What do Celebrity do to manage their financial situation

[bnurick]

9 hours ago, BermudaBound2014 said:

 

Since we are speculating. I think CCL is big enough to piece out their line. The Saudi Sovereignty already owns about 10% off CCL. Huge port going in at Dubai. I see CCL selling off the entire Seabourn line and maybe one of their smaller lines. They already are piecing out Costa ships and adding Costa ships to Carnival and calling it something like Carnival Italiano (I forget the exact name).

 

IMO: NCL is in the weakest position to survive. They are a step ahead of RCL and CCL in terms of layoffs. They are just so small in comparison. They have also had the largest insider trading lately.

 

For what it's worth (and since we are speculating); I see MSC coming off as the big winner here. They have very minimal debt thanks to a nice bail out from momma and daddy MSC Shipping (which is one of the worlds largest container shipping companies). Therefore they aren't strapped to the interest payments and they are positioned with a beautiful fleet. If I'm not mistaken, they nudged out NCL  and is officially the third largest cruise company. They are privately held, so no rushing off to buy their stock lol 🙂 

 

I still see shorts as the play. 

Need to add Disney to the thesis too, own their entertainment, adding ships and evolving their focus.  Don’t rule out a shift in a more broad focus.

 

I see a credit event for CCL, but time will tell.  Been short the industry for awhile in full disclosure.

[BermudaBound2014]

1 hour ago, bnurick said:

Need to add Disney to the thesis too, own their entertainment, adding ships and evolving their focus.  Don’t rule out a shift in a more broad focus.

 

I see a credit event for CCL, but time will tell.  Been short the industry for awhile in full disclosure.

 

Yep, Disney is a player. I went full disclosure at the 'great reset" (July 2021). Got a lot of laughs on these forums. People said I was crazy. I took some serious criticism but saw it as a safe play (as safe as shorts can be). Cruise lines have so many strikes working against them; shuttered for 18 months, strict covid protocols upon return, interest rates, fuel prices, image of a petri dish, etc..., ect... ect.... 

 

They still can't fill ships. I call BS on all this talk of 'record bookings' for 2023. The data is skewed because there is record inventory available. In other words, when they release a huge Black Friday sale there are simply more cabins available to book, doesn't mean the ships are selling at capacity loads. Then throw in $1 deposits (princess) or $25 (HAL) and sure bookings will increase. One only needs to read the forums to see how many free casino cruises they are giving away so they can report higher load factors.  The quarterlies tell the story. NCL and CCL are both still in the 80% load range with RCL doing better @96%, but all three are still increasing debt as I type. It's all about the debt and ability to kick the can.

 

The market was Bear in 2022, but cruise line stocks preformed dismally: 

CCL down 59.94% 

RCL down 36.72% 

NCLH down 40.98% 

 

Shorts were the play. I believe shorts still are the play but with less opportunity for major gains. It has not been fun betting against an industry I love, but it has been profitable. 

 

 

Edited January 10, 2023 by BermudaBound2014

[bnurick]

2 minutes ago, BermudaBound2014 said:

 

Yep, Disney is a player. I went full disclosure at the 'great reset" (July 2021). Got a lot of laughs on these forums. People said I was crazy. I took some serious criticism but saw it as a safe play (as safe as shorts can be). Cruise lines have so many strikes working against them; shuttered for 18 months, strict covid protocols upon return, interest rates, fuel prices, image of a petri dish, etc..., ect... ect.... 

 

They still can't fill ships. I call BS on all this talk of 'record bookings' for 2023. The data is skewed because there is record inventory available. In other words, when they release a huge Black Friday sale there are simply more cabins available to book, doesn't mean the ships are selling at capacity loads. Then throw in $1 deposits (princess) or $25 (HAL) and sure bookings will increase. One only needs to read the forums to see how many free casino cruises they are giving away so they can report higher load factors.  The quarterlies tell the story. NCL and CCL are both still in the 80% load range with RCL doing better @96%, but all three are still increasing debt as I type. It's all about the debt and ability to kick the can.

 

The market was Bear in 2022, but cruise line stocks preformed dismally: 

CCL down 59.94% 

RCL down 36.72% 

NCLH down 40.98% 

 

Shorts were the play. I believe shorts still are the play but with less opportunity for major profit margins. 

