Solvency of Cruise Lines

[greykitty]

2 minutes ago, Pcardad said:

 

I have no idea. I am not really a TA in the classic sense. I provide a specialized service to a small group of clients. I facilite all aspects of the travel experience on a 24x7 basis if required. 

 

The finance guy in me actually sees fairly strong financials, especially over the past few years. A private equity group simply buys a piece of the pie....they usually do not run the company.

Well, PE's definitely want to enhance value in the companies they purchase so they can sell at a profit. I've rarely heard of them being passive investors.  

[Pcardad]

1 minute ago, greykitty said:

But what number is increased to guarantee that same profit while allowing opt outs?  Base fare?  

 

Nope - the amount of credit issued in lieu of excursions. Fare remains the same. Perhaps a $45 credit per day if you opt out. It would be about half of whatever Regent actually pays. 

[greykitty]

2 minutes ago, Travelcat2 said:

greykitty - Regent only contracts for a certain number seats on each contracted flight.  This is why so many of us deviate (or to use the "new" term Custom Air).  There are obviously more contracted seats available 270 days prior to the cruise than there are 90 or 75 days prior to the cruise.  The word "contracted" here is important.  While we have deviated and been on Cathay Pacific to Asia (contracted), it is likely not contracted to some other places in the world where they may fly.  Another example is Emirates.  Regent used to allow passengers on the east coast to fly Emirates to Dubai without an uncharge while those of us on the west coast had a $1,500/person uncharge.  I am not certain that this is still in effect.

 

 

Thank you - so, if I understand you, comparing air (or hotel) opt outs to tour opt outs is indeed apples and oranges?

[Pcardad]

Just now, greykitty said:

Well, PE's definitely want to enhance value in the companies they purchase so they can sell at a profit. I've rarely heard of them being passive investors.  

 

The Kingdom also just bought 8% of carnival stock. They are a private investor. Their control is limited to their voting stock.

 

The investment of money means they buy stock. The influx of money greatly increases the chance that the stock goes from $10/sh now back to $50/share in 2 years. The value enhancement is the influx of capital. The profit is the massive price increase in stock brought about by their massive influx of capital.

[greykitty]

1 minute ago, Pcardad said:

 

Nope - the amount of credit issued in lieu of excursions. Fare remains the same. Perhaps a $45 credit per day if you opt out. It would be about half of whatever Regent actually pays. 

To make sure I understand - where is Regent recouping that $45/day credit?   Unless it's considered immaterial?  Or is that credit in nonrefundable OBC in this scenario?

[Pcardad]

2 minutes ago, greykitty said:

Thank you - so, if I understand you, comparing air (or hotel) opt outs to tour opt outs is indeed apples and oranges?

 

I think the contract probably provides for cost increases to Regent beyond a certain number of seats in a specific time frame. I don't think Regent actually buys a set amount of seats but rather commits to a certain fee structure based on volume.

[rallydave]

4 minutes ago, greykitty said:

But what number is increased to guarantee that same profit while allowing opt outs?  Base fare?  

Believe you earlier talked about using consolidator air tickets, tc talked about contract with various airlines.  

 

Sure Regent uses a combination of contracted with airline tickets, consolidator tickets as well as tickets bought directly from the airlines without being contracted.  Sure they do what any business would and that is purchase the tickets from the lowest possible source at the time they have to be bought.   This is why some tickets are upgradeable, some not; some get First withing the US to overseas and some don't , etc.

 

No way ever with previous history with so many departure airports and so many embarkation ports anyone would hazard a guess to guarantee buying tickets on airlines.

[Pcardad]

1 minute ago, greykitty said:

To make sure I understand - where is Regent recouping that $45/day credit?   Unless it's considered immaterial?  Or is that credit in nonrefundable OBC in this scenario?

 

Part of the $1,000 per day you pay goes to covering excursions. By removing excursions, Regent has lower costs. Imaginer they give you back the cost portion of the excursions (say $45) but they have $75 per day per person budgeted for excursion. These numbers are probably high.

[Pcardad]

Ie. They get the profit without doing anything.

 

[rallydave]

7 minutes ago, Pcardad said:

 

Nope - the amount of credit issued in lieu of excursions. Fare remains the same. Perhaps a $45 credit per day if you opt out. It would be about half of whatever Regent actually pays. 

And probably about 1/4th of what Regent includes in the cruise fare to cover the excursions.

[Pcardad]

Just now, rallydave said:

And probably about 1/4th of what Regent includes in the cruise fare to cover the excursions.

 

Agreed.

[Travelcat2]

10 minutes ago, greykitty said:

Thank you - so, if I understand you, comparing air (or hotel) opt outs to tour opt outs is indeed apples and oranges?

 

I am much more familiar with air than I am with hotels since we tend to opt out of hotels.  Yes - the only thing that air, hotels and excursions have in common is that they are provided off of the ship by contractors.  This is why I made the suggestion about excursions - they do not take place on the ship and thus does not change the onboard exclusivity of Regent.

 

The main discussions that I have had with Regent is keeping the onboard experience the same for everyone.  I believe that everyone should be treated the same once they step outside of their suite (no "class" system.)  This is why I was upset when pre-boarding was allowed for top suites (even though we tend to book them).  On the other hand, I have no problem with upper tier Seven Seas Society members receiving perks (like early boarding) since they have earned them.  

 

P.S. Pcardad - did Regent raise their fares 25% when included excursions were implemented?  I do not recall that happening.  Regent added included excursions during the downturn of the economy in around 2009.  Is it correct to assume that they "ate" most of the extra cost?  In terms of your other post we would be very happy to receive $45/day in OBC's for opting out.

Edited April 26, 2020 by Travelcat2

[Pcardad]

Top suites get unlimited specialty dining options as well as some other unpublished goodies.

