I'm finding it hard to believe?

[woodyren]

China is set to be the biggest cruising nation (RCI moving 2 of it's newest Quantum class down into Asia) and they will not be tipping 20% ! so just watch this space.

 

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Please stick to facts.

 

Having one new ship (Quantum) permanently based there and another (Ovation which will also spend time in Australia/NZ/Pacific) based there for much of the year along with the other ships currently based there does not make China anywhere near the biggest cruising nation. Check the capacity of ships based in the USA and cruising out of Rome or Barcelona.

 

Sure it's a large growth market starting from a very low base but they are a long way off being the biggest cruising nation.

 

What evidence do you have that Chinese will remove auto gratuities.

 

My experience from talking to many on board Quantum was that they almost ALL booked through travel agents who put together a package of cruise fare, grats, air fare, excursions, transfers, hotels and the also spent plenty on board on drinks which come with an auto gratuity of 18%.

 

Auto grats actually fit well with their (non) tipping culture because they just factor in the total cost of their package.

 

Incidentally it is why I am also a fan of auto grats. I hate having to hand people cash. Just not something I have been brought up with and I don't even like to think about it BUT I also as a worker like to feel that workers are compensated at the rate with which they agreed to work for. I also do not want to be responsible for micro managing service staff performance.

They have supervisors for that.

 

I also hate the money talks attitude where some think that by tipping big they deserve to have better, faster service than me. It's called a bribe in Australia.

 

Auto tips fit the bill. Cruise staff and management have obviously agreed that that is the fair amount and who gets the distribution. I agree with logical argument that including it in the cruise price would probably raise the prices by more that that amount. I know upfront how much they are and I can just leave them alone without thought.

 

In saying that I also dislike having to pay them up front as I would prefer to use any OBC I receive to pay them even though I will never remove them.

[Jomtien]

Please stick to facts.

 

Having one new ship (Quantum) permanently based there and another (Ovation which will also spend time in Australia/NZ/Pacific) based there for much of the year along with the other ships currently based there does not make China anywhere near the biggest cruising nation. Check the capacity of ships based in the USA and cruising out of Rome or Barcelona.

 

Sure it's a large growth market starting from a very low base but they are a long way off being the biggest cruising nation.

 

What evidence do you have that Chinese will remove auto gratuities.

 

My experience from talking to many on board Quantum was that they almost ALL booked through travel agents who put together a package of cruise fare, grats, air fare, excursions, transfers, hotels and the also spent plenty on board on drinks which come with an auto gratuity of 18%.

 

Auto grats actually fit well with their (non) tipping culture because they just factor in the total cost of their package.

 

Incidentally it is why I am also a fan of auto grats. I hate having to hand people cash. Just not something I have been brought up with and I don't even like to think about it BUT I also as a worker like to feel that workers are compensated at the rate with which they agreed to work for. I also do not want to be responsible for micro managing service staff performance.

They have supervisors for that.

 

I also hate the money talks attitude where some think that by tipping big they deserve to have better, faster service than me. It's called a bribe in Australia.

 

Auto tips fit the bill. Cruise staff and management have obviously agreed that that is the fair amount and who gets the distribution. I agree with logical argument that including it in the cruise price would probably raise the prices by more that that amount. I know upfront how much they are and I can just leave them alone without thought.

 

In saying that I also dislike having to pay them up front as I would prefer to use any OBC I receive to pay them even though I will never remove them.

 

 

Royal Caribbean Cruises Gross Profit Margin (Quarterly):32.66% for March 31, 2015

$593 million Not a bad profit!!

Multiply that across the industry and there is no reason not to pay a decent wage

 

 

 

 

 

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[woodyren]

Royal Caribbean Cruises Gross Profit Margin (Quarterly):32.66% for March 31, 2015

$593 million Not a bad profit!!

Multiply that across the industry and there is no reason not to pay a decent wage

 

 

 

 

 

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What has any of this got to do with my post that you quoted disputing your ( ridiculous) claim that China is set to become the biggest cruising nation or that the Chinese will not pay their auto grats.

[Jomtien]

Chinese (along with much of Asia) do not tip

China is set to be the world's number one economy with the largest middle classy he cruise lines are already gearing up and changing their product to meet the Chinese market

RCI's ships are not down here for the tiny Australian cruise market but for the growing Chinese demand

Time to close this topic

 

 

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[Adidas4fun]

"I could go on against tipping, but let’s leave it at this: it is irrational, outdated, ineffective, confusing, prone to abuse and sometimes discriminatory."

 

So said Pete Wells more than two years ago, Pete is a noted New York Times restaurant critic; someone who is well versed in american tipping culture and seemingly reasonably qualified to comment on such things.

 

Noted American chefs have refused to allow tipping in their own restaurants and have claimed that service levels were better when they did so.