 

 

 

Could not agree more...

[NorthStarStateCruiser]

11 hours ago, mpdog42 said:

Thanks for your support. I understand what you’re trying to say but you’re not explaining your post that’s what I’m interested in. Please explain to me your original post and the opinion you have !!!!as I’ve said it sounds like.post straight from Celebrity…. And that’s not some kind of attack.

I appreciate you clearing the air.  I do understand how my first response regarding the food sounded very sided towards Celebrity and that may be due to me being an optimist in most situations.  However, I do feel as though Celebrity has an opportunity to increase the quality of their food while cutting costs in order to stay profitable given the recent surge in food costs.  When a business dedicates efforts towards a smaller subset of activities (in this case food options) that allows for better control of those pared-down activities.  Cut the fat out (literally) and get down to the good stuff. 

 

There will be those that are very directly affected by these changes and will see these efforts as a way of downgrading the product, but Celebrity likely can't just keep kicking the can down the road and stay profitable at the same time.  The thought I had is if Celebrity can increase the overall food experience (faster and more attentive service at the MDR) and quality of the food offered (by paring down the menu to increase focus and quality) there may be a net gain in customer satisfaction to offset those who see the changes as detrimental to their vacation experience.

 

Again, thinking optimistically here and it's entirely possible that the management met and decided the easiest ways to cut costs is to reduce dinner service in the OVC and add a charge for room service.  However, I doubt that decision was made so shortsightedly.

[RichYak]

8 minutes ago, NorthStarStateCruiser said:

Again, thinking optimistically here and it's entirely possible that the management met and decided the easiest ways to cut costs is to reduce dinner service in the OVC and add a charge for room service.  However, I doubt that decision was made so shortsightedly.

I think realistically, not optimistically, which makes me wonder what's next. The new policies seem intent on driving more traffic to the MDRs. Why is that? Are there new "revenue enhancements" in store for the MDR? Upcharges for certain menu items? Time will tell. I hope I'm wrong.

[NorthStarStateCruiser]

1 minute ago, RichYak said:

I think realistically, not optimistically, which makes me wonder what's next. The new policies seem intent on driving more traffic to the MDRs. Why is that? Are there new "revenue enhancements" in store for the MDR? Upcharges for certain menu items? Time will tell. I hope I'm wrong.

I hope better deserts. That was a huge miss for Celebrity on my December cruise.

[graphicguy]

On 1/8/2023 at 10:29 AM, NutsAboutGolf said:

 

Companies carrying massive debts is nothing new and there isn't a NEED to get out of it quickly

 

It seems what they're trying to do is to further differentiate the Retreat as it seems to be immune from the new fees and cuts

Agree!  I don’t know what their analytics are telling them, and what they are looking at.  But, emphasizing their “premium” experiences, as in the Retreat, allows for higher margins per passenger.

[Ipeeinthepools]

On 1/8/2023 at 10:54 AM, Los_Pepes said:

The top three major cruise lines took on incredible amounts of additional debt during Covid. RCL even issued 11% junk bonds last year to restructure existing debt. 

 

 

Let's see if my math is correct, if it is RCL has a much bigger problem than I thought.  So based on this table RCL took on about $11 billion in additional debt from 2019 to the end of 2021.

 

From a recent article on Cruisehive RCL has about 90,000 berths at double occupancy.  

 

"In total, Royal Caribbean’s fleet can welcome as many as 89,700 guests at a single time at double occupancy (nearly 113,000 when fully booked with all berths filled)."

 

So let's assume RCL was going to pay off the debt in one year.  If you divide $11B by 365 you get about $30 million per day.  So this means that RCL would need to generate another $30 million in income every day of the year to pay down the debt to 2019 levels in one year.

 

Let's say the extend the payment time to 10 years, then they would only need to generate an additional $3 million a day in 10 years

 

Based on RCL's double occupancy berths of 90,000, this means that every passenger would need to pay an additional $33/day every day of the year to pay down the debt in 10 years, not accounting for interest.  Also assumes that the ships are sailing at 100% capacity.

 

Is everyone prepared to spend an additional $233 per week to pay off the Covid debt?

[LGW59]

28 minutes ago, Ipeeinthepools said:

 

Let's see if my math is correct, if it is RCL has a much bigger problem than I thought.  So based on this table RCL took on about $11 billion in additional debt from 2019 to the end of 2021.

