So Are things Looking up?

[Jmoondance]

47 minutes ago, HMR74 said:

 

Is my last line just now pretty much true?  If so, then as long as markets stay up people in the older generations will spend and spend on suites and specialty dining and first class flights. Its the rest of the population thas going to be stressed.

Second that!

[D C]

43 minutes ago, terrydtx said:

As others and I have said here, the cutbacks and new cruise pricing by Celebrity is forcing us "savvy" suites customers to be looking at more premium cruise lines. Last year we had a Baltic cruise booked with Oceania that we canceled after the Ukraine invasion by Russia because of stops in Russia. I just looked at the Oceania website and they have the same 10 day cruise in 2024 minus the stops in Russia for the exact same price we were booked last year.  At least Oceania is not elevating pricing for their future cruises like Celebrity.

 

We have stayed loyal to Celebrity because of the Retreat product and that for us it was affordable, until now. Our loyalty is evaporating very quickly with the future suites pricing. 

Likewise, us non-suite customers will look at other lines.  

I priced a few different 7n Caribbean sailings on X vs Princess vs Holland.  Same weeks, similar ports. 

We can book either of the other two WITH drinks, grats, and wifi for very close to the same price as X gets WITHOUT any perks.  Add in $550+ pp for AI, and it's a huge difference for what's becoming an inferior product.    

We've been loyal because they've been price competitive and have delivered a quality product that we felt was appropriate for the fare.  Right now, we can't justify the X premium on either an objective or subjective basis.  

[Jmoondance]

23 minutes ago, HMR74 said:

two part response  agreeing with your evaluation

1) I will be doing a 5 week land trip in Southern Europe late spring rather than cruising. Its more work to plan and takes energy once there as we go to 8 places. However its far less expensive and far more  immersive in local culture tradition and food. Our Airbnb places -each one a minimum of 400 sq feet, Venice was king of tough to find a big place and all except Venice have terraces. 400sq ft is more space than a SS cabin, but these places have their "quirks" and we kind of like that.

Good lord willm we wil be in Rome when Andreas Bocelli is performing Jun 10--but ticket prices are 2k minimum vs 100 on his US tour.

 

We are using Celebrity as transportation coming back to us and relax, after couple weeks of independent traveling.

Booked two Transatlantic cruise from Rome and Barcelona.

One in Oct.2023, 2024,  since weather in Med is very nice at that time.

[terrydtx]

25 minutes ago, D C said:

Likewise, us non-suite customers will look at other lines.  

I priced a few different 7n Caribbean sailings on X vs Princess vs Holland.  Same weeks, similar ports. 

We can book either of the other two WITH drinks, grats, and wifi for very close to the same price as X gets WITHOUT any perks.  Add in $550+ pp for AI, and it's a huge difference for what's becoming an inferior product.    

We've been loyal because they've been price competitive and have delivered a quality product that we felt was appropriate for the fare.  Right now, we can't justify the X premium on either an objective or subjective basis.  

We stopped sailing with HAL because their suites are a joke compared to Celebrity's Retreat product. HAL does not have the most of amenities that the Retreat has, all you get with HAL is basically a larger room.

 

We did a cruise last year from Venice that followed a suites cruise on the Reflection and our group of 4 thought the food in the Oosterdam was much better overall than the Luminae on the Reflection. Their newer ships are very beautiful and have traditional balconies and if we were booking a non-suite we would choose HAL over Celebrity. We are booked in the newer Koingsdam in November because of a FCC that would expire this year, we booked in an aft facing standard veranda with the HIA promo included and the weeks cruise cost us nothing with the FCC. BTW room service is still free on HAL and you can order diner from the MDR menu. Their specialty restaurants are 20-30% less in cost than Celebrity too. If you have not tried HAL you most likely will like them, once you get past the much older demographic. BTW, the HAL Have it All promo includes not only drinks and Wi-Fi, but you get a credit for shore excursions, a free specialty restaurant and OBC depending on cruise lenghts.

Edited February 9, 2023 by terrydtx

[D C]

18 hours ago, HMR74 said:

As some of you are aware, RCL, INC reported earnings  the other day and RCL lost money with a 95% occupancy rate. That rate is about 8% points lower than prepandemic (over100% due to holidays where cabins would be booked for 3 or 4) .

