RCL is fortunate to have more cost cuts in the bag and a stronger Europe/Asia business. But there is no question that the Caribbean has gotten weaker.
CONF CALL
- TUI JV: Mein Sciff 3 will take delivery one month from today
- Will have scrubbers
- Installing new O3B internet systems to increase internet bandwidth for Oasis of the Seas. Could roll out to more ships as well.
- 1Q: oil spill in Gulf, damaged propeller in Tokyo affected 2 sailings
- 1Q 2013: record yields
- 1Q Caribbean: 2/3 of capacity
- Settled maturity of 1BN euro bond in 1Q
- 2014: will recognize $23MM in restructuring expenses and $11MM loss associated with Pullmantur tour business. $19.6MM was included in 1Q and rest will be recognized later this year.
- Bookings volume: have been accelerating, bookings up 20% YoY, driven partly by Caribbean discounting. APDs are high.
- More bullish on Europe and China and incorporated more conservative outlook in Caribbean.
- Pricing pressure on Caribbean (3-7 night itineraries)
- Caribbean capacity is higher in Q2 than in all other quarters; expect largest yield decline there.
- European sailngs are at higher prices and volume. US source market particularly strong. Finally seeing pricing recovery in Southern Europe
- Asia: continue to exceed pricing and volume expectations.
- Costs: Inflation pressures, rising insurance premiums, and nominal capacity growth
- Caribbean:
- Continuing to experience significant promotional activity
- Yields to be down slightly
- Guidance assumes continued promotional activity for rest of year
- Oasis continue to command highest premiums
- Bookings in March/April up double digits
- Quantum of the Seas: Dynamic Dining exceptionally well-received
- Marnier and Voyager of the Seas doing well in Asia
- Strong onboard revenue in Asia will improve further
- Expect double digit yield improvement in 2014
- Europe: capacity-adjusted bookings up 25% YoY; load factors highest since 2007
- Demand from NA particularly strong
- 80% NA bookings on the books for 2014, considerably higher than that of last year
- Northern Europe/Med: doing well
- 2014: Yields up double digits
- Alaska: solid performer; anticipate highest yielding product in 2Q/3Q
- Low-mid single yield growth for 2014
- Expect more marketing for Asia later this year
Q & A
- 1Q incidents: all were small e.g. Explorer norovirus
- Caribbean: booking trends lower but normal since it's post-Wave but more volume than normally in March/April.
- Surprised post-Wave volumes were stronger than historically been
- Caribbean: weaker yields today than in January; have been weaker than what mgmt expected
- Caribbean capacity in 2015: very slightly up
- Quantum pricing in China vs Caribbean: very confident the ship will do well in Caribbean and Asia (ticket/onboard)
- China is more expensive to operate in
- 1Q Caribbean capacity deployment was higher before Quantum move. After move, it is basically flat
- China is in a profitable position today
- Still sees opportunity in Latin America and South America e.g. Pullmantur
- High costs in Brazil
- Canyon Ranch: finished transition to Celebrity in less than 4 wks; not much disruption
- 1Q Onboard strength: gaming and beverage
- Strength in Spain, UK, and Ireland markets
- Med: less capacity YoY, more strength from Southern Europe, better distribution channels
- Pullmantur tour business: +/- zero for a couple of years; sold in late January
- Not included in previous and current guidance
- Revitalizations have helped onboard revenue
- 3 Asian source market developments: Quantum in Shanghai; Tianjin/Bejing region; Pearl River Delta/Hong Kong region
