almost half a billion dollars profit. Thom Link to comment Share on other sites More sharing options...
Ken at the beach Posted December 1, 2014 #28 Share Posted December 1, 2014 Lower fuel prices will not result in lower cruise fares; lower cruise fares occur solely because of low demand. As long as the company can avoid Bankruptcy liquidation, cruise prices are almost entirely driven by supply and demand, and there is very little relationship between the cost of running the ship and the price one pays for a cruise. Way more than 100% of RCCL's profit comes from on-board sales (eg. bar, shops, spa, photo, tours). If you look at RCL (the stock symbol for Royal Caribbean Cruises Ltd.) 2013 SEC 10-K, you will discover that revenues from on-board sales were $2237 million, while expenses for on-board sales were $569 million, leaving a profit of $1668 million from on-board sales. The net profit of the entire company for 2013 was $474 million, meaning that excluding on-board sales the company LOST $1194 million. Yes, the company took over a billion dollars in loss lead in order to get passengers on-board so they could sell to a captive audience, and in the end they netted almost half a billion dollars profit. Thom While I agree with you that On Board revenue is significant to does not generate nearly the profit that you have stated. RCI does not split out expenses directly related to passenger ticket revenue and on board revenue. They are all intermingled. The one figure that you quoted os just part of the expenses. There are payroll, food and shoreside expenses that are also part of the on board expenses. It is impossible to determine the exact profitably of on board revenue other than to state that it is significant. Link to comment Share on other sites More sharing options...
Rocketlady Posted December 1, 2014 #29 Share Posted December 1, 2014 4 cruises with us and no fuel charges added. But what is funny UPS charged for fuel charges and do you think they will come down in price to ship? Dream on. Link to comment Share on other sites More sharing options...
TravelerThom Posted December 1, 2014 #30 Share Posted December 1, 2014 While I agree with you that On Board revenue is significant to does not generate nearly the profit that you have stated. RCI does not split out expenses directly related to passenger ticket revenue and on board revenue. They are all intermingled. The one figure that you quoted os just part of the expenses. There are payroll, food and shoreside expenses that are also part of the on board expenses. It is impossible to determine the exact profitably of on board revenue other than to state that it is significant. Okay, it is possible I over simplified, but if my expenses were overstated and revenue remained the same, wouldn't that mean that the profit is HIGHER than I stated? If you look at page 49 of the 2013 10-K is is a one step calculation to find that entirely separate from on-board sales expenses are payroll expenses of $844 million and food expenses of $470 million, so I can't understand why you claim these were not split out. Thom Link to comment Share on other sites More sharing options...
dacsmom Posted December 1, 2014 #31 Share Posted December 1, 2014 I haven't paid a fuel surcharge with RCI in many years. It was clearly labeled when it was added though. I hope the OP comes back and tells us how they knew they were paying a fuel surcharge and the result of the call to RCI. Link to comment Share on other sites More sharing options...
