Cruise Industry Positive Outlook and HAL Ships

[TRLD]

13 minutes ago, BermudaBound2014 said:

 

I believe I'm on the record stating CCL is likely too big to fail. I am also on the record stating that the debt load being carried makes me skeptical that CCL will remain in tact with all 9 brands (yes, I know you believe they are paying debt off quick enough not to be concerned). We are both capable of reading a 10Q and on this we shall just agree to disagree and let time tell the story. If HAL is around in a decade I'll admit I'm wrong 😁. Actually, if HAL starts building ships again in 2026 as you have predicted, I'll eat crow then too. I'm never hesitant to admit when I'm wrong. BTW: Not sure this prediction is doom and gloom, as companies evolve all the time. Selling off parts of a company to make the parent company stronger often makes everyone happy.

 

I am also on record stating the HAL has found a niche in longer cruises with unique itineraries at a very reasonable cost. They are getting a good chunk of my vacation budget in 2025 for these reasons. I'll also add that HAL seems to have a niche in the sedate cruising market. I don't mean that in a negative way, but seems to me that many on the HAL boards appreciate fewer activities and are content being in bed by 10:30 p.m. Some here are actually repulsed by the thought of a waterslide at sea while I'm riding that bad boy into the sunset 😄  

 

If another line mainstream line was offering 35 night itineraries to Tahiti  (and 22 night itineraries to Antarctica) at a similar price point; I'd very likely be choosing to spend my travel budget on another line. I like more activities and a much more modern ship design which offers lots more choices. But, as it sits, no other mainstream line is competing with HAL in the itineraries I'm booked on so I'm choosing to sail with HAL, knowing what product HAL delivers. No complaints, but that doesn't mean that I turn a blind eye to areas where HAL can improve.  IMO; All lines have things they do well, and areas that fall short of the competition. The only thing I've found consistent across all the mass market cruise lines is the feeling of gratitude I experience every day at sea.

 

Ok, for giggles: 

 

NCL  $116,772

(I counted roughly 54,000 cabins at 2 per cabin)

 

Almost on par with HAL and celebrity. But, we need to realize that data is skewed here because NCL does not often have just 2 in a room.

 

It would be so much easier if the cruise lines just gave us the data in the quarterlies. 😄 

 

Princess doesa 30 day Hawaii, Somoa, Tahiti loop.

 

We tried the 22 day Oceania from Papeete this year, by the end of that we though HAL entertainment looked good compared to the ground hog every day is the same on Oceania. The only crews we ever wanted to get off early. It was far far too sedate and the music too heavily curated.

 

We will probably do the Paul Gauguin or Windstar next year.

[TRLD]

1 hour ago, BermudaBound2014 said:

 

I believe I'm on the record stating CCL is likely too big to fail. I am also on the record stating that the debt load being carried makes me skeptical that CCL will remain in tact with all 9 brands (yes, I know you believe they are paying debt off quick enough not to be concerned). We are both capable of reading a 10Q and on this we shall just agree to disagree and let time tell the story. If HAL is around in a decade I'll admit I'm wrong 😁. Actually, if HAL starts building ships again in 2026 as you have predicted, I'll eat crow then too. I'm never hesitant to admit when I'm wrong. BTW: Not sure this prediction is doom and gloom, as companies evolve all the time. Selling off parts of a company to make the parent company stronger often makes everyone happy.

