66% of NCL's advance ticket sales are FCC?!?

[AstoriaPreppy]

Just read the following news piece about the NCLH investors call, and this bit made my eyes pop out: (bolding mine) 

 

"Pent-up consumer demand is still driving bookings for 2021, according to NCLH, which notes that the corporation had $1.2 billion in advance ticket sales as of June 30. Approximately $0.8 billion of that is future cruise credits."

 

This seems... insane? Assuming that this includes CruiseNext deposits, this means 2/3 of NCL's future bookings is money that they've already got/spent? 

Maybe someone who is better with financials can more thoroughly explain, because this doesn't seem to bode well for future cash flow once things restart. 

[ABoatNerd]

AstoriaPreppy, thank you for posting this information.

 

"Pent up demand" - fascinating reworking of the past customers bookings.

 

Not a good situation. None of my friends have any interest in cruising going forward - all took refunds. None have made a future booking and will not book in the future.

 

We are however, examining Globus tours and other high end tour companies for the future. 

[HaveWeMetYet]

That information was as of June 30. I bet it is a lot worse today as most people are not booking anything with all the cancellations going on and more people with canceled cruises are taking the refund and getting out of the aggravation of constantly rebooking.

[luv2kroooz]

About what I would have expected. Regardless of what NCL wants you to believe,  they are no different than other parts of the travel industry including competitor cruise lines, hotels, airplanes, and amusement parks. Look at Disney's park attendance. Way below what they thought. In fact, many parks are actually reducing operating hours and days due to the lack of demand. The only meaningful demand for cruising is from people that have value tied in up in expiring FCCs.

[Trimone]

All new booking should be suspended, until a cruise date is set in stone, they are taking hardworking customers money with no date in sight, they have no other form of income before they sail again. It’s all promises 

[adam_s_allen]

I’m surprised they have 400 million in future bookings that aren’t FCC 

[Paul Bogle]

The surprise is that appx 400 million in cash was received for new cruises. 

 

Cruising from USA ports is in limbo. When it will restart is as obscure as it was several months ago.

[Fido Chuckwagon]

4 hours ago, AstoriaPreppy said:

Just read the following news piece about the NCLH investors call, and this bit made my eyes pop out: (bolding mine) 

 

"Pent-up consumer demand is still driving bookings for 2021, according to NCLH, which notes that the corporation had $1.2 billion in advance ticket sales as of June 30. Approximately $0.8 billion of that is future cruise credits."

 

This seems... insane? Assuming that this includes CruiseNext deposits, this means 2/3 of NCL's future bookings is money that they've already got/spent? 

Maybe someone who is better with financials can more thoroughly explain, because this doesn't seem to bode well for future cash flow once things restart. 

You’d have to be unbelievably dumb to give actual money to these about to become insolvent companies at this point so I think a better question is who are the 44 percent?

[Trimone]

I don’t believe there is a 44% I think it’s all mirrors, robbing Peter to pay Paul...

[hallux]

Glass half full - they only have $400 million left to convert to actual cruises, FCC or refunds.

[luv2kroooz]

4 hours ago, Trimone said:

All new booking should be suspended, until a cruise date is set in stone, they are taking hardworking customers money with no date in sight, they have no other form of income before they sail again. It’s all promises 

I agree. However, unless living under a rock for the past six months, anyone voluntarily booking cruises at this point ought to understand there is substantial economic and health risks associated with said booking.

[npcl]

6 hours ago, AstoriaPreppy said:

Just read the following news piece about the NCLH investors call, and this bit made my eyes pop out: (bolding mine) 

 

"Pent-up consumer demand is still driving bookings for 2021, according to NCLH, which notes that the corporation had $1.2 billion in advance ticket sales as of June 30. Approximately $0.8 billion of that is future cruise credits."

 

This seems... insane? Assuming that this includes CruiseNext deposits, this means 2/3 of NCL's future bookings is money that they've already got/spent? 

Maybe someone who is better with financials can more thoroughly explain, because this doesn't seem to bode well for future cash flow once things restart. 

Most of the time the cruise lines have spent the money as fast as it comes it the door.  For example prior to COVID NCLH had over 2 billion in customer deposits liability, but less than 500 million in cash. The only difference is now it is FCC's and the customers can not get it back as a refund whereas before they had that option. But in either case the money was spent before the customer ever boarded the ship.