setsail Posted December 1, 2014 #32 Share Posted December 1, 2014 Lower fuel prices will not result in lower cruise fares; lower cruise fares occur solely because of low demand. As long as the company can avoid Bankruptcy liquidation, cruise prices are almost entirely driven by supply and demand, and there is very little relationship between the cost of running the ship and the price one pays for a cruise. Way more than 100% of RCCL's profit comes from on-board sales (eg. bar, shops, spa, photo, tours). If you look at RCL (the stock symbol for Royal Caribbean Cruises Ltd.) 2013 SEC 10-K, you will discover that revenues from on-board sales were $2237 million, while expenses for on-board sales were $569 million, leaving a profit of $1668 million from on-board sales. The net profit of the entire company for 2013 was $474 million, meaning that excluding on-board sales the company LOST $1194 million. Yes, the company took over a billion dollars in loss lead in order to get passengers on-board so they could sell to a captive audience, and in the end they netted almost half a billion dollars profit. Thom Quantum’s launch is important for the industry because it will serve as a litmus test to determine whether it can increase margins on ticket pricing. One of the biggest misnomers of the cruise industry repeated often but inaccurately, is that tickets are priced at cost and profits are derived via onboard spending. This is not at all true. In reality, the biggest driver of profits on cruise ships is the ability to increase ticket prices, which is something the industry has been essentially unable to do since the financial collapse of 2008. Indeed, more than any negative publicity surrounding “poop ship,” norovirus, or even sinking, what has taken the biggest toll on cruise ship performance are things utterly out of its control, such as the Arab spring, the tsunami in Japan, and, most impactful, the recession of 2008. Roughly speaking, the revenue breakdown for cruise ships is 75% for tickets and 25% for onboard spending. Of Royal Caribbean’s $8 billion in revenue last year, for instance, $5.7 billion came from ticketing, and the remaining $2.2 billion came from onboard spending. But none of the categories of onboard spending, which include beverages, gaming, dining, retail, and shore excursions, approach 10% of the company’s aggregate revenue base. Link to comment Share on other sites More sharing options...
Ocean Boy Posted December 1, 2014 #33 Share Posted December 1, 2014 And people, don't get too excited about the possibility of lower fares in the near future due to lower Oil market prices. Firstly, refiners do not pass along lower input (Oil) costs quickly and RCI buys refined product not crude oil. And secondly, RCI routinely hedges about half of their fuel requirements which means they are locked into higher than current market prices for a portion of their fuel requirements. RCI's fuel costs are about $1B per year. A 10% decline in price for the full year would only save them less than 5% of that amount. The same goes with airlines and other heavy fuel use industries. I completely agree. The only thing that will lower fares is less demand for the product. Any savings that RCI sees from lower fuel prices will simply increase the profit margin. Link to comment Share on other sites More sharing options...
DirtyDawg Posted December 2, 2014 #34 Share Posted December 2, 2014 I completely agree. The only thing that will lower fares is less demand for the product. Any savings that RCI sees from lower fuel prices will simply increase the profit margin. Absolutely! Costs have nothing to do with pricing. Pricing is determined by supply and demand along with the intensity of competition. In this case, lower oil prices act like a 'tax cut' for consumers who will have extra income left over, after paying for gasoline and other oil energy costs, to spend on other things ... like cruises. So lower oil prices could, in fact, result in higher cruise prices as demand increases and supply remains the same. :( Link to comment Share on other sites More sharing options...
LovesCruising Posted December 2, 2014 #35 Share Posted December 2, 2014 OP - how'd you make out with checking your statement? Link to comment Share on other sites More sharing options...
TravelerThom Posted December 2, 2014 #36 Share Posted December 2, 2014 Setsail: I’m trying to figure out the following: “…One of the biggest misnomers of the cruise industry repeated often but inaccurately, is that tickets are priced at cost and profits are derived via onboard spending. This is not at all true…” Are you claiming that entirety of current RCCL profits are not derived from on-board spending? If that is what you are saying, what numbers do you have to back that up? I do agree that “tickets are priced at cost” is not at all true, since they are currently on average priced 20% BELOW cost. I agree that ticket revenue is RCCL’s largest income stream (71.9% of total 2013 income), and that RCCL would love to show a profit from ticket revenue alone, but 2013 numbers show that they would have to raise ticket prices more than 20% just to break even from ticket revenue. 2013 was not an anomaly; for many years the profits from on-board sales have been greater than the total RCCL profit, meaning that on-board sales are not only where the profits are derived, but they are also covering massive losses if the company depended solely on ticket revenue. Thom NOTE: I am not an accountant nor in finance professionally, so maybe I am totally mixed up on all this. However, I am a scientist, and generally understand numbers. If I’m shown to be incorrect I will consider it a lesson learned, and learning is always a good thing as far as I’m concerned. Link to comment Share on other sites More sharing options...