 

From a recent article on Cruisehive RCL has about 90,000 berths at double occupancy.  

 

"In total, Royal Caribbean’s fleet can welcome as many as 89,700 guests at a single time at double occupancy (nearly 113,000 when fully booked with all berths filled)."

 

So let's assume RCL was going to pay off the debt in one year.  If you divide $11B by 365 you get about $30 million per day.  So this means that RCL would need to generate another $30 million in income every day of the year to pay down the debt to 2019 levels in one year.

 

Let's say the extend the payment time to 10 years, then they would only need to generate an additional $3 million a day in 10 years

 

Based on RCL's double occupancy berths of 90,000, this means that every passenger would need to pay an additional $33/day every day of the year to pay down the debt in 10 years, not accounting for interest.  Also assumes that the ships are sailing at 100% capacity.

 

Is everyone prepared to spend an additional $233 per week to pay off the Covid debt?

yes

[Cruising Cindy Lou]

45 minutes ago, Ipeeinthepools said:

 

Let's see if my math is correct, if it is RCL has a much bigger problem than I thought.  So based on this table RCL took on about $11 billion in additional debt from 2019 to the end of 2021.

 

From a recent article on Cruisehive RCL has about 90,000 berths at double occupancy.  

 

"In total, Royal Caribbean’s fleet can welcome as many as 89,700 guests at a single time at double occupancy (nearly 113,000 when fully booked with all berths filled)."

 

So let's assume RCL was going to pay off the debt in one year.  If you divide $11B by 365 you get about $30 million per day.  So this means that RCL would need to generate another $30 million in income every day of the year to pay down the debt to 2019 levels in one year.

 

Let's say the extend the payment time to 10 years, then they would only need to generate an additional $3 million a day in 10 years

 

Based on RCL's double occupancy berths of 90,000, this means that every passenger would need to pay an additional $33/day every day of the year to pay down the debt in 10 years, not accounting for interest.  Also assumes that the ships are sailing at 100% capacity.

 

Is everyone prepared to spend an additional $233 per week to pay off the Covid debt?

Or instead if ships not sailing full and they don't want to raise prices enormously, they try to find things they can do to help them with their expenditures.   Cut back on some of the cuts of meat and cut back on food.  Keep the staff down to minimum. Try to cut back as much as they can without pissing off the customer base too much.   

We have cruised on 3 different lines in last 5 months.  You can see things are not the same for any of the lines post covid.  I feel like they are trying hard, but have to come up with some cuts to help them survive.  None of the ships I sailed on were any where near full.  I am trying to be patient.  I love to cruise and would love them to survive this mess.  

[C4HCG]

1 hour ago, Ipeeinthepools said:

 

Let's see if my math is correct, if it is RCL has a much bigger problem than I thought.  So based on this table RCL took on about $11 billion in additional debt from 2019 to the end of 2021.

 

From a recent article on Cruisehive RCL has about 90,000 berths at double occupancy.  

 

"In total, Royal Caribbean’s fleet can welcome as many as 89,700 guests at a single time at double occupancy (nearly 113,000 when fully booked with all berths filled)."

 

So let's assume RCL was going to pay off the debt in one year.  If you divide $11B by 365 you get about $30 million per day.  So this means that RCL would need to generate another $30 million in income every day of the year to pay down the debt to 2019 levels in one year.

 

Let's say the extend the payment time to 10 years, then they would only need to generate an additional $3 million a day in 10 years

 

Based on RCL's double occupancy berths of 90,000, this means that every passenger would need to pay an additional $33/day every day of the year to pay down the debt in 10 years, not accounting for interest.  Also assumes that the ships are sailing at 100% capacity.

 

Is everyone prepared to spend an additional $233 per week to pay off the Covid debt?

Explains the almost impossible problem they have to solve and should be borne in mind by everyone is complaining so loudly (and maybe with justification, I don’t know). Seems to me the only viable alternative to seeking cost cuts is to cease trading. talking about all lines, not just Celebrity, sure everyone on here would prefer to live with the cuts and reduced quality than see that happen.

