Solvency of Cruise Lines

[rallydave]

1 minute 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.

Not trus Susie.  Say for instance Regent put $100 in the cruise fare for each port day for excursions and they gave the opt outers the $45 Pcarded mentioned, that is still $55 pure profit that Regent is retaining.  No loss still a gain.

[SusieQft]

4 minutes ago, Pcardad said:

 

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.).

 

4 minutes ago, rallydave said:

Not trus Susie.  Say for instance Regent put $100 in the cruise fare for each port day for excursions and they gave the opt outers the $45 Pcarded mentioned, that is still $55 pure profit that Regent is retaining.  No loss still a gain.

 

Yes, you are both right to the extent that the people who do not want the excursions are going on them anyway.  I based my assumption that they are "MOSTLY" not in large part on what TC2 has posted, that she very rarely goes on the excursions.  If she and her husband are atypical in this regard among the passengers who would want this option, then there might be a way for Regent to offer an onboard credit for significantly less than they are including in the cost for shore excursions and make it work financially.

[Travelcat2]

19 minutes ago, rallydave said:

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.

 

I disagree.  While the circumstances in 2009 were not as dire as we currently have, Regent made the decision to include excursions which was a significant change to their entire structure and required changes to the computer systems, advertising, etc. When you are trying to get passengers back to booking (without FCC's), we do not  know what Regent is willing to do.  What I do know is that they like to hear from their customers (well, perhaps I should have said that Regent is always open to suggestions rather than criticism or complaints).

[rallydave]

2 minutes ago, Travelcat2 said:

 

I disagree.  While the circumstances in 2009 were not as dire as we currently have, Regent made the decision to include excursions which was a significant change to their entire structure and required changes to the computer systems, advertising, etc. When you are trying to get passengers back to booking (without FCC's), we do not  know what Regent is willing to do.  What I do know is that they like to hear from their customers (well, perhaps I should have said that Regent is always open to suggestions rather than criticism or complaints).

There is absolutely NO COMPARISON of today to 2009.   Most people understand that without giving examples!!

[rallydave]

7 minutes ago, SusieQft said:

 

 

Yes, you are both right to the extent that the people who do not want the excursions are going on them anyway.  I based my assumption that they are "MOSTLY" not in large part on what TC2 has posted, that she very rarely goes on the excursions.  If she and her husband are atypical in this regard among the passengers who would want this option, then there might be a way for Regent to offer an onboard credit for significantly less than they are including in the cost for shore excursions and make it work financially.

Yes, it would  work financially for Regent  in all cases however it would work less for any of the proposed changes whee people don't take the Regent  included excursions because in those cases Regent get profit for the entire amount they put in the cruise fare for any ports where anyone doesn't take a tour.  There are probably cases for passengers where if they opted out and decided to take Regent excursions they would cost the passenger more.  

[fudgbug]

How did this thread go from Solvency to other topics?

[Travelcat2]

8 minutes ago, rallydave said:

There is absolutely NO COMPARISON of today to 2009.   Most people understand that without giving examples!!

 

Sorry, I also do not agree with "most people" understanding this.  Many people were not cruising Regent at that time and have no idea whatsoever when included excursions were started or why. Regent needed to fill the ships and they did so.

 

I posted that our current situation is more dire but that does not change the fact that Regent needs to fill their ships.  This is a constant and becomes more important when people have less disposable income which was the case then and in some cases now.

 

Let's try to keep this calm and civil.  This discussion is going quite well - despite differences of opinions.

 

fudgbug - the subject is the same.  Regent needs to fill their ships in order to make money.  Some folks are afraid to cruise, do not have the money to cruise, etc.  Finding a way to entice people back onto the ships without unduly harming their bottom line is part of the same subject.  The money people on this thread are able to give input to the ideas frequent cruisers on Regent may suggest.

 

It's all good!

Edited April 26, 2020 by Travelcat2

[rallydave]

2 minutes ago, Travelcat2 said:

Let's try to keep this calm and civil.

Just what wasn't calm and civil???  I simply emphasized that the times today  are so completely different that 2008 that almost everyone would understand that.  I would give many examples but, am tired of almost always hearing how someone is being attacked when someone disagrees with them and many times for good reason..

[SusieQft]

12 minutes ago, Travelcat2 said:

Many people were not cruising Regent at that time and have no idea whatsoever when included excursions were started or why. Regent needed to fill the ships and they did so.

