Is There a Capacity Minimum that Must Be Reached or A Cruise is Cancelled?

[teacherman]

We are scheduled for a Reflection cruise in January.  I did a "dummy" booking the other day and was somewhat shocked at the number of balcony cabins that were still available.  Do any of you know if there is some type of capacity that must be reached or the cruise is cancelled?  I realize that many ships are sailing with very low passenger counts, but this is low season and Covid is still very much in the news.  I thought bookings would start to pick up come winter.  Covid has now been with us for 18 months, or more, and vaccines are readily available.  If passenger counts are so low now when there are few ships available, then what happens when more ships are added.  Just looking for any information some of you may have on this topic.

[cangelmd]

No one knows the future, but according to CNBC cruise stocks are up some on strong bookings. Typically, labor is the largest expense of a business, but that might not be as true of the cruise industry where they don’t follow American or EU standards. How much does it cost to keep ships on standby.

We have a Feb cruise on Reflection, so I know where you are headed with this. Some persons here on CC with more local or industry knowledge have said that there are signs that Reflection is in the start-up process - exact start date may be in doubt, but before Christmas.

Our plan is to be ready to switch to another ship if necessary after final payment or take a refund. We may be on a position to drive to FLL at that point, which makes waiting much easier.

[Phxazzcruisers]

Look at the dummy booking and see if there are still a lot of Suites available.  On our last cruise in August, there were a lot of veranda rooms available, but the suites were totally sold out.  That is want the cruise lines want, the majority of the expensive rooms sold first.

[TeeRick]

@teacherman

Your question is a good one.  Here are a few thought I have.  At some point the cruise lines will need to make financial decisions based on capacity projections.  And without artificial backlogs due to replacement of cancelled cruises and demand because of passengers with FCC.   Presently they are just trying to start up and to appear normal to attract willing customers even at the high prices existing now.  I don’t really think they will fully rebound to pre-pandemic levels for perhaps years. And they are still building and launching huge new ship with new capacity.  Two things will happen IMO.  Fewer older ships will be brought back to operations and there will be fewer cruises overall with more limited itineraries.  And hopefully prices become a bit more reasonable.  

[D C]

2 hours ago, teacherman said:

We are scheduled for a Reflection cruise in January.  I did a "dummy" booking the other day and was somewhat shocked at the number of balcony cabins that were still available.  Do any of you know if there is some type of capacity that must be reached or the cruise is cancelled?  I realize that many ships are sailing with very low passenger counts, but this is low season and Covid is still very much in the news.  I thought bookings would start to pick up come winter.  Covid has now been with us for 18 months, or more, and vaccines are readily available.  If passenger counts are so low now when there are few ships available, then what happens when more ships are added.  Just looking for any information some of you may have on this topic.

Which cruise are you looking at? I checked a couple, including my 29-Jan Reflection and it looks about the same as before and more booked than I see a lot of cruises sailing at right now.  

[DCPIV]

If there actually is a minimum, I don't know what it is. We sailed at 25% on Summit a couple months ago, and I hear that may be even lower when I'm back on board next week. 

 

As has been said, they are more concerned with showing that cruising can be done safely than they are about making money. It's a long view situation. 

[zitsky]

How are you all finding out what the capacity is when you sail?  Who are the staff to ask?  And is there any way to find out how full a ship is *before* you cruise?

[hasentreelake]

26 minutes ago, DCPIV said:

If there actually is a minimum, I don't know what it is. We sailed at 25% on Summit a couple months ago, and I hear that may be even lower when I'm back on board next week. 

 

 

Just off the Summit and we sailed at 15% (325 passengers out of a total capacity of 2158)
We were told they sailed this week with 10% or just over 200 passengers.
That said - Retreat was near 100% full.

[hasentreelake]

8 minutes ago, zitsky said:

How are you all finding out what the capacity is when you sail?  Who are the staff to ask?  And is there any way to find out how full a ship is *before* you cruise?

The concierge staff was more than eager to tell us once we were checked in.
They would not tell us about our Nov cruise.  Their position was there will be lots of adds and drops before November.