 

I am also on record stating the HAL has found a niche in longer cruises with unique itineraries at a very reasonable cost. They are getting a good chunk of my vacation budget in 2025 for these reasons. I'll also add that HAL seems to have a niche in the sedate cruising market. I don't mean that in a negative way, but seems to me that many on the HAL boards appreciate fewer activities and are content being in bed by 10:30 p.m. Some here are actually repulsed by the thought of a waterslide at sea while I'm riding that bad boy into the sunset 😄  

 

If another line mainstream line was offering 35 night itineraries to Tahiti  (and 22 night itineraries to Antarctica) at a similar price point; I'd very likely be choosing to spend my travel budget on another line. I like more activities and a much more modern ship design which offers lots more choices. But, as it sits, no other mainstream line is competing with HAL in the itineraries I'm booked on so I'm choosing to sail with HAL, knowing what product HAL delivers. No complaints, but that doesn't mean that I turn a blind eye to areas where HAL can improve.  IMO; All lines have things they do well, and areas that fall short of the competition. The only thing I've found consistent across all the mass market cruise lines is the feeling of gratitude I experience every day at sea.

 

Ok, for giggles: 

 

NCL  $116,772

(I counted roughly 54,000 cabins at 2 per cabin)

 

Almost on par with HAL and celebrity. But, we need to realize that data is skewed here because NCL does not often have just 2 in a room.

 

It would be so much easier if the cruise lines just gave us the data in the quarterlies. 😄 

 

just did Carnival  it's number is $70,284 

 

Oceania is $214,562

Edited July 29 by TRLD

[TRLD]

Took a look at the 10k for 2023. The market watch numbers appear to be a rolling last 12 months  last 2q of 2023 and first 2q of 2024

 

Looking at all of 2023 the average revenue per berth was $83,716 and average expense per berth was $76,133, yielding an operating income of $7,583. 

 

Using 10q data for a rolling 12 month  gives an average revenue per berth of $90,865 and average expense of $79,843 yielding an operating income per berth of $11,022. 

 

The market watch numbers bracketing those numbers depending upon line would seem to support that the data set is reasonable.

[chisoxfan]

14 hours ago, TRLD said:

Because it is only one side of the equation. It does not show expense.

 

For all we know Princess is 50 or 60% more efficient in cost per berth.

Expense is kind of important. Without looking at any numbers and being argumentative I am fairly certain that HAL is not 50-60% more efficient than their competitors.  From a macro view the longer term questions in my mind are future cost and availability of debt, recession impact on disposable income, changing demographics for specific cruiselines, age of fleet, etc. etc. Then there are the black swans of international conflict, fuel prices, growing restrictions on ports, and (hopefully not) any disease outbreak. These effect the cruise industry in general but if and when any negatively raise their head think that CCL will likely streamline their brand and HAL becomes perhaps the most vunerable. Just my opinion that I am not hoping will come true.

Of course if  HAL (CCL) invests in AI all problems will be solved 

[TRLD]

1 hour ago, chisoxfan said:

Expense is kind of important. Without looking at any numbers and being argumentative I am fairly certain that HAL is not 50-60% more efficient than their competitors.  From a macro view the longer term questions in my mind are future cost and availability of debt, recession impact on disposable income, changing demographics for specific cruiselines, age of fleet, etc. etc. Then there are the black swans of international conflict, fuel prices, growing restrictions on ports, and (hopefully not) any disease outbreak. These effect the cruise industry in general but if and when any negatively raise their head think that CCL will likely streamline their brand and HAL becomes perhaps the most vunerable. Just my opinion that I am not hoping will come true.

Of course if  HAL (CCL) invests in AI all problems will be solved 

HAL revenue per lower berth is less efficient than Celebrity, only more efficient than Princess out of its competition.

 

Might be a couple of reasons for that. First, HAL fares tend to be a bit higher than Princess for equivalent cabins. Much more on the longer cruises. Second look at ship design  and cabin mix.

 

Go ahead look at the data or for that matter any data source you can find.

 

 

Edited July 30 by TRLD

[Gail & Marty sailing away]

9 hours ago, TRLD said:

Took a look at the 10k for 2023. The market watch numbers appear to be a rolling last 12 months  last 2q of 2023 and first 2q of 2024

 

Looking at all of 2023 the average revenue per berth was $83,716 and average expense per berth was $76,133, yielding an operating income of $7,583. 