I admit I was one of those not here at the time.   But if adding included excursions worked to increase the number of people sailing Regent, what makes you think that excluding them now would also increase the number of people sailing?

[Travelcat2]

7 minutes ago, rallydave said:

Just what wasn't calm and civil???  I simply emphasized that the times today  are so completely different that 2008 that almost everyone would understand that.  I would give many examples but, am tired of almost always hearing how someone is being attacked when someone disagrees with them and many times for good reason..

 

If you weren't yelling (all caps), your post may have come across differently.  I did not claim that you were attacking me until your last post so kindly do not claim that I do this whenever someone disagrees with me.  I have had respectful disagreements with posters for years (and even have cruising disagreements with my DH).  I respond in the same manner as the posters that quote me.

 

In any case, I still believe that some posters were not sailing on Regent 11 or 12 years ago and therefore did not know when or why the "free" excursions were put into place.  It was only an informational comment - not meant to enflame anything.

 

SusieQft - "Free" excursions (which is what Regent calls them) was a huge draw for people new to Regent.  Some long time cruisers like ourselves complained but stayed with Regent because we love the product.  Others left Regent (as I have mentioned).  So, in my opinion, offering the opt out option would satisfy those of us that do not wish to take excursions while not affecting the draw that it has for new customers (or for those that enjoy the excursions).  Our issue with the included excursions is that we have been to some ports numerous times and there is nothing left to see on an excursion.  However, we love taking walks, going into local supermarkets, restaurants, etc.  Even a small discount would really be appreciated and would enable us to take advantage of some of the onboard things that can be a bit costly (which is a subject for another topic).  

[BarbarianPaul]

I read an article about cruise line excursions a while back, and my key takeaway was that they are huge moneymakers for the cruise lines. Like so many posters here, my wife and I were really disappointed in the quality of the Regent excursions. At best, they were nothing special and no different than any other cruise line’s product because they’re using the same vendors, and at worst, well, really bad.

 

So, in essence, isn’t Regent basically forcing all of their passengers to pay for a whole itinerary’s worth of substandard excursions that alot of us just don’t want? Shouldn’t we expect more from a luxury cruise line?

[fizzy]

We are with Travelcat2 on the excursion thing. We moved over to Silversea when the excursions became included. We enjoy the product very much but also still love the Regent trips and just mentally suck it up when the dates and itineraries have a better fit.

[Dolebludger]

First, I wish we could somehow take the excursion discussion to its own thread. I is certainly a valid cruise topic, but this thread is about cruise line solvency, which is rather a separate issue. Second, I don’t think I knew what good shore excursions were until taking a couple of river cruises on Scenic. These included guided tours of museums, buildings of interest, shopping districts and more. All had “walky talks” so we could hear the guide. We were given priority entrance to attractions so we just walked past the lines. Each day, we were given several choices of excursions. We were even taken to concerts, castles, and caves. Yes, all included in the fare. Nobody complained. Of course, many places where Regent stops don’t have such things available, but some do and ine included excursions involve only a bus ride. Regent should do better, no doubt.

 

But this thread should be about Regent’s financial problems, and it certainly has them. I have stated what the financial press and my own financial advisor says so I won’t repeat those opinions. But they aren’t optimistic.

[CBWIR]

4 hours 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?

 

Bravo. I have been reading the Regent board for long enough to realize that you will never have the last word with certain posters now matter how much you try. 

Edited April 27, 2020 by CBWIR

[JMARINER]

6 hours ago, rallydave said:

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

It is nowhere near that high. For comparison go look on a site like Viator to compare prices.  I would guess that at most it is 10% of the fare. You have to factor in a discount for sea days and the fact that at least 20-30 % of passengers on any given day stay onboard.

 

I am looking at Viator for Barcelona. I think that this if fairly typical selection. Theses arer rack rates and I would guess Regent get similar tours  for less.  Most tours are $100 or less.

 

Here are some examples:

 

• Montserrat Half-Day Tour with Tapas and Gourmet Wines from Barcelona $82

• Skip the Line: Park Guell and La Sagrada Familia Guided Tour $98

• Tapas and Wine Experience Small-Group Walking Tour $82

• Interactive Spanish Cooking Experience in Barcelona $43

• Barcelona City Tour Hop-On Hop-Off $35

• Barcelona Old Town Walking Tour, Flamenco Show & Tapas Tour in the Born District $89

• Barcelona Highlights Small Group Half Day Tour with Hotel Pick Up $73

• Barcelona Half-Day Bike Tour $33

 

Even if you figure in another $$10-$15 pp for transportation your still way under $100 per person per day on average.