[teacherman]

Like many people, we fly to our embarkation city.  And we arrive a day early.  So, now, we have to test on Monday, fly on Tuesday, and embark on Wednesday.  Seems stressful and tricky.  We would normally have our air tickets already, but have not even seriously considered buying them yet.  So, price of those tickets will probably increase.  I hope they drop the test mandate for people who are fully vaxxed and can show proof of it.

[jelayne]

 We do the same as you, arrive at least the day before.  The BinaxNOW tests make this less complicated.  We plan to test on Thursday morning, if negative finish packing and fly out Friday morning and board the ship Saturday.

[Guppy99]

How can anyone answer this question?  There are so many tangible and intangible factors that would go into such a decision.

 

Examples;

1- is it a round trip or one way, and the ship has to be at the other end timely?

2 - do they still have an obligation to pay and/or house vendors and employees?

3 - is there port space available?

4 - what is the cost per passenger so the ship might at least break even?

5 - what is the brand and/or good will damage if a sailing is cancelled? The answer to this one also moves with the market conditions.

 

Anyone here who offers any kind of definitive answer is purely guessing.

 

[zitsky]

36 minutes ago, Guppy99 said:

How can anyone answer this question?  There are so many tangible and intangible factors that would go into such a decision.

 

Examples;

1- is it a round trip or one way, and the ship has to be at the other end timely?

2 - do they still have an obligation to pay and/or house vendors and employees?

3 - is there port space available?

4 - what is the cost per passenger so the ship might at least break even?

5 - what is the brand and/or good will damage if a sailing is cancelled? The answer to this one also moves with the market conditions.

 

Anyone here who offers any kind of definitive answer is purely guessing.

 

 

It may be difficult for you.  It will be interesting to see if someone has a guess.

[LGW59]

45 minutes ago, Guppy99 said:

How can anyone answer this question?  There are so many tangible and intangible factors that would go into such a decision.

 

Examples;

1- is it a round trip or one way, and the ship has to be at the other end timely?

2 - do they still have an obligation to pay and/or house vendors and employees?

3 - is there port space available?

4 - what is the cost per passenger so the ship might at least break even?

5 - what is the brand and/or good will damage if a sailing is cancelled? The answer to this one also moves with the market conditions.

 

Anyone here who offers any kind of definitive answer is purely guessing.

 

we should ask the magic 8 ball

[CTKath]

11 hours ago, cangelmd said:

 

We have a Feb cruise on Reflection, so I know where you are headed with this. Some persons here on CC with more local or industry knowledge have said that there are signs that Reflection is in the start-up process - exact start date may be in doubt, but before Christmas.

I hope you are wrong about the Reflection, as I am on the November 6th sailing - the first one out.  I haven’t heard that it might be delayed.  Where do you get your info?

[BigTorino]

What occupancy does Royal Caribbean Group need on its ships to be at a break even point for cashflow?

Somewhere between 35 and 50 percent, depending on the ship, according to Jason Liberty, executive vice president and CFO.

“The ships are accretive to us around that 35% to 50% mark,” he said, on the company’s second quarter earnings call.

“And obviously, the newer, larger ships are closer to 35%. And older, smaller ships are closer to that 50%.”

 

According to Cruise industry news, Aug 6, 2021

[MR_T]

I am currently on the Apex and although it looked like the retreat was sold out online guest relations said it’s not but they are limited to how many people can be in there as it’s a smaller area so I guess they are just holding suites back so they can’t be full in there! I guess the same system they are using on the rest of the ship when cruises get to near the capacity levels they want as a maximum.

 

this week there’s just over 1000 onboard and next week it’s around 500 and I was told the transatlantic that follows next weeks cruise is around 1800 which I believe is where celebrity want to max out currently... 

[MR_T]

8 hours ago, BigTorino said:

What occupancy does Royal Caribbean Group need on its ships to be at a break even point for cashflow?

Somewhere between 35 and 50 percent, depending on the ship, according to Jason Liberty, executive vice president and CFO.

