RCL 2Q REPORT CARD

In an effort to evaluate performance and as a follow up to our YouTube, we compare how the quarter measured up to previous management commentary and guidance

OVERALL

  • WORSE:  While RCL remains focused on cost controls, weaker demand from Europe and Alaska is dragging down its outlook.

RCL 2Q REPORT CARD - RCL234 

PRICING/BOOKINGS

  • WORSE:  Q3 APDs are lower YoY as Europe and Alaska discounting has picked up while load factors remain below last year's levels.  Q4 APDs and load factors have been relatively stable.
  • PREVIOUSLY:  
    • "We continue to experience a slow but steady recovery in our booking patterns. Over the past four weeks though, we have seen better demand especially from the United States where year-over-year bookings have been exceeding last year's levels." 
    • "Overall, our current pricing remains in line or higher than the same time last year for all major itinerary groups except Europe."

WEAK 2Q/3Q, STRONG 4Q/1Q 2013

  • WORSE:  Q3 yields are underperforming while Q4 yield growth is slowing. Management did not want to comment on Q1 trends.
  • PREVIOUSLY:  "Not surprisingly, the second and third quarters are suffering the most. They book a great deal during the wave period and the summer is our most valuable season, especially in Europe, with less of a cushion than the first quarter, they are therefore and not surprisingly the most vulnerable. On the other hand, as we enter the fall, we appear to be turning a corner. Sailings in the fourth quarter and for all of 2013 show promise. Both remained stronger than comparables from the same time last year and I think that further validates our belief that this is a shorter-term issue."

DEVELOPMENTAL ITINERARIES

  • BETTER:  Asia led the charge with dramatically higher yields.  Even though that region had given easy Tsunami comps, it outperformed management expectations and drove ticket revenues higher.

VOYAGER IN ASIA

  • SAME:  Voyager of the Seas was well-received in China
  • PREVIOUSLY:  "The bigger story of Royal Caribbean seasonal deployment, however, is the move of Voyager of the Seas to Singapore and then China, while the ship will not arrive in Singapore until May 26, it is clear the perspective presence of Voyager in Asia has galvanized interest in Royal Caribbean in the region. Asia is in general a late booking market, so we still have limited visibility into the performance of specific sailing, but at this stage of the selling effort, we are pleased at the market's response to Voyager."

ALASKA

  • WORSE:  Q3 APD has been steadily trending lower since May.
  • PREVIOUSLY:  "For the summer season, our Alaska product, where we are once again operating three ships, is performing well. Bookings for our seven-night Bermuda sailings out of Cape Liberty this summer are also doing well and we are on pace to achieve healthy yield improvements over last year on both of these products."

ONBOARD REVENUES

  • WORSE:  onboard revenues came in weaker than management forecasts
  • PREVIOUSLY:  "Very strong beverage revenue, we've seen strong shore ex. revenue. Casino has not rebounded yet, but we've put programs as a whole, but we've put programs together with high rollers to help casino improve."

FIRST TIME CRUISER

  • SAME:  % of repeat cruisers continues to be higher, compared with prior years
  • PREVIOUSLY:  "We are seeing a lot more hesitancy from the first time cruiser."