Billion Dollar Profit

[Baron Barracuda]

3 hours ago, SRF said:

Corporations pay taxes on profits.

Not cruise lines.  Never have, even pre-covid.  Domiciled in tax havens offshore

[nferr]

On 10/26/2023 at 1:03 PM, twangster said:

This is why they were able to get big loans to survive during the shutdown.  Cruise ships are massive money generating machines.  The folks who loaned them billions to stay afloat knew this day would come.

 Yes, but at sky high interest rates. If it was such a "safe" bet believe me the rates would have been way lower. Banks were borrowing from Treasury at almost zero and lending to RCL at 11% in May 2020. Do a little research. RCL was actually floating bonds but it's the same concept.

Edited November 6, 2023 by nferr

[grandgeezer]

25 minutes ago, nferr said:

 Yes, but at sky high interest rates. If it was such a "safe" bet believe me the rates would have been way lower. Banks were borrowing from Treasury at almost zero and lending to RCL at 11% in May 2020. Do a little research. RCL was actually floating bonds but it's the same concept.

Is that any different than what the cruise lines pay for the things such as alcohol, and other things they sell on the ships for greatly inflated price? Call it dynamic lending, like the lines call dynamic pricing. What’s good for the goose is good for the gander.

[nferr]

2 minutes ago, grandgeezer said:

Is that any different than what the cruise lines pay for the things such as alcohol, and other things they sell on the ships for greatly inflated price? Call it dynamic lending, like the lines call dynamic pricing. What’s good for the goose is good for the gander.

 No difference. It's business. But they have to make that back. Crying that they're making money now is silly.

[outdoorphoto]

4 hours ago, Baron Barracuda said:

Not cruise lines.  Never have, even pre-covid.  Domiciled in tax havens offshore

The last year CCL made a profit was 2019. They paid $70m in US income tax. 

https://www.wsj.com/market-data/quotes/CCL/financials/annual/income-statement

[Baron Barracuda]

3 hours ago, outdoorphoto said:

The last year CCL made a profit was 2019. They paid $70m in US income tax. 

https://www.wsj.com/market-data/quotes/CCL/financials/annual/income-statement

That $70 million (2.3% of earnings) is global, not just US.  Small amount of US taxes is related to their Alaskan hotel and tour operations.  Cruise earnings aren't subject to US tax.  It's spelled out in their 10k.

[cruiselvr04]

I monitored pricing for a recent cruise down to 48 hours prior.  Price never went down and I counted at least a dozen oceanview and inside cabins that went empty.  Wouldn’t it be better to sell some of those and trust that on board purchases would make them some money in excursions, drinks and casino?  I’m not a finance person but I thought it was interesting. Or do they get to a certain threshold and consider they are good? 

 

[RobInMN]

On 11/6/2023 at 8:31 AM, SRF said:

Corporations pay taxes on profits.

Correction:

Consumers of Corporations' products pay all the taxes. It's built into the prices of the goods & services.

[outdoorphoto]

13 hours ago, Baron Barracuda said:

That $70 million (2.3% of earnings) is global, not just US.  Small amount of US taxes is related to their Alaskan hotel and tour operations.  Cruise earnings aren't subject to US tax.  It's spelled out in their 10k.

You obviously didn't read the link. The earnings report specifically says "Income Tax - Current Domestic". Contrary to your statement, US-based cruise lines do pay US income tax on their earnings.

[Baron Barracuda]

2 hours ago, outdoorphoto said:

You obviously didn't read the link. The earnings report specifically says "Income Tax - Current Domestic". Contrary to your statement, US-based cruise lines do pay US income tax on their earnings.

Read the link but prefer to believe what CCL says in their SEC filings over third party reformatted data.  Just  read the extensive tax discussion in the 10k.    Also, there are numerous news articles from the covid shutdown period on how the cruise lines were excluded from the various relief packages because they are foreign companies that pay little to no US taxes.  VP Mike Pence was involved in these cruise line discussions.

[chengkp75]

20 hours ago, outdoorphoto said:

The last year CCL made a profit was 2019. They paid $70m in US income tax. 

https://www.wsj.com/market-data/quotes/CCL/financials/annual/income-statement

Here is the page on US taxes from CCl's 2022 annual report.

