NCL stock down on mixed earnings results.

[newmexicoNita]

Google shows NCLH down 9.30% and CCL down 2.53% right now. That is quite a difference.

 

Another noticable factor is NCLH trading volume is more than double the average.

 

did you check to see how far down rci is this year? It is scary!!!! RCI is down about 30% this year; as of this morning NCL was down 34% and Carnival less than 20%. But look at other aspects of the travel industry; most are having a horrible year.

Edited August 13, 2016 by newmexicoNita

[DGP1111]

.

 

Not so pretty, again, today. :(

 

.

[Shawnino]

oh for heaven's sake, this has nothing to do with the stock market. RCI is suffering as well; as is Carnival, etc. It has to do with world affairs. You may not be happy, many of us do not like all the changes but the market is controlled by more than a few not caring for the product. As much as we are hearing complaints here on CC, my travel agent says her NCL sales are not down anymore than other lines.

 

Good for your travel agent.

The stock market tells a different story: NCLH down well more than other stocks.

 

It has rather little to do with world affairs, and much to do with overpriced caboins, decreased amenities, and former customers defecting to other lines, or choosing land-based vacations.

[swedish weave]

did you check to see how far down rci is this year? It is scary!!!! RCI is down about 30% this year; as of this morning NCL was down 34% and Carnival less than 20%. But look at other aspects of the travel industry; most are having a horrible year.

 

I am not interested in RCI and won't buy NCLH. CCL is doing very well for me with paying dividends and OBC. NCL does not pay dividends even when they are reporting profits.

 

I checked the numbers a few minutes ago and NCLH was down while CCL was up.

Edited August 16, 2016 by swedish weave

[mking8288]

Stock's movement would be interesting if and when there's a change in price target, downgrade or otherwise. It's now 94% institutional owned (was at 90% just a month ago) so the small players are bailing out, with insiders holding fewer than 1% - poor souls with stock options that are pretty much worthless at the moment ... Zack Research revised its price target to $53.75 (previously, some has it at the $65 + range; and, it almost reached it)

 

Holding 500 shares of stocks that consistently paid a nice, quarterly cash dividend is far superior to any OBC issued, and you don't need to spend a penny more to get the benefits of re-investing for compound growth - in a diversified portfolio.

Edited August 16, 2016 by mking8288

[violetcat911]

I just bought 100 shares of NCLH. I had been thinking about doing it for a long time. I figured that I spent @ $3800 for the stock and just this year I will be getting $200 obc. That is better than 5% interest on my money. At this point you are lucky to get 1-2% anywhere else. I feel that the stock will go back up at some point. Since I cruise often I will make my money with the obc. Oh and the nice thing is obc is not taxed as gains, lol, yet.;)

I also own 100 shares of CCL too and am getting the obc from that ownership as well.

 

Smiles:D

[violetcat911]

I cancelled 2 NCL cruises and did a bus tour in Europe in June. Loved it and am planning another. Next cruises are 2 b2b Carnival Vista Athens to NY in Oct. Not sure when I will do another NCL. Have future cruise certificates. But don't care if they run out.

 

Sent from my BLU STUDIO 6.0 HD using Tapatalk

 

I have not paid my final on the second cruise yet. It is due September 5th. If you are of the mind to get rid of these I can help.

 

Smiles:D

[warb]

"It was a challenging booking environment where we remained mindful of our go to market strategy to minimize discounting and maintain our hard-fought pricing gains, resulting in lower occupancy, which in turn lowered onboard revenue and overall Net Yield growth compared to our expectations earlier in the year.

 

 

 

 

I thought "Charging More" meant more profit ? Maybe the last minute deal

 

seekers are not to be forgotten. They do spend $$$$ in the casinos,stores etc.

[fshagan]

"It was a challenging booking environment where we remained mindful of our go to market strategy to minimize discounting and maintain our hard-fought pricing gains, resulting in lower occupancy, which in turn lowered onboard revenue and overall Net Yield growth compared to our expectations earlier in the year.

 

 

 

 

I thought "Charging More" meant more profit ? Maybe the last minute deal

 

seekers are not to be forgotten. They do spend $$$$ in the casinos,stores etc.

 

It might mean more profit, even with lower onboard revenue and lower growth, but we'll see. I suspect that NCL will have to return to deep discounting like RCL has done (their prices on their Pacific Coastal cruises are very low right now as they try to fill their ships).

 

I suspect after August NCL will start lowering prices. They will have the unofficial results of most of the 3rd quarter and will know if investors will be calling for their heads if they don't improve bookings.

[SteveH2508]

"It was a challenging booking environment where we remained mindful of our go to market strategy to minimize discounting and maintain our hard-fought pricing gains, resulting in lower occupancy, which in turn lowered onboard revenue and overall Net Yield growth compared to our expectations earlier in the year.