J

 

[Travelcat2]

30 minutes ago, JMARINER said:

It is nowhere near that high. For comparison go look on a site like Viator to compare prices.  I would guess that at most it is 10% of the fare. You have to factor in a discount for sea days and the fact that at least 20-30 % of passengers on any given day stay onboard.

 

I am looking at Viator for Barcelona. I think that this if fairly typical selection. Theses arer rack rates and I would guess Regent get similar tours  for less.  Most tours are $100 or less.

 

Here are some examples:

 

• Montserrat Half-Day Tour with Tapas and Gourmet Wines from Barcelona $82

   

• Skip the Line: Park Guell and La Sagrada Familia Guided Tour $98

   

• Tapas and Wine Experience Small-Group Walking Tour $82

   

• Interactive Spanish Cooking Experience in Barcelona $43

   

• Barcelona City Tour Hop-On Hop-Off $35

   

• Barcelona Old Town Walking Tour, Flamenco Show & Tapas Tour in the Born District $89

   

• Barcelona Highlights Small Group Half Day Tour with Hotel Pick Up $73

   

• Barcelona Half-Day Bike Tour $33

   

 

 

Even if you figure in another $$10-$15 pp for transportation your still way under $100 per person per day on average.

 

 

J

 

 

That makes alot more sense.   Appreciate the post!

[BarbarianPaul]

15 hours ago, Dolebludger said:

First, I wish we could somehow take the excursion discussion to its own thread. I is certainly a valid cruise topic, but this thread is about cruise line solvency, which is rather a separate issue. Second, I don’t think I knew what good shore excursions were until taking a couple of river cruises on Scenic. These included guided tours of museums, buildings of interest, shopping districts and more. All had “walky talks” so we could hear the guide. We were given priority entrance to attractions so we just walked past the lines. Each day, we were given several choices of excursions. We were even taken to concerts, castles, and caves. Yes, all included in the fare. Nobody complained. Of course, many places where Regent stops don’t have such things available, but some do and ine included excursions involve only a bus ride. Regent should do better, no doubt.

 

But this thread should be about Regent’s financial problems, and it certainly has them. I have stated what the financial press and my own financial advisor says so I won’t repeat those opinions. But they aren’t optimistic.

Three reactions:

1. Forced shore excursion payment is clearly a source of profit for Regent,  but their continued inclusion in the cruise fare is controversial, and can affect whether or not potential passengers decide to cruise with them. That’s a direct factor in Regent’s financial health, which is what this thread is about.

2.  As cruise lines all scramble to ensure their financial health, many are using this downtime to formulate strategies to get passengers back on board, as a means of mitigating their financial problems. Tough times require outside the box thinking, such as TC’s suggestion to allow passengers to opt out of excursions. Of course this pertains to the topic at hand.
3. Not sure if your financial advisor’s expertise is in this sector. If it was, he might actually be interested in changes to Regent’s game plan to get back on their feet, no?

Edited April 27, 2020 by BarbarianPaul
Typo

[Wendy The Wanderer]

19 hours ago, Travelcat2 said:

Let's try to keep this calm and civil.  This discussion is going quite well - despite differences of opinions.

 

It would help if everyone tried not to be passive aggressive in their responses.

[Travelcat2]

37 minutes ago, Wendy The Wanderer said:

 

It would help if everyone tried not to be passive aggressive in their responses.

 

 

I feel that posters understand that these are difficult times.  What is accurate one minute could be inaccurate the next.  How we get the virus - how to prevent the virus - how long it stays on surfaces - when or if cruises will resume are all fluid.  Therefore what we are in agreement with now may not be what we are in agreement later.  Bottom line - we need to all mellow out and discuss or debate issues rather than getting upset with each other.  And, judging others is really not going to work in this environment.

[orvil]

Back to solvency.  The money that we pay in advance for our tickets is all aggregated and placed on the balance sheet as a liability.  Much of that money is already spent in capital expenses before the service every occurs.  Once the cruise starts, these funds are moved to the other side of the balance sheet and used to offset expenses.  What is leftover is profit.  The reason these are carried as liabilities is they are funds in advance of a service and theoretically might have to be paid back.

