Jaffa Posted July 8, 2011 #1 Share Posted July 8, 2011 I was bored this week so set myself a little task that some here may find interesting. I was confused with the fact that the publicly listed cruiselines or their parent companys this year are all still showing huge profits. This is despite the fact they are crying poor to customers and cutting services, food, drink quality ect. So are the cruiselines really doing it tough?? or are they shedding crocodile tears and simply maintaining growth in big profits by offering less. I selected an average 7 day Med Cruise on the Wind off peak. Silverwind voyage 2127 24th Sept 2011. Owners 2 bed Per Person $13923 Per suite $27846 Mult by 2 suites =Total $55692 Grand 2 bed Per person $13383 Per suite $26766 Mult by 2 suites = Total $55532 Royal 2 bed Per person $12843 Per suite $25686 Mult by 2 suites Total $51372 Silver 1 bed Per person $8793 Per suite $17586 Mult by 3 suites Total $52758 Medalion 1 bed Per person $7668 Per suite $15336 Mult by 5 suites Total $76680 Mid Ship V 1 bed Per person $5148 Per suite $10296 Mult by 38 suites Total $391'248 Veranda 1 bed Per person $4878 Per suite $9756 Mult by 56 suites Total $546'336 Vista 1 bed Per person $3753 Per suite $7506 Mult by 27 suites Total $202'662 Now this Total does not reflect a 3rd person in a suite or more than 2 people in a 2 bed suite ie owners ect TOTAL Rev, full cap $1'432'280.00 We know that on average Silversea pay's 13% commission - Comm $186'196.00 Total $1'246'084.00 Of course that is assuming every berth is sold by a travel agent and not by Silversea direct which would save commissions. Now lets multiply out this 7 day cruise annually. 52 7 day cruises at same revenue Total $64'796'368.00 So at full cap the Winds revenue annually is just below 65 million We know the Wind was built in 94 so the ship has been cruising for 17 years. If l remove say 1 year for refits, breakdowns ect and Multiply this out by 16years the total would now be Total $1'036'741'888.00 Yep the total is just over 1 billion dollars in revenue. Now lets look at the numbers if the Wind only sailed at 75% cap over its lifetime. The example cruise above $1'074'210.00 less commission $ 934'562.70 Multiply by 52 weeks $48'597'206.00 Multiply by 16 years $777'556'166 Now we know the Silverwind cost 125 million to build in 94 so it does not matter how you look at the numbers, cruising is a very lucrative and profitable industry. Even today in this ecconomic climate. We know that fuel for a 7 night Med cruise breaks down to about $450-$700 per person on a ship the size of the Wind. This post may interest some re fuel. http://boards.cruisecritic.com/showthread.php?t=759005 So then comes labor costs: The following helps to broadly break this down. However not all of the below is directly relevant to Silversea. All of the following are monthly salary ranges. Shore Excursion Manager: $2500 - $3500 Shore Excursion Staff: $1500 - $3000 Gift Shop Manager: $2500 - $5000 Gift Shop Staff: $1000 - $3000 Art Sales Associate: $2500 - $10000 Captain: $6000 - $10000 Higher striped officers: $4000 - 7000 Deck Officer: $1500 - $3000 Engineer: $1500 - $4000 Cruise Director: $5,000 - $10,000 Assistant Cruise Director: $3000 - $5000 Host/Hostess: $800 - $2000 Youth Counseler: $1000 - $2500 Dancer: $1900 - $3000 Musician: $1600 - $3000 Lead Technician: $2500 - $4000 Broadcast & AV Technician: $1300 - $3000 Guest Entertainer: $4000 - $10000 Bar & Wait Staff: $500 - $2000 In general higher end cruise lines pay much more as they also demand a higher standard of employee, while Carnival, for example would have more jobs available, but at a lower wage. Now keep in mind too, that cruise lines do pay their crew in cash. That's right a stack of $100's every month paid out to each crewmember. Many of the crew don't have to claim taxes. This is a big plus as tax free earnings lure many to a shipboard life. The Truth shall set you free And I must bring up another point that is not often addressed and that would be how much crew from 3rd world countries make. You see, passengers often feel sorry for these crew who are away form their families for 10 months at a time, only to make a couple hundo a month that they send home to their families. Heartbraking... I know. Here's the deal Yes we have all heard the claim that "with exchange rates they are making decent money to live off of". Yes that is true, but even without the exchange rate, they still make good money. The top guys and gals from India, Philippines and Indonesia can make upwards of $2000 per month waiting tables, cleaning rooms and doing some the "lesser jobs" that you probably couldn't be asked to do.. Then these crew show you a photo of their kids. I have personally known a couple guys who had pictures of their friends or families kids to help them solicite tips from passengers. And the passengers fall for it everytime. We have seen these same guys going into the gift shops buying a $700 Tissot watch. I guess his family didn't need the money that bad after all. So next time you go on a cruise, be sure to take a look at your room cleaners watch and see if he really is as hard up as he wants you to think. Cont: Link to comment Share on other sites More sharing options...
meow! Posted July 8, 2011 #2 Share Posted July 8, 2011 What a marvellous posting! You deserve a heart felt thank you from all of us .. meow! Link to comment Share on other sites More sharing options...
