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.
CONF CALL
- 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