 

The real question is how fast they start getting cash bookings once cruising restarts.  The new booking cash flow will be critical.

[Fido Chuckwagon]

2 hours ago, Fido Chuckwagon said:

You’d have to be unbelievably dumb to give actual money to these about to become insolvent companies at this point so I think a better question is who are the 44 percent?

34 percent rather.

[littlelulu01]

2 hours ago, Fido Chuckwagon said:

You’d have to be unbelievably dumb to give actual money to these about to become insolvent companies at this point so I think a better question is who are the 44 percent?

Cruise nexts?  I used some cruise nexts along with the fcc’s and 25% discounts.  I didn’t give any additional $ but did get some sailings booked for 2021. 
 

idk what will actually happen when businesses start honoring all the credits.  Airfare and cruises will have the credits dispersed over a couple years but what about stuff like concerts?  Makes no sense with  2020 canceled and rescheduled for 2021.  They were paid for 2020 and then working for free in 2021? 

[Fido Chuckwagon]

1 minute ago, littlelulu01 said:

Cruise nexts?  I used some cruise nexts along with the fcc’s and 25% discounts.  I didn’t give any additional $ but did get some sailings booked for 2021. 
 

idk what will actually happen when businesses start honoring all the credits.  Airfare and cruises will have the credits dispersed over a couple years but what about stuff like concerts?  Makes no sense with  2020 canceled and rescheduled for 2021.  They were paid for 2020 and then working for free in 2021? 

Yeah but if you’re just using previous deposits you’re not adding new money so you’re in the 66 percent.  It’s the 34 percent that is flabbergasting.  A fool and his money I guess. 

[ziggyuk]

The new booking are much higher that it appears.

 

All those FFC customers are paying huge payments upfront, but those new bookings have only paid a deposit so although it only appears to be 34%, there is a lot more money to come once those customers reach final payment date.

 

The fact that customers with FCC's make such a big payment upfront will always skew the figures massively.

 

$ from advance ticket sales might be 2/3 v 1/3 but customer volume will be the opposite.

[Turtles06]

6 hours ago, Trimone said:

All new booking should be suspended, until a cruise date is set in stone, they are taking hardworking customers money with no date in sight, they have no other form of income before they sail again. It’s all promises 

Well, no one is forcing those hardworking customers to pay over any money. 

[BirdTravels]

12 hours ago, HaveWeMetYet said:

That information was as of June 30. I bet it is a lot worse today as most people are not booking anything with all the cancellations going on and more people with canceled cruises are taking the refund and getting out of the aggravation of constantly rebooking.

The metrics in the statement above would say otherwise.

 

The data point is only a month old and there are probably no end-of-July metrics available yet. So, you would probably lose that bet. 

 

So far, we have taken the FCC on all of our cancelled cruises (the most recent one cancelling on 7/29/20). We rebooked using that FCC on 7/30. So we're contributing to the 66%... taking the 25% bonus plus the $300 in OBC under the current promotion. 

[HaveWeMetYet]

14 hours ago, ziggyuk said:

The new booking are much higher that it appears.

 

All those FFC customers are paying huge payments upfront, but those new bookings have only paid a deposit so although it only appears to be 34%, there is a lot more money to come once those customers reach final payment date.

 

The fact that customers with FCC's make such a big payment upfront will always skew the figures massively.

 

$ from advance ticket sales might be 2/3 v 1/3 but customer volume will be the opposite.

Thats not the way it works.

The 1.2 billion in advance ticket sales is the full price of the cruise not just the deposit.

[HuliHuli]

On 8/7/2020 at 11:29 AM, AstoriaPreppy said:

Approximately $0.8 billion of that is future cruise credits."  ...  Assuming that this includes CruiseNext deposits, this means 2/3 of NCL's future bookings is money that they've already got/spent? 

Future Cruise Credits are not the same as CruiseNext deposits.  They are segregated on your account and "refunded" in like-kind credits when cruises are cancelled.

 

17 hours ago, npcl said:

Most of the time the cruise lines have spent the money as fast as it comes it the door. 