TravelerThom Posted December 2, 2014 #37 Share Posted December 2, 2014 Absolutely! Costs have nothing to do with pricing. Pricing is determined by supply and demand along with the intensity of competition. In this case, lower oil prices act like a 'tax cut' for consumers who will have extra income left over, after paying for gasoline and other oil energy costs, to spend on other things ... like cruises. So lower oil prices could, in fact, result in higher cruise prices as demand increases and supply remains the same. :(WOW - I had never considered the possibility that cheaper oil could lead to increased prices. Unfortunately (as far as I'm personally concerned) it makes sense. Thom Link to comment Share on other sites More sharing options...
Clarea Posted December 2, 2014 #38 Share Posted December 2, 2014 WOW - I had never considered the possibility that cheaper oil could lead to increased prices. Unfortunately (as far as I'm personally concerned) it makes sense. Thom That pricing behavior seemed to be case in 2008 and 2009. They were charging the fuel supplement and the prices were very low. Link to comment Share on other sites More sharing options...
bigque Posted December 2, 2014 #39 Share Posted December 2, 2014 (edited) Last time the fuel surcharge was added was in 08 or 09. Yes..my first cruise in 2008 had the fuel supplement and it was listed on my booking invoice, but I have not had one since. :cool: Edited December 2, 2014 by bigque Link to comment Share on other sites More sharing options...
monctonguy Posted December 2, 2014 #40 Share Posted December 2, 2014 Havent noticed one charge yet, but here in Canada alot of the vacation companies just include it in their "fees and taxes" and of course they have not nor will not reduce those when the price of oil drops. Even though they increased them based on the cost of doing business when oil is over $100....funny how it doesnt work the other way eh?! At least with a company that actually shows the charge and bills you for it is being up front/honest about it and is easy to verify if/when you are being charged for it. Link to comment Share on other sites More sharing options...
setsail Posted December 2, 2014 #41 Share Posted December 2, 2014 Setsail: Are you claiming that entirety of current RCCL profits are not derived from on-board spending? If that is what you are saying, what numbers do you have to back that up? Thom . I am not claiming anything, only quoting what the experts say that report on rci. The #'s/bresakdown are clearly quoted in post 32. Link to comment Share on other sites More sharing options...
TravelerThom Posted December 2, 2014 #42 Share Posted December 2, 2014 I am not claiming anything, only quoting what the experts say that report on rci. The #'s/bresakdown are clearly quoted in post 32. What experts claim (and it doesn’t have to be a direct quote) the following? :confused: “…One of the biggest misnomers of the cruise industry repeated often but inaccurately, is that tickets are priced at cost and profits are derived via onboard spending. This is not at all true…” Given that RCCL's largest revenue stream by a large amount is ticket revenue it is reasonable to see increased ticket prices having the biggest upside potential. But there is a big difference between potential and reality. According to the 2013 numbers provided by RCCL to the SEC, on-board sales profits were not only larger than the $474 million corporate profit, but in addition covered a $1.2 billion short fall in ticket revenue versus cost to run the company. Link to comment Share on other sites More sharing options...
