• It's Here!

    Etf Pro

    Get the big financial market moves right, bullish or bearish with Hedgeye’s ETF Pro.

  • It's Here


    Identify global risks and opportunities with essential macro intel using Hedgeye’s Market Edges.

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


  • MIXED:  2013 net yield guidance of +2-4% is solid and underpinned by record US volumes and easy Costa Concordia comps.  European markets, especially Spain, remain the laggard with poor visibility.  2013 Cost guidance (+2-3%) was the negative surprise, which the company blamed on higher insurance, marketing, and technology costs. 

RCL 4Q 2012 REPORT CARD - 11


  • WORSE:  RCL has seen a 50% increase in their protection and indemnity insurance costs.  Their reinsurance costs incurred by the P&I clubs due to Costa Concordia was higher than previous estimates. 2013 insurance costs will be up $20MM YoY (60bps increase in costs), mainly related to P&I.  Increases in investments/marketing will impact costs equally.  The cruising space continues to be competitive and RCL needs to invest global marketing capabilities to maintain its edge.
  • PREVIOUSLY:  "I think we've talked about on the capital side that we are investing in IT and trying to upgrade a lot of our systems, both shore side and shipboard. Not all those expenses are capitalized, so we may feel some pressure there. I think we're looking at some modest increases in insurance, but I think they'll be manageable. We do have a number of revites, as Adam alluded to, over the next year, and there are costs that hit the P&L that come from there. And we're still evaluating things like food inflation and freight and whatnot. So there are some pockets of pressure, but again, I think we have pretty disciplined environment here that, hopefully, we can help keep this to a minimum."


  • SLIGHTLY BETTER:  Post-Costa Concordia bookings have been up 20% YoY.  Significant challenges remain in Spain with pricing and volumes lower; hence, the impairment charge for the Pullmantour brand in 4Q.  UK volumes have been disappointing at higher pricing.  Having sold less than 50% of European itineraries, Europe will be the largest swing factor in RCL's guidance.  Northern Europe booking curve is the same YoY.  Southern Europe booking curve are about 1 month closer than a year ago.  
  • PREVIOUSLY:  “The last few months of booking activity have been fairly stable. Our deployment has been adjusted slightly to accommodate for the stronger markets and the early order book for 2013 is encouraging....We are seeing a much more normalized booking curve from the North American market. Europe and particular Southern Europe has had a contracted booking curve. Northern Europe has actually had a pretty normal booking curve as we look out."


  • BETTER:  Caribbean yields are up in the mid-single digits while European itineraries were down slightly.
  • PREVIOUSLY:  “Currently, the fourth quarter sailings, our load factors are slightly below last year, but at slightly higher APDs. Caribbean itineraries, which account for 42% of our inventory in the fourth quarter, are showing the greatest strength. On the other hand, European itineraries, which account for 27% of our capacity, are forecasted to be down slightly."


  • SAME:  Cautiously optimistic for 2013.  Short excursions and beverage (introductions of new options) outperformed in 2012.  The revitalization programs have benefited onboard revenues and will continue in 2013.
  • PREVIOUSLY:  “We saw some strength in gaming, in retail and in short excursions."


  • SAME:  New ECA regulations will negatively impact fuel expenses by $11 million in 2013
  • PREVIOUSLY:  "While the ECA came into effect on August 1 of 2012, it isn't really until 2015 that the very – much more significant burden of sulfur requirements kicks into effect. So while we are facing a somewhat extra burden of fuel costs because of the first stage of the ECA right now and that will continue through the end of 2014, it's really not significant in the scheme of things for us and, I think, for the industry in general. The question is really what more will happen as we approach 2015? Will the ECA regime stay exactly in a fact as it is, or will there be potentially some adjustments through political or legislative process."

RCL 4Q 2012 REPORT CARD - 23