 

Even with the 95%, cash flow is still impared due to FCC being used. Much iof that money was spentby RCL a long time ago and now RCL is providing the service.

 

However the big issue that we know is happening but did not have it quantified, is debt service and specifically interest. Interest was 100 million a quarter pre pandemic and is now 430 million per quarter.  Thats ~1.3 billion more in annual interest. While food costs are continuing to move up  and energy costs too.

 

Bill Ackman, a top hedge fund manager asked the question of how the  customer base will respond to the RCL push to drive margins up via ancillary fees.

 

RCL lost 500 million in the 4th Q, with 2.6 billion of revenue. RCL pre covid had profits of 20% of sales but Return on investment is lower due to its being capital intensive.

It forecasts profits in 2023 of $3+ per share. A loss in first qtr. Cashflow should be positive.

 

It also has a lot of depreciation in its loss, just from Apex and Beyond, and more coming from Ascent and Icon and small ship Silver Nova.

 

The problem is debt service. No surprise.

 

Customer deposits were , no surprise at a record high of $4.2 billion at 12/31/22. The company has cash of 2.9 billion at 12/31/22--so not near healthy yet when they finance current operations with customer money.

 

hmm, 2/3 of revenue is on board vs tickets. Food is 7.6% of revenues so no bonanza there for cost cutting. Fuel  is big at 10% of revenue, but commissions are huge. I was once sent my TA's commission statement and I will only say what they gave me in OBC/rebate or price reduction was fair.

 

RCL has 3.2 billion of current liquid assets and 8.6 billion of current liabilities--thats part of the big problem.

 

and I bet the  other cruise lines are not much different

 

Its worth it if of course it interests you, to google rcl investors to see the Profit and Loss statement

 

any questions why X (and its competition)  is trying to find ways to increase cash flow?

 

 

 

 

Thanks for the detailed review and insight.  Much appreciated.

From a shareholder perspective, I look at the data and comments and think "things look rather dire...maybe", but then look at my RCL stock and see that it's up 100% since I bought it last summer.  To the extent that our collective opinions regarding the financial health of the company mean squat for the stock price, I suppose I'm happy with where things are right now.

 

As a customer, I honestly don't care about any of that.  Whether they're running up their credit card debt, or if they're rolling in cash, it matters not to me.  I'm not sympathetic to whatever their plight may be (as so many seem to be).  This is a company that is providing a service, and that service is appealing for the price, I'll buy from them.   If not, I'll spend my money elsewhere.  When and how that shows up in the stock price? Who knows.  But I do need to consider when the best time to sell might be, despite the above.
 

 

[D C]

4 minutes ago, terrydtx said:

We stopped sailing with HAL because their suites are a joke compared to Celebrity's Retreat product. HAL does not have the most of amenities that the Retreat has, all you get with HAL is basically a larger room.

 

We did a cruise last year from Venice that followed a suites cruise on the Reflection and our group of 4 thought the food in the Oosterdam was much better overall than the Luminae on the Reflection. Their newer ships are very beautiful and have traditional balconies and if we were booking a non-suite we would choose HAL over Celebrity. We are booked in the newer Koingsdam in November because of a FCC that would expire this year, we booked in an aft facing standard veranda with the AI promo included and the weeks cruise cost us nothing with the FCC. BTW room service is still free on HAL and you can order diner from the MDR menu. Their specialty restaurants are 20-30% less in cost than Celebrity too. If you have not tried HAL you most likely will like them, once you get past the much older demographic.

Thanks!  We sailed on Princess last month for the first time and concluded that while it was different than what we've become accustomed to on X, there wasn't enough different to justify a significant premium for the X we used to know.  We're now shopping for price on those 3 lines (still scared of MSC).  

[terrydtx]

3 minutes ago, D C said:

Thanks!  We sailed on Princess last month for the first time and concluded that while it was different than what we've become accustomed to on X, there wasn't enough different to justify a significant premium for the X we used to know.  We're now shopping for price on those 3 lines (still scared of MSC).  

We consider HAL to be more of a competitor with Celebrity, similar sized ships and demographic, X being a little younger. I would put Princess in more of a competitor with RCL, bigger ship and more kids and families.