 

 

 

 

I thought "Charging More" meant more profit ? Maybe the last minute deal

 

seekers are not to be forgotten. They do spend $$$$ in the casinos,stores etc.

 

Charging more only works if you preserve volume. Any accountants reading this will understand about volume variances and price variances. The two are inter-connected by the immutable laws of Supply v. Demand and Price v. Demand.

 

Note to Mr DR - there are certain laws of economics which cannot be beaten.

[tartan cruiser]

Exactly. I've said it before and I'll say it again. There is a certain amount of lag time to when all the changes start and they show up affecting the bottom line. Most cruises are booked 6 months to a year or more in advance. That was the time period since Mr. Del Rio took charge and started all the changes. Most of those cruises have now been taken. We're now seeing customers voting with their wallets and looking at other options hence the lowered outlook. Even the cheerleaders are taking notice. I only see it getting worse if the "fee style cruising" continues.

[Fido Chuckwagon]

The problem for Del Rio is that his customers aren't the stupid sheep he thinks we are, and profits and the stock price are down as a result.

[ilusha]

One customer's opinion who just got off the Breakaway Bermuda 7/31-8/7 and who's last cruise before that was The Epic Feb 2013:

 

Man the prices have changed...A LOT. The cruise itself was 5.2k (2 adults 1 child) when the 2013 one was $3800 (both peak fares).

 

The specialty dining went from a flat fee to ala carte. $8 in cagney's for a tiny shrimp cocktail (they used to be giant, now they are tiny) that they were giving away for free in the Atrium the next night, that one sticks out.

 

Man the drink prices...WOW. $11 for a Bloody Mary when they used to be $6.50. Yes there is a drink package but my wife doesn't drink so its not worth it for us, but I kept my drinking to a minimum because of these new prices. I couldn't believe that they were charging NYC bar prices now.

 

So I'm not saying any of this has to do with their stock price but I am certainly looking into different cruise lines for our next trip, when before I considered myself NCL for life. I've always felt RC was more expensive but they appear to be in parity now.

 

Yeah I think they are shooting themselves in the foot. Priced the same trip I am taking this year breakaway haven 2br $8.6k and its coming up $13.1k for same dates next year. No way I am paying that. 2 or 3 years ago 2br suite on jewel class from Boston I paid $4.5k + 500 OBC no free at sea but kids sail free, all 3 of them. I like suites but for this price I rather take the kids on a disney cruise in a deluxe room.

 

I cruised with NCL 3 times in suites and I bet I am not the only customer they will loose with this kind of pricing.

[Bonobochick]

It might mean more profit, even with lower onboard revenue and lower growth, but we'll see. I suspect that NCL will have to return to deep discounting like RCL has done (their prices on their Pacific Coastal cruises are very low right now as they try to fill their ships).

 

I suspect after August NCL will start lowering prices. They will have the unofficial results of most of the 3rd quarter and will know if investors will be calling for their heads if they don't improve bookings.

 

I'm looking at taking a November or December cruise so I'm hoping your suspicions are correct that NCL will lower prices.

[sfaaa]

Charging more only works if you preserve volume. Any accountants reading this will understand about volume variances and price variances. The two are inter-connected by the immutable laws of Supply v. Demand and Price v. Demand.

 

Note to Mr DR - there are certain laws of economics which cannot be beaten.

 

More passengers means more overhead costs (think buffet and extra cleaning) and wear and tear on the ship. When given a choice, a business would prefer to charge a higher rate with lower occupancy than the other way around for the same bottom line result.

[Warm Breezes]

More passengers means more overhead costs (think buffet and extra cleaning) and wear and tear on the ship. When given a choice, a business would prefer to charge a higher rate with lower occupancy than the other way around for the same bottom line result.

 

Higher occupancies on the other hand lead to more revenue from on board spending. I can easily see this from another angle. I don't think the overhead increases much from more passengers. I see the majority of that as a fixed cost...depreciation, wages, fuel, etc.

[67Miner]

Well, I am a newbie to NCL from Celebrity and just returned from an 8-day cruise on the Escape. I liked it. In fact I liked it so much that I purchased 100 shares yesterday in order to qualify for the OBCs. I also own RCL stock but don't get OBCs often because they are very restrictive and not combinable with other offers. My research shows that NCL is much less restrictive. We'll see. Anyway, stock up $1.03 today. RCL down 6 cents. I did ok.

[NLH Arizona]

Well, I am a newbie to NCL from Celebrity and just returned from an 8-day cruise on the Escape. I liked it. In fact I liked it so much that I purchased 100 shares yesterday in order to qualify for the OBCs. I also own RCL stock but don't get OBCs often because they are very restrictive and not combinable with other offers. My research shows that NCL is much less restrictive. We'll see. Anyway, stock up $1.03 today. RCL down 6 cents. I did ok.