 

But despite this the dogma remains. American self belief in the "superiority" of their cultural practices is unshakeable. Research has shown that their tipping behaviour can be influenced by things as silly as the waiter drawing a smiley face on the bill. But remember this: tipping is not silly, and anyone who dares suggest that shall be subject to more wrath than a jihadist!

[RDC1]

Royal Caribbean Cruises Gross Profit Margin (Quarterly):32.66% for March 31, 2015

$593 million Not a bad profit!!

Multiply that across the industry and there is no reason not to pay a decent wage

 

 

 

 

 

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Where did you get those numbers? I got mine from EDGAR, the companies quarterly report to the SEC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (USD $)

In Thousands, except Per Share data, unless otherwise specified

3 Months Ended

Mar. 31, 2015 Mar. 31, 2014

Income Statement [Abstract]

 

Passenger ticket revenues

$ 1,306,779 $ 1,348,203

Onboard and other revenues

508,820 539,021

Total revenues

1,815,599 1,887,224

Cruise operating expenses:

 

Commissions, transportation and other

324,418 325,865

Onboard and other

116,239 123,032

Payroll and related

211,591 210,801

Food

119,786 118,080

Fuel

205,276 244,459

Other operating

245,307 281,743

Total cruise operating expenses

1,222,617 1,303,980

Marketing, selling and administrative expenses

286,832 290,307

Depreciation and amortization expenses

200,468 193,735

Restructuring charges

0 1,736

Operating Income

105,682 97,466

Other income (expense):

 

Interest income

3,737 3,276

Interest expense, net of interest capitalized

(70,159) (68,571)

Other income (expense)

5,970 (5,714)

Total other income (expense)

(60,452) (71,009)

Net Income

45,230 26,457

Earnings per Share:

 

Basic (in dollars per share)

$ 0.21 $ 0.12

Diluted (in dollars per share)

$ 0.20 $ 0.12

Weighted-Average Shares Outstanding:

 

Basic (in shares)

219,626 221,295

Diluted (in shares)

220,842 222,671

Comprehensive Loss

 

Net Income

45,230 26,457

[RDC1]

If you look at it from an annual basis the margin looks a bit better and has improved over the last few years. Made it all the way up to 9% in 2014 compared to 0.2% in 2012

 

Note all of these numbers are percentages. Useful in comparing trends from one year to another to see how revenue and expenses compare by category, even with changes in fleet size. Note the reduction in on board revenue as a percentage of income. My understanding is that tips (gratuities, service charges, whatever one calls them) should not be reflected in these numbers because they are dispersed to the crew and are not considered as cruise line revenue or expense. If one did away with them and added them to the ticket prices, then they would have to get difference accounting treatment and would have to be considered as revenue, with payout being an expense with appropriate impact on various taxes, withholding, recruitment contracts, etc.

 

Year Ended December 31,

 

2014 2013 2012

Passenger ticket revenues

73.0% 71.9% 72.8%

Onboard and other revenues

27.0 28.1 27.2

Total revenues

100.0 100.0 100.0

 

Cruise operating expenses:

 

Commissions, transportation and other

17.0 16.5 16.8

Onboard and other

7.2 7.1 6.9

Payroll and related

10.5 10.6 10.8

Food

5.9 5.9 5.8

Fuel

11.7 11.6 11.8

Other operating

13.3 14.9 15.0

Total cruise operating expenses

65.7 66.7 67.1

Marketing, selling and administrative expenses

13.0 13.1 13.2

Depreciation and amortization expenses

9.6 9.5 9.5

Impairment of Pullmantur related assets

— — 5.0

Restructuring and related impairment charges

0.1 0.7 —

Operating income

11.7 10.0 5.2

Other expense

(2.2) (4.1) (5.0)

Net income

9.5% 6.0% 0.2%

 

 

Will be interesting to see next years numbers with the changes they are making.

Edited July 20, 2015 by RDC1

[Jomtien]

Where did you get those numbers? I got mine from EDGAR, the companies quarterly report to the SEC.

 

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (USD $)

 

In Thousands, except Per Share data, unless otherwise specified

 

3 Months Ended

 

Mar. 31, 2015 Mar. 31, 2014

 

Income Statement [Abstract]

 

 

 

Passenger ticket revenues

 

$ 1,306,779$ 1,348,203

 

Onboard and other revenues

 

508,820539,021

 

Total revenues

 

1,815,5991,887,224

 

Cruise operating expenses:

 

 

 

Commissions, transportation and other

 

324,418325,865

 

Onboard and other

 

116,239123,032

 

Payroll and related

 

211,591210,801

 

Food

 

119,786118,080

 

Fuel

 

205,276244,459

 

Other operating

 

245,307281,743

 