 

US Annual Report - Final PDF.pdf

 

Notice that it mentions, as it does every year, that Section 883 of the IRS Code exempts all revenue generated by a foreign flag vessel from US federal income tax.  It states that the only US income tax they pay is on the land hotel and transportation services of HAL's Alaska operations.  The next page, which I have not copied lists their income liabilities to UK, Australia, Italy, and Germany, in the form of "tonnage tax".  Those are the only taxations mentioned.

 

CLIA freely admits that the bulk of taxes paid by its member cruise lines in the US are for local property taxes, and Social Security taxes for US land employees.

[outdoorphoto]

32 minutes ago, chengkp75 said:

Here is the page on US taxes from CCl's 2022 annual report.

 

US Annual Report - Final PDF.pdf 29.54 kB · 0 downloads

 

Notice that it mentions, as it does every year, that Section 883 of the IRS Code exempts all revenue generated by a foreign flag vessel from US federal income tax.  It states that the only US income tax they pay is on the land hotel and transportation services of HAL's Alaska operations.  The next page, which I have not copied lists their income liabilities to UK, Australia, Italy, and Germany, in the form of "tonnage tax".  Those are the only taxations mentioned.

 

CLIA freely admits that the bulk of taxes paid by its member cruise lines in the US are for local property taxes, and Social Security taxes for US land employees.

All of that is great but has nothing to do with the poster's incorrect statement that cruise lines pay no US income tax. Now the argument has shifted to cruise lines don't pay US income tax on ship revenue and they only pay a little income tax on non-ship revenue.

 

It seems we are all in agreement the poster's original statement that cruise lines never have paid US Income Tax is incorrect. They just don't pay Income Tax on ship-generated revenues.

 

[chengkp75]

5 minutes ago, outdoorphoto said:

All of that is great but has nothing to do with the poster's incorrect statement that cruise lines pay no US income tax. Now the argument has shifted to cruise lines don't pay US income tax on ship revenue and they only pay a little income tax on non-ship revenue.

 

It seems we are all in agreement the poster's original statement that cruise lines never have paid US Income Tax is incorrect. They just don't pay Income Tax on ship-generated revenues.

 

And, ship revenue is the vast bulk of their revenue.  From their latest quarterly report, ticket fares made up 65% of their revenues (tax exempt), "onboard and other" revenue made up 35%.  While they don't break this down by percentages, the "onboard" part includes beverage sales, dining upcharges, shops and casino concession fees, shore excursions, transfers and any other revenue that is directly based on the operation of the ship.  Even drink packages sold before the cruise are part of "ship operations", and therefore tax exempt.  All of this revenue is tax exempt under section 883.  If you want to quibble that the pittance that the cruise lines pay in corporate tax is really above "nothing", then okay, but that $70 million figure is not for just US taxes. The only US income taxes that have been paid by foreign flag cruise lines are for, as I noted before in their statement, US operations, not ship operations.

[skittl1321]

17 hours ago, cruiselvr04 said:

I monitored pricing for a recent cruise down to 48 hours prior.  Price never went down and I counted at least a dozen oceanview and inside cabins that went empty.  Wouldn’t it be better to sell some of those and trust that on board purchases would make them some money in excursions, drinks and casino?  I’m not a finance person but I thought it was interesting. Or do they get to a certain threshold and consider they are good? 

 

Not necessarily, discounting as a marketing strategy can degrade the amount of money they can make on future products.  If people expect discounts, and wait for them, then they may not be able to fill cabins at high prices later.  People who book at the discounted rates may start viewing that as what the product is worth, and the market position changes to a "bargain" line.

 

There are tons of models financial and operations run to help them better understand if it is worth the short term gain of onboard spending vs the long term brand positioniong.  

My understanding is RCCL has said they don't want cruise to be a bargain compared to land vacations (which has been CCL's stance based on mailings I get); they want to raise prices on the base fare; not just on the onboard spend/total revenue per customer.  Discounting doesn't accomplish that.

