Without Cuba cruises, Royal Caribbean lowers profit outlook

Harmony of the Seas

Royal Caribbean Cruises Ltd. said eliminating Cuba from the itinerary of various sailings will reduce 2019 earnings by $52 million to $73 million.

“While the affected sailings impact only 3% of our 2019 capacity, the extremely short notice period for this high-yielding destination amplifies the earnings impact,” said Jason T. Liberty, executive vice president and CFO. “The result of this policy change has created a short-term impact on our guests, operations and earnings; fortunately, we have many alternative and attractive destinations for our guests to choose from.”

The other major cruise companies affected by the decision to ban U.S. cruises to Cuba haven’t commented on the financial impact.

Cuba accounts for 1% of capacity at Carnival Corp. and 4% at Norwegian Cruise Line Holdings, according to a note from Wells Fargo Securities, which estimated the economic impact on Carnival at $21 million to $42 million and on Norwegian at $26 million to $60 million.

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Cruise-Line Size Race Is Over; Now It’s About Amenities

Symphony of the seas sea trial

Photo: Royal Caribbean

By Christopher Palmeri (Bloomberg) — When the $1.35 billion Symphony of the Seas steamed out of Barcelona on its maiden voyage in April, it instantly claimed the title of world’s largest cruise ship.

At 228,000 gross tonnes, Symphony is a tad larger than the previous titleholder, its two-year-old sister, the Harmony of the Seas. But dive deeper into the stats and the victory looks iffy. It’s actually the same length and carries fewer passengers, a maximum of 6,680.

Owner Royal Caribbean Cruises Ltd., which has continually led the industry with its ever-larger vessels, says size won’t matter as much as it used to. Of the 16 ships the company has on order, only one will be larger than Symphony, and just barely. Icon, the new class of ships the company is building in a Finnish shipyard, will be smaller.

“We don’t expect that there will be a leap in the size,” said Harri Kulovaara, the naval architect who has led new ship construction at Royal Caribbean for 23 years. “There might be some tweaks, but not quantum leaps.”

Instead, the Miami-based company is focusing on how to make guests happier on those big boats, which can run close to a quarter mile in length. With eight of the 10 largest cruise ships in the world, Royal Caribbean is looking to speed the boarding process and get the fun started sooner. It’s introducing technology to give guests more control over their vacations and is creating onboard entertainment that’s more personal in nature.

“It’s not, ‘Everyone now goes into the theatre to see a great show,’” said Richard Fain, Royal Caribbean’s chief executive officer since 1988. “People want something that’s just for them.”

The cruise-line industry is in the midst of a building boom, and that added capacity is coming online at a time when some markets are starting to look weak. Carnival Corp., the industry’s largest player, said on Thursday that its revenue would be lower than expected next year, news that sent the shares of cruise operators tumbling.

Royal Caribbean, the second-largest player in the cruise business after Carnival, has always been an innovator. Its original ship, the Song of Norway, was launched in 1970 as the first purposely built for warm-weather cruising, with a pool on the deck instead of lifeboats. Other innovations include the first buffet, on the Song of America in 1982, and an atrium, in 1988’s Sovereign of the Seas, the largest in its day.

In 1998, Royal Caribbean created a splash with Voyager of the Seas, which featured the first ice-skating rink and a rock-climbing wall. It wasn’t easy. The rink required extensive testing of cooling equipment and materials to create a surface that wouldn’t crack when the ship rocked. And Fain admits he didn’t expect the climbing wall to be a hit.

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Still, he used that ship to reinforce the idea that cruising wasn’t just for older folks who wanted to eat and watch Broadway-style shows. He introduced Voyager in a TV campaign featuring the Iggy Pop song “Lust for Life.”

“It was a very visible manifestation that this was not a sedentary, not a passive vacation,” Fain said in an interview.

The number of guests cruising industrywide has increased threefold since then to an estimated 30 million this year.