 

Using 10q data for a rolling 12 month  gives an average revenue per berth of $90,865 and average expense of $79,843 yielding an operating income per berth of $11,022. 

 

The market watch numbers bracketing those numbers depending upon line would seem to support that the data set is reasonable.

That sounds good ..

[TRLD]

2 hours ago, chisoxfan said:

Expense is kind of important. Without looking at any numbers and being argumentative I am fairly certain that HAL is not 50-60% more efficient than their competitors.  From a macro view the longer term questions in my mind are future cost and availability of debt, recession impact on disposable income, changing demographics for specific cruiselines, age of fleet, etc. etc. Then there are the black swans of international conflict, fuel prices, growing restrictions on ports, and (hopefully not) any disease outbreak. These effect the cruise industry in general but if and when any negatively raise their head think that CCL will likely streamline their brand and HAL becomes perhaps the most vunerable. Just my opinion that I am not hoping will come true.

Of course if  HAL (CCL) invests in AI all problems will be solved 

HAL is really not the vulnerable, because it's ships do not fit with the future direction of any line, except Cunard and that is very unlikely. It also fills a unique niche, doing unique itineraries at a mass market prices. 

 

P&O Australia only had 3 old ships, old Princess ships. Their source of ships was from Princess. Since Princess will need to keep its ships longer that source dried up. No brainer that it was time for that line to go.

 

Costa is a large line. Just a bit smaller than P&O UK and Princess. Even after the ship transfers. It went through a period of poor performance after the sinking so those transfers were as much about right sizing as anything else. Costa had excess capacity, Carnival could make use of it. Both tend to glitz decor so the ships fit right in with little modification.

[chisoxfan]

6 hours ago, TRLD said:

HAL revenue per lower berth is less efficient than Celebrity, only more efficient than Princess out of its competition.

 

Might be a couple of reasons for that. First, HAL fares tend to be a bit higher than Princess for equivalent cabins. Much more on the longer cruises. Second look at ship design  and cabin mix.

 

Go ahead look at the data or for that matter any data source you can find.

 

 

I think you would concur data supplied is deficient. Accurate expense and revenue per passenger/ day would make comparison  compelling.

That said, not challenging the immediate numbers you are throwing around but just offering my macro opinion that I could see HAL vunerable in next downturn when CCL may clean up their corporate line up.  I still put some credibility in the way capital is deployed at CCL and Carnival, Princess, and Cunard seem to be the focus. My views and a five dollar bill may get you a glass of beer (not sure of the current price on HAL).

[TRLD]

Just now, chisoxfan said:

I think you would concur data supplied is deficient. Accurate expense and revenue per passenger/ day would make comparison  compelling.

That said, not challenging the immediate numbers you are throwing around but just offering my macro opinion that I could see HAL vunerable in next downturn when CCL may clean up their corporate line up.  I still put some credibility in the way capital is deployed at CCL and Carnival, Princess, and Cunard seem to be the focus. My views and a five dollar bill may get you a glass of beer (not sure of the current price on HAL).

Sure but without per passenger per day, measuring against fleet capacity gives a measure independent of cruise length (the major limitation of the per passenger).

 

In the per passenger data HAL was highest revenue of Celebrity and Princess. With Princess lowest.

 

Against per lower berth line capacity HAL slightly below Celebrity, but well.above Princess. With HAL itinerary length vs Celebrity and both lines  fare structure that makes sense.

 

Princess also has some long cruises (shorter average than HAL, but longer than Celebrity) so not as much impact vs Princess. Princess is also the value line with the lowest average fares of the 3 so that makes sense as well.

 

What revenue per passenger day would give is the best view into average fare or spend. You would also need cruise days and occupancy rate to get the same view that revenue per cruise line lower  berth gives.

 

Sorry that the data does not match pre conceived view. (I was actually a bit surprised but the more I dug into it the more sense it made)  Feel free to dig into any data source you can find for something different beyond the HAL must be in trouble emotional responses that many give here for one reason or another because they personally do not like something about the line.

