Profits per passenger

[rance]

I just read an article that said on Oasis of the seas the average profit per passenger was $145 last year up from $135 10 years ago.

 

Does that sound correct? I would have thought profit per passenger would be higher....I guess if you have 6000 passengers on board thats a profit of $900,000 per week.

 

 

http://www.nytimes.com/2015/03/22/business/a-luxury-liner-docks-and-the-countdowns-on.html

Edited March 23, 2015 by rance

[Woodmnky]

I just read an article that said on Oasis of the seas the average profit per passenger was $145 last year up from $135 10 years ago.

 

Does that sound correct? I would have thought profit per passenger would be higher....I guess if you have 6000 passengers on board thats a profit of $900,000 per week.

 

 

http://www.nytimes.com/2015/03/22/business/a-luxury-liner-docks-and-the-countdowns-on.html

This surprised me as well. I too would have thought that the profit per passenger would have been higher. Considering all that profit is made up of (fares, onboard purchases, gambling, spas, specialty dining, ect) it would be interesting to know the profit per passenger if based upon fare alone?

 

DH & I were discussing how on our last several cruises our onboard bill has been under $100 for 3 people and therefore how little the profit margin must be on our travels.

[chengkp75]

This surprised me as well. I too would have thought that the profit per passenger would have been higher. Considering all that profit is made up of (fares, onboard purchases, gambling, spas, specialty dining, ect) it would be interesting to know the profit per passenger if based upon fare alone?

 

DH & I were discussing how on our last several cruises our onboard bill has been under $100 for 3 people and therefore how little the profit margin must be on our travels.

 

Traditionally, the ticket fare provides almost no profit, just covering the overhead of the ship. Onboard revenue is the major concern of ship's management, and is the major discussion point in the weekly revenue meetings.

[Aquahound]

That's actually a pretty good profit, I think. I remember seeing a show a few years ago, Cruise Inc, I think it was called, where they followed a NCL ship for one week. I remember them struggling to break even for the week and in the end, they actually did turn a profit. They didn't say how much though. So I'd say $145 pp is on the hight end of cruise ship profits.

 

But either way, Oasis hasn't been around 10 years, so I'm not sure what ship they are referencing? :confused:

Edited March 23, 2015 by Aquahound

[chengkp75]

I just read an article that said on Oasis of the seas the average profit per passenger was $145 last year up from $135 10 years ago.

 

Does that sound correct? I would have thought profit per passenger would be higher....I guess if you have 6000 passengers on board thats a profit of $900,000 per week.

 

 

http://www.nytimes.com/2015/03/22/business/a-luxury-liner-docks-and-the-countdowns-on.html

 

And that $900k/week is $48million per ship per year. Profit, not revenue.

[Spurschick]

That actually works out well. It may not sound much but the other thing to take into consideration is 10 years ago we didn't have the huge ships like oasis etc. .Whilst the average profit per guest has only minimally increased, it would be interesting to know how much more capacity they have now compared to 10 years ago. I am sure someone will have the figures.:D

 

Ps Oasis was released 2009 if my memory serves me correct.

Edited March 23, 2015 by Spurschick

[setsail]

I just read an article that said on Oasis of the seas the average profit per passenger was $145 last year up from $135 10 years ago.

 

Does that sound correct? I would have thought profit per passenger would be higher....I guess if you have 6000 passengers on board thats a profit of $900,000 per week.

 

 

http://www.nytimes.com/2015/03/22/business/a-luxury-liner-docks-and-the-countdowns-on.html

 

Its not for Oasis but for all the pax rci carries in a year on all the ships

[mr walker]

I too would have thought that the profit per passenger would have been higher.

 

DH & I were discussing how on our last several cruises our onboard bill has been under $100 for 3 people and therefore how little the profit margin must be on our travels.

 

That's very clever how you managed to answer your own question from the 1st paragraph in your 2nd paragraph;)

[orville99]

I just read an article that said on Oasis of the seas the average profit per passenger was $145 last year up from $135 10 years ago.

 

Does that sound correct? I would have thought profit per passenger would be higher....I guess if you have 6000 passengers on board thats a profit of $900,000 per week.

 

 

http://www.nytimes.com/2015/03/22/business/a-luxury-liner-docks-and-the-countdowns-on.html

 

 

Better than GM, that on average loses money every time it sells a vehicle ;)

[cle-guy]

From the 2014 annual 10k filed with the SEC,

 

RCI (all brands) carried 5,149,952 passengers.

Net income was $764,146,000

 

That equates to $148.37 per passenger

 

There were 36,710,966 "passenger cruise days" so profit per passenger per day was $20.81 (passenger Crusie days are the number of total days at sea times the number of passengers boarded on the ship).

 

Passenger Cruise Days adjustes for short term and long term cruises where a passenger is only counted 1 time be it a 2 day cruise or 3 week cruise.

