Richard Fain comments today about pricing

[CruiseKeeper]

The part I don't appreciate is the total confusion when you get your confirmation sheet with 20 different amounts on the tally: For fair advertised at $629 pp:

Guest 1 Guest 2 Total

871.00 871.00 1742.00

 

CAS Rates: -90.00 - 45.00

 

BOGOHO: -298.00

BOGOHO -138.00

 

Taxes/fees

135.82 135.82 1442.84

 

How is one supposed to make any sense of that? Where in any accountant lingo is $629.00??? It really makes one lose any sense of trust doesn't it?

 

 

This Exactly!!! If this new math isn't meant to confuse, then I'll eat my hat! Sigh. I remember when I used to be able to understand my invoices.

[thrifty99]

While you as an individual may see a significant increase in ticket prices, if you look at Royal Caribbean's overall Passenger Ticket Revenues, they are not increasing much.

 

We have sailed every year for the past several years and some years have seen a little increase and some years had a nice decrease. It depends on when we travel, how far in advance we make a reservation, or if we take advantage of a great last minute deal. If you cruise during the highest rate periods (spring break and summer) you may find prices going up more if the cruises are selling out early on. It is just like an airline... if you are not one of the first to book, the price keeps going up for a popular flight.

 

Some are reporting 50% price increases. If that is happening, you either had a great deal the year before or you paid way too much this year.

 

Anyway, as you can see from the actual revenue numbers from their annual 10-K reports below Royal Caribbean is not just increasing prices by huge amounts across the board.

 

I did not post all the notes, but most years a substantial amount of the increase has been primarily in European cruises and/or from an increase in capacity from new ships. Some of the older years I could only quickly find total revenue changes but it did show how much of that was from increased capacity. You can roughly see the revenue increase excluding the additional capacity was less than 5%.

 

I posted some notes from the 2014 10-K (annual filing) earlier. Here is the revenue number again and some prior years:

 

2014:Passenger ticket revenues comprised 73.0% of our 2014 total revenues. Passenger ticket revenues increased by $171.1 million, or 3.0%, to $5.9 billion in 2014 from $5.7 billion in 2013.

 

2013: Passenger ticket revenues comprised 71.9% of our 2013 total revenues. Passenger ticket revenues increased by $128.1 million, or 2.3%, to $5.7 billion in 2013 from $5.6 billion in 2012.

 

2012: Total revenues for 2012 increased $150.8 million or 2.0% to $7.7 billion from $7.5 billion in 2011. Despite theimpact of the Costa Concordia incident and the continued instability in the global economic landscape, especially in Europe, our passenger ticket revenues increased $68.7 million or 1.2% to $5.6 billion from $5.5 billion in 2011 and our onboard and other revenues increased $82.1 million or 4.1% to $2.1 billion from $2.0 billion in 2011.

 

2011: Total revenues for 2011 increased $784.8 million or 11.6% to $7.5 billion from $6.8 billion in 2010. Approximately $507.8 million of this increase was attributable to a 7.5% increase in capacity. The increase in capacity was primarily due to a full year of revenue generated by Allure of the Seas which entered service in December 2010, the addition of Celebrity Silhouette which entered service in July 2011, and a full year of Celebrity Eclipse which entered service in April 2010.

 

2010: Total revenues for 2010 increased $862.7 million or 14.6% to $6.8 billion from $5.9 billion in 2009. Approximately $654.1 million of this increase is attributable to an 11.1% increase in capacity. The increase in capacity is primarily due to a full year of service of Oasis of the Seas, which entered service in December 2009, the addition of Celebrity Eclipse which entered service in April 2010, a full year of service of Celebrity Equinox which entered service in July 2009, a full year of service of Pacific Dream, which entered service in May 2009 and the addition of Allure of the Seas, which entered service in December 2010.

[karena1]

All I will say is this - we booked a bunch of cruises when the BOGOHO first came out and prices were amazing. NOW every cruise I booked as gone through the ceiling -increase so much over what I paid. So don't tell me prices have not changed. They are nuts now which is why we have a cruise booked on Celebrity and another on NCL (which I never would have thought to do until Royal got nuts with their prices)

 

Never in all the years we have cruised as an OV on Enchantment been so nuts. Maybe there is something going on and I get that. But both Majesty and Enchantment for short cruises are really high. got the same thing on NCL, same price as Majesty BUT with the free bev pkg. So time to try them out

 

I am one that pretty much lived/died with Royal-thought they were always the best-still think they have good perks. BUT now Loyal customers don't mean that much to them - the pool service is horrendous and then pool bar tenders are so overworked b/c the service around the pool is so bad. Royal needs to fix a bunch of stuff. I know they want to go after the NEW group - but at some point your oldies but goodies are the ones to keep you moving and you are pushing us to the side with high prices and poor service-hence why a loyal Royal is now going to try NCL.

