Higher Ticket Prices and Onboard Spend Primary Drivers for Royal Caribbean’s Q2

Symphony of the Seas

With capacity up 2.6 per cent, higher ticket prices and onboard revenue were the main drivers for Royal Caribbean Cruises reporting record results today in the second quarter.

Royal Caribbean reported net income of (GAAP) $466.3 million, or $2.19 per share, on revenues of $2.3 billion for its second quarter ended June 30, 2018, compared to net income of $369.5 million, or $1.71 per share, on revenues of $2.2 billion last year.

Ticket revenue per passenger day was $163.76 for the second quarter of this year, compared to $158.92 last year and the onboard spend was $65.12 compared to $61.70 per passenger last year.

Operating expenses rose moderately at $128.70 per passenger day with increases in all expense categories, from $126.30 last year.

With operating income of $456.9 million this year, up $37.2 million from $419.7 million, $9.4 million in interest and other income this year, compared to a $50.2 million in interest and other expenses last year, contributed further to boost net income to $466.3 million over $369.5 million.

The increase in per share income was also boosted by fewer outstanding shares, a result of Royal Caribbean’s share buyback program. Outstanding shares numbered 212.5 million, compared to 216.1 million for the same period last year.

Royal Caribbean reported 10,213,067 passenger cruise days this year, up from 9,950,570 passenger cruise days last year, and 1,461,055 passengers, compared to 1,433,339 in 2017.

Fred Olsen Cruise Lines May Open Rivers to Big 3

Fred Olsen Cruise Lines May Open Rivers to Big 3

PHOTO: Amadeus Princess. (photo via Flickr/Lutz Blohm)

After Crystal Cruises decided to venture from the oceans to rivers, we speculated that other brands might follow suit, and now Fred. Olsen Cruise Lines has: The UK company plans to sail the Brabant beginning in 2018.

Upon further inspection, it turns out the Brabant will actually be the 2006-built Amadeus Princess renamed for Fred. Olsen’s purposes. That means its presumably chartered program will more closely mimic how Celebrity Cruises once collaborated with Amras Cruises, or how Adventures by Disney is still partnering with AmaWaterways.

Crystal Cruises, on the other hand, started its Crystal River Cruises division with a permanent takeover of an existing riverboat followed by complete new-builds.

Either way, Crystal and Fred. Olsen will essentially be the only two ocean operators on the river. (Adventures by Disney doesn’t quite count as an independent brand from Disney Cruise Line.)

So, again we ask: Might even more ocean cruise lines soon be inclined to roll down the river?

The river cruise market boom is beginning to slow a little. Ubiquitous Viking River Cruises only christened two of its signature Longships this year and does not have any additional new ones currently scheduled to launch next year. (It does have the Viking Ra, a heavily redesigned existing vessel, set to come online in Egypt in 2018, however.) Conversely, AmaWaterways is growing even bigger with the new double-wide AmaMagna planned for 2019.

With such characteristic ebbs and flows, there definitely remains room for other players to make a move.

European rivers often appear saturated with ships, but additional charter opportunities seem to abound. Major US companies like Carnival Corporation, Norwegian Cruise Line Holdings Limited and Royal Caribbean Cruises Limited are the most likely to consider, albeit likely with purpose-built riverboats.

The question is whether or not they would apply any of their current ocean brands to the river or if they would establish new lines for the purpose.

The decision would have to be made whether a Holland America River Line, Oceania River Cruises or Celebrity River Cruises make sense as example sub-brands for each of the big three corporations respectively.

Previously, it appeared that Norwegian might corporately want to stay out of the river market to give Crystal Cruises the edge with their link via Genting Group, but now the financial separation is growing wider, making direct competition fair game.

It’s still possible that the domestic brands would prefer to test the waters locally, however, heading out on the Mississippi over the Danube first. Getting loyalists to try a new product closer to home is always an easier sell. Then if it proved successful, it could be expanded abroad.

Otherwise, a completely new brand under one of the corporate umbrellas could be a better approach to drawing from several pools of loyalists at once to build up a new river cruise base.

Of course, the timeline for any of this is likely dependent on the success of another current experiment: Cuba.

As long as the Trump administration does not reverse relations with the island nation, ocean cruise lines are focused mostly on sending existing hardware there now and into the immediate future. Any likelihood that new river hardware and software is next established by such companies will likely be put on hold until they can better measure success or failure in the Caribbean.

In the meantime, keep looking to Crystal River Cruises and Fred. Olsen River Cruises to pave the potential way for others.