 

Keep in mind that some are saying that HAL is at risk because no new ships ordered since restart. Keep in mind that no new ships have been ordered for P&O UK or Aida since the restart and both of those lines have reached the 12% ROIC target. From the last call Aida probably the best based upon the CEO praised them.

 

At this point capital is limited and will be for a few years, so ships will be kept longer then they would have preCovid and orders will be fewer but will hapoen.

[howiefrommd]

On 7/29/2024 at 11:51 PM, TRLD said:

Took a look at the 10k for 2023. The market watch numbers appear to be a rolling last 12 months  last 2q of 2023 and first 2q of 2024

 

Looking at all of 2023 the average revenue per berth was $83,716 and average expense per berth was $76,133, yielding an operating income of $7,583. 

 

Using 10q data for a rolling 12 month  gives an average revenue per berth of $90,865 and average expense of $79,843 yielding an operating income per berth of $11,022. 

 

The market watch numbers bracketing those numbers depending upon line would seem to support that the data set is reasonable.

Reading this made me think of an interaction I had a few years ago while still in clinical practice.  Had a patient that came to Baltimore for a second opinion.  He had recently retired as a CFO of a fortune 50 (not 500) company.  It just happened that the same day we were seeing a patient who was a very published fiction writer, whom he saw in the lobby.  This former CFO joked to me that if you want to see fiction at its best read 10ks. He certainly did not indicate they were not truthful, but how each word was specifically chosen for a reason.  Even better he said, listen to quarterly calls with the investment community. 

Edited July 31 by howiefrommd
typo correction

[BermudaBound2014]

7 minutes ago, howiefrommd said:

............. if you want to see fiction at its best read 10ks. He certainly did not indicate hey were not truthful, but how each word was specifically chosen for a reason.  Even better he said, listen to quarterly calls with the investment community. 

 

This forum needs a love button! 

 

Quarterly reports often require rose colored glasses and serve the worlds finest word salad. 

 

I do listen to some quarterly calls because its easier for me to read between the lines while the players stumble to find the word ingredients to add to those five star salads. 😁

 

Like my very favorite statistician always says... "crunch the numbers until they confess". 

 

 

[ontheweb]

1 hour ago, BermudaBound2014 said:

 

Like my very favorite statistician always says... "crunch the numbers until they confess". 

 

 

Way long ago back when I was in high school, I was impressed when I heard my debate coach say, "There are three types of lies, lies, damn lies, and statistics".

 

Then I discovered he had plagiarized that as it had been said by Mark Twain/

[TRLD]

4 hours ago, howiefrommd said:

Reading this made me think of an interaction I had a few years ago while still in clinical practice.  Had a patient that came to Baltimore for a second opinion.  He had recently retired as a CFO of a fortune 50 (not 500) company.  It just happened that the same day we were seeing a patient who was a very published fiction writer, whom he saw in the lobby.  This former CFO joked to me that if you want to see fiction at its best read 10ks. He certainly did not indicate they were not truthful, but how each word was specifically chosen for a reason.  Even better he said, listen to quarterly calls with the investment community. 

Very much so. Pretty much why I ignore most of the verbiage and go to the actual financials. Over half of the text is boiler plate listing all of the potential risks to the business, no matter how unlikely they are. They are put in to protect the company from getting sued by shareholders in case something goes wrong such as covid.

 

That said any statements that can later be proven wrong based upon info that the company had at the time opens the company and their auditing firm to potential civil and regulatory legal action. Have on one occasion spent a couple of days (along with the Corp CEO, CFO and a couple of other execs getting interviewed individually by SEC attorneys explaining  the back ground of some information published in a 10q. The data we had, why it was interpreted the way it was, and why it was stated in the filings the way it was. It eventually turned out to be nothing and the matter dropped after they got all the details. I will say it was not a fun process and most execs would certainly not want to go through. There are some dishonest companies out there, but most try to make sure the data is correct.