Edited March 23, 2015 by cle-guy

[cruisinfanatic]

They make money on every aspect of sailings.. BOOZE GAMBLING SPECIAL REST, their stores..Look how they charge you for everything..

is there a cruiseline or any business for profit that doesn't?

[bcarney]

Better than GM, that on average loses money every time it sells a vehicle ;)

 

But they make it up in volume! :)

 

 

Sent from my iPad using Tapatalk HD

[celebrity]

I wish that was my final bill.

[steveru621]

They make money on every aspect of sailings.. BOOZE GAMBLING SPECIAL REST, their stores..Look how they charge you for everything..

 

They do try to make a profit on every part of the ship. But 'making money' does not always = profits. Revenue minus expenses = profits. The depreciation of the ship, food, fuel, and salaries on a ship must be enormous. Don't forget that $148 is an average. The must be a whole lot of passengers that are a net loss in terms of profit.

[cle-guy]

This surprised me as well. I too would have thought that the profit per passenger would have been higher. Considering all that profit is made up of (fares, onboard purchases, gambling, spas, specialty dining, ect) it would be interesting to know the profit per passenger if based upon fare alone?

 

Doing this simply:

 

• Net income was $764,146,000
  
• subtract out On Board revenues of $2,180,008,000
  
• Add back in expenses relative to Onboard Revenues $582,750,000
  
• Get's a net loss of ($833,112,000) or a loss of ($161.77) per passenger, or ($22.69) per passenger per day.
  

 

Cabin fares make up 73% of revenue, and onboard accounts for 27% of revenue. Net profit was 9.5% of revenue.

 

The interesting takeaway from this exercise to me, is anyone who says "stop nickel and diming me, just make it all inclusive and keep it in the fare" we need to see fares increase by 27% to cover the lost On Board Revenues.

 

I doubt those same people would tolerate a 27% fare increase.

[CORKY_Q]

They do try to make a profit on every part of the ship. But 'making money' does not always = profits. Revenue minus expenses = profits. The depreciation of the ship, food, fuel, and salaries on a ship must be enormous. Don't forget that $148 is an average. The must be a whole lot of passengers that are a net loss in terms of profit.

 

steveru621, if you would "stack" your signature instead of running it horizontal, it would make your posts so much easier to read. Thanks. :)

[cle-guy]

That actually works out well. It may not sound much but the other thing to take into consideration is 10 years ago we didn't have the huge ships like oasis etc. .Whilst the average profit per guest has only minimally increased, it would be interesting to know how much more capacity they have now compared to 10 years ago. I am sure someone will have the figures.:D

 

Ps Oasis was released 2009 if my memory serves me correct.

 

Found the 2004 10k.

 

2004

• PAX carried 3,405,227
  
• PAX Crusie days: 22,661,965
  
• Occupancy: 105.7%
  
• Net Profit: $474,691,000
  
• Profit per Guest: $139.40
  
• Profit per Cruise Day: $20.94
  
• Ticket revenues: 73.7% of revenue
  
• On Board Revenues: 26.3% of revenue
  

 

2014

• Pax Carried 5,149,952
  
• Pax Cruise Days: 36,710,966
  
• Occupancy: 105.6%
  
• Net Profit $764,146,000
  
• Profit per Guest: $148.37
  
• Profit per Cruise Day: $20.81
  
• Ticket revenues: 73% of revenue
  
• On Board Revenues: 27% of revenue
  

[steveru621]

steveru621, if you would "stack" your signature instead of running it horizontal, it would make your posts so much easier to read. Thanks. :)

 

Thanks for letting me know. Must be differences in browsers and screen resolution. On my screen it looks fine, and it takes up less vertical space, which is what I was going for.

 

Enjoy your future cruises.

[cruzsnooze]

Doing this simply:

 

• Net income was $764,146,000
  
• subtract out On Board revenues of $2,180,008,000
  
• Add back in expenses relative to Onboard Revenues $582,750,000
  
• Get's a net loss of ($833,112,000) or a loss of ($161.77) per passenger, or ($22.69) per passenger per day.
  

 

Cabin fares make up 73% of revenue, and onboard accounts for 27% of revenue. Net profit was 9.5% of revenue.

 

The interesting takeaway from this exercise to me, is anyone who says "stop nickel and diming me, just make it all inclusive and keep it in the fare" we need to see fares increase by 27% to cover the lost On Board Revenues.

 

I doubt those same people would tolerate a 27% fare increase.

I think the revenue they are counting comes from Boutiques and excursions and drinks and not the nickle and dime items so much.

[DirtyDawg]

I think the revenue they are counting comes from Boutiques and excursions and drinks and not the nickle and dime items so much.