[Cuizer2]

hes got his fiduciary duty to his shareholders before all else....

 

 

at the end of the day royal is a business, they are in it to make money not give away breakeven cruises...

 

Okay, but what does that have to do with Richard Fain's credibility? :confused:

[Cuizer2]

While you as an individual may see a significant increase in ticket prices, if you look at Royal Caribbean's overall Passenger Ticket Revenues, they are not increasing much.

 

We have sailed every year for the past several years and some years have seen a little increase and some years had a nice decrease. It depends on when we travel, how far in advance we make a reservation, or if we take advantage of a great last minute deal. If you cruise during the highest rate periods (spring break and summer) you may find prices going up more if the cruises are selling out early on. It is just like an airline... if you are not one of the first to book, the price keeps going up for a popular flight.

 

2013: Passenger ticket revenues comprised 71.9% of our 2013 total revenues. Passenger ticket revenues increased by $128.1 million, or 2.3%, to $5.7 billion in 2013 from $5.6 billion in 2012.

 

I wish my revenues would increase by $128.1 million (or even half that amount).

[Cuizer2]

It doesnt mean anything. He is a representative of his company and will tell you whatever you want to hear.

 

I want to hear the truth.

[John&LaLa]

I want to hear the truth.

 

You can't handle the truth.

[Yorkvillain]

You can't handle the truth.

 

LOL. Well done.

[Cuizer2]

You can't handle the truth.

 

I was waiting for that come back. :)

[cruisingsince94]

In Oct, 2005 DW and I went on a 7 day Caribbean cruise on the Navigator of the Seas. We paid $2,049 for the both of us, out the door. This was a balcony. In Oct, 2014 we booked a balcony on the Oasis of the Seas and guess what we paid? $2,049, out the door!! I don't see the outrageous price increases the OP is talking about. Forget about BOGOHO, how much more are you actually paying? For us, the prices for RCI over the past 20 years have remained relatively stable.

 

I think you need to read the original post again. I said nothing about outrageous price increases. My only remark pertained to Fain stating that RCCL had not raised pricing in 6 years. Their own 2014 SEC filings proves that statement to be false.

[cruisingsince94]

When we book a cruise we look at what we are actually paying, not how the marketing department decided to offer the prices -- so I enjoy how you have put it, highlighted above. It is all about the 'bottom line' price, not how it was achieved.

 

But over the years, the cruise experience has changed, and most people are also complaining about that relative to the cost.....per se -- 'I maybe paying the same amount, but am getting less for it'. No intention to hijack this thread away from the original focus.

 

It is a never ending conversation.

 

It is all about the price for us. Fain claims RCL has not raised pricing for 6 years. Their own SEC filings for 2014 stated they had. Two years ago my wife and I did a 10 night European cruise on Serenade out of Barcelona. We paid $799pp for our midship balcony cabin purchased 7 months prior to sailing. Similar cruises today are at least double that.

Edited March 20, 2015 by cruisingsince94

[P&O Lynn Knickers]

Excellent post! One of the most convincing arguments I have read since ages.:

 

Thank you christi1805, for your nice comments.

He is a true gentleman, and he made me chuckle during our many meals together. He did talk about work at times, and the great company that is Royal, but he did speak about his private life and his passions in life also.

 

Again, many thanks for making my day with your nice comments.

 

 

 

 

PS : I don't have much time for the other person you mentioned, but I don't want to offend your personal opinion and hope you dont mind me saying it. It is very obvious that you hold him in high esteem.

 

 

 

 

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Edited March 20, 2015 by P&O Lynn Knickers
Lynn loves people

[Biker19]

???

 

 

.

 

well, there were other stories about you and gentlement so I thought there was another coming related to this.....:p

[Biker19]

It is all about the price for us. Fain claims RCL has not raised pricing for 6 years. Their own SEC filings for 2014 stated they had.

Most of the revenue increases have come from increased capacity not from per passenger fare increases. So the per passenger revenue rise (which the passanger sees) is like 1-2% which most businessmen could very well call not rising. Granted, the profit has gone up, but that is not from base fare increases.