Total cruise operating expenses

 

1,222,6171,303,980

 

Marketing, selling and administrative expenses

 

286,832290,307

 

Depreciation and amortization expenses

 

200,468193,735

 

Restructuring charges

 

01,736

 

Operating Income

 

105,68297,466

 

Other income (expense):

 

 

 

Interest income

 

3,7373,276

 

Interest expense, net of interest capitalized

 

(70,159)(68,571)

 

Other income (expense)

 

5,970(5,714)

 

Total other income (expense)

 

(60,452)(71,009)

 

Net Income

 

45,23026,457

 

Earnings per Share:

 

 

 

Basic (in dollars per share)

 

$ 0.21$ 0.12

 

Diluted (in dollars per share)

 

$ 0.20$ 0.12

 

Weighted-Average Shares Outstanding:

 

 

 

Basic (in shares)

 

219,626221,295

 

Diluted (in shares)

 

220,842222,671

 

Comprehensive Loss

 

 

 

Net Income

 

45,23026,457

 

 

New York, 4/21/2015 (CRMZ News Service) -- The following information has been updated recently:

Updated financial statements are available for the period ended 3/31/2015.

The following information was extracted from our full report:

 

First Quarter Results

 

Sales for the 3 months ended 3/31/2015 decreased 3.80% to $1.82 billion from last year's comparable period amount of $1.89 billion.

 

Gross profit margin increased 1.67% for the period to $592.98 million (32.66% of revenues) from $583.24 million (30.90% of revenues) for the same period last year.

 

Does it matter!

 

 

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[cgags47]

[RDC1]

New York, 4/21/2015 (CRMZ News Service) -- The following information has been updated recently:

Updated financial statements are available for the period ended 3/31/2015.

The following information was extracted from our full report:

 

First Quarter Results

 

Sales for the 3 months ended 3/31/2015 decreased 3.80% to $1.82 billion from last year's comparable period amount of $1.89 billion.

 

Gross profit margin increased 1.67% for the period to $592.98 million (32.66% of revenues) from $583.24 million (30.90% of revenues) for the same period last year.

 

Does it matter!

 

 

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Yes it does matter because gross profit margin does not take into account a whole range of things on the expense side. For example it does not include Sales, Marketing and Administrative expenses. It also does not include depreciation and amortization expenses. The category that included a few little things that cruise lines needs like, paying for their ships. I am quite sure if they did not need to pay for them, they would be able to pay a lot more for a lot of things. However, in the real world gross margin does not equal profits. Handy measure for evaluating operating efficiency, but not a measure of profitability.

 

As the terms are defined:

 

A gross profit margin is the difference between sales and the cost of goods sold divided by revenue. This represents the percentage of each dollar of a company's revenue available after accounting for cost of goods sold.

 

(in the cruise line area gross profit margin means ticket and ship sales revenue minus ship operating expenses)

 

 

Profit margin represents the percentage of revenue that a company keeps as profit after accounting for fixed and variable costs. It is calculated by dividing net income by revenue. The profit margin is mainly used for internal comparisons, because acceptable profit margins vary between industries. In general, narrow profit margins indicate increased volatile earnings. For companies with significant fixed costs, wide profit margins reduce the risk that a decline in sales will cause a net profit loss.

 

(cruise lines have significant fixed costs for sales, marketing and administration, as well as significant capital costs for ship acquisition)

Edited July 20, 2015 by RDC1

[cle-guy]

New York, 4/21/2015 (CRMZ News Service) -- The following information has been updated recently:

Updated financial statements are available for the period ended 3/31/2015.

The following information was extracted from our full report:

 

First Quarter Results

 

Sales for the 3 months ended 3/31/2015 decreased 3.80% to $1.82 billion from last year's comparable period amount of $1.89 billion.

 

Gross profit margin increased 1.67% for the period to $592.98 million (32.66% of revenues) from $583.24 million (30.90% of revenues) for the same period last year.

 

Does it matter!

 

If it did't matter no one would be asking you, nor would you have initially posted your figures - it'a also equally important to have facts and not suppositions and assumptions.

 

You don't understand GROSS MARGIN, it's a very top line calculation, sales less cost of goods sold. It does not factor in overhead costs, ammortization, marketing, interest, depreciation etc. These expenses are big.

 

PROFIT is net income, the very bottom line.

 

For comparison, a retail store would expect a gross margin of 50% to 60% with a net profit of 10% to 20%. So a 30% gross margin isn't really that awesome.

 

The profit is simply:

$1,815,599,000 Gross Revenue versus $45,230,000 in net profit.

 

Which is a net profit of only 2.4%. Not a whole lot of room left there to pay more expenses.

[cle-guy]

This is inaccurate. To perform cabotage between two US ports requires that the ship be US flagged (which requires it also be US built). The risk of Jones Act/PVSA violations is far too high doing cruises around Hawaii to risk it.

