Royal can breakeven with 30% load factor. Until things get back to normal

[taglovestocruise]

Why Ships Could Sail With Far Fewer Guests

Photo via Royal Caribbean

One of the most surprising things to come out of the conference call was just how empty ships can sail and still prove to be profitable. “On our newer ships,” said Liberty, “you need about a 30% load factor to kind of break-even” on what’s known as an EBITDA level of profitability.

This refers to the earnings before interest, taxes, depreciation and amortization and can be a misleading number due to the various things not factored in.

However, it does give at least some indication of how ships could theoretically sail with far fewer passengers, making social distancing easier to control until things get back to normal.

[Seville2Cabo]

Isn’t this like saying, I make enough money to pay for gas, oil changes and car insurance, but can’t make the car payment.  

[taglovestocruise]

18 minutes ago, Seville2Cabo said:

Isn’t this like saying, I make enough money to pay for gas, oil changes and car insurance, but can’t make the car payment.  

That was a big reason car pooling was in fashion a few decades back.

[Seville2Cabo]

1 minute ago, taglovestocruise said:

That was a big reason car pooling was in fashion a few decades back.

Lol. So the front of the ship is RC and the back is NCL

[DrivesLikeMario]

I find it an interesting idea and find it encouraging.  If they want to limit capacity to 50% or even less, that sounds like a dream cruise to me!  

[Tree_skier]

I'm looking forward to sailing on half empty ships!  What a treat!

[Jimbo]

11 minutes ago, Tree_skier said:

I'm looking forward to sailing on half empty ships!  What a treat!

It will all be relative though, half the crew, still be lines.

[Tree_skier]

Oh I'm sure there will be lines but a lot of things will be improved by the lack of crowd.  Shorter lines at the Flowrider, easier to get a good seat at ice show, smaller crowd in Schooner bar, tables spaced wider in the main dining room.  I could go on but you get my point. I'm sure some people will find a reason to find something objectionable.  I'm not one of those people.

Edited May 22, 2020 by Tree_skier

[Sunshine3601]

1 minute ago, Tree_skier said:

Oh I'm sure there will be lines but a lot of things will be improved by the lack of crowd.  Shorter lines at the Flowrider, easier to get a good seat at ice show, smaller crowd in Schooner bar, tables spaced wider in the main dining room.  I could go on but you get my point. I'm sure some people will find a reason to something objectionable.  I'm not one of those people.

I definitely agree with everything you said.    Less crowds at the casino, movie theater, etc. etc.  and less crowd at windjammer will help with the buffet situation.    And less pool chair hogs!!!

[DISFANS3]

Count me in..

[pstone1]

We have no desire to sail on big ships that go nowhere.  Sailing only the “big” ships, if that means larger than Voyager class, would cancel every cruise of the 17 cruises we have booked during the next year.

 

We were perfectly willing to sail with a mask, but it sounds like we might not have to!

[Mikew0805]

2 hours ago, Tree_skier said:

I'm looking forward to sailing on half empty ships!  What a treat!

It was FANTASTIC on Mariner March 13th. Every time I hit an elevator button, a door opened. No matter what floor I chose, I went straight to it without stopping. We were never in an elevator with another person. Specialty restaurants were empty, the promenade was empty... it was really nice. (A little sad too, but I decided to enjoy it since it will eventually get back to normal.)

[Ocean Boy]

Hopefully, I will get to experience a less than full Oasis in January.

[Merion_Mom]

 

 

2 hours ago, Tree_skier said:

Oh I'm sure there will be lines but a lot of things will be improved by the lack of crowd.  Shorter lines at the Flowrider, easier to get a good seat at ice show, smaller crowd in Schooner bar, tables spaced wider in the main dining room.  I could go on but you get my point. I'm sure some people will find a reason to find something objectionable.  I'm not one of those people.

 

 

Not necessarily.

 

The point is to spread everyone out.  Social distancing.  So if there are only 3000 customers on the Oasis, every other seat at the show (or maybe even two seats) will be blocked off.  You won't be able to sit there.  Spreading out actually means spreading out.  You may find yourself sitting very far back, or off to the side, because lots of seats are blocked by tape, not filled by people.  The effect would be the same.

