As we expected, Europe lead the Q2 beat despite lower onboard spend than we thought. 3Q net yield guidance was within expectations.  Quantum will be the next catalyst in November.



  • Double Double program (3-yr goal):  
    • Optimizing revenue
      • Structurally, had seen general pressure on pricing and compression on pricing
        • 4 areas of revenue expansion:
          • Strengthening brand
            • Azamara achieving double digit yield improvements
          • Enhancing global footprint
            • Bringing US guests on European itineraries
          • Asia
            • Quantum deployment to China is very exciting
          • Pullmantur
            • Cusp of turning an important corner.  Increased focus on Latin America.
    • Controlling costs
    • Moderate growth
      • 3-5% average compound growth is appropriate
  • Quantum of the Seas
  • 2Q
    • Better close-in pricing for Europe and Asia
    • Caribbean- highly promotional; ticket revenue yields down YoY
    • Onboard revenue yield:  +3% (10th consecutive quarter of onboard growth) - beverages packages and internet service drove the gains
    • NCC - better than expected, mostly timing related; balance of costs will be spent in rest of year
  • Booking environment:  significantly higher YoY.  Booking window continue to expand.  load and APD are up for rest of 2014.
  • Early 2015:  load and APD higher YoY
  • Caribbean:  very price sensitive.  Have implemented various promotions.  Expect Caribbean yield declines but see some improvement on Oasis ships.
  • Europe:   
    • Guests paying 20% more (in-line with our pricing survey)
    • Less supply to sell
    • Black Sea sailings pressured by conflicts in region
    • Med sailings doing well
  • Q3 guidance
    • Positive trends in Europe, China, and Alaska

Q & A 

  • Caribbean:  closer to inflection point; more pressure on 7 night and shorter itineraries.
  • Caribbean got quite a bit worse from 1Q to 2Q but has stabilized since.
  • Caribbean:  1Q 2015 comps will be harder than rest of quarters
  • Either higher dividends or stock repurchases in future
  • China:  proven to be a successful market but it is fairly young; but  investments have been costly, as with all new markets.  Still in the 1st inning.
  • 2015 NCC:  general commitment to cost cutting but there will be inflation pressures
  • Net Yield outlook:  +4% on average is a little on the high side
  • Q4 yield growth:  relatively consistent on bookings environment.
  • New onboard planning tool:  too soon to see how CruisePlanner will perform but doing well on Quantum
  • FY yield target unchanged due to rounding 
  • China vs Caribbean:  economically, Quantum should perform as well in China as in Caribbean (more costs but also more onboard revenues)
  • Demand will drive the profitability change.  Capacity has been set for the next 3 yrs.
  • Onboard revenue:  all categories up.  Doubled efforts on shore excursions.