The financial statements and logic do not support this statement.  If that were the case, they would not have had the cash reserves they had at the start of this pandemic.

[chipmaster]

On 8/7/2020 at 8:29 AM, AstoriaPreppy said:

Just read the following news piece about the NCLH investors call, and this bit made my eyes pop out: (bolding mine) 

 

"Pent-up consumer demand is still driving bookings for 2021, according to NCLH, which notes that the corporation had $1.2 billion in advance ticket sales as of June 30. Approximately $0.8 billion of that is future cruise credits."

 

This seems... insane? Assuming that this includes CruiseNext deposits, this means 2/3 of NCL's future bookings is money that they've already got/spent? 

Maybe someone who is better with financials can more thoroughly explain, because this doesn't seem to bode well for future cash flow once things restart. 

 

Very simple, they booked cash in their account, canceled cruises, and posted a loss and will continue to post a lost.   

 

When they sail ( which they won't till 2022 ) they won't actually get any cash, LOL.

 

[adam_s_allen]

3 minutes ago, chipmaster said:

 

Very simple, they booked cash in their account, canceled cruises, and posted a loss and will continue to post a lost.   

 

When they sail ( which they won't till 2022 ) they won't actually get any cash, LOL.

 

They will get cash from on-board spending.

[npcl]

3 hours ago, HaveWeMetYet said:

Thats not the way it works.

The 1.2 billion in advance ticket sales is the full price of the cruise not just the deposit.

Nope.  The 1.2 billion is all monies received for cruises not yet taken, in whatever form received cash deposits, fcc's etc. It does include deposits.

 

It is strictly the amount the company is liable for in case those cruises are not conducted and the value must be refunded.

 

 

[npcl]

31 minutes ago, chipmaster said:

 

Very simple, they booked cash in their account, canceled cruises, and posted a loss and will continue to post a lost.   

 

When they sail ( which they won't till 2022 ) they won't actually get any cash, LOL.

 

No, but the second that it appears that sailing will truly start back up they will start to receive new cash deposits and booking.  Keep in mind that cruise lines with their final payment dates have been receiving and spending the case months before the cruise actually sails and is booked as revenue.

 

The deposits and payments is when they restart is what will determine if they survive, not the fact that a percentage of around 12-15%(approximately 1/8 of the first 12-18 months) bookings will be using FCC's.  The 1/8 is calculated by using that approximately 1 quarters revenue was in the prepaid booking category and approximately 1/2 of that amount was returned as FCC's.  Since people are using those FCC's to book over a range of 2021 and 2022 dates, the impact will be spread out over that period.

 

That means that 85-88% for each cruise during that time will be cash flow for the cruise line as well as the on board spend.

 

Even if all of the FCC's were magically assigned to the first cruises it would only be for about 6 weeks of a fully run schedule and they would be receiving cash deposits and payments for almost twice that period.

 

It all comes down to rate of new bookings.

 

Which as Del Rio stated that he was surprised people were still booking.

Edited August 8, 2020 by npcl

[chipmaster]

1 hour ago, npcl said:

No, but the second that it appears that sailing will truly start back up they will start to receive new cash deposits and booking.  Keep in mind that cruise lines with their final payment dates have been receiving and spending the case months before the cruise actually sails and is booked as revenue.

 

The deposits and payments is when they restart is what will determine if they survive, not the fact that a percentage of around 12-15%(approximately 1/8 of the first 12-18 months) bookings will be using FCC's.  The 1/8 is calculated by using that approximately 1 quarters revenue was in the prepaid booking category and approximately 1/2 of that amount was returned as FCC's.  Since people are using those FCC's to book over a range of 2021 and 2022 dates, the impact will be spread out over that period.

 

That means that 85-88% for each cruise during that time will be cash flow for the cruise line as well as the on board spend.

 

Even if all of the FCC's were magically assigned to the first cruises it would only be for about 6 weeks of a fully run schedule and they would be receiving cash deposits and payments for almost twice that period.

 

It all comes down to rate of new bookings.

 

Which as Del Rio stated that he was surprised people were still booking.

 

Booking with FCC is simply a shell game and someday this has to get reconciled, it'll be an interesting end game coming.