 

 

[chipmaster]

2 hours ago, Tree_skier said:

I'm looking forward to sailing on half empty ships!  What a treat!

 

Till they are bankrupt 

[chipmaster]

3 hours ago, taglovestocruise said:

Why Ships Could Sail With Far Fewer Guests

Photo via Royal Caribbean

One of the most surprising things to come out of the conference call was just how empty ships can sail and still prove to be profitable. “On our newer ships,” said Liberty, “you need about a 30% load factor to kind of break-even” on what’s known as an EBITDA level of profitability.

This refers to the earnings before interest, taxes, depreciation and amortization and can be a misleading number due to the various things not factored in.

However, it does give at least some indication of how ships could theoretically sail with far fewer passengers, making social distancing easier to control until things get back to normal.

 

They are doing spin control to manage the stock price and investors, the reality is you can't longterm run the business like this and it doesn't even address the elephant in the room which is the passengers cant get there, or when they do and sail, they got no port to go to, nor may not be allowed back.   

 

After the Diamond, Grand, Zaandaam, etc.  I am sure nobody cares about a 30% full ship or 100% they same issue with onship risk with no vaccine and low confidence testing makes all the people at risk.    

[drrich2]

Here's a major elephant in the room; are they factoring in reduced passenger capacity into the bookings they're taking for 2021? 

It's easy to say 'Just lift and shift,' or similar, but if you've got a job, kids in school, etc..., other factors may impact your vacation scheduling flexibility. For some people, getting time off approved can seem like pulling teeth. 

If they take bookings to fill those ships, then decide to cancel on 2/3rds the passengers, there'll be some ticked off people. 

[ownedbypets]

I want to know how they are going to decide who gets to cruise if the sailing is currently booked at over 50%.

[John&LaLa]

33 minutes ago, ownedbypets said:

I want to know how they are going to decide who gets to cruise if the sailing is currently booked at over 50%.

 

They could cancel all cruises August- November, then change the itineraries to Only do short Bahamas, then cap the occupancy 

 

Just speculation, no evidence of any kind

[mugtech]

Could do it for a month or two on a limited number of ships just to get people cruising again, but it would take great planning to not oversell the 30% ships.

 

[Jingerwoppy]

Might be sailing with fewer passengers but you'll pay for it. What they didn't say is that if they drop the capacity to 30% they will get to substantially increase the prices because the demand will likely exceed the supply.  

[9876]

I would love that!

 

[yogimax]

This is nonsense.  RCCL cannot exist at 30% capacity for any extended period of time.  This "spin" factors out interest, taxes. depreciation and amortization.  Last I looked interest and taxes can't be ignored.

 

I do wish management would be more up front with us and, at this moment of time, we need to more realistic than optimistic.

[Billy Baltic]

7 hours ago, drrich2 said:

Here's a major elephant in the room; are they factoring in reduced passenger capacity into the bookings they're taking for 2021? 

It's easy to say 'Just lift and shift,' or similar, but if you've got a job, kids in school, etc..., other factors may impact your vacation scheduling flexibility. For some people, getting time off approved can seem like pulling teeth. 

If they take bookings to fill those ships, then decide to cancel on 2/3rds the passengers, there'll be some ticked off people. 

Agreed. Having a 50/50 chance of getting to go on the vacation you’ve booked would put off most working people and families. I love cruising but I’ll take a land based vacation that’s almost certain to happen over a cruise that we maybe bounced from in that situation. 
It would probably only leave RC with the retired market. 

[CRUISEFAN0001]

1 hour ago, Billy Baltic said:

Agreed. Having a 50/50 chance of getting to go on the vacation you’ve booked would put off most working people and families. I love cruising but I’ll take a land based vacation that’s almost certain to happen over a cruise that we maybe bounced from in that situation. 
It would probably only leave RC with the retired market. 

Not even close.

 

If anything, the pent up demand for cruises and other vacation choices following Covid-19 will result in more of an appreciation and demand than in the past, albeit with changes needed to assure the safety of passengers.