Travelcat2 Posted July 8, 2011 #3 Share Posted July 8, 2011 Thank you for that marvelous post! Link to comment Share on other sites More sharing options...
Jaffa Posted July 8, 2011 Author #4 Share Posted July 8, 2011 So now we know that wages for a 7 night cruise are not nearly as large or expensive as one would first think. As to food and beverage l have not been able to establish a cost on this yet, perhaps others may have something to contribute. Some info on the above. The cruise prices l selected were best available direct from Silversea's WebSite and included all available discounts. I did not take into account OBC as this is new to Silversea over the last 2-3 years and not relevant over the life of the ship. I know that some may think because todays cost dollar is not equal to 16 years ago that my estimates may not equate, but the cost of things like fuel, wages, labor and food and bev were much cheaper in 94 so the balance of profit ratio should still on average be about the same, roughly. As l went through this process, even on average estimates l was astounded just how proifitable cruiselines are. Even at the Lux level. Silversea could have had effectivley paid off the Wind in total in 2 years if it had wanted to. Naturally my numbers do not include shore-side and onshore services, office's, company costs/wages, marketing, insurance ect. I found this whole research enlightining and informative, I hope you find it interesting as well. I would love to read your thoughts and contributions. Cheers Link to comment Share on other sites More sharing options...
Jaffa Posted July 8, 2011 Author #5 Share Posted July 8, 2011 Ok, I have found some info directly relating to food costs that some may find interesting. It seems the average cost for Silversea/Seabourn was $26.00 per day in 2008 per person. Here is an interesting post re the subject. The numbers you are looking for are very carefully guarded secrets in the cruise industry. The cruise lines are even reluctant to give them to each other. The numbers do vary quite a bit as well, depending on ship, itinerary, and time of year. Here is a general break-down, per passenger, per day: Seabourn, Silver Sea - $24 - 26 per day Oceania, Regent - $18 - 20 per day Celebrity, Princess - $12 - 15 per day RCCL, HAL - $12 - 13 per day Carnival - $8 - 10 per day NCL - $7.50 - 8.50 per day Bear in mind that itinerary has a lot to do with these numbers: Flying tons of food from USA to a ship in Europe is very expensive. European Cruisers have paid substantially more for a cruise and have higher expectations. Their menus are usually pricier. Caribbean Cruisers generally pay far less for a cruise. Their expectations are generally lower, so menus carry less expensive items. Loading food in the Caribbean is usually far less expensive as well. Alaska Cruises are generally pricier, people eat more there and spend more time in the restaurants. Shipping and loading are more expensive in Alaska. Menus are generally higher cost on these itineraries. Transatlantic cruisers eat far more than those on a "regular" cruise. This pushes costs about 50% higher. Cruises with more sea days have far higher food costs than cruises that are port-intensive. It seems that when cruisers are not going ashore, they are eating, eating, eating. Most passengers gorge themselves for the first 3 or 4 days of their cruise. When they finally realise that they are eating themselves sick, they back off a bit and eat more normally. As a result, food costs on a 3 or 4 day cruise are far higher than on longer cruises. Repositioning cruises usually attract the bargain hunters. The mass market cruise lines just wants to break even on fuel costs to get the ship from the old itinerary to the new one. Most of the higher priced items disappear from these menus to cut costs. By the way, there will be a percentage of readers on this board who will say that these numbers are impossible. Next time you want to complain about food quality on a ship, think about how they are able to sell you such a low priced vacation.................. Here is a link to this whole thread: http://boards.cruisecritic.com/showthread.php?t=1096980 I don't know about you, but l thought this cost would have been higher per person. So an average 7 night cruise on Silversea even at $30.00 per person per day would equate to $210 per week. If this is close to accurate, Silversea's buying power serves them very well. Now, i'm on the search for beverage costs. Can anyone help?? Link to comment Share on other sites More sharing options...
rojaan19 Posted July 8, 2011 #6 Share Posted July 8, 2011 This will blow a hole in your figures - on our last cruise - Shadow - Incheon to Anchorage May 17 - there were only 94 paying passengers !!!!!!!!!! :D Link to comment Share on other sites More sharing options...