 

Spent time involved in the process of writing and reviewing filings. There is a lot of time spent making sure that such filing 1. Can be supported by data 2. is legally defensive 3. explains potential risks 4. meets SEC reporting requirements.

 

Another point about 10k and 10q filings. When looking at a company do not just read one. Look at the companies past filing for inconsistencies as well as look at their competitions filings. See if their is data that one includes but another skips over. CCL and RCL filings mirror each other very well  NCLH uses a different format and is harder to dig out certain details.

Edited July 31 by TRLD

[chisoxfan]

On 7/30/2024 at 3:52 PM, TRLD said:

Sorry that the data does not match pre conceived view. (I was actually a bit surprised but the more I dug into it the more sense it made)  Feel free to dig into any data source you can find for something different beyond the HAL must be in trouble emotional responses that many give here for one reason or another because they personally do not like something about the line.

 

Keep in mind that some are saying that HAL is at risk because no new ships ordered since restart. Keep in mind that no new ships have been ordered for P&O UK or Aida since the restart and both of those lines have reached the 12% ROIC target. From the last call Aida probably the best based upon the CEO praised them.

I do not have a pre-conceived view, my response is not emotional but was an opinion, and as stated previously I like HAL and hope it succeeds. I know you have your head full of the most recent 10k,q data but don't think that tells the story.

One of my base cases is that the current favorable bookings and pricing power of mainstream cruise lines in general will be challenged by recession (these do happen despite the best efforts of the Fed to circumvent the natural business cycle) and that this could trigger CCL need to streamline. If you do a data dive the world consumer is in a world of hurt by most measures (savings rate, delinquent credit, declining employment, etc). 

As a 'layman' I have to believe that the massive new capital directed to Carnival and Princess are telling and not a random thing. The 4-5 year gestation period for a new ship pretty clearly shows where the poker chips are being placed.

Don't mean to be strident but frankly don't think the data overides the marketing quandry that HAL and CCL have. Carnival middle class, Princess upper middle class (expanding their profitable suite upperscale offerings), Cunard and Seabourn upperclass (speaking of cruise market not necassarily class of people cruising). The European brands I don't know enough about to comment on except that a North American and European 'division' makes sense. So IMHO HAL may  'possibly' become GM's Oldsmobile, Chrysler's Plymouth, or Ford's Mercury when push comes to shove. I don't think analyzing the last quarter financials have a bearing on this 'possible' future macro prospect.

[TRLD]

17 minutes ago, chisoxfan said:

I do not have a pre-conceived view, my response is not emotional but was an opinion, and as stated previously I like HAL and hope it succeeds. I know you have your head full of the most recent 10k,q data but don't think that tells the story.

One of my base cases is that the current favorable bookings and pricing power of mainstream cruise lines in general will be challenged by recession (these do happen despite the best efforts of the Fed to circumvent the natural business cycle) and that this could trigger CCL need to streamline. If you do a data dive the world consumer is in a world of hurt by most measures (savings rate, delinquent credit, declining employment, etc). 

As a 'layman' I have to believe that the massive new capital directed to Carnival and Princess are telling and not a random thing. The 4-5 year gestation period for a new ship pretty clearly shows where the poker chips are being placed.

Don't mean to be strident but frankly don't think the data overides the marketing quandry that HAL and CCL have. Carnival middle class, Princess upper middle class (expanding their profitable suite upperscale offerings), Cunard and Seabourn upperclass (speaking of cruise market not necassarily class of people cruising). The European brands I don't know enough about to comment on except that a North American and European 'division' makes sense. So IMHO HAL may  'possibly' become GM's Oldsmobile, Chrysler's Plymouth, or Ford's Mercury when push comes to shove. I don't think analyzing the last quarter financials have a bearing on this 'possible' future macro prospect.