[P&O Lynn Knickers]

well, there were other stories about you and gentlement so I thought there was another coming related to this.....:p

 

Oh, my encounters in the restaurants are well documented here.

But there was no escargot involved with Richard Fain.

I promise.

Was on my best behavior, I was.

 

 

 

 

 

 

 

.

[rusty nut]

I think you need to read the original post again. I said nothing about outrageous price increases. My only remark pertained to Fain stating that RCCL had not raised pricing in 6 years. Their own 2014 SEC filings proves that statement to be false.

when I see first-hand all the cutbacks in services, staffing, etc, the current rates going ever higher

Okay, I exaggerated a little bit with the "outrageous" comment but the point I'm trying to make is, I'm not seeing "current rates going ever higher". Sure, I can find 7 day cruises that cost four times what I paid in the past. Those aren't the cruises I book. There's too many factors involved in cruise pricing, most of which is timing. In my experience, cruising with RCI for twenty plus years, I've not seen prices going ever higher.

 

What I have seen over the last several years is the tendency for RCI to nickel and dime passengers to death. In that regard, I would say it's getting outrageous.

Edited March 20, 2015 by rusty nut

[poncho1973]

Don't even get me started on the banana placement. It's enough to drive a person to Carnival!

Edited March 20, 2015 by poncho1973

[monctonguy]

I am pretty sure almost all of my cruises have been more expensive than the last one....i know everything averages out and exceptions to the rule..blah blah blah..

 

But for him to say they havent increased rates in 6 years??!....how can he say that with a straight face and not expect at least one person to call him out on it...

[3dog]

It is all about the price for us. Fain claims RCL has not raised pricing for 6 years. Their own SEC filings for 2014 stated they had.

 

I'd have to read the entire filing, but the summaries posted on this thread do not show ticket "prices" have risen. They do show increased revenue on ticket sales, but to know if this is due to increased prices requires much more information, including the number of paying passengers that sailed during that timeframe (having 1% more passengers should increase the revenues by 1% without a price increase). Increased ticket revenues can also be driven by reduction in discounting or increase in paid upgrades (vs. free upgrades) which is different than the base price.

 

Two years ago my wife and I did a 10 night European cruise on Serenade out of Barcelona. We paid $799pp for our midship balcony cabin purchased 7 months prior to sailing. Similar cruises today are at least double that.

 

I could easily believe this was a discounted fare (either to spark demand, from a short-term sale, or requested after original booking due to a sale/discount), in that you paid less that $80pp per day (not many balcony cabins at this price even 10 years ago). I could also believe this was a standard low fare based on a sailing at a time when people don't cruise, leading to a significantly lower fare (a good example is Caribbean fares in September: much lower than the fares in June simply due to supply and demand pricing structures, and often much closer to your $80pp balcony).

 

I received an awesome price on a suite on a cruise 2 years ago due to a last-minute sale on lots of unsold inventory. Today, that suite is still offered at the same price as before the sale. Sure, I could say that my fare doubled in two years, but the first fare was based on a deep discount, not the second being on an increase in the base price.

 

Arguments can be made about whether the original price on my cabin was too high or even if yours was too low (assuming that it was a normal fare and not a special discount), but adjusting pricing based on any supply and demand curves is good business; not indicative of an overall price adjustment.

[time4u2go]

From the SEC filing:

 

"Total revenues increased 1.4% to $8.1 billion from $8.0 billion in 2013 primarily due to an increase in overall capacity and ticket prices."

 

Also this:

 

"Passenger ticket revenues comprised 71.9% of our 2013 total revenues. Passenger ticket revenues increased by $128.1 million, or

2.3%, to $5.7 billion in 2013 from $5.6 billion in 2012. The increase was primarily due to:

• an increase in ticket prices for European sailings and certain deployment initiatives, including but not limited to increased

deployment in Australia and Asia, all of which contributed to a $117.6 million increase in Passenger ticket revenues"

 

and this:

 

"Net Yields increased 2.7% in 2013 compared to 2012 primarily due to an increase in ticket prices"

 

The filing is located here:

 

http://services.corporate-ir.net/SEC/Document.Service?id=P3VybD1hSFIwY0RvdkwyRndhUzUwWlc1cmQybDZZWEprTG1OdmJTOWtiM2R1Ykc5aFpDNXdhSEEvWVdOMGFXOXVQVkJFUmlacGNHRm5aVDB4TURBNU5ETXdPQ1p6ZFdKemFXUTlOVGM9JnR5cGU9MiZmbj1Sb3lhbENhcmliYmVhbkNydWlzZXNMdGQucGRm

 

 

So he's basically contradicting what's stated in the SEC filing.