[HMR74]

8 minutes ago, D C said:

Thanks for the detailed review and insight.  Much appreciated.

From a shareholder perspective, I look at the data and comments and think "things look rather dire...maybe", but then look at my RCL stock and see that it's up 100% since I bought it last summer.  To the extent that our collective opinions regarding the financial health of the company mean squat for the stock price, I suppose I'm happy with where things are right now.

 

As a customer, I honestly don't care about any of that.  Whether they're running up their credit card debt, or if they're rolling in cash, it matters not to me.  I'm not sympathetic to whatever their plight may be (as so many seem to be).  This is a company that is providing a service, and that service is appealing for the price, I'll buy from them.   If not, I'll spend my money elsewhere.  When and how that shows up in the stock price? Who knows.  But I do need to consider when the best time to sell might be, despite the above.
 

 

the part thats a potential problem being with X  and the royal financial problems is I do not want too much deposit exposure.

 

On the investor side, the recent run up in RCL price might be considered a gift to cash out at least 50%. several reasons, We could be in a tough recession and that eventually means fewer customers and lower stock prices all over but discretionary especially luxury spending takes it on the chin first

 

The Federal Reserve Goals with inflation is to kill it by killing demand and that demand kill is for everyting including cruising. Split thoughts n that fro investment community, Some thing the Fed will indeed keep going, Some think the Fed will cave to  keeping the economy from declining.

 

I cannot control that but I am never embarrassed to take a profit on stocks,

 

 

[HMR74]

6 minutes ago, terrydtx said:

We consider HAL to be more of a competitor with Celebrity, similar sized ships and demographic, X being a little younger. I would put Princess in more of a competitor with RCL, bigger ship and more kids and families.

my wife and our daughters  sailed on Princess before things came to a halt and they just did not like the vibe, despite Princes upgrading them to a large aft suite with 2 baths et al. So right now Princess is a no go.

 

About to look into Oceana but not too thrilled  if their final payment date is still 6 months  before sailing with a large deposit. We should look at HAL as we in our 70's are probably prime targets for them. Viking should be on the list but they are over 1k a night for a std balcony.

 

Crystal anybody?

 

I understand the  concept of not allowing a free ride cancellation too close to sailing date, but now that the prices are high and the financial situations of them all is an issue, I do not want to have 3-5 cruises open and subject to loss if something else happens or rates go to 15% like 1979.

My 5 week land trip is cancellable, with full refunds up to 2-3 weeks before going  without penalty although I have deposited 1/2 of air bnb costs, and 1/3 of Vrbo.

 

 

[D C]

3 minutes ago, HMR74 said:

my wife and our daughters  sailed on Princess before things came to a halt and they just did not like the vibe, despite Princes upgrading them to a large aft suite with 2 baths et al. So right now Princess is a no go.

 

About to look into Oceana but not too thrilled  if their final payment date is still 6 months  before sailing with a large deposit. We should look at HAL as we in our 70's are probably prime targets for them. Viking should be on the list but they are over 1k a night for a std balcony.

 

Crystal anybody?

 

I understand the  concept of not allowing a free ride cancellation too close to sailing date, but now that the prices are high and the financial situations of them all is an issue, I do not want to have 3-5 cruises open and subject to loss if something else happens or rates go to 15% like 1979.

My 5 week land trip is cancellable, with full refunds up to 2-3 weeks before going  without penalty although I have deposited 1/2 of air bnb costs, and 1/3 of Vrbo.

 

 

Does refundable vs non-refundable enter into the corporate financials?  X is asking for higher non-refundable deposits, while P is far lower and refundable.  Seems like some sort of guaranteed vs at-risk $ sitting in their bank. 

[terrydtx]

7 minutes ago, HMR74 said:

About to look into Oceana but not too thrilled  if their final payment date is still 6 months  before sailing with a large deposit

Unless things have changed very recently it is 90 days out for final payment on O and the deposits are 100% refundable with no $100 fees deducted prior to FP.

Edited February 9, 2023 by terrydtx

[HMR74]

1 hour ago, D C said:

Does refundable vs non-refundable enter into the corporate financials?  X is asking for higher non-refundable deposits, while P is far lower and refundable.  Seems like some sort of guaranteed vs at-risk $ sitting in their bank. 

they must know how much is out there for each. not obvious. 3 years ago I called RCL investors group to find out and they never returned the call. I think its buried in customers deposits as a liability untill such time as its not.