“The ships are accretive to us around that 35% to 50% mark,” he said, on the company’s second quarter earnings call.

“And obviously, the newer, larger ships are closer to 35%. And older, smaller ships are closer to that 50%.”

 

According to Cruise industry news, Aug 6, 2021

I saw an interview with royals ceo and he said their average was around 40% to break even so you’re reports sounds about right

[Guppy99]

12 hours ago, BigTorino said:

What occupancy does Royal Caribbean Group need on its ships to be at a break even point for cashflow?

Somewhere between 35 and 50 percent, depending on the ship, according to Jason Liberty, executive vice president and CFO.

“The ships are accretive to us around that 35% to 50% mark,” he said, on the company’s second quarter earnings call.

“And obviously, the newer, larger ships are closer to 35%. And older, smaller ships are closer to that 50%.”

 

According to Cruise industry news, Aug 6, 2021

That is based on a complete compliment of crew. Ships are currently sailing with a very scaled down crew. Therefore these statistics are not accurate under these conditions.

[Jeremiah1212]

The best place to look for their true outlook would be the last quarter report:

 

https://www.sec.gov/ix?doc=/Archives/edgar/data/884887/000088488721000018/rcl-20210630.htm

 

It doesn't necessarily make sense to deploy a ship then cancel particular sailings one week at a time. There are a lot of costs associated when the ship is crewed that they will incur if the ship has passengers or not. They would also likely offer everyone onboard an extra 25% FCC in this case which adds to the cost. Pre/eary-Delta variant they were expecting ~80% capacity around the holiday cruises. Doubtful that number is achievable now. Ships that are sailing are also not staffed to support 100% occupancy either.

 

 

[zitsky]

2 hours ago, Guppy99 said:

That is based on a complete compliment of crew. Ships are currently sailing with a very scaled down crew. Therefore these statistics are not accurate under these conditions.

 

Uhh.  I think the CFO might have more data than we do.

[elaineb]

On 9/27/2021 at 8:04 AM, cangelmd said:

No one knows the future, but according to CNBC cruise stocks are up some on strong bookings. Typically, labor is the largest expense of a business, but that might not be as true of the cruise industry where they don’t follow American or EU standards. How much does it cost to keep ships on standby.

We have a Feb cruise on Reflection, so I know where you are headed with this. Some persons here on CC with more local or industry knowledge have said that there are signs that Reflection is in the start-up process - exact start date may be in doubt, but before Christmas.

Our plan is to be ready to switch to another ship if necessary after final payment or take a refund. We may be on a position to drive to FLL at that point, which makes waiting much easier.

Our Reflection cruise, Nov 6th is supposed to be the 1st one.

[Guppy99]

4 hours ago, zitsky said:

 

Uhh.  I think the CFO might have more data than we do.

I think those comments are old. That's the point.  duh..

[Baron Barracuda]

In their earnings report last week CCL reported delta variant caused bookings to slow in 3rd qtr.  NCLH made similar comments.  Expect RCL brands are experiencing same slowdown.

 

Regarding break-evens.  Yes, Jason Liberty has commented in the past that it runs from 30% on newer/larger ships to 50% on older/smaller but in current environment sailing at even lower loads is likely more attractive than allowing fully crewed ship to sit idly at anchor.

[TeeRick]

On 9/27/2021 at 1:22 PM, teacherman said:

Like many people, we fly to our embarkation city.  And we arrive a day early.  So, now, we have to test on Monday, fly on Tuesday, and embark on Wednesday.  Seems stressful and tricky.  We would normally have our air tickets already, but have not even seriously considered buying them yet.  So, price of those tickets will probably increase.  I hope they drop the test mandate for people who are fully vaxxed and can show proof of it.

Yes this 2-day testing time frame is a big issue even with the at-home tests.  It is usual to fly in the day before.  It does not give people flying a significant distance with connections much of a chance to test before they leave home.  Testing after flying to the port city is OK for some but too much of a risk for others.  What happens if you get a positive test?  How do you get home or quarantine? Celebrity will only take care of you if you test positive once you are on board.  Not before check in.