Edited March 20, 2015 by time4u2go

[nelblu]

From the SEC filing:

 

"Total revenues increased 1.4% to $8.1 billion from $8.0 billion in 2013 primarily due to an increase in overall capacity and ticket prices."

 

Also this:

 

"Passenger ticket revenues comprised 71.9% of our 2013 total revenues. Passenger ticket revenues increased by $128.1 million, or

2.3%, to $5.7 billion in 2013 from $5.6 billion in 2012. The increase was primarily due to:

• an increase in ticket prices for European sailings and certain deployment initiatives, including but not limited to increased

deployment in Australia and Asia, all of which contributed to a $117.6 million increase in Passenger ticket revenues"

 

and this:

 

"Net Yields increased 2.7% in 2013 compared to 2012 primarily due to an increase in ticket prices"

 

The filing is located here:

 

file:///C:/Users/m/Downloads/RoyalCaribbeanCruisesLtd.pdf

 

So he's basically contradicting what's stated in the SEC filing.

 

That's not good as it less than the real inflation. By the way, based on the numbers you quoted the %+ is 1.01%.

[time4u2go]

That's not good as it less than the real inflation. By the way, based on the numbers you quoted the %+ is 1.01%.

 

This thread has nothing to do with inflation.

 

The OP pointed out that Fain stated that they have not been able to raise ticket prices. The SEC filing indicates that they have indeed raised ticket prices. The percentage is irrelevant.

[3dog]

From the SEC filing:

 

"Total revenues increased 1.4% to $8.1 billion from $8.0 billion in 2013 primarily due to an increase in overall capacity and ticket prices."

 

Also this:

 

"Passenger ticket revenues comprised 71.9% of our 2013 total revenues. Passenger ticket revenues increased by $128.1 million, or

2.3%, to $5.7 billion in 2013 from $5.6 billion in 2012. The increase was primarily due to:

• an increase in ticket prices for European sailings and certain deployment initiatives, including but not limited to increased

deployment in Australia and Asia, all of which contributed to a $117.6 million increase in Passenger ticket revenues"

 

and this:

 

"Net Yields increased 2.7% in 2013 compared to 2012 primarily due to an increase in ticket prices"

 

The filing is located here:

 

http://services.corporate-ir.net/SEC/Document.Service?id=P3VybD1hSFIwY0RvdkwyRndhUzUwWlc1cmQybDZZWEprTG1OdmJTOWtiM2R1Ykc5aFpDNXdhSEEvWVdOMGFXOXVQVkJFUmlacGNHRm5aVDB4TURBNU5ETXdPQ1p6ZFdKemFXUTlOVGM9JnR5cGU9MiZmbj1Sb3lhbENhcmliYmVhbkNydWlzZXNMdGQucGRm

 

 

So he's basically contradicting what's stated in the SEC filing.

 

Did you fully read your bullet? As it was specific to particular itineraries or regions, it is definitely not a general price increase (if they were regularly charging $799pp or less for a 10 day cruise, should I be a shareholder I would scream that they should at least raise those).

 

Ships redeployed to an area where they can charge more for the rooms, though technically is a price increase for a particular ship, is more practically a supply and demand adjustment (similar to spot increases because they realized they can charge more for particular cruises). The filing also specifically referenced Asia and Australia as a significant amount of that revenue, where they might well get more per room than in other sailings.

 

My point here is even though they might have raised prices in some cases (singular opportunities or deployment to better revenue generating regions) which will look on a filing as increased prices, this doesn't reflect an overall increase in prices (and as the actual change in revenue is very small suggests that increases are about proper adjustment then an overall increase).

[3dog]

check out their stock over the last 52 weeks, nothing to write home about

 

Approximately 50% increase is nothing to write home about? Where is your smiley?

[cruisingsince94]

Most of the revenue increases have come from increased capacity not from per passenger fare increases. So the per passenger revenue rise (which the passanger sees) is like 1-2% which most businessmen could very well call not rising. Granted, the profit has gone up, but that is not from base fare increases.

 

The SEC filing by RCCL specifically spoke of a price increase of 2.4%. It had absolutely nothing to do with increased capacity numbers or additional passenger revenue. The filing says they raised rates plain and simple.