Fain’s push for the new and exciting seems to come naturally. He has been known to challenge guests to an onboard surfing competition on one of Royal Caribbean’s FlowRider machines or learn to pour seven martinis at once for an employee party.

“Most people would not categorize me as a millennial,” the 71-year-old executive said. “I feel like one.”

Over the past two years, Fain has sought to make Royal Caribbean’s creative process part of its culture, opening an innovation lab next to its dockside Miami headquarters and hiring talent from competitors such as Walt Disney Co. Some 150 employees work in the lab, meeting with shipyard officials and executives from Royal Caribbean’s six brands, including the higher-end Celebrity and Azamara lines. Some projects are visualized in a space called the Cave, where staffers don 3D goggles for virtual walk-throughs of new designs.

Downstairs, a warehouse floor holds prototypes of projects in the works. On a recent day they included a new cabin design, a pirate-themed game, a tropical signpost for one of the company’s private islands and a cart that looks like something Jules Verne would have designed — if the science-fiction writer had wanted a vehicle that mixed cocktails.

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Augmented reality will become a navigation aid on the cruise ship

Many of the more personalized experiences Fain is emphasizing are evident on ships the company launched this year. Stairs on the Symphony of the Seas, for example, light up and play music like a scene from the movie “Big.” A musician wheels a piano around the ship and takes requests, even in elevators. Guests on deck 12 can hold their smartphone up to a painting and see an “X-Ray” view of the bridge crew working behind the wall.

“I’m very cynical — I have been on over 150 cruises,” said John Maguire, who runs the travel booking site CruiseDirect.com and who sailed on the Symphony recently. “They do wow me.”

On another new vessel, the Celebrity Edge, diners watch an animated chef prepare their food on a video projected onto their table, then the real dishes are delivered.

At new port facilities Royal Caribbean has built in Miami and Fort Lauderdale, Florida, guests can upload passport information and a headshot, then use facial-recognition checkpoints to speed boarding — “from car to bar” — in under 10 minutes, according to Jay Schneider, who heads the company’s digital initiatives.

Over the next few months, Royal Caribbean will make refinements to its app, letting customers adjust the temperature in their rooms before they get there, receive alerts when restaurant reservations are available and order a Mai Tai that will be delivered to them anywhere in the ship.

“What people expect in their vacations has evolved dramatically,” Fain said. “I think one of the reasons the industry is doing so well is we keep evolving what we’re offering.”

Carnival Corp chairman’s foundation pledges $5m towards global disaster relief

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The family foundation of Carnival Corporation chairman Micky Arison and his wife Madeleine is donating $5 million towards global disaster relief efforts.

The money will go to help communities affected by Hurricane Florence in North and South Carolina, Super Typhoon Mangkhut in the Philippines and the recent earthquake and resulting tsunami in Indonesia.

The $5 million donation from the Micky and Madeleine Arison Family Foundation is going to Save the Children and humanitarian organisation Direct Relief to support urgent relief needs, as well as the long-term recovery strategy across the globe in the wake of recent natural disasters.

Additional grants are underway from Carnival Foundation, the cruise conglomerate’s philanthropic arm, and brands including Carnival Cruise Line, Holland

America Line, Princess Cruises, Seabourn, AIDA Cruises, Costa Cruises, Cunard, P&O Cruises Australia and P&O Cruises UK.

Carnival Corporation’s collective donations will go toward supporting global aid agency Mercy Corps in Indonesia, International Medical Corps in the Philippines, and Save the Children in North and South Carolina and the Philippines.

Carnival Foundation executive director Linda Coll said: “Our hearts go out to those who are dealing with great hardship and loss following these major natural disasters, and our sincere hope is that these additional resources will help our partner organizations execute response plans for both immediate relief needs and longer-term recovery efforts.

“The Micky and Madeleine Arison Family Foundation have helped so many people and communities over the years through its generous donations, and with this new pledge, it continues to provide critical support resources around the globe that will make a difference for those in need.”

She added: “We want to do all we can to help those with the most urgent needs, and also build a foundation for the future health and well-being of these affected communities for years to come.”