[grandgeezer]

1 hour ago, C4HCG said:

Explains the almost impossible problem they have to solve and should be borne in mind by everyone is complaining so loudly (and maybe with justification, I don’t know). Seems to me the only viable alternative to seeking cost cuts is to cease trading. talking about all lines, not just Celebrity, sure everyone on here would prefer to live with the cuts and reduced quality than see that happen.

Not everyone. It comes down to perceived value. If you think the current product is worth the cost, do it. If you feel it’s not, don’t keep crying but continue to throw you money at them. If not, just stay home like we are, easy peasy.

[NutsAboutGolf]

On 1/8/2023 at 1:56 PM, weregoingcruising said:

If this is happening what's your plan for future cruising?

 

Not sure what you're asking, I've been cruising since 2009 and am still cruising despite the fares and executive compensation increasing while passenger products/services decline.  I both cruise and take land based vacations

[NutsAboutGolf]

11 hours ago, RichYak said:

I think realistically, not optimistically, which makes me wonder what's next. The new policies seem intent on driving more traffic to the MDRs. Why is that? Are there new "revenue enhancements" in store for the MDR? Upcharges for certain menu items? Time will tell. I hope I'm wrong.

 

FYI for those who don't know...On Carnival you still get one night of free lobster...However, in the complimentary restaurants they offer "steak house selections" where for an upcharge you get your choice of a new steaks or a petite filet and tail for a $23 up charge.  The biggest benefit about this is you get a specialty dining entree without needing a specialty dining dinner reservation which seem impossible to obtain on X before 9pm once on board.  If X goes in this direction it would be welcomed however, the fear is eventually they'll remove free lobster like NCL

[NMTraveller]

7 hours ago, Ipeeinthepools said:

Is everyone prepared to spend an additional $233 per week to pay off the Covid debt?

Yes.  However I would not spend the extra $233 per week with the current cuts.  It is a diminished product.

[Ipeeinthepools]

5 minutes ago, NMTraveller said:

Yes.  However I would not spend the extra $233 per week with the current cuts.  It is a diminished product.

 

You're not alone, that's why you can't cut your way to profitability.  

[mpdog42]

13 hours ago, NorthStarStateCruiser said:

I appreciate you clearing the air.  I do understand how my first response regarding the food sounded very sided towards Celebrity and that may be due to me being an optimist in most situations.  However, I do feel as though Celebrity has an opportunity to increase the quality of their food while cutting costs in order to stay profitable given the recent surge in food costs.  When a business dedicates efforts towards a smaller subset of activities (in this case food options) that allows for better control of those pared-down activities.  Cut the fat out (literally) and get down to the good stuff. 

 

There will be those that are very directly affected by these changes and will see these efforts as a way of downgrading the product, but Celebrity likely can't just keep kicking the can down the road and stay profitable at the same time.  The thought I had is if Celebrity can increase the overall food experience (faster and more attentive service at the MDR) and quality of the food offered (by paring down the menu to increase focus and quality) there may be a net gain in customer satisfaction to offset those who see the changes as detrimental to their vacation experience.

 

Again, thinking optimistically here and it's entirely possible that the management met and decided the easiest ways to cut costs is to reduce dinner service in the OVC and add a charge for room service.  However, I doubt that decision was made so shortsightedly.

Thanks for offering the post explaining your position...You clearly took the time to go through your position line by line Thanks!!....I agree and i hope these changes will be positive...but with my life experiences dealing with Government, Crime and Coporation's..... along with the new thought process in America today which is.. "Let rip everybody off"...I think that these changes will go in the wrong direction..Thanks Again!!

[mpdog42]

On 1/9/2023 at 10:30 AM, LB_NJ said:

The bookings were made before the changes took effect.  After the changes it will be a couple of months before we see how bookings are going forward.  Because of very high non-refundable deposits there won't be that many cancellations.

 

Corporate management always think they are doing things right, that is why they are doing them.  I assume the management of Pan Am, Eastern Airlines, etc. thought they were doing the right thing.

Mic Drop...

[Mickey S]

On 1/8/2023 at 9:54 AM, Los_Pepes said:

The top three major cruise lines took on incredible amounts of additional debt during Covid. RCL even issued 11% junk bonds last year to restructure existing debt. 

