Profits per passenger

[DirtyDawg]

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

 

It not on each and every cruise. It's the average over the year. Low season they might generate an accounting loss, and in high season they might generate an accounting profit. On average for the entire year.... Break even.

[cle-guy]

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!

 

Average passenger on board spend:

 

2014

• Pax Carried: 5,149,952
  
• Pax Cruise Days: 36,710,966
  
• On Board Revenues: $2,180,008,000
  

 

• Average passenger spend is $423.30
  
• Average per passenger per day: $59.38
  

[DirtyDawg]

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

 

And you hurt Micky's feeling and cash flow as a result. :mad: How do you live with yourself for depriving a rodent his due?:o:p:)

[whitshel]

Average passenger on board spend:

 

2014

• Pax Carried: 5,149,952
  
• Pax Cruise Days: 36,710,966
  
• On Board Revenues: $2,180,008,000
  

 

• Average passenger spend is $423.30
  
• Average per passenger per day: $59.38
  

 

I love all these numbers :D

[chengkp75]

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.

 

As cle-guy says, the majority of cost to operate is fixed, whether the ship is full or empty, so they will sell the last cabins as "loss leaders" to get (and the cruise industry uses the same term) "heads in beds", so that they can spend money onboard, and their cabin fare covers at least some of the expense. And where a cruise to point A is discounting to get people onboard, another ship is charging premium because demand there is high. One ship may be losing money on cabin fares, but another is making profit on cabin fares.

 

As for the art auction, spa, and shops, these are concessions. This means that they pay the cruise line for the opportunity to have their business onboard. Whether or not they make any sales, they are paying a fixed fee to use the ship's facilities.

 

And shore excursions rank far behind the casino in onboard revenue. The cruise line makes a good bit of money on excursions, but not on a per head basis. Most of the money goes to the operator. One reason the ship's excursions are pricier is that, of course the operator has to pay the cruise line, but also because the cruise line requires insurance bonding, usually very high bonding, which independent operators typically don't.

[nelblu]

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

 

What are the components of the profit--is it after all overhead, including administrative, interest, and other types of expenses.

[chengkp75]

What are the components of the profit--is it after all overhead, including administrative, interest, and other types of expenses.

 

Using the figure given in the OP, and given that cle-guy's calculations are remarkably similar, then yes. For SEC filings, and the company's overall statements, that figure is net profit, after all expenses. Internally, each ship is considered a profit center, and will have a fixed expense per cruise which includes a share of corporate cost (headquarters, shore staff, insurance, interest, taxes, etc.). Some ships will lose money on any given cruise, some will make money, the corporate figure used in this thread is the average.

[bouhunter]

I'm sorry, does not anyone here realize how irrelevant this discussion is?:rolleyes: Large corporations (and even small ones) show "income" and "cash flow" on their statements that may be no real indicator of their true position or situation. It's necessary due to the games they must play to meet government tax policies. Not to mention the CPA's and "GAAP". Sorry but it's almost halarious to see people debating and discussing this on a cruise forum. I couldn't imagine a more irrelevant topic to discuss here........

Edited March 24, 2015 by bouhunter

[alfaeric]

I'm sorry, does not anyone here realize how irrelevant this discussion is?:rolleyes: Large corporations (and even small ones) show "income" and "cash flow" on their statements that may be no real indicator of their true position or situation. It's necessary due to the games they must play to meet government tax policies. Not to mention the CPA's and "GAAP". Sorry but it's almost halarious to see people debating and discussing this on a cruise forum. I couldn't imagine a more irrelevant topic to discuss here........

 

Seems like a lot of this data comes from the annual report. Which you would suggest is a lie. Between the SEC and investors, I don't think it's common practice to lie in an annual report.

 

May not be a relevant discussion, but it does not mean it's incorrect.

 

Then again relevancy is kind of up to the reader.

[chengkp75]

Seems like a lot of this data comes from the annual report. Which you would suggest is a lie. Between the SEC and investors, I don't think it's common practice to lie in an annual report.

 

May not be a relevant discussion, but it does not mean it's incorrect.

 

Then again relevancy is kind of up to the reader.

 

I think what he means is that there are all kinds of accounting loopholes that can be used to diminish reported profit, but everyone uses them, so while it may not be a realistic number, it is a basis for comparison between years and competitors.

[DirtyDawg]

I'm sorry, does not anyone here realize how irrelevant this discussion is?:rolleyes: Large corporations (and even small ones) show "income" and "cash flow" on their statements that may be no real indicator of their true position or situation. It's necessary due to the games they must play to meet government tax policies. Not to mention the CPA's and "GAAP". Sorry but it's almost halarious to see people debating and discussing this on a cruise forum. I couldn't imagine a more irrelevant topic to discuss here........

 

Oh there are lots of more irrelevant topics discussed here each and every day.

 

Pre-tipping vs. post tipping

Honest reviews vs. who knows

Cabin decorating

Kids in the solarium

and of course each and every Formal wear thread.:rolleyes:;)

 

Bob, just think of these threads as teachable moments for people. Give them your insights on accounting, business, economics etc. Wouldn't it be nice if members here could learn a bit more than just what's the best breakfast item in the Windjammer.:D

Edited March 24, 2015 by DirtyDawg

[CruisingMachine]

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

Please tell me where you can go and get FREE booze, gamble for NOTHING, eat anything and everything you want, and loot the stores...all at "no charge".

[DirtyDawg]

I think what he means is that there are all kinds of accounting loopholes that can be used to diminish reported profit, but everyone uses them, so while it may not be a realistic number, it is a basis for comparison between years and competitors.

 

Which is irrelevant (Bob's word) for the cruise industry as they pay so little income taxes anyways.;) But that one is for another thread entirely.