 

NCL's POA ship has a specific legal exemption (literally an act of Congress) to be allowed to be flagged in the US despite being a foreign-built ship, permitting it to operate a Hawaii itinerary without risk of PVSA violations.

 

Thanks for the correction. I actually found a good article in NYT that describes the process as it went down.

 

http://www.nytimes.com/2003/12/14/us/political-savvy-gets-us-flags-on-foreign-ship.html

[dkjretired]

The cruise works, (as I understand) because all employees are paid as normal US employees are paid, and follow all US wage regulations and other regulations all according to US Law primarily, then international and Maritime laws apply.

 

This has a lot to do with why Cruises to Nowhere are ending Jan 1 - it was US Immigration that stopped them, as staff on those ships do not work under US wages and do not have appropriate work VISA do do work within the USA, which a CTN technically never leaves the USA, thus the issue. Ships that port here and leave to a foreign territory, have different immigration requirements.

 

But Pride of America on NCL, all staff and the ship itself follows US Immigration requirements and laws, which makes it costly to operate, which makes no one want to get into that market (made NCL pill 2 additional ships out of the market), which makes the cruise itself more costly than typical 7 day sailings.

 

So really, any cruise line can come into Hawaii, do round trip cruises around Hawaii, all they have to do is pay US wages and follow all US laws - but costs/benefit analysis makes this an unsound business decision for expansion.

 

Not correct, I was on this board when all this went down and one of the things they must do is build the ship at a US shipyard. This, as I stated pretty much precludes anyone from going into the Hawaii market.

[xmarksx]

Chinese (along with much of Asia) do not tip

China is set to be the world's number one economy with the largest middle classy he cruise lines are already gearing up and changing their product to meet the Chinese market

RCI's ships are not down here for the tiny Australian cruise market but for the growing Chinese demand

Time to close this topic

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Really? I have traveled to China several times. Yes, some of the less traveled parts of China may find tipping a bit confusing, I once had a shuttle driver refuse a tip but he recognized the concept. However, the major cities completely understand the process and you are 100% assured that any travel related business expects it. In a couple of restaurants it was added to the bill.

[woodyren]

Really? I have traveled to China several times. Yes, some of the less traveled parts of China may find tipping a bit confusing, I once had a shuttle driver refuse a tip but he recognized the concept. However, the major cities completely understand the process and you are 100% assured that any travel related business expects it. In a couple of restaurants it was added to the bill.

 

From Americans? Foreigners? Locals?

 

I spend a lot of time in China in large cities, admittedly not so much in Beijing or Shanghai and have NEVER seen any restaurant that expects a tip. I have been with wealthy Chinese locals who have spent thousands of yuan on the meal and not left a cent of the change when paying the bill.

 

Is the travel related stuff a case of foreign tourists, forgetting the "when in Rome" advice that they dish out, starting to tip and the locals now taking advantage of this for some extra revenue?

[Adidas4fun]

From Americans? Foreigners? Locals?

 

I spend a lot of time in China in large cities, admittedly not so much in Beijing or Shanghai and have NEVER seen any restaurant that expects a tip. I have been with wealthy Chinese locals who have spent thousands of yuan on the meal and not left a cent of the change when paying the bill.

 

Is the travel related stuff a case of foreign tourists, forgetting the "when in Rome" advice that they dish out, starting to tip and the locals now taking advantage of this for some extra revenue?

 

Have you ever been to Rome?

 

I have, and I witnessed the behaviour of american tourists. They clearly have no concept of any other culture but their own. (And calling that cultured is only akin to the petri dish.)

[cle-guy]

Have you ever been to Rome?

 

I have, and I witnessed the behaviour of american tourists. They clearly have no concept of any other culture but their own. (And calling that cultured is only akin to the petri dish.)

 

I was just in Rome after my transatlantic. I definitely don't follow their customs very well. I just can't bring myself to throw trash on the streets or spray paint everything within sight. I expected a lot more, but found it to be merely a step above Cairo. :(

[RDC1]

Have you ever been to Rome?

 

I have, and I witnessed the behaviour of american tourists. They clearly have no concept of any other culture but their own. (And calling that cultured is only akin to the petri dish.)

 

I was just in Italy last month. Noticed something very interesting as far as tipping is concerned. In non-tourist areas the norm of rounding up seems to still be the practice.

 

In tourist areas such as Lake Como, Rome, etc. the locals might follow the practice of rounding up, but if you are an American tourist and follow the local practice you get some interesting responses. Basically the staff in such places (heavy tourist traffic) expect Americans to tip, not follow local practice. Had a number of waiters that were very friendly, until they saw that we were rounding up and not tipping the American norm.