 

YOu obviously were aboe to get teh data soyou have a feel for this stuff, so expand your thoughs a bit more on the debt of all the cruise lines and while you are at it all compaies youi nvest in or buy bonds  or muni bonds , or the banks in the US or the us itself.

Almost everythig os over everaged. and worse, looking at comoanies, tale off the intangible assets like goodwill, and many balance sheets go underwater. Big problem for all.

 

Key is to look at how liquid a specific company is, eg can they meet payroll.

Everybody knows cruisingis one of the most capital intensice businesses. Before the lockdown, RCL company was making 20% pre tax proft on sales and thats high, except the real metric should be return on capital. It was doing fine.

 

I will throw another wrench into the pile, inthat there are many people in govt who wantto go green and cruising is not green no matter how hard they try-Wasted fooe, diesel fuel, the ditry type, is a major variable cost.

 Everybody has seen the cost of eggs recently--how many eggs do we thing are used PP during a cruise.

But my point is teh CDC pushed hard on cruise lines during the lockdown and that  fear was due to the over all environental bias against cruise lines.

 

 

 

 

 

[LGW59]

3 minutes ago, Mickey S said:

YOu obviously were aboe to get teh data soyou have a feel for this stuff, so expand your thoughs a bit more on the debt of all the cruise lines and while you are at it all compaies youi nvest in or buy bonds  or muni bonds , or the banks in the US or the us itself.

Almost everythig os over everaged. and worse, looking at comoanies, tale off the intangible assets like goodwill, and many balance sheets go underwater. Big problem for all.

 

Key is to look at how liquid a specific company is, eg can they meet payroll.

Everybody knows cruisingis one of the most capital intensice businesses. Before the lockdown, RCL company was making 20% pre tax proft on sales and thats high, except the real metric should be return on capital. It was doing fine.

 

I will throw another wrench into the pile, inthat there are many people in govt who wantto go green and cruising is not green no matter how hard they try-Wasted fooe, diesel fuel, the ditry type, is a major variable cost.

 Everybody has seen the cost of eggs recently--how many eggs do we thing are used PP during a cruise.

But my point is teh CDC pushed hard on cruise lines during the lockdown and that  fear was due to the over all environental bias against cruise lines.

 

 

 

 

 

Ok its the eggs causing the increase, now its all making sense 

[Mickey S]

On 1/8/2023 at 9:29 AM, NutsAboutGolf said:

 

Companies carrying massive debts is nothing new and there isn't a NEED to get out of it quickly

 

It seems what they're trying to do is to further differentiate the Retreat as it seems to be immune from the new fees and cuts

I would bet that when the stock and bond markets head south-which is what the fed wil do with fighting inflation (infation in food and energy and stock and bond prices ) and retireees of all ages look at beaten up portfolios, we wil not be so eagar to pay 1500 a day for Retreat Sky Suites.

 

There has been a wealth factor created for many people thats been caused by a trememdous amount of money printed due to decades of deficit spending in the US--at first  a lot of that $$ chased stocks and bonds, and recently its chasing food and energy and consumer products,

Now the Fed is raising rates and cutting liquidity.Its nearing the rock and hard spot. Companies will be hurt

 

The consumer? While the Govt said it created 223k jobs last month, it buried discussion that the economy added 400k part time jobs and lost 600k full time jobs, and thats a net big loss and not indicative of a strong economy.

 

I just cancelled a trip on Beyond. The current pricing in S1  (s2 is the same) is almost 1800 a day, plus there are the extra grats for the cabin stew, the Valet, the servers and asst and the wine sommelier, the head maiter' d and asst.

 

$1000 per day per person is just too much. Esp if they do not have the wine, bourbon or beer I like and not if I have to wait for it. At 1K a day (it rhymes) things need to be extrordinary. 

 

Not just x but all cruise lines are pricing theselves out of the market. Same goes for Disney.

 

Expectations wil be high this summer on expensive itineraries. People wil be hard pressed to to diss theservice and fun levels due to embarrassment of how much they spent.

 

Just a big picture view of things with my own value judgement

 

 

 

 

 

[NutsAboutGolf]

5 minutes ago, Mickey S said:

I would bet that when the stock and bond markets head south-which is what the fed wil do with fighting inflation (infation in food and energy and stock and bond prices ) and retireees of all ages look at beaten up portfolios, we wil not be so eagar to pay 1500 a day for Retreat Sky Suites.