DirtyDawg Posted December 2, 2014 #43 Share Posted December 2, 2014 Setsail: I’m trying to figure out the following: “…One of the biggest misnomers of the cruise industry repeated often but inaccurately, is that tickets are priced at cost and profits are derived via onboard spending. This is not at all true…” Are you claiming that entirety of current RCCL profits are not derived from on-board spending? If that is what you are saying, what numbers do you have to back that up? I do agree that “tickets are priced at cost” is not at all true, since they are currently on average priced 20% BELOW cost. I agree that ticket revenue is RCCL’s largest income stream (71.9% of total 2013 income), and that RCCL would love to show a profit from ticket revenue alone, but 2013 numbers show that they would have to raise ticket prices more than 20% just to break even from ticket revenue. 2013 was not an anomaly; for many years the profits from on-board sales have been greater than the total RCCL profit, meaning that on-board sales are not only where the profits are derived, but they are also covering massive losses if the company depended solely on ticket revenue. Thom NOTE: I am not an accountant nor in finance professionally, so maybe I am totally mixed up on all this. However, I am a scientist, and generally understand numbers. If I’m shown to be incorrect I will consider it a lesson learned, and learning is always a good thing as far as I’m concerned. Thom, both of you are partially correct in your analysis. RCL makes a lot on Shipboard sales but not as much as one would like just reading the numbers. They do list those revenues in 2013 as $2,237.2M and costs of $568.6M for a gross profit of $1,668.6M. But think of those costs as as direct costs associated with the onboard revenue, like a retailer that will have the direct costs of the the merchandise they sell. But there are other costs that must be assigned to the onboard revenues to truly see the actual profitability of those activities. For example; Depreciation: The casino, bars, shops spa, etc cost money to build so that cost needs to be recognized. Interest on the debt. i.e on the money borrowed to build the casino, bars, etc. Payroll; I'm not 100% sure but this cost item most likely is all payroll which would include the bartenders, casino staff, etc. And other things like insurance, energy costs for the lights and refrigeration, head office sales, marketing, HR and accounting costs etc. to run the onboard revenue activities. There are probably other costs as well but I'll let the cost accountants argue over those.;) With all that being said, Those onboard sales are very profitable for a cruise line and are essential for a successful business model in this industry. Note: I am a finance professional and for fun I lecture in economics and investments at a local college. So I can't tell you anything about how those ships are constructed or remain floating, but I know a thing or two about how and why they get built, and how the cruise companies stay afloat.:D Link to comment Share on other sites More sharing options...
Ken at the beach Posted December 2, 2014 #44 Share Posted December 2, 2014 What experts claim (and it doesn’t have to be a direct quote) the following? :confused: “…One of the biggest misnomers of the cruise industry repeated often but inaccurately, is that tickets are priced at cost and profits are derived via onboard spending. This is not at all true…” Given that RCCL's largest revenue stream by a large amount is ticket revenue it is reasonable to see increased ticket prices having the biggest upside potential. But there is a big difference between potential and reality. According to the 2013 numbers provided by RCCL to the SEC, on-board sales profits were not only larger than the $474 million corporate profit, but in addition covered a $1.2 billion short fall in ticket revenue versus cost to run the company. This is from page 74 of the 2013 annual report. Income is split into 2 categories, passenger ticket sales and on board revenue. Expenses are only split into 5 categories, cruise operating expenses, marketing and admin, depreciation, impairment and restructuring. The cruise operating expenses are further broken down into subcategories, commissions, on board, food, payroll, fuel and other. The onboard expenses are not solely related nor do they directly correlate to the on board revenue. All of those cruise operating expenses combined are all of the expenses of directly operating the ships. The actual expenses related to on board revenue are buried in every subcategory (with the exception of fuel). With the information that Royal provides there is no way to figure out the profit margin for on board revenue. Link to comment Share on other sites More sharing options...
Ashland Posted December 2, 2014 #45 Share Posted December 2, 2014 Several years ago we did have a fuel surcharge...however when we boarded we had an OBC for it as it had been reduced...RCI did this automatically we didn't need to ask for it. Link to comment Share on other sites More sharing options...
TravelerThom Posted December 2, 2014 #46 Share Posted December 2, 2014 ...With the information that Royal provides there is no way to figure out the profit margin for on board revenue... ...With all that being said, Those onboard sales are very profitable for a cruise line and are essential for a successful business model in this industry...I will readily concede that the devil is in the details and we (or at least I) are far from having all the details. I was remiss in not clearly stating disclaimers that I was being grossly simplistic. I can happily agree with what you have pointed out. Thom Link to comment Share on other sites More sharing options...
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