RCCL hits Q3 profit forecast

[Cruising89143]

From Seatrader and Cruise Industry News

 

http://www.seatrade-insider.com/news/news-headlines/royal-caribbean-hits-q3-profit-forecast-raises-guidance.html

 

http://www.cruiseindustrynews.com/cruise-news/10111-royal-caribbean-reports-strong-third-quarter.html

 

http://www.cruiseindustrynews.com/cruise-news/10112-royal-caribbean-gross-numbers-are-up-for-q3-positive-forecast-.html

 

http://www.seatrade-insider.com/news/news-headlines/premium-capacity-helps-royal-caribbean-in-price-challenged-caribbean.html

[dz9yvr]

The article lists cost control as one of the major factors offseting the lossses from the Millenium drydock. Cost control means that their have been further cutbacks in service. I don't think continuing cut basks is the secret for long term success of an up scale cruise line.

[cruisestitch]

"Cost control means that their have been further cutbacks in service."

 

Is that necessarily true? I mean, is the term "cost control" always associated with cutbacks in service? Could it not mean something else, like lower energy bills due to greater efficiency, or lower rents per square foot due to renegotiated leases, or some other aspect of doing business besides salaries and/or number of employees?

[celebrity]

"Cost control means that their have been further cutbacks in service."

 

Is that necessarily true? I mean, is the term "cost control" always associated with cutbacks in service? Could it not mean something else, like lower energy bills due to greater efficiency, or lower rents per square foot due to renegotiated leases, or some other aspect of doing business besides salaries and/or number of employees?

 

It can also be a case of contracting with various vendors that offer lower price points.

[dirtymoney]

The charts on this page feature a breakdown of the total annual pay for the top executives at ROYAL CARIBBEAN CRUISES LTD as reported in their proxy statements.

 

 

http://www1.salary.com/ROYAL-CARIBBEAN-CRUISES-LTD-Executive-Salaries.html

[The_Big_M]

It can also be a case of contracting with various vendors that offer lower price points.

 

It can also be... but that can also cause a cutback in service. ;)

[Orator]

Several have been arguing for some time that any corporate decision will be driven by impact on the bottom line. Now all doubters can see that this is true.

[Christine Frances]

So it would be better for us if RCCL posted a loss? This is bad news?

 

 

Sent using the Cruise Critic forums app

[cruisestitch]

Of course corporate decision making is driven by the bottom line. But that doesn't necessarily mean cutbacks in service.

 

When service cutbacks become too drastic, and customers are driven off, then the bottom line once again comes into play, and service must be restored, although then the cost of the product may have to go up.

 

Meanwhile, cost cutting, through a variety of options that don't affect service, should always be sought.

[Orator]

Of course corporate decision making is driven by the bottom line. But that doesn't necessarily mean cutbacks in service.

 

When service cutbacks become too drastic, and customers are driven off, then the bottom line once again comes into play, and service must be restored, although then the cost of the product may have to go up.

 

Meanwhile, cost cutting, through a variety of options that don't affect service, should always be sought.

 

You are correct and there seems to be a number of steps that have been taken. Service that directly impacts the customer is usually the last thing cut. I've been warning people not to expect significant enhancement in the Elite program for the great mass of Elites. I suspect that this is a potential target for trimming. My guess would be that "super" Elites might see a slight increase in benefits. Look for more added charges and further increses in package prices in an attempt to balance lower base fares. Of course this is all speculation on my part.

[Gonzo70]

You are correct and there seems to be a number of steps that have been taken. Service that directly impacts the customer is usually the last thing cut. I've been warning people not to expect significant enhancement in the Elite program for the great mass of Elites. I suspect that this is a potential target for trimming. My guess would be that "super" Elites might see a slight increase in benefits. Look for more added charges and further increses in package prices in an attempt to balance lower base fares. Of course this is all speculation on my part.

 

I think you are likely spot on with your inferences.

[Bababooey Land]

"Cost control means that their have been further cutbacks in service."

 

Is that necessarily true? I mean, is the term "cost control" always associated with cutbacks in service? Could it not mean something else, like lower energy bills due to greater efficiency, or lower rents per square foot due to renegotiated leases, or some other aspect of doing business besides salaries and/or number of employees?

 

 

 

these comments are from the conference call they had with security analysts yesterday.

 

Richard Fain "Now turning to the expense side of our programs, we're also seeing our efforts bear fruit here too. As you know, establishing a global footprint

over the last five years hasn't come cheap. In addition, we've invested heavily in improving the guest experience on board our ships and increased

our spending on sales and marketing to drive higher revenues. It's a testimony to our focus on costs that we been able to make all these incremental

investments and still reduce our net cruise costs, even without higher capacity growth to help absorb the costs. Remarkably, our net cruise costs, including fuel this year, should actually be lower per berth than they were in 2008. This effort has not been easy,

but it is essential. We're searching every corner for opportunities to improve our situation without undermining the product. And I'm very pleased

to see how well that effort is coming together. The bulk of the savings is not coming changing the product, but from reducing our overhead.

Unfortunately, there's no silver bullet. We've referred some of the bigger items before, but mostly it's simply a highly focused attention to detail.

[The_Big_M]

We're searching every corner for opportunities to improve our situation without undermining the product.

 

The thing is the product - the onboard experience - has been undermined from what it was a few years ago as he compares it to.

 

Of course, everyone wants the theory above to happen, but when you have such a focus - again as he says they have - there are invariably valuable services that aren't identified or sufficiently acknowledged that get lost, and the pressure on remaining staff increases which impacts their service provision.

 

The question is only who tolerates it most - staff, customers, or management.

[Andy]

Several have been arguing for some time that any corporate decision will be driven by impact on the bottom line. Now all doubters can see that this is true.

 

I've always agreed with the bottom line theory Orator. Never a doubt.

 

It's also notable that 100 members of the RCCL family lost their jobs last month. Also, their UK & Ireland call centers are being moved to a Xerox call center in Guatemala. Let's just say I'm not a fan of remote call centers. They may be cheaper, but the service is often abysmal.

 

While the call center decision should save RCCL a great deal of money (at least initially), I wonder how many UK consumers may experience a downgrade in the Pre-Cruise experience, which may ultimately hurt future bookings and revenues/profits. It's something to keep on the radar.