 

Just think of GAAP (Generally Accepted Accounting Principles) not so much as Rules but suggestions, guidelines - similar to cruise line dress codes, they are bendable, fudge-able and open to interpretation.;)

[chengkp75]

Which is irrelevant (Bob's word) for the cruise industry as they pay so little income taxes anyways.;) But that one is for another thread entirely. BINGO

 

Just think of GAAP (Generally Accepted Accounting Principles) not so much as Rules but suggestions, guidelines - similar to cruise line dress codes, they are bendable, fudge-able and open to interpretation.;)

 

Like the Pirate Code (more of a guideline, really) :D

[DirtyDawg]

Like the Pirate Code (more of a guideline, really) :D

 

:D:D See everything returns to the Sea!;)

[tahqa]

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.

 

You don't necessarily need to stack it. You just need to insert a space between the tickers. That way the browser can decide the optimal way to display your signature. :)

 

(When you don't have the space it's considered one very wide graphic instead of several smaller ones)

[alfaeric]

I think what he means is that there are all kinds of accounting loopholes that can be used to diminish reported profit, but everyone uses them, so while it may not be a realistic number, it is a basis for comparison between years and competitors.

 

Maybe, but the way it was phrased makes the strong implication that there is lying involved.

 

Again, my point is that the numbers are real to the investors and the SEC- since that is who they are generally presenting them to.

 

If you want to lie to that group, well, you will likley lose a lot of investors, as well as face some nice fees for trying to sell your stock from a false standpoint. That does not seem like a group that takes lying to their face, for such simple data, very well.

 

I guess I should go find the statement to see. The math presented is pretty easy- at least for the reports I've read.

Edited March 24, 2015 by alfaeric

[DirtyDawg]

Maybe, but the way it was phrased makes the strong implication that there is lying involved.

 

Again, my point is that the numbers are real to the investors and the SEC- since that is who they are generally presenting them to.

 

If you want to lie to that group, well, you will likley lose a lot of investors, as well as face some nice fees for trying to sell your stock from a false standpoint. That does not seem like a group that takes lying to their face, for such simple data, very well.

 

I guess I should go find the statement to see. The math presented is pretty easy- at least for the reports I've read.

 

Unfortunately there have been many (too many) accounting scandels over the years. Enron, Worldcom, HealthSouth, Tyco, our own Bre-X, and list goes on and on. Those managements were lying to the regulators, shareholders, employees, and just about everyone else. Sad, but all too true.:(

[cle-guy]

One thing that struck me as comforting, was the presentation of numbers from 2004 to 2014 was striking similar, even the averages were close, which leads me to believe they have a good business model that scales well.

 

Over those years capacity was added, on a per-pax basis all was roughly the same, though overall, due to volume, bottom line increased accordingly. I will say I was spurious that the percentage of Cabin fare and On Board Revenues remains nearly identical at 73% and 27%. I'd have thought that over recent times, we'd have seen on-board spending increase.

 

So even if there are games being played with the figures (which I don't believe), the games have been consistent for 10 years so the comparisons over that time still have meaning.

[chengkp75]

One thing that struck me as comforting, was the presentation of numbers from 2004 to 2014 was striking similar, even the averages were close, which leads me to believe they have a good business model that scales well.

 

Over those years capacity was added, on a per-pax basis all was roughly the same, though overall, due to volume, bottom line increased accordingly. I will say I was spurious that the percentage of Cabin fare and On Board Revenues remains nearly identical at 73% and 27%. I'd have thought that over recent times, we'd have seen on-board spending increase.

 

So even if there are games being played with the figures (which I don't believe), the games have been consistent for 10 years so the comparisons over that time still have meaning.

 

I think that given that the profit per day remained stable, but the profit per passenger went up 6%, this is indicative of the economies of scale presented by the larger ships.

[DirtyDawg]

I think that given that the profit per day remained stable, but the profit per passenger went up 6%, this is indicative of the economies of scale presented by the larger ships.

 

cle-guy and chengkp75 If you guys are really interested in this topic look at Carnival's and Norwegian's 10K also and do a comparison between the three. Find the metrics or ratios that are of interest and see how those have trended over time and how they compare between the companies.

[DirtyDawg]

sound like a fun meeting

 

LOL Crunching those types of numbers is like cruising. It only appeals to a small segment of people. But for those who like it - they really really like it.:D

 

But unlike cruising, crunching those numbers can puts lots of cash into your bank account, not drain it.;)

[DirtyDawg]

businesses do not go into business to break even. its profit at the end of the year or they would not be sailing

 

I didn't say that RCL just broke even (accounting wise) only that their cruise fares barely cover all their expenses (accounting break even) and all the other ship board revenue provide most if not all of their accounting profit.

 

BTW while businesses go into business to do better than break even, many do not. And if they lose cash (not just accounting profits) for too many years they go out of business.

Edited March 24, 2015 by DirtyDawg

[grandgeezer]

Im not sure if your are proud that you average spending four dollars a day per person....

 

On our last three cruises we spent 0 dollars per day, per person. We are not going to over pay (drinks, specialty restaraunts, etc), just so they can make huge profits. My loyalty is to my family's financial health, not the cruise line. There used to be pricing levels I could live with, not anymore.

[rusty nut]

On our last three cruises we spent 0 dollars per day, per person. We are not going to over pay (drinks, specialty restaraunts, etc), just so they can make huge profits. My loyalty is to my family's financial health, not the cruise line. There used to be pricing levels I could live with, not anymore.

If you paid for your cruise fair, you did not sail for $0 per day. If you take your total cruise fair and divide it by the number of family members sailing, then divide that number by the number of days you sailed you will get a figure that you actually paid per person, per day. Seeing as how the ticket price is usually the most expensive part of the cruise, you certainly did not cruise for free.