[Baron Barracuda]

22 hours ago, chengkp75 said:

And, ship revenue is the vast bulk of their revenue.  From their latest quarterly report, ticket fares made up 65% of their revenues (tax exempt), "onboard and other" revenue made up 35%.  While they don't break this down by percentages, the "onboard" part includes beverage sales, dining upcharges, shops and casino concession fees, shore excursions, transfers and any other revenue that is directly based on the operation of the ship.  Even drink packages sold before the cruise are part of "ship operations", and therefore tax exempt.  All of this revenue is tax exempt under section 883.  If you want to quibble that the pittance that the cruise lines pay in corporate tax is really above "nothing", then okay, but that $70 million figure is not for just US taxes. The only US income taxes that have been paid by foreign flag cruise lines are for, as I noted before in their statement, US operations, not ship operations.

Thanks chief, but Outdoorphoto obviously believes a 3rd party web site has it all right and Carnival's SEC filings and shareholder reports are all wrong.

[outdoorphoto]

59 minutes ago, Baron Barracuda said:

Thanks chief, but Outdoorphoto obviously believes a 3rd party web site has it all right and Carnival's SEC filings and shareholder reports are all wrong.

You stated:

"Not cruise lines.  Never have, even pre-covid.  Domiciled in tax havens offshore"

 

You stated:

"Small amount of US taxes is related to their Alaskan hotel and tour operations."

 

So which of your statements is factual? Do they pay none or a small amount? Words have meaning. Both can't be true.

 

Directly from the 2019 Annual Report:

Regulations under Section 883 list certain activities that the IRS does not consider to be incidental to the international operation of ships and, therefore, the income attributable to such activities, to the extent such income is U.S. source, does not qualify for the Section 883 exemption. Among the activities identified as not incidental are income from the sale of air transportation, transfers, shore excursions and pre-and post-cruise land packages to the extent earned from sources within the U.S.

 

This supports your original statement that cruise lines don't pay US Income Tax is false, which is all I've ever claimed. You just keep moving the goal posts and talk about things that were never questioned. We can 'quibble' over the exact amount paid, but the fact remains that US-based cruise lines pay US Income Tax when they have taxable earnings. Please stop spreading disinformation!

 

I'm done.

[Baron Barracuda]

2 hours ago, outdoorphoto said:

You stated:

"Not cruise lines.  Never have, even pre-covid.  Domiciled in tax havens offshore"

 

You stated:

"Small amount of US taxes is related to their Alaskan hotel and tour operations."

 

So which of your statements is factual? Do they pay none or a small amount? Words have meaning. Both can't be true.

 

Directly from the 2019 Annual Report:

Regulations under Section 883 list certain activities that the IRS does not consider to be incidental to the international operation of ships and, therefore, the income attributable to such activities, to the extent such income is U.S. source, does not qualify for the Section 883 exemption. Among the activities identified as not incidental are income from the sale of air transportation, transfers, shore excursions and pre-and post-cruise land packages to the extent earned from sources within the U.S.

 

This supports your original statement that cruise lines don't pay US Income Tax is false, which is all I've ever claimed. You just keep moving the goal posts and talk about things that were never questioned. We can 'quibble' over the exact amount paid, but the fact remains that US-based cruise lines pay US Income Tax when they have taxable earnings. Please stop spreading disinformation!

 

I'm done.

Seems pretty clear to me.  CCL has both cruise and non-cruise business.  The cruise business pays no US taxes while the Alaskan tour business does.  Results for tour business segment isn't broken out in their financials.  Also, as the chief explained the $70 million in taxes is global, not just US.  How much is US?  Don't know, they don't break out taxes by country.  If you need to know call Jim Heaney, their CFO and see if he'll tell you.  

[PhillyFan33579]

On 11/6/2023 at 11:13 PM, cruiselvr04 said:

I monitored pricing for a recent cruise down to 48 hours prior.  Price never went down and I counted at least a dozen oceanview and inside cabins that went empty.  Wouldn’t it be better to sell some of those and trust that on board purchases would make them some money in excursions, drinks and casino?  I’m not a finance person but I thought it was interesting. Or do they get to a certain threshold and consider they are good? 

 

This exact topic came up during a special event I attended this past Summer. According to the officers we were talking to, RCI doesn’t discount cruise fares last minute because they don’t want to create an environment where potential passengers don’t book a cruise because they are waiting for a last minute deal. They provided more detail on this subject, but my last sentence basically covers why they don’t do this.