How will the Epic make money?

[ohioNCLcruiser]

Hey everyone,

 

I've been thinking and crunching some numbers about the Epic and I'm not sure how its going to pull in her large price tag. This is mainly a comparison to Oasis of the Seas.

 

After cancellation fees, change design fees the 150,000 ton Epic is going to cost around the same cost as the 220,000 ton Oasis of the seas.

 

What was a big shock to me was how low the cruises are going for on the Epic. Look at the prices on Oasis and you will see a very large difference. Oasis also has enough extra passengers to bring in about 1,000,000 dollars of extra revenue a week. Sure the Epic will have surcharge restaurants but the Oasis will also.

 

I just don't see how you make money on a billion dollar ship with $500 7 day cruise voyages? Is the Ice Bar going to be the deal breaker?! :eek::cool:

 

 

Seriously though what are peoples thoughts on this?

[bakerintn]

I guess that is for NCL to figure out .... not me. I just take the cruise and enjoy.

[ZoneHPH]

how i wish i had serious insight on this matter. so i guess i'm going to leave a whimsical remark.

 

have the Oasis and Epic play chicken in the ocean. the ship that survives wins! :D

[InTheCruisingYearsOfLife]

Hey everyone,

 

I've been thinking and crunching some numbers about the Epic and I'm not sure how its going to pull in her large price tag. :eek::cool:

 

Seriously though what are peoples thoughts on this?

 

Hmmm. In the Zero Mostel movie The Producers Gene Wilder was the number cruncher, and he came to the same conclusions as you did, and also an innovative solution. Perhaps NCL plans to do the maritime equivalent. On the maiden cruise, perhaps just a wee course change off of St. Marteen to the Bermuda Triangle?

 

Parodying an ole sailor folk ballad (snippetted from here, where there's also a nifty midi file of the tune http://www.wtv-zone.com/phyrst/audio/nfld/11/titanic.htm):

 

Oh, they built the ship The Epic

To sail with Man Group Blue,

And they thought they had a ship

That the water would never go through;

But the Lord's almighty hand,

Said that ship would never land.

It was sad when that great ship went down.

It was sad, It was sad,

It was sad when the great ship went down;

Husbands and wives, blue faced actors lost their lives,

It was sad when the great ship went down.

 

Okay, in case there are any humor-impaired readers out there: I'm just kidding! Looking forward to cruising the Epic as soon as I can afford it, but the ohsuchadeal I have on my current Alaskan cruise simply means the Epic is gonna have to wait.

[kamfan]

James, it is kind of hard for me to get into all of the details, but you must know that most of the money made on each cruise is not done through room costs alone. Alot of the money made is in the form of all the extras, drink, excursions etc. As well, keep in mind that the cost of the ship will be amortized over the expected life of that ship. Without doing the research, a ship's life is what? approximately 10 years? Over how cruises? And then of course at the end of the expected life of that ship for NCL, it will be sold, at a substantial price. I, for one, have no doubt that corporate has taken a very serious look at the cost versus income ratio's and factored that all in. Their bean counters are paid to do exactly this type of thing all the time.

[Elde]

After cancellation fees, change design fees the 150,000 ton Epic is going to cost around the same cost as the 220,000 ton Oasis of the seas.

 

I suspect corporate may write off the cancellation costs as a tax loss rather than charging them to the Epic as a cost. (If they can do so.) This not only reflects the situation better, it makes the bottom line look better.

 

I just don't see how you make money on a billion dollar ship with $500 7 day cruise voyages? Is the Ice Bar going to be the deal breaker?!

Feestyling?

 

Also, keep in mind the final cost depends on the cost of financing.

[CanadianTwosome]

James, it is kind of hard for me to get into all of the details, but you must know that most of the money made on each cruise is not done through room costs alone. Alot of the money made is in the form of all the extras, drink, excursions etc. As well, keep in mind that the cost of the ship will be amortized over the expected life of that ship. Without doing the research, a ship's life is what? approximately 10 years? Over how cruises? And then of course at the end of the expected life of that ship for NCL, it will be sold, at a substantial price. I, for one, have no doubt that corporate has taken a very serious look at the cost versus income ratio's and factored that all in. Their bean counters are paid to do exactly this type of thing all the time.

 

Hmmmmmmmm... are you an accountant, too? :p I was thinking along the same lines.

 

Also, just because Oasis CAN hold more passengers doesn't mean she's going to. Until we have evidence to the contrary, the Epic is a very desirable product being offered at an affordable price, and that's going to appeal to a lot of people - possibly even some who would 'normally' choose RCI. I'm about as open to 'other lines' as a person can be, but it ultimately comes down to my pocketbook, and I can't see myself ever sailing on Oasis because the cost is prohibitive.

[ZoneHPH]

i was pondering this more and more. and the answer is...

