RCL Earnings Summary

[ltlslick1]

Obviously as a publicly traded company, Royal releases company earnings quarterly. I like to listen in just to get an idea of how the company is operating and if we cruisers should expect to see any changes. Below I thought I'd share a few bullet points from the earnings call:

 

Geographic Performamce

• A strong North American consumer has provided a solid base for bookings
  
• Momentum in the Caribbean is going strong and new buildings continue to perform exceptionally well on every measure.Economic struggles in Latin America are having a profound effect on the Pullmantur brand
  

• Latin American strategy for Pullmantur hit a brick wall when the economies of key local markets all but collapsed.
  
  
• Pullmantur Empress will transition back to the Royal Caribbean International fleet in early 2016 and after an extensive dry dock will begin sailing as the Empress of the Seas in the spring of 2016.

  
  

• China is the fastest growing market
  
• Quantum and Legend will continue to service that market
  
  
• Asia Pacific region has and will continue to be yield accretive for the brand overall.

  
  

 

Pricing

• In 2016, there is a higher percentage booked and at higher prices than ever before in history.
  
• Price integrity policy
  
• Policy is designed to give guests and travel partners more comfort that when they book a cruise.
  
  
• RCL won’t be dropping the price of that same cruise during the last few days before the ship sails.
  
  
• Depending on the itinerary, RCL has internally banned any new discounts in the U.S. and the Canada in the last 10, 20, 30 or 40 days before the cruise starts.
  
  
• The program has been in place for seven months or so, and RCL has not granted a single exception to the policy. It has cost RCL a bit and is costing a bit this year in revenue, and some cabins have gone empty which could have been filled with dramatic last minute deals, but RCL stood firm and has made zero exceptions.
  
  
• Expect it will cost the company a bit more in 2016

  
  

 

Overall Performance

• The out performance was driven by strong pricing for the Caribbean and Europe as well as strong on-board revenue on Asia itineraries.
  
• On board revenues did not disappoint. RCL achieved 10% growth year-over-year driven by improvements in beverage, retail sales and demand for Boom, the fastest internet at sea.
  
• The Caribbean will remain the biggest product with about 43% of total capacity.
  
• Overall, European itineraries will represent about 21% of total capacity which is similar to this year.
  
• The most significant increase will once again occur in the Asia Pacific region. Capacity will be up more than 30% year-over-year due in part to the addition of Ovation of the Seas in Tianjin and the year round presence of Quantum of the Seas in Shanghai.
  

 

My Comments:

 

I think it will be really interesting to see a small ship return to the fleet. The Empress will certainly be different than any other ship in the brand (see separate threads in the forum for more discussion on that). I was sort of surprised to see how strong the pricing environment is in the Caribbean. It has been my sense that there has been a ton of supply coming online from all the major cruise companies - the demand obviously has to be very strong from the North American consumer. There was a ton of conversation on the earnings call regarding China - its a huge market folks, expect to loose more ships to Asia in the future would be my guess. As it relates to pricing and this is key as we all want to get the best pricing on our sailings. It seems as though the no discounting idea has worked well so far. By the companies own admission, they have had to let some cabins go unfilled. It will be really interesting to see if that continues. As countless users have said, booking early will be the best strategy. Curious to hear others thoughts.