 

Its always our looking at the objective bottom line compared to the subjective value received.

 

which to my knowledge the non refundable  started around Jan 1, 2020, it was as a discount from cruise price, eg I booked a B2b Aqua for SE asia and Austrailia, and I risked 1800 vs 1800 of discount,. and it reduced the cost per day to the  December 2019 Aqua costs. 

 

Seemed fair but then covid came along

 

Now its an add on to an already costly cruise. and the cost to get refundable is somewhat related to the cruise cost. this is where the perceived value coms in--is X worth more than Princess. or any other option.

 

This all used to be so simple to do.

 

 

Edited February 9, 2023 by HMR74

[terrydtx]

26 minutes ago, HMR74 said:

they must know how much is out there for each. not obvious. 3 years ago I called RCL investors group to find out and they never returned the call. I think its buried in customers deposits as a liability untill such time as its not.

 

Its always our looking at the objective bottom line compared to the subjective value received.

 

which to my knowledge the non refundable  started around Jan 1, 2020, it was as a discount from cruise price, eg I booked a B2b Aqua for SE asia and Austrailia, and I risked 1800 vs 1800 of discount,. and it reduced the cost per day to the  December 2019 Aqua costs. 

 

Seemed fair but then covid came along

 

Now its an add on to an already costly cruise. and the cost to get refundable is somewhat related to the cruise cost. this is where the perceived value coms in--is X worth more than Princess. or any other option.

 

This all used to be so simple to do.

 

 

Again unless the policy has changed, the NRD on Celebrity only had a $100 fee that was not refundable, the balance could be switched to another cruise or be a FCC.  We have done this several times post Covid.

Edited February 9, 2023 by terrydtx

[markeb]

1 hour ago, D C said:

Does refundable vs non-refundable enter into the corporate financials?  X is asking for higher non-refundable deposits, while P is far lower and refundable.  Seems like some sort of guaranteed vs at-risk $ sitting in their bank. 

 

It shouldn't. Since they're a publicly traded company, they have to follow standard accounting practices. Deposits aren't revenue; they're actually a liability on the balance sheet (accounts payable) and not the income statement, but they are positive cash flow. So the deposits would show up on cash flow either way. Don't ask; modern accounting was created in the same place that over engineered Ferrari and Lamborghini so they'd run well but require a lot of maintenance...

 

They can't actually recognize the revenue on their income statements until you take the cruise. Same principal applies to gift cards, etc.

[HMR74]

16 minutes ago, terrydtx said:

Again unless the policy has changed, the NRD on Celebrity only had a $100 fee that was not refundable, the balance could be switched to another cruise or be a FCC.  We have done this several times post Covid.

Yep-I too have that but if you have 2 cruises b2b and 1800 of deposit, 1800 becomes 1400 then 1000 and ther is a expire date on them,,,,,,,,and the price of teh cruises is going up way more than what you had before. It gets worse now with big dollars at stake with insurance, with aall the obs and refundable OBC or debitcards where you still need to insure the full cost.

 

[D C]

53 minutes ago, HMR74 said:

they must know how much is out there for each. not obvious. 3 years ago I called RCL investors group to find out and they never returned the call. I think its buried in customers deposits as a liability untill such time as its not.

 

Its always our looking at the objective bottom line compared to the subjective value received.

 

which to my knowledge the non refundable  started around Jan 1, 2020, it was as a discount from cruise price, eg I booked a B2b Aqua for SE asia and Austrailia, and I risked 1800 vs 1800 of discount,. and it reduced the cost per day to the  December 2019 Aqua costs. 

 

Seemed fair but then covid came along

 

Now its an add on to an already costly cruise. and the cost to get refundable is somewhat related to the cruise cost. this is where the perceived value coms in--is X worth more than Princess. or any other option.

 

This all used to be so simple to do.

 

 

 

27 minutes ago, terrydtx said:

Again unless the policy has changed, the NRD on Celebrity only had a $100 fee that was not refundable, the balance could be switched to another cruise or be a FCC.  We have done this several times post Covid.

Seems as though the $100 non-refundable wouldn't be a liability.