 

There has been a wealth factor created for many people thats been caused by a trememdous amount of money printed due to decades of deficit spending in the US--at first  a lot of that $$ chased stocks and bonds, and recently its chasing food and energy and consumer products,

Now the Fed is raising rates and cutting liquidity.Its nearing the rock and hard spot. Companies will be hurt

 

The consumer? While the Govt said it created 223k jobs last month, it buried discussion that the economy added 400k part time jobs and lost 600k full time jobs, and thats a net big loss and not indicative of a strong economy.

 

I just cancelled a trip on Beyond. The current pricing in S1  (s2 is the same) is almost 1800 a day, plus there are the extra grats for the cabin stew, the Valet, the servers and asst and the wine sommelier, the head maiter' d and asst.

 

$1000 per day per person is just too much. Esp if they do not have the wine, bourbon or beer I like and not if I have to wait for it. At 1K a day (it rhymes) things need to be extrordinary. 

 

Not just x but all cruise lines are pricing theselves out of the market. Same goes for Disney.

 

Expectations wil be high this summer on expensive itineraries. People wil be hard pressed to to diss theservice and fun levels due to embarrassment of how much they spent.

 

Just a big picture view of things with my own value judgement

 

With any kind of travel, the key is to be flexible, obviously this won't work for everyone yet many can get a week off of work with a few notice without issue.  On the sailings cruise lines can't fill, as they get closer to the sail date, they'll greatly reduce pricing.  Most cruise article contributors never mention this when interviewing cruise execs who state they're raising pricing.  That's only the initial pricing, again if there are vacancies they will greatly lower the price.  For example, the following is the per person fare before fees and taxes but is the cheapest suites.  Focus on the right most column which lists the per night; you can do the same thing with E-Class sailings if you wish:

 

[Mickey S]

2 hours ago, NutsAboutGolf said:

 

With any kind of travel, the key is to be flexible, obviously this won't work for everyone yet many can get a week off of work with a few notice without issue.  On the sailings cruise lines can't fill, as they get closer to the sail date, they'll greatly reduce pricing.  Most cruise article contributors never mention this when interviewing cruise execs who state they're raising pricing.  That's only the initial pricing, again if there are vacancies they will greatly lower the price.  For example, the following is the per person fare before fees and taxes but is the cheapest suites.  Focus on the right most column which lists the per night; you can do the same thing with E-Class sailings if you wish:

 

Thanks

First thing I saw was aqua was more than a suite -obstructed view.

 

lets look at this. Its 4500 for two people in cabin. Obstructed view next to magic carpet cabins

 

642 a day

 

The itinerary is nothing  special-was at 2 of those ports 6 weeks ago.  

I am not looking for that  however, if I just wanted to get away for a week or two I might consider that, or an all inclusive resort trip.

 

I just do not see anyvalue in that. But thats my opinion. Many people will just take what they can find at lower price as they just want to get away--not my thing.

 

and remember once inside 90 days they do want to fill those cabins.

However if you want to do interesting.  sightseeing, the price goes up

 

 

Take a look at 2023 med cruises on edge or Beyond. If you can find Sky Suites they are expensive

 

 

[LMaxwell]

On 1/10/2023 at 9:23 AM, RichYak said:

 Are there new "revenue enhancements" in store for the MDR?

After royals roll out 

[NutsAboutGolf]

3 hours ago, Mickey S said:

Thanks

First thing I saw was aqua was more than a suite -obstructed view.

 

lets look at this. Its 4500 for two people in cabin. Obstructed view next to magic carpet cabins

 

642 a day

 

The itinerary is nothing  special-was at 2 of those ports 6 weeks ago.  

I am not looking for that  however, if I just wanted to get away for a week or two I might consider that, or an all inclusive resort trip.

 

I just do not see anyvalue in that. But thats my opinion. Many people will just take what they can find at lower price as they just want to get away--not my thing.

 

and remember once inside 90 days they do want to fill those cabins.

However if you want to do interesting.  sightseeing, the price goes up

 

 

Take a look at 2023 med cruises on edge or Beyond. If you can find Sky Suites they are expensive

 

 

 

Have never booked a suite on X so I don't know what is considered expensive...There are 5 sailings under $600/night which would be the cheapest in 2023