Plans that affect Princess by CCL Corp

[caribill]

On a stock analysts conference call Tuesday, CCL Corp talked about a number of things that obviously affect Princess as well as the other Carnival Corp brands.

o A goal to help keep cruise pricing at higher rates is being pursued by managing the growth of capacity so there is relative scarcity of supply to meet a growing demand for cruise vacations. So while industry capacity growth in the period 2014-2018 is expected to be about 5% annually, CCL Corp brands will average about a 2.9% annual growth rate. (Much the same strategy US airlines are following. By not growing capacity much, planes are flying fuller and fares are remaining high.)

o Carnival Corp brands carry about 50% of the passengers that cruise anywhere in the world.

o One way of creating the relative scarcity in existing markets in the redeployment of ships from existing markets to new areas. Princess, for example, is deploying more ships to emerging markets such as China and Australia and will have fewer ships in the Caribbean and the Mediterranean.

o In 2016, CCL Corp brands will have about 4 million cruise days for sale in China. The sister ship to the Royal and Regal is being “purpose built for Chinese consumers.”

o Overall the CCL Corp brands are ahead in bookings for the remainder of this year when compared to last year at this time. This will help keep pricing higher as there is less inventory left to sell.

o Bookings for the first quarter of 2016 are also ahead of what booking for the first quarter of 2015 were at this time last year.

o Marketing (advertising) expenses are higher this year in order to create more demand (and thus add to relative scarcity). Goal is to generate more demand than growth in capacity.

Some China based itineraries are being altered at the request of the charter companies due to MERS in South Korea.

o The main competition to CCL Corp brands is not other cruise lines; it is land based vacations. It is recognized that when CCL Corp advertising creates demand for cruises, the demand created also benefits other cruise lines.

o Last year CCL Corp brands had 3.4 million first time cruisers (many of these in China). The year before that attracted about 2.8 first time cruisers.

o The various CCL Corp brands “all independently make pricing decisions.”

o To enhance on-board revenue, the best practices on the various CCL Corp brands are being shared with all the brands.

o As an example of reducing costs across the brands, mattress purchases are being consolidated for the various Carnival Corp brands. This helps reduce costs while at the same time increasing the quality standard. (Nothing was said to indicate that the same quality mattresses would be on all of the brands.)

o Onboard revenue enhancements are expected from communications (Internet) enhancements, casino initiatives and beverage options (think AIBP).

o Several mentions were made about the recently announced future ships that will have about 5000 Lower Berth capacity with a total berth capacity of about 6600 passengers.

- Besides the LNG being used as a fuel, there will also be conventional fuel used.

- These new ships will have a similar space/passenger ratio as exists on current ships under construction. The designs of these ships have “more efficient use of ship spaces.”

- Still in the design stage, some single-occupant cabins are being considered “in some visualizations.”

- Overall (not just fuel), these ships are expected to be greater than 40% more efficient that recent new builds. (I interpret this to mean 40% less cost per lower berth both in fixed and operating costs.)

o The new fathom brand is expected to attract people that have never cruised before. The projects selected in the Dominican Republic are with proven impact providers. The goal is that in a few years when volunteering is not needed anymore in that area, another destination will be selected.

[Astro Flyer]

Thanks for sharing the info & hopefully they're successful with their plan. That's good for my shares value however with higher prices it's not good for me as a passenger.

[Pam in CA]

Thanks for the info. Not much is a surprise. For all those who ask, "Why doesn't Princess sail from....?" the answer is supply and demand, Marketing 101.

 

As for the AIBP, I predicted that regular drink prices would increase, and they have. Significantly. Princess and other brands are laughing all the way to the bank.

 

Interesting that they're considering solo cabins. Sure hope they do and that they're not closet-sized.

[Wehwalt]

o The new fathom brand is expected to attract people that have never cruised before. The projects selected in the Dominican Republic are with proven impact providers. The goal is that in a few years when volunteering is not needed anymore in that area, another destination will be selected.

 

The poor will never cease from the earth. I have it on very good Authority. Likely same with the Dominican Republic. In other words, they will change when enough of their target audience is bored with the DR.

 

Thanks for sharing the info & hopefully they're successful with their plan. That's good for my shares value however with higher prices it's not good for me as a passenger.

 

Not just the prices. The megaships don't sound that great, 6,000 people (!). As for more "efficient" use of public spaces, sounds like what they did on the Royal and Regal in minimizing the promenade deck.