 

Cruise lines and airlines are cash flow businesses.  As long as there is cash flow, the business is able to pay their liabilities with current bookings.  If you can't book new business, you had better have enough liquid assets to offset that liability number.  Right now, they can't do that.  If you don't or can't mortgage assets for cash, you will be bankrupt.  If you have enough assets but they aren't very liquid, you may be able to reorganize under bankruptcy to restart the business.  If you don't, you liquidate.

 

This is the situation that cruise lines and airlines find themselves experiencing.  No amount of goodwill will solve this problem.  The only solution is cash flow and it helps by keeping those advanced ticket payments in the bank account and not redeemed.  That future cruise credit is really a loan against cash flow.  Out of that 25% they are removing interest and profit in order to keep your money.  It's a loan at this point.  Right now cruise lines and airlines are living on credit.  If you have paid money for a future cruise or paid up for a cancelled cruise, you are a creditor. 

 

Cruise lines and airlines can't shed expenses fast enough and can't generate cash to offset these looming liabilities.  They are great businesses until the merry go round quits turning.  It came to a grinding halt in March.  Things will change for all the cruise lines, it's just a question of how.  Only time will provide that answer.  Until then, be very glad that you paid for your cruise with an credit card.  Credit card companies hold back a portion of funds from a company and watch that company's liabilities very carefully.  When the credit card companies start putting the screws to the cruise lines, you will know the end is nigh.  I certainly hope it won't come to that.  I enjoy cruising.  

[Dolebludger]

orvil,

 

Yours is a great post, explanation, and prediction. 

[Steve Q]

39 minutes ago, orvil said:

Back to solvency.  The money that we pay in advance for our tickets is all aggregated and placed on the balance sheet as a liability.  Much of that money is already spent in capital expenses before the service every occurs.  Once the cruise starts, these funds are moved to the other side of the balance sheet and used to offset expenses.  What is leftover is profit.  The reason these are carried as liabilities is they are funds in advance of a service and theoretically might have to be paid back.

 

Cruise lines and airlines are cash flow businesses.  As long as there is cash flow, the business is able to pay their liabilities with current bookings.  If you can't book new business, you had better have enough liquid assets to offset that liability number.  Right now, they can't do that.  If you don't or can't mortgage assets for cash, you will be bankrupt.  If you have enough assets but they aren't very liquid, you may be able to reorganize under bankruptcy to restart the business.  If you don't, you liquidate.

 

This is the situation that cruise lines and airlines find themselves experiencing.  No amount of goodwill will solve this problem.  The only solution is cash flow and it helps by keeping those advanced ticket payments in the bank account and not redeemed.  That future cruise credit is really a loan against cash flow.  Out of that 25% they are removing interest and profit in order to keep your money.  It's a loan at this point.  Right now cruise lines and airlines are living on credit.  If you have paid money for a future cruise or paid up for a cancelled cruise, you are a creditor. 

 

Cruise lines and airlines can't shed expenses fast enough and can't generate cash to offset these looming liabilities.  They are great businesses until the merry go round quits turning.  It came to a grinding halt in March.  Things will change for all the cruise lines, it's just a question of how.  Only time will provide that answer.  Until then, be very glad that you paid for your cruise with an credit card.  Credit card companies hold back a portion of funds from a company and watch that company's liabilities very carefully.  When the credit card companies start putting the screws to the cruise lines, you will know the end is nigh.  I certainly hope it won't come to that.  I enjoy cruising.  

Excellent post.

I wonder how many of our fellow CC posters are deciding to make the final payment for an upcoming cruise and how many are cancelling. Also, how many are putting deposits on future cruises. That, I suspect, is the determining factor in where we really stand on the solvency Norwegian.

[tripperva]

Good post Orvil.

[Wendy The Wanderer]

This is pretty concerning, considering credit cards have a 60-day window for disputes (but I'll have to check that with Amex Canada to be sure), but that Regent says it might take 90 days to get a refund.  Hmm.  Guess I'll start worrying about that in a few weeks.

 

I think many people are postponing their cruises rather than cancelling.  We just decided not to take that risk since it's a 5 figure deposit.

[Foggyzx9r]

Thanks Orvil for a very succinct explanation.