 

DW and i are booked on the EPIC next november. with my bar tab...they are DEFINITELY going to make money!

[jp2001]

All those extra costs already and the my impression that the Studios won’t sell well at all and NCL will have to let them go for the solo travelers at no extra charge (or a very small one), won’t help the ship be profitable.

 

But, the only way I would be interested in sailing the Epic actually is if they sell the studios at no extra charge for solo travelers. Otherwise, this ship has nothing to really appeal to me, I’ll keep sailing out Northeast on “older” ships. I’m 30, 5’3” and 112lbs and I feel from the ship renditions that I won’t fit in this crown of 20-something perfect bodies.

[4boysnana]

I wish I could say I was booked on a spa balconey on the Epic. Someday I will!! What I wonder about is how they will handle all the people getting on and off the ship. I always wonder how they can get everyone off and all the new people on and ready to go. For both the Oasis and the Epic that is a bunch of people. :confused:

Get me on and I will do my best to help NCL's bottom line. If you are happy and ready to enjoy the vacation I will spend more.

[CC Help Michell]

James, it is kind of hard for me to get into all of the details, but you must know that most of the money made on each cruise is not done through room costs alone. Alot of the money made is in the form of all the extras, drink, excursions etc. As well, keep in mind that the cost of the ship will be amortized over the expected life of that ship. Without doing the research, a ship's life is what? approximately 10 years? Over how cruises? And then of course at the end of the expected life of that ship for NCL, it will be sold, at a substantial price. I, for one, have no doubt that corporate has taken a very serious look at the cost versus income ratio's and factored that all in. Their bean counters are paid to do exactly this type of thing all the time.

 

I would think that a cruise ship has a much longer service life than ten years! In any event, I agree with you -- I don't believe they'd have completed construction on the Epic if they didn't think they will be able to make money operating her.

[newmexicoNita]

Hey everyone,

 

I've been thinking and crunching some numbers about the Epic and I'm not sure how its going to pull in her large price tag. This is mainly a comparison to Oasis of the Seas.

 

After cancellation fees, change design fees the 150,000 ton Epic is going to cost around the same cost as the 220,000 ton Oasis of the seas.

 

What was a big shock to me was how low the cruises are going for on the Epic. Look at the prices on Oasis and you will see a very large difference. Oasis also has enough extra passengers to bring in about 1,000,000 dollars of extra revenue a week. Sure the Epic will have surcharge restaurants but the Oasis will also.

 

I just don't see how you make money on a billion dollar ship with $500 7 day cruise voyages? Is the Ice Bar going to be the deal breaker?! :eek::cool:

 

 

Seriously though what are peoples thoughts on this?

 

lots of extra charges I am sure, plus those rates are for now, give it a little while and watch them sky rocket...Also, right now RCI prices seem to be totally out of line with other cruise companies.

 

Nita

[time2cruise1]

How do they make money. First thing they don't have to staff it with US workers :D Seriously forget the capital outlay for the moment the cost per passenger to operate a ship that hold twice the number of passengers then a Jewel class ship is far lower.

As far as the capital cost they have to look at it this way. NCL could have just walked away from all 3 F3s. That would have cost them over $500M with no chance of recovery after all the legal crap was settled. So you model your revised business case around the incremental cost to complete the ship. Can NCL make a return on that $500M and yes they clearly believe they can but not with $500 pp fares ( I have not seen fares that low on the Epic yet) but with $1500 to $8000 pp staterooms & suites and the money those in the the cabins spend onboard.

The net the incremental cost was not that much more then a new Jewel class ship with more then twice the capacity.

The Oasis is not a comparable ship. The Epic is in fact about the same size and capacity as a Freedom class ship that cost RCI more then $800,000,000

[dkittl20]

We just dont know how there business plan is layed out and never will, but what we do know is that NCL is a large company and they will make money, if not now because of there mistakes they will still re coop there costs somehow in the future, that is for sure.

 

So book Epic now! and help them out.

[JohnIreland]

I don't see them filling the Oasis every week , especially once it's not longer the biggest/newest ship around.

 

The Epic I think will fill because of the cheaper cabins.

[HMK8273]

I think part of the math is that there are no garden villas on board - but more CY Villas and Owners Suites - which they can sell more easily at $7K to $8K per person rather than $17K to $19K per person for a garden villa on a Jewel class ship - not exact numbers but hopefully you get the jist. Sell more cabins that you can at full price rather than doing upsells at lower rates just to fill the rooms.

 

I know it doesn't make up for the lowest price cabins and the number of those but it does impact things when they are doing 7 day cruises all the time - that is 52 weeks of money making activity all year round - once it starts up.

 

If it has the biggest casino at sea, trust me - it will be raking in money, plus the drinks, plus the excursion money, plus the photos - all of the items where it makes a profit - someone said go for the Epic at corporate because it was forecast to make money somewhere.