Edited June 24, 2015 by Wehwalt

[Astro Flyer]

Not just the prices. The megaships don't sound that great, 6,000 people (!). As for more "efficient" use of public spaces, sounds like what they did on the Royal and Regal in minimizing the promenade deck.

You can read this list of ships being constructed through the end of the decade & most of them have over 4,000 passengers. That makes the Royal-class ships less than many other new builds. The only ships under 1,000 passengers are luxury cruise lines Seabourn & Regent plus the new Viking ocean ships. Holland America has a pair of 2,650 passenger ships & Celebrity a pair of 2,900 passenger ships.

 

http://usat.ly/12oqLRa

 

My pockets are not deep enough to sail the more exclusive smaller ships that are being built & most of us cannot afford to sail on those luxury cruise lines. My future options are to either sail on more affordable efficient mass market ships or not sailing at all. No matter what any of us feel about this trend things are not going to change.

 

Cruise lines are seeking new generations of passengers & many of them desire a high tech active floating hotel experience & they don't really care that much about us old timers. ;)

Edited June 24, 2015 by Astro Flyer

[Wehwalt]

You can read this list of ships being constructed through the end of the decade & most of them have over 4,000 passengers. That makes the Royal-class ships less than many other new builds. The only ships under 1,000 passengers are luxury cruise lines Seabourn & Regent plus the new Viking ocean ships. Holland America has a pair of 2,650 passenger ships & Celebrity a pair of 2,900 passenger ships.

 

http://usat.ly/12oqLRa

 

My pockets are not deep enough to sail the more exclusive smaller ships that are being built & most of us cannot afford to sail on those luxury cruise lines. My future options are to either sail on more affordable efficient mass market ships or not sailing at all. No matter what any of us feel about this trend things are not going to change.

 

Cruise lines are seeking new generations of passengers & many of them desire a high tech active floating hotel experience & they don't really care that much about us old timers. ;)

 

Oh, I'm with them on some things. The current state of internet on board ships is ridiculous, and the sooner they update to Millennial expectations of flat-rate internet the better.

[thinfool]

Pricing strategy is understandable, but may continue to be a challenge. Limiting capacity in established markets allows room for other things...

 

http://www.usatoday.com/story/cruiselog/2015/06/23/virgin-cruises-richard-branson-first-ship-miami-in-2020/29164413/

[paul929207]

Thanks for the comments

[Grego]

As much as we love the glamour and excitement of cruising, it is a business that is interested in making profit. I would rather that the demand would drive the business model rather than the supply creating a price position.

[Mommypig]

They can build all the mega ships they want. I won't be on them. I do understand that they are in the business to make money. But I cruise to get away and relax. Being in that kind of a crowd is not relaxing for me. I am so hoping that they keep the Pacific Princess. We would rather cruise less and be on a small ship than try to tender into a port with 6000 passengers.

[Birubi]

They can build all the mega ships they want. I won't be on them. I do understand that they are in the business to make money. But I cruise to get away and relax. Being in that kind of a crowd is not relaxing for me. I am so hoping that they keep the Pacific Princess. We would rather cruise less and be on a small ship than try to tender into a port with 6000 passengers.

 

I totally agree. The image of tendering ashore with 6000 others at the numerous tender ports in the South Pacific, Australia and New Zealand is really scary.:eek:

[greenie082756]

Thanks for the report! Not surprised in the direction they are going and I just hope they do it with much thought.

As a shareholder..I'm watching the value go up while watching some of my others struggle. So no complaints here.

As far as someday going on a 6000 passenger ship..I would. Heck what's another 3500 more as long as the ship is larger.

I think making single cabins is a great idea. Don't need a whole lot but perhaps 20 % being single berths.

 

Anyways, thanks for the report! :)

[jasbo49]

I understand CCL wanting to keep prices up to maximize profits, but in doing so, they're inviting people to check out their competition. We take about half of our vacations to land destinations, half on cruises. I once considered cruises a slightly better deal, but, with the scarcity of true "deals," I think that's beginning to tip.

 

Our upcoming Panama Canal cruise, even though I booked at several hundred dollars less than the current rate, is going to cost quite a bit more than our most common land vacation, two weeks in Maui. If we don't see the occasional great deal, like the ones that got us started cruising, then we'll just get in the habit of land vacations again and the industry will lose customers like us.

 

CCL can protect its finances, but vacationers will do the same.