 

Look at the 10K for the definition of revenue but revenue is moot. Frankly profit is moot also. What counts is Cash Flow. As one of my favorite Accounting Profs said; "If it doesn't jingle, it doesn't count." i.e. cash is the only relevant measure of a company's success or not. You can't pay your employees, suppliers, debt holders, or owners from profit. You pay them from cash flow.

[DirtyDawg]

Doing this simply:

 

• Net income was $764,146,000
  
• subtract out On Board revenues of $2,180,008,000
  
• Add back in expenses relative to Onboard Revenues $582,750,000
  
• Get's a net loss of ($833,112,000) or a loss of ($161.77) per passenger, or ($22.69) per passenger per day.
  

 

Cabin fares make up 73% of revenue, and onboard accounts for 27% of revenue. Net profit was 9.5% of revenue.

 

The interesting takeaway from this exercise to me, is anyone who says "stop nickel and diming me, just make it all inclusive and keep it in the fare" we need to see fares increase by 27% to cover the lost On Board Revenues.

 

I doubt those same people would tolerate a 27% fare increase.

 

The only comment I would make is that they do not break out the SG&A between the ship activities and the on-board activities. For example, if RCL served no booze at all they would save all the on-board employees costs but they would also be able to fire all the buyers, logistics people at head office associated with booze and lower their SG&A costs. Some of the reported SG&A costs that go into the net income number are for those on-board activities. So the actual loss on cruise fares is somewhere between your figure and close to break even. But your point is a great one, nickel and dimes add up!;)

[MADflyer]

This figure seams very much in line with some of the data from the Virgin Cruises court case that was released today.

 

These projections were prepared by a former NCL exec for the feasibility planning for a Virgin ship. He is suing Virgin.

 

http://www.cruiseindustrynews.com/cruise-news/12370-virgin-cruises-ship-renderings-and-details-shown-in-lawsuit-filings.html

[MrsPete]

Traditionally, the ticket fare provides almost no profit, just covering the overhead of the ship. Onboard revenue is the major concern of ship's management, and is the major discussion point in the weekly revenue meetings.

I heard that on a TV show on Travel channel, and at first I thought it sounded right ... but then I realized that it can't be true. Think through it:

 

You sail in low season, say, mid-January, and you pay $500/person for a balcony cabin. You sail again in July -- same cabin -- and pay $1000/person. You go back a third time to that same cabin for a New Year's cruise, and you pay $1500/person. Obviously I've made up these numbers, but you get the point.

 

The company's cost to operate the ship may fluctuate a bit -- bananas cost more out of season, the towel vendor raises his prices, the hotel manager gets a raise, the cost of oil drops -- but by and large, the ship's costs don't change between January and July.

 

So which cost is the "break even" on the ticket price? It can't be true for all of them.

 

Regardless, I'm 100% sure that they do want to make additional revenue from onboard purchases. I heard on that same show that alcohol is their #1 money-maker, and I believe that. #2 and #3 were the casino and excursions, but I can't remember which was #2 and which was #3. I suspect those things are #1,2,3 because pretty much everyone buys these things, whereas the art auction, spa, and specialty restaurants aren't things that make everyone open his or her wallet.

[cle-guy]

So which cost is the "break even" on the ticket price? It can't be true for all of them.

 

As with many businesses and pricing schemes, you have to look at an entire "market basket" assortment.

 

Some cruses may lose money, some may make a lot of money, and many will make the average.

 

Supply and demand, high demand periods like holidays, jack the price up just because you can.

 

Low demand periods, lower the price just to do the best you can to keep cash rolling in, since you have all that overhead you have to pay anyway - "Heads in Beds" we used to say in the hotel business. After the ship leaves the port, no more chance to sell the cabin, so sell last minute for whatever you can get, and then count on some on board spend. This is why cruise lines rely on Interline fares with the Airline and Hotel industries to sell cabins, and why there are last minute resident fares.

 

It's why some businesses are not profitable in some month's yet make gangbusters in other months to make up for it.

 

The break even is just an analysis of fixed cost and variable costs to determine what that number is. It isn't hinged on revenue benchmarks, it's based on analysis of expenses.

 

The Fixed expenses on a a ship are huge the variable costs are only going to be food and fuel, and even the fuel could be thought of as fixed since the ship will sail every day even if not full. And food cost is only about $12 per passenger per day. Many businesses, labor would be a variable cost, but on a ship, all are on contract, so even is ship sits in port for dryadic, staff are being paid.

Edited March 24, 2015 by cle-guy

[amscene1]

I wish that was my final bill.

 

 

Question: I don't think there talking about $148.00 as being the average bill overall, they are saying $148 is the average profit and I'm sure that is after the base fare and room tab. So the average spent is still unknown but I'm sure it's closer to $500.00.

 

Every cruise I've been on averaged about $800.00 for the onboard charges...

 

Disney was actually the cheapest because I just suitcase on my beer!