Just looked and NCL is up 2.74% and RCCL is down .08% and since I don't purchase items based on what a CEO makes or where the company's stock is, I'll keep both my NCL and Celebrity cruises.

[sfaaa]

Higher occupancies on the other hand lead to more revenue from on board spending. I can easily see this from another angle. I don't think the overhead increases much from more passengers. I see the majority of that as a fixed cost...depreciation, wages, fuel, etc.

 

While true to an extent, it's all about market segments and guest mix. While high rollers and big spenders would always be happy to open their wallets onboard, last minute cheapskates and budget cruisers are not so inclined to spend and gamble. It's all a balancing act and not just a body count exercise.

[SteveH2508]

Higher occupancies on the other hand lead to more revenue from on board spending. I can easily see this from another angle. I don't think the overhead increases much from more passengers. I see the majority of that as a fixed cost...depreciation, wages, fuel, etc.

 

Accountants call it marginal costing - what is the extra cost of one unit? (basically the variable costs involved in producing/servicing an extra unit).

Edited August 17, 2016 by SteveH2508

[Warm Breezes]

Accountants call it marginal costing - what is the extra cost of one unit? (basically the variable costs involved in producing/servicing an extra unit).

 

Umm....yes I am an accountant and I know the accounting concepts well. However in the case of cruise lines in the mass market I am seeing higher fixed costs than variable costs. I saw a show before (based on an NCL ship) where the rooms were loss leaders to get passengers on the ship. The revenue was made in on board sales once they had the passengers in those rooms.

[fshagan]

Umm....yes I am an accountant and I know the accounting concepts well. However in the case of cruise lines in the mass market I am seeing higher fixed costs than variable costs. I saw a show before (based on an NCL ship) where the rooms were loss leaders to get passengers on the ship. The revenue was made in on board sales once they had the passengers in those rooms.

 

I think that's the situation that NCL is trying to correct. I seem to remember that the break even point was 105% of capacity (based on 2 people per cabin). Something like that. So they depended on alcohol sales and other on-board revenue to generate profit.

 

The prices are higher with the promos, so there's probably a spreadsheet somewhere showing that the higher average fare plus the not-quite-free promo on beverage plan gets them to break even and profit earlier. Maybe they are OK at 90% capacity with the higher fares.

 

Deep discounting can't go on forever so prices are higher on most cruise lines (lots of grumbling on the other cruise line forums too).

[RDC1]

More passengers means more overhead costs (think buffet and extra cleaning) and wear and tear on the ship. When given a choice, a business would prefer to charge a higher rate with lower occupancy than the other way around for the same bottom line result.

 

Not for cruise lines. Most of the cruise line costs are fixed per cruise, even food is mostly fixed (less consumption more wastage). Very little is variable costs (maybe alcohol) As such they are very dependent upon maximizing capacity. Marginal change in expenses per passenger not material. Marginal change in revenue per passenger very material. Reason why average annual occupancy numbers on mass market cruises lines run about 105% of bottom bunk capacity with around 25-30% of revenue per passenger coming from on board sales.

Edited August 18, 2016 by RDC1

[SteveH2508]

Not for cruise lines. Most of the cruise line costs are fixed per cruise, even food is mostly fixed (less consumption more wastage). Very little is variable costs (maybe alcohol) As such they are very dependent upon maximizing capacity. Marginal change in expenses per passenger not material. Marginal change in revenue per passenger very material. Reason why average annual occupancy numbers on mass market cruises lines run about 105% of bottom bunk capacity with around 25-30% of revenue per passenger coming from on board sales.

 

I can see the point here. You rightly state that the 'marginal change in revenue per passenger is very material' (Mr Del Rio's '$x more per passenger' statement at his takeover). I do wonder though whether they are actually making that extra, given the number of people who are fed up with last minute changes and are saying 'I'm not now going to spend this on XYZ any more'.

 

IMHO NCL are struggling with their intangibles: reputation and goodwill.

[Froggitt]

I think that's the situation that NCL is trying to correct. I seem to remember that the break even point was 105% of capacity (based on 2 people per cabin). Something like that. So they depended on alcohol sales and other on-board revenue to generate profit.

 

The prices are higher with the promos, so there's probably a spreadsheet somewhere showing that the higher average fare plus the not-quite-free promo on beverage plan gets them to break even and profit earlier. Maybe they are OK at 90% capacity with the higher fares.

 

Deep discounting can't go on forever so prices are higher on most cruise lines (lots of grumbling on the other cruise line forums too).

If discounted prices are all the customer is prepared to pay, then deep discounting can and will go on forever (basic supply/demand). However in order to facilitate this, they need to remove significant cost from the balance sheet. One significant cost is the cost of ships. In order to remove it, they would need to go bust, wiping out the shareholders.