 

Just hope that we don't find out it was a stupid thing for NCL to do until after we all get a chance to cruise her at least once!

[G'ma]

lots of extra charges I am sure, plus those rates are for now, give it a little while and watch them sky rocket...Also, right now RCI prices seem to be totally out of line with other cruise companies.

 

Nita

 

Correct.....

 

And, CC published some info on Oasis a few week ago.....out of 22 dining venues onboard, so far 12 of them have an additional charge and others are listed as "fee may apply"......

[CanadianTwosome]

All those extra costs already and the my impression that the Studios won’t sell well at all and NCL will have to let them go for the solo travelers at no extra charge (or a very small one), won’t help the ship be profitable.

 

But, the only way I would be interested in sailing the Epic actually is if they sell the studios at no extra charge for solo travelers. Otherwise, this ship has nothing to really appeal to me, I’ll keep sailing out Northeast on “older” ships. I’m 30, 5’3” and 112lbs and I feel from the ship renditions that I won’t fit in this crown of 20-something perfect bodies.

 

I realize that you're hoping that they'll end up giving some sort of single discount for the studios, but I don't think it's going to happen. Your opinion is based only on your personal perception of what is appealing about the studios, but I think you're missing some things. Because you see these cabins as 'inferior', you believe they should cost less. I wasn't surprised at all (as you were, based on other posts) to find that the studios were priced about the same as inside cabins. They have a bit less private space, but they have their own community social area - and for many people this is a HUGE perk. My prediction is that the studio zone is going to be very popular with people who enjoy socializing.

 

As for the artist's renditions... um... they're artist's renditions. NCL's marketing team clearly chose to go the road of most other advertisers - with images that they believe people find most appealing to look at. That means nothing whatsoever about what those people look like themselves. :p If seeing people in advertisements that appear 'too perfect' are going to turn you off of NCL, though, you might as well give up on cruising all together, because I have yet to see an ad for any cruise line that depicts people with any physical 'imperfections' at all. :)

[salty dingo]

The cruise fare will be the loss leader, and they will make money on selling drinks, photos, and food.

 

I would expect the quality of the "free" dining options to decline until enough people pay for the specialty restaurants to make a profit there.

 

These huge ships will probably be going to places where the ship has made deals with the locals and gets a cut of sales on shore.

 

There will be bargains for those who know how to get them, but the upscale experience is definitely going to get more expensive. No doubt in my mind.

[ce2000]

We are looking at the profitability of the Epic in today's economic climate. Yes, NCL may have to lower fares to fill the ship today, but I believe that eventually the economy will recover and fares will rise. Due to the construction of only one ship and the fees associated with the cancellation of the second ship, NCL has more money invested in the Epic than they should. I believe that eventually the Epic will have a pay out, just not as soon as it could have been.

Remember there are a variety of reasons that people book a cruise with a cruise line.

For some, it is all about price.

For some, it is all about a specific cruiseline.

For some, it is all about the itenery.

For some, it is all about the onboard experience. (Freestyle for example)

Do you have a cruise booked at this time? Why did you book the specific cruise that you did?

[Planmaam]

The Epic is a beautiful ship, and I liked the looks and style of the Wave cabins, but I was not planning to cruise her, since I enjoy cool climates more than warm climates for cruising until I heard that the Blue Man Group would be entertainment on board. Now I HAVE to! That and the Cirque experience. I may just have to sign up for a future cruise on my next cruise.;)

[ohioNCLcruiser]

Do you have a cruise booked at this time? Why did you book the specific cruise that you did?

 

 

I can proudly say that I have NO cruises booked for my vacation! This time I want to stay as far away from ships as I can! :eek::D

[CruisnGram]

I can proudly say that I have NO cruises booked for my vacation! This time I want to stay as far away from ships as I can! :eek::D

 

Hey James, long time no chat. Sounds like you are finally getting your fill of being on cruise ships. LOL

 

So what's next when this contract is up?

 

Joyce

[ohioNCLcruiser]

Hey James, long time no chat. Sounds like you are finally getting your fill of being on cruise ships. LOL

 

So what's next when this contract is up?

 

Joyce

 

I leave the ship in 8 days!!! I'm going to Australia for a few weeks then just relaxing at home. I would consider going on a last minute cruise if the prices for Balconys were pretty cheap so I could just stay in my room for a week and not see passengers and just do movies and room service..hmm that sounds kinda nice actually :D

[CruisnGram]

I leave the ship in 8 days!!! I'm going to Australia for a few weeks then just relaxing at home. I would consider going on a last minute cruise if the prices for Balconys were pretty cheap so I could just stay in my room for a week and not see passengers and just do movies and room service..hmm that sounds kinda nice actually :D

 

Ah to be young. Austrailia? Lucky man. I'd like to get there someday. So is your contract over? Or are you just on vacation?

 

Joyce