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Great Q and Q4 guidance. We have reservations surrounding 2014 guidance (management conceded low visibility) based on results from our pricing survey. We prefer CCL.


  • 2014 will be 5th consecutive of further yield improvements
  • Guest surveys doing well
  • Caribbean a particularly concern; but premium (Oasis/Solstice class) continue to enjoy great pricing
  • Look forward for Caribbean to improve
  • NCC ex fuel per berth in 2013 has been lower than that in 2008
  • Average price of crude is 8% higher than that in 2008
    • Fuel consumption per berth has declined 14% since 2008
  • Pullmantur: struggling, biggest challenge; Spain economy continues to be big headwind. Pullmantur will open new Latin America office later this year.  Actively seeking to divest Pullmantur non-cruise businesses.
  • Must get double-digit ROIs
  • Restructing/consolidating charges: $12.2MM in 3Q, $13.9MM YTD;  global restructuring charges in the future -($10MM in 4Q, $16MM in 2014) 
  • 9 cent Celebrity Millennium impact
  • Ex Celebrity Millennium, net yields would have been up 0.4% bps or 3.0%
  • 25% Caribbean capacity in 3Q - performance in-line with expectations
  • Onboard very strong:  further spend from US customers in beverages, gaming, retail, shore excursions, specialty dining
  • Ex Millennium impact, NCC would have been 2.8%
  • $2.8BN in liquidity
  • 4Q
    • Competitive pricing pressuring Caribbean
    • Australia/Asia products are up
    • overall, shaping up better than expected
  • Encouraged by 2014 sailings - booked ahead last year on loaded 
  • Average booking window has been widened slightly
  • Caribbean yields:  flat to slightly down; currently booked ahead on 1Q and behind for rest of 2014
    • Expect more positive consumer cruising by end of Q1
    • +13% Caribbean capacity growth (most of the market capacity growth is in South Florida but RCL capacity growth will be in Glaveston)
  • Europe yields:  solid gains in pricing; demand from US, UK, and Ireland has been strong.  TTM Booking were up 25%.  Oasis of the Seas doing well.  Load factors ahead on mid-single digits.  Europe 20% of global portfolio.
  • Asia yields:  still cannot open up calls in Japan.  Most of 2014 itineraries will be based in Korea.  2014 capacity increase in Asia will be 20% (Mariner of the Seas moving to where Legend of the Seas was).
  • Expect to add 75 stateroom to each of the Voyager class ships over the next few years
  • Alaska:  10% of overall capacity; bookings/pricing 2014 ahead of last year and further yield growth.  Early 2014 performance is shaping up nicely. 
  • NCC ex fuel:  better than flat in 2014, aggressive target but achievable

Q & A

  • Oasis/Allure of the Seas:  leaders in Caribbean 
  • Caribbean:  last few weeks- nothing new worth noting
  • Promotional activity bottomed in Caribbean?  No answer.
  • 2014 guidance assumes environment stays consistent and promotional environment in Caribbean is status quo.
  • Mid-February will have lapped negative press
  • Europe:  surprisingly positive demand from US market.  
  • Onboard:  investments will continue to pay dividends into revenue growth into 2014 and beyond; 
  • 2014 net yield:  ticket yield will be up YoY; onboard yield will be up but not as much as 2013
  • Celebrity Millennium outage 
  • Repeat cruisers are contributing to the strong business performance
  • Shorter cruise itineraries in Caribbean (3-4 days) are struggling - where there are most 1st time cruisers 
  • Long cruiser itineraries in Caribbean are seeing some pricing gains
  • Absorbing Caribbean capacity well
  • 2013 3% net yield guidance breakout:  ticket +2-3%, onboard: +7%
  • Have expanded casino offerings, revitalised shore excursions
  • 2014 onboard low hanging fruit:  package shore excursions
  • Spa - healthy revenue, looking for opportunity to push pricing
  • Europe (Celebrity) - relatively optimistic over demand
    • Some comeback in Southern Europe (Germany) - particularly from affluent population
  • TUI Cruises have been extremely successful in Germany
  • 1Q 2014 booked in Caribbean:  2/3 booked
  • Asia onboard component has been attractive
  • No comment on possible additional capacity to Asia