Princess has not gotten any new orders. The Sun and the Star were both ordered pre Covid. Just as their have been no new ship orders since covid for P&O, Cunard, Aida, as well as HAL. 

 

Companies are always subject to economic cycles,changes in market conditions, failure of the Sun to rise in the morning, etc. Nothing unusual there. If the is a downturn CCL and the older ships no longer are cash flow positive they will be sold off or scrapped keeping the newer ship core of each line intact. Again nothing unusual there.

 

 Those actions when and if they occur are made to reduce operational expense, not to raise cash, since as demonstrated by the RCL sale of Azamara even the sale of an entire line generated only 210 million.

 

HAL has a unique niche that as shown in the revenue numbers has very good revenue per passenger and shows good use of their capacity. As such while they have not yet reached the 12% ROIC goal That P&O, Aida and Carnival have reached, has all.the indications that it does gave positive cash flow that assists in CCL paying off its debt.

 

So while the sun might not come up in the morning,  it is a very low probability event.  At this the economy does not appear on the edge of a major downturn during the next couple of years, interest rates appear that they will start coming down slightly. No sign of the economic disaster awaiting CCL on the horizon.

 

I never just look at the last 10Q. I look at pretty several years of a companies filings and their behavior during both up and down markets, as well as their competition.

 

 

 

[chisoxfan]

41 minutes ago, TRLD said:

So while the sun might not come up in the morning,  it is a very low probability event.  At this the economy does not appear on the edge of a major downturn during the next couple of years, interest rates appear that they will start coming down slightly. No sign of the economic disaster awaiting CCL on the horizon.

I never bet on the sun not coming up in the morning but did post four or five real concerns that could impact the cruise industry. I also never said there was an economic 'disaster' awaiting CCL just that a normal recession or other issues could impact the company and add momentum for a streamlining.  You dismiss any downturn (of course when the fed lowers interest rate in Sept. by 1/4 everything will be fine-if you want to research the state of the economy when the Fed cuts it may be eye opening-it's not good).

Anyway, we both have opinions that are as valid as anyone's although seemingly quite divergent- both hoping for HAL to continue!

 

ps. just struck by improbable thought. Cunard's newest Queen Anne (just sailing) was patterned after Konongsdam.......... Holland Pinnacle class to Cunard? I am sure our comments on CC will be forgotten tomorrow but it would be interesting to revisit in four years to see if either of us were on point. Happy cruising.

[TRLD]

4 minutes ago, chisoxfan said:

I never bet on the sun not coming up in the morning but did post four or five real concerns that could impact the cruise industry. I also never said there was an economic 'disaster' awaiting CCL just that a normal recession or other issues could impact the company and add momentum for a streamlining.  You dismiss any downturn (of course when the fed lowers interest rate in Sept. by 1/4 everything will be fine-if you want to research the state of the economy when the Fed cuts it may be eye opening-it's not good).

Anyway, we both have opinions that are as valid as anyone's although seemingly quite divergent- both hoping for HAL to continue!

 

ps. just struck by improbable thought. Cunard's newest Queen Anne (just sailing) was patterned after Konongsdam.......... Holland Pinnacle class to Cunard? I am sure our comments on CC will be forgotten tomorrow but it would be interesting to revisit in four years to see if either of us were on point. Happy cruising.

Not dismissing any down turn.

Just do not expect any down turn to result in anything different than actions taken, during even more severe downturn in the past.

 

oh gee another point that some tend to grab in their quest to think of reason why HAL might go away.

 With the 3 ships that HAL got the lines overall capacity had increased significantly. Cunard on the other hand needed a new ship since they 1. have very few and 2. What they had was getting old. That made sense in why the last  ship order was for Cunard. Of course a lot of old time Cunard passengers do not like the design. 

 

Time will tell. I fully expect to be sailing on HAL, as well as other lines 10 years from now.