 

[flossie009]

In these extremely difficult times for Regent, and indeed all the cruise lines worldwide, isn't all this talk about tinkering with peripheral services such as excursions, hotels & air-fares akin to re-arranging the deck chairs on Titanic?

 

[Pcardad]

None of the cruise lines are going under...they have far too much ROI potential. Carnival is already out of the woods. The others will follow.

[SusieQft]

4 minutes ago, Pcardad said:

 

Nope - the amount of credit issued in lieu of excursions. Fare remains the same. Perhaps a $45 credit per day if you opt out. It would be about half of whatever Regent actually pays. 

I seriously doubt that Regent is paying $45 per day per passenger for shore excursions.  Maybe that is a ballpark amount for those that actually take a shore excursion that day, but not for those who don't or for for sea days.  Even if you say $45 pp per day for port days only, the people who are already not taking excursions are the ones that will take the opt-out.  (Yes, they are subsidizing the others who do take excursions, just like those who do not drink or use their butler subsidize those who do.)  If you give them $45 per day pp, even as an onboard credit, for the most part you are returning money that would otherwise have been profit, not money that would have otherwise been spent on shore excursions.

[greykitty]

Well, it is - probably just discussion for a boring afternoon.  Less chilling than reading the last round of SEC filings, anyway.  I was idly thinking about when cold layups will come into play.  More 'fun' discussing whether butler service is still a key element to 'luxury' sailing, but you're entirely right.

 

Any of these changes will have relatively minor effect on the the bleeding going on.  That's why I'm curious what any PE firm would put in place if they take a substantial position in any of the lines.  

[Travelcat2]

2 minutes ago, Pcardad said:

Top suites get unlimited specialty dining options as well as some other unpublished goodies.

 

 

Yes we do but, IMHO, these are invisible perks.  Passengers do not notice how many times another passenger has been in a specialty restaurant nor do they know whether someone is receiving free laundry or are paying for them.  

 

I'm thinking about "in your face" perks for upper suites such as they have on Oceania.  Oceania has small lounges with computers, a large television, comfortable seating, snacks and a Concierge that are only open to guests in certain suite levels (the larger ships have two - one for the very top suites and one for PH I believe).  To add insult to injury, the doors are glass so people can look in.  

 

Just saw your last post and it is good to know this.  What is ROI potential?

[rallydave]

3 minutes ago, flossie009 said:

In these extremely difficult times for Regent, and indeed all the cruise lines worldwide, isn't all this talk about tinkering with peripheral services such as excursions, hotels & air-fares akin to re-arranging the deck chairs on Titanic?

 

Very true flossie and at this point in time with all of the other issues affecting all of the cruise lnes these types of distractions are really unnecessary.  Many more important decisions nee to be made other than changing the entire structure of the cruise line plus making unnecessary significant changes to the computer systems, advertising, etc.

[greykitty]

ROI is return on investment.  Sometimes you get it, sometimes you're throwing good money after bad.

[Pcardad]

1 minute ago, SusieQft said:

I seriously doubt that Regent is paying $45 per day per passenger for shore excursions.  Maybe that is a ballpark amount for those that actually take a shore excursion that day, but not for those who don't or for for sea days.  Even if you say $45 pp per day for port days only, the people who are already not taking excursions are the ones that will take the opt-out.  (Yes, they are subsidizing the others who do take excursions, just like those who do not drink or use their butler subsidize those who do.)  If you give them $45 per day pp, even as an onboard credit, for the most part you are returning money that would otherwise have been profit, not money that would have otherwise been spent on shore excursions.

Like I said in Post #443 - these numbers are high. Illustration purposes, etc. Regent know show much they make per person per day per cruise and can easily credit that number. Just because we don't know, doesn't mean they don't. I am certain they do.

[SusieQft]

1 minute ago, Pcardad said:

Like I said in Post #443 - these numbers are high. Illustration purposes, etc. Regent know show much they make per person per day per cruise and can easily credit that number. Just because we don't know, doesn't mean they don't. I am certain they do.

Yes, but the main point is that those who opt out are those who are MOSTLY not taking excursions anyway, so Regent will lose money/lose profit by giving them a rebate.  The question is whether they will make it up in volume.

 

Reminds me of the old saying that it is okay to lose money on every sale, because you will make it up in volume.

[rallydave]

2 minutes ago, Pcardad said:

Like I said in Post #443 - these numbers are high. Illustration purposes, etc. Regent know show much they make per person per day per cruise and can easily credit that number. Just because we don't know, doesn't mean they don't. I am certain they do.

Just like for opting out for air or hotel where for sure the full dollars included in the fare is not credited, it for sure would be the same for excursions if that would even happen.

 

And yes for sure Regent has all those values and we will never see them.

[Pcardad]

3 minutes ago, SusieQft said:

Yes, but the main point is that those who opt out are those who are MOSTLY not taking excursions anyway, so Regent will lose money/lose profit by giving them a rebate.  The question is whether they will make it up in volume.

 

Reminds me of the old saying that it is okay to lose money on every sale, because you will make it up in volume.

 

Respectfully, I disagree with your premise that people who would opt out don't take excursions. It has been my experience in hundreds of nights as a passenger that people on Regent are not really inclined to waste the money they paid and take the Regent excursion most of the time. They only book their own if an outside factor comes in to play (they want to see something not offered or medical, etc.).

Edited April 26, 2020 by Pcardad
add in "NOT"

[Pcardad]

1 minute ago, rallydave said:

Just like for opting out for air or hotel where for sure the full dollars included in the fare is not credited, it for sure would be the same for excursions if that would even happen.

 

And yes for sure Regent has all those values and we will never see them.

 

Yessir - agreed.