Jaffa Posted July 8, 2011 Author #7 Share Posted July 8, 2011 Thanks for that rojaan19, However my stats were only up to Jan this year. So your occupancy should not make any difference. I would probally view the 75% occupancy numbers l calculated as a much better representation than full occupancy anyway. A couple of individual differences in a number of small cruises won't effect the numbers much. That is taken over the life of the Wind. Link to comment Share on other sites More sharing options...
goose30 Posted July 8, 2011 #8 Share Posted July 8, 2011 Did I miss food, fuel and port fees in the OP's calculations? Link to comment Share on other sites More sharing options...
smoggyboy3 Posted July 8, 2011 #9 Share Posted July 8, 2011 I'm not sure how the breakdown on all inclusive drink will work out to, but I can safely say that on our next cruise my wife & I will consume above average HIC ! The reasoning behind this is so as not to offend Silversea who have been so gracious in offering it to us !! Link to comment Share on other sites More sharing options...
duct tape Posted July 8, 2011 #10 Share Posted July 8, 2011 WOW! You really have too much time on your hands. Have fun. Link to comment Share on other sites More sharing options...
newlondon Posted July 8, 2011 #11 Share Posted July 8, 2011 I have been in the investment management business for over 30 years. I used to cover the cruise industry and Jaffaa you are absolutely right-it is very profitable; but not quite as profitable as you make it. First, revenues vary substantially depending on the economy and second, fuel costs (although they can be surcharged) cut into margins if the environment is rising oil. To give you an example of profitability, Carnival built the Destiny in the mid-90s for between $500m and $600m. They expected the cash thrown off by operating this ship to have paid for it completely in 2-3 years. Not a bad ROI. Link to comment Share on other sites More sharing options...
meow! Posted July 8, 2011 #12 Share Posted July 8, 2011 So are you suggesting that those who have the money buy cruise line stocks? Any down side and risks? Link to comment Share on other sites More sharing options...
wripro Posted July 8, 2011 #13 Share Posted July 8, 2011 Jaffa, Hows about a similar analysis for airlines? Talk about crying poor while making a profit, especially due to baggage fees. Link to comment Share on other sites More sharing options...
Host Dan Posted July 8, 2011 #14 Share Posted July 8, 2011 Great posts Jaffa! Host Dan Link to comment Share on other sites More sharing options...
newlondon Posted July 8, 2011 #15 Share Posted July 8, 2011 Meow, It's too complicated to give an easy answer. Link to comment Share on other sites More sharing options...
Older Party Posted July 8, 2011 #16 Share Posted July 8, 2011 Did I miss food, fuel and port fees in the OP's calculations? What about in room movies and internet? The cruise lines pay millions for both of these services. Link to comment Share on other sites More sharing options...
TheSeaAroundUs Posted July 8, 2011 #17 Share Posted July 8, 2011 Now, i'm on the search for beverage costs. Can anyone help?? I spoke with one of Regent's executives, and I don't remember the actual figure right now, but he said he gets a one-liter bottle of pretty high-end liquor, i.e. Ketel One vodka, for something absolutely ridiculous, like $10. (It might even have been $7 -- actually, I think it was.) Beer drinkers cost him more than liquor drinkers. Great post! Link to comment Share on other sites More sharing options...
oregon50 Posted July 8, 2011 #18 Share Posted July 8, 2011 Everyone, and I mean EVERYONE sailing as crew with SS is well paid and I'm happy to read Jaffa's last couple paragraphs of his original post. Jaffa, have you noticed the whiskers growing? $32/38 per day is my guess for F&B expense per passenger on SS. I wouldn't begin guessing what the earnings are, nor do I care. More the better for all of us. A fraction of incurred expenses listed. What do you think they have sitting in contingency fund for when things go wrong? And does a day pass when something doesn't go wrong? Link to comment Share on other sites More sharing options...
meow! Posted July 9, 2011 #19 Share Posted July 9, 2011 Jaffa, have you noticed the whiskers growing? meow! Our gracious host has the best reply Great posts Jaffa! Host Dan Link to comment Share on other sites More sharing options...
funoton Posted July 9, 2011 #20 Share Posted July 9, 2011 The Wind was taken out of service for 18 months sitting in wet dock in Genoa after 9/11. Link to comment Share on other sites More sharing options...
Stevanb Posted July 10, 2011 #21 Share Posted July 10, 2011 What does it cost on the up keep of the ship and when they put it into dry dock for refit. The ships needs repairs and they are not cheap. If they made that much money cruise ship stock would be a great investment . Link to comment Share on other sites More sharing options...
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