[D C]

1 hour ago, HMR74 said:

they must know how much is out there for each. not obvious. 3 years ago I called RCL investors group to find out and they never returned the call. I think its buried in customers deposits as a liability untill such time as its not.

 

Its always our looking at the objective bottom line compared to the subjective value received.

 

which to my knowledge the non refundable  started around Jan 1, 2020, it was as a discount from cruise price, eg I booked a B2b Aqua for SE asia and Austrailia, and I risked 1800 vs 1800 of discount,. and it reduced the cost per day to the  December 2019 Aqua costs. 

 

Seemed fair but then covid came along

 

Now its an add on to an already costly cruise. and the cost to get refundable is somewhat related to the cruise cost. this is where the perceived value coms in--is X worth more than Princess. or any other option.

 

This all used to be so simple to do.

 

 

WAY back in 2019, picking non-refundable didn't change the price, but gave us "all 4" perks instead of 3 (or was it 2?), including the premium beverage pkg and ~$300 OBC.  Not a bad deal. 

Edited February 9, 2023 by D C

[mnocket]

On 2/7/2023 at 12:48 PM, mcrcruiser said:

 The cruise lines are their own worse enemy . When the CDC got them to shut down they should have brought it into court because the CDC is not a governing body but is a advisory body . These increases can not last & expect people to absorb them . when a person has to make the decision to pay rent or their mortgage .The later will come first  .Most people in the states have dipped into savings to survive  this inflation brought upon us.

Whenever a government claims Emergency Powers, the citizens, and certainly the press, should be very wary.  Unfortunately as we saw with Covid this is not the case.  Blind adherence to whatever the government decreed was the only acceptable, and often allowable, behavior - enforced by the press and public alike.  The result has been much unnecessary damage to the economy, small businesses and, perhaps most concerning, children.

[mnocket]

22 hours ago, HMR74 said:

As some of you are aware, RCL, INC reported earnings  the other day and RCL lost money with a 95% occupancy rate. That rate is about 8% points lower than prepandemic (over100% due to holidays where cabins would be booked for 3 or 4) .

 

Even with the 95%, cash flow is still impared due to FCC being used. Much iof that money was spentby RCL a long time ago and now RCL is providing the service.

 

However the big issue that we know is happening but did not have it quantified, is debt service and specifically interest. Interest was 100 million a quarter pre pandemic and is now 430 million per quarter.  Thats ~1.3 billion more in annual interest. While food costs are continuing to move up  and energy costs too.

 

Bill Ackman, a top hedge fund manager asked the question of how the  customer base will respond to the RCL push to drive margins up via ancillary fees.

 

RCL lost 500 million in the 4th Q, with 2.6 billion of revenue. RCL pre covid had profits of 20% of sales but Return on investment is lower due to its being capital intensive.

It forecasts profits in 2023 of $3+ per share. A loss in first qtr. Cashflow should be positive.

 

It also has a lot of depreciation in its loss, just from Apex and Beyond, and more coming from Ascent and Icon and small ship Silver Nova.

 

The problem is debt service. No surprise.

 

Customer deposits were , no surprise at a record high of $4.2 billion at 12/31/22. The company has cash of 2.9 billion at 12/31/22--so not near healthy yet when they finance current operations with customer money.

 

hmm, 2/3 of revenue is on board vs tickets. Food is 7.6% of revenues so no bonanza there for cost cutting. Fuel  is big at 10% of revenue, but commissions are huge. I was once sent my TA's commission statement and I will only say what they gave me in OBC/rebate or price reduction was fair.

 

RCL has 3.2 billion of current liquid assets and 8.6 billion of current liabilities--thats part of the big problem.

 

and I bet the  other cruise lines are not much different

 

Its worth it if of course it interests you, to google rcl investors to see the Profit and Loss statement

 

any questions why X (and its competition)  is trying to find ways to increase cash flow?

 

 

 

 

Nice summary of RCL earnings call.  Judging by the recent stock performance, wall street seems to like the steps the cruise lines are taking to regain their financial footing.  I do not, but I'm starting to think may be because of my parochial viewpoint.