 

Jim

[caribill]

Oh, I'm with them on some things. The current state of internet on board ships is ridiculous, and the sooner they update to Millennial expectations of flat-rate internet the better.

 

Don't confuse flat rate with higher speeds.

 

You could get (based on the pricing I see on Carnival ships) the same speed you are getting now but at a higher cost if you are on for only 30 minutes a day or less.

[Working 2 Cruise]

Very interesting!

 

As far as deals are concerned, for my June 27 cruise to Alaska, I'm very happy... this is one of the most expensive time of year to cruise to Alaska... Got a deal for $760 for a balcony for a 7 day cruise, including upsell offer! So, the deals are still there.

 

I'm not too happy about the behemoths of the seas... they're just too big. I like feeling like I'm on a ship, feeling the ocean and I think the bigger ships won't accommodate this...:eek:

[Colo Cruiser]

Very interesting but predictable. :cool:

[pablo222]

Don't confuse flat rate with higher speeds.

 

And, 3000 people may jump on the low price plan.

[Wehwalt]

And, 3000 people may jump on the low price plan.

 

United will be giving me reasonably priced Wi-Fi on a transatlantic airplane tonight. That seems rather harder than a cruise ship.

[dhill]

Cool lets pay more for less:)

[IECalCruiser]

Thanks for the info. Not much is a surprise. For all those who ask, "Why doesn't Princess sail from....?" the answer is supply and demand, Marketing 101.

 

As for the AIBP, I predicted that regular drink prices would increase, and they have. Significantly. Princess and other brands are laughing all the way to the bank.

 

Interesting that they're considering solo cabins. Sure hope they do and that they're not closet-sized.

Pam, Check out the single inside and balcony cabins on the Lido deck of Britannia. They look fairly decent for a single. Maybe that will be the template for other new builds.

[Astro Flyer]

Cool lets pay more for less:)

And to reach the point where the price excludes many of us average folks by becoming too expensive. :(

 

Cruising has been a lot of fun however with these trends cruising will be a less affordable option for many retirees. Princess is gearing their ships for the largely untapped Asian market including modifying the 3rd Royal-class ship for Asia. The Diamond was greatly improved for Asia while in my mind they did nothing to improve the Island for the U.S. & European market.

 

I understand the economic issues but hopefully Princess will be able to replace retired passengers like my wife & me who for several years have sailed often. It's one thing to attract new passengers...it's another thing to make it so expensive that their loyal repeat passengers may longer be able to afford to cruise as often.

 

These trends are disappointing to me as a passenger even though on paper my shares value is increasing.

Edited June 24, 2015 by Astro Flyer

[Colo Cruiser]

And to reach the point where the price excludes many of us average folks by becoming too expensive. :(

 

Cruising has been a lot of fun however with these trends cruising will be a less affordable option for many retirees. Princess is gearing their ships for the largely untapped Asian market including modifying the 3rd Royal-class ship for Asia. The Diamond was greatly improved for Asia while in my mind they did nothing to improve the Island for the U.S. & European market.

 

I understand the economic issues but hopefully Princess will be able to replace retired passengers like my wife & me who have for several years sailed a cumulative month or two per year. It's one thing to attract new passengers...it's another thing to make it so expensive that their loyal repeat passengers may longer be able to afford to cruise as often.

 

These trends are disappointing to me as a passenger even though on paper my shares value is increasing.

 

 

Right on with that one Frank! Sad. :(

[icat2000]

I like the idea of solo cabins so long as they not a broom closet and the price they charging is not much less than what it is for solo rate in a normal size cabin. There would have to be some pricing variation to get me to travel in a solo cabin especially when the space ratio will be less.

[caribill]

United will be giving me reasonably priced Wi-Fi on a transatlantic airplane tonight. That seems rather harder than a cruise ship.

 

On my United flight from Denver to Fairbanks, they charged a higher price for music/TV since the flight was more than 3 hours.

 

About two hours after leaving Denver, the flight crossed the Canadian border and the music/TV became unavailable for the remainder of the flight. You don't always get what you pay for on United.

[DaisyRose]

All of this makes me very sad. I already find Princess prices high, and to think they will intentionally keep supply low so they can keep prices high is disappointing. I already push my budget to be able to cruise. On my last cruise I definitely saw the "creep" of onboard prices, especially for drinks. I bought less because of it. I see last minute bookings, lower priced cruise lines, and land based trips in my future.