| Date Published: January 28, 2010 |
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(5:30 p.m. EST) -- Royal Caribbean Cruises Ltd. -- parent company of Royal Caribbean, Celebrity Cruises and Azamara Club Cruises -- struck a positive tone during this morning's fourth quarter earnings call, outlining a period in which the company launched the world's largest cruise ship, faced extreme scrutiny following a decision to return to Haiti shortly after an earthquake devastated the country, and eked out a profit of $3.4 million. |
Do the Math
The $3.4 million profit was a bit of a surprise and sent RCCL shares up today (.88 cents to $26.31 at last check). It is more than double the $1.5 million the company reported for the same period last year.
Deals or No Deals?
Executives suggest that, in line with the slow recovery of the economy, the public is hungry to cruise again. But are prices on the way up? Fain told analysts that "slow, steady improvement in fares was consistent with slow, steady improvement in the economy." Taken across the whole brand, some of this had to do with Oasis of the Seas, which has demanded price premiums. One region that continues to be weak? The Mexican Riviera. Why? "We're not sure," was the word from Chief Financial Officer Brian Rice, although he says low fares may be due to H1N1 or a soft economy in Southern California, from where these sailings depart.
In another strong sign of economic recovery, executives noted that cruisers are starting to cast their gazes beyond the comfortable -- and cheap -- confines of the Caribbean. Namely, European bookings are heating up. "What we're seeing in terms of bookings in Europe is really encouraging at this point," noted Royal Caribbean International President Adam Goldstein. The line has the same number (eight) of ships in Europe this year as it did in 2009, but there are more passenger berths.
Execs spoke candidly about the cruise ship new-build slowdown, saying that it's highly unlikely that there will be anything new before 2013. Fain noted that we'll have to get use to an extended period of slower growth. In fall 2012, Celebrity's fifth Solstice-class ship is set to launch, and it's the last new cruise ship on the books for RCCL. More interestingly, when the next order is finally made, it won't be for the third Oasis ship. "Oasis was a special case," said Fain, adding that it's unlikely Royal Caribbean will build more than the two it has. (Allure of the Seas is due out at the end of this year.)
One analyst asked for Royal Caribbean executive's view of the duo of upcoming Disney ships, the first of which is set to launch in 2011. While Fain first said bluntly that he wouldn't comment on another brand's ships, he ultimately couldn't help himself. "Historically, we've seen that the Disney brand is so strong that it adds a halo to market," he said. "It adds validation to cruising as a vacation of choice."
In Case You Missed It
Richard Fain, Chairman and CEO of RCCL related how the company agonized over its decision to return to Haiti -- the line calls at a private beach resort called Labadee, some 85 miles from Port-au-Prince -- just six days after the capital was flattened by a massive earthquake. Fain said that they understood the image of people enjoying a holiday so close to such devastation, but ultimately, they felt a moral imperative to bring tourist dollars and supplies to the country. In total, the line has so far transported close to one million pounds of food, water and medical supplies to Haiti.
Miscellaneous Numbers & Facts
Oasis still commands premiums. A seven-night Caribbean cruise mid-February costs $1,699 per person (balcony).
Oasis isn't the only star, though: Fain says Solstice-class ships have been "kicking butt," too.
New bookings are up some 30 percent over the same time last year.
Want to know more? Cruise Critic followed the action, providing live tweets.
--by Dan Askin, Associate Editor
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