Source: RCL
CONF CALL
- Anthem of the Seas has been 'quite profitable and generating strong returns'
- Quantum of the Seas bookings in China has been 'heartwarming'
- Double-Double program still on track
- Hedgeye is skeptical
- China now represents 6% of capacity at a higher level % of the company's profitability
- Bookings curve moved forward since they marketed sailings earlier than usual; thus, less need to offer late-minute discounts
- In March, adopted new policy that they will not offer late-minute discounting in North America (excluding 2-4 night itineraries). This may negatively impact short-term bookings but believe this is the right method over the long-term.
- Strength in close-in pricing in Caribbean boosted Q1. Caribbean capacity had 69%.
- Quantum had significantly higher premiums vs rest of fleet
- At this point, Booking and APDs are higher vs same time last year
- Previous guidance already incorporated better Caribbean pricing in Q2-Q4
- Continue to expect low single digit yield increase in Caribbiean sailing
- Europe: volumes slightly down vs 2014. Capacity up 5% YoY. Strength coming down Baltic/Med doing well. Eastern Med are soft, particularly Turkey. Still see mid-single digit yield increase in 2015.
- Asia: in 2015, capacity accounts for 15%. Asia itineraries, as a whole, has been trending well but individual itinerary's performance vary. Quantum is booked 80% for the summer 2015. 2016 is looking good as well.
- We agree. As we wrote in "RCL: HOT ASIA BOOKINGS", Quantum bookings have been stellar. But pricing performance is mixed particularly with the older fleet underperforming in non-China itineraries.
- Expect low to mid single digit yield increase.
- Lower Fuel consumption due to better fuel initiatives.
- 2Q 2015: capacity mix: 37% Caribbean, 25% Europe, 10% Alaska, 10% China
Q & A
- China: 66% more capacity in China this year. Good yield growth but not double digit growth this time around.
- Southeast Asia: yields are flattish.
- Australia: yields are up slightly
- Consumer pay bundled packages in non-US$
- Onboard rev will still have a record year
- 150bps change from Q2 -Q4 ; half of it on anticipation of weaker non-US onboard spend. Another half of it is on Eastern Med and new NA pricing pricing policy mentioned above
- Is new NA pricing policy shared by their competitors? They don't think so.
- Repositioning is great for Quantum but lower yields for everyone else who has repositioned.
- We've been concerned about the underperformance of the pre-2006 fleet.
- Why NCC ex fuel much higher in 2Q? mostly due to Quantum repositioning to China
- Relative to guidance in October 2014, currency impact -$0.59, +$0.54 fuel impact. Relative to guidance in Jan 2015, -$0.36 (-$0.15 (fuel), -$0.20 (FX).
- Committed to keeping costs down this year and next year
- 2-4 itineraries is only a small portion of their NA itineraries
- FX impact onboard spend depends on exposure (see chart above)