 

I've become so concerned by what I see as a "death spiral" of cruise lines raising prices while degrading service that I've begun unloading my cruise line stocks despite the rising stock prices.  I acknowledge that this may be a mistake brought on by my personal focus on Premium cruise lines. I'm starting to think that the future of cruising will be safe with the mass market lines and, to a lesser extent, with the luxury lines.  It's really only the Premium lines whose future is seriously in doubt.  That said, I'm still getting out of cruise line stocks.  I just think there are better industries to invest in whose futures are easier to forecast.

[HMR74]

19 minutes ago, mnocket said:

Whenever a government claims Emergency Powers, the citizens, and certainly the press, should be very wary.  Unfortunately as we saw with Covid this is not the case.  Blind adherence to whatever the government decreed was the only acceptable, and often allowable, behavior - enforced by the press and public alike.  The result has been much unnecessary damage to the economy, small businesses and, perhaps most concerning, children.

I agree and thats yet another subject that stirs up tremendous debate.

 

[HMR74]

41 minutes ago, D C said:

WAY back in 2019, picking non-refundable didn't change the price, but gave us "all 4" perks instead of 3 (or was it 2?), including the premium beverage pkg and ~$300 OBC.  Not a bad deal. 

back in Jan 2020 when I booked my b2b of 14 days each in Aqua by selecting non refundable it lowered the price by 1899 on a 12,000 AI 28 days. Now its non refundable unless you opt for refndable and depending on teh cruise it can be much more than the 450 PP. X has made itself into an insuranc company on this and probably a new profit center. Perhaps a finance company too as it pushes up deposits that RCL uses to finance operations.

 

They all have a ton of deposits where service comes down the road but they use the money for todays cruises. . It is kind of like a ponzi scheme, and you do not want to be left holding the bag.

 

Laughing now when i think the cruise can be free but you have to pay a 15,000 non refundable deposit  and no changes allowed .

Edited February 9, 2023 by HMR74

[NevadaCruiser2023]

21 hours ago, NutsAboutGolf said:

The older generations calling the younger generations more entitled is nothing new

True dat.  I was watching something on the news or a tv show and I remember thinking "what the heck is the world coming to" and suddenly was possessed by what a middle aged person listening to Elvis for the first time in the 50's, must have felt. The more things change...

[NutsAboutGolf]

6 minutes ago, NevadaCruiser2023 said:

True dat.  I was watching something on the news or a tv show and I remember thinking "what the heck is the world coming to" and suddenly was possessed by what a middle aged person listening to Elvis for the first time in the 50's, must have felt. The more things change...

 

Even though the youngin's call us old, we're simply getting wiser 🙃

[weregoingcruising]

30 minutes ago, NutsAboutGolf said:

 

Even though the youngin's call us old, we're simply getting wiser 🙃

My wife has a throw pillow that says "Age is just a numnber Mine is unlisted" My pillow says "KIng of the Remote"

[HMR74]

43 minutes ago, NevadaCruiser2023 said:

True dat.  I was watching something on the news or a tv show and I remember thinking "what the heck is the world coming to" and suddenly was possessed by what a middle aged person listening to Elvis for the first time in the 50's, must have felt. The more things change...

Way back in  the dark ages when I started out in lower corp management, once a year we had a meeting of all managers,

 

Guest speaker was Morris Massey  and the theme was " you are what you were when you were born" and the education was that we all in the mgt group have different perspectives on life based on when we were born and we had to work together and get past those type of differences.

 

It went so well that the next education was taking us in groups of 8 to "Outward Bound"  where we learned how to work together. It was 2 nights of camping, and things like "trust falls".

 

It went well for most but not me as I was hooked up with the VP of HR, and we were on different pages in different books. He was old and I was still youngish. I won out.

 

Now relating this to X as a profit center for RCL.  Mnagement is making too many mistakes with its best assets, Employees and customer base. If Mgt upsets  just 30% and lose 20, or 15%, thats a ton of cash flow and profit. One of the basic rules in business is customer retention. If they go somewhere else and like it you screwed up bad. Captains Club status only does so much.

 

X had a great thing going pre covid. all it had to do is bring it back the same way, slowly ramp up occupancy till thingswere "right" and apologize for changes made which is basic stuff. Do not get too fancy after getting a huge curve ball bean ball thrown at you. Do the blocking and tackling, the fundamentals,  right.