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

[CRUISEFAN0001]

32 minutes ago, Ocean Boy said:

Which will be met with the usual amount of empathy found on these boards.

Yup.

[gatour]

18 minutes ago, Ocean Boy said:

That depends. I would think there has to be a number where it costs less to park a ship than to run it. 

That number would equal to the cost of fuel, cost of food/beverages, and wage costs along with some ancillary costs.

[Ocean Boy]

22 minutes ago, John&LaLa said:

 

Unfortunately,  you can't just park a ship like you do a second car. The ocean is constantly at war with you, and humidity creates mold

I was not arguing that point.

[BirdTravels]

15 hours ago, DrivesLikeMario said:

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!  

They can "kind of" break even on the cruise, but that does not pay all the bills for non-operational ships and crew. 

 

@ 50% load, you can expect a lot fewer crew, closed bars, few/no bar servers, fewer onboard activities that cause crowds, less entertainment, shorter hours on non-revenue generating activities (setup and tear down pool), intentional gaps in programming to get people into the stores and casino, and high price cruises. To make a 50% load cruise break even, you won't go far (save gas); short cruises Miami - Key West - Coco Cay - Miami. 

[LXA350]

Guys I think you are not getting it, it's not about the cruisline to block ship's capacity at 30% or 50%. It's about the begining once RCL deciides to start offering cruises again at what minimum occupancy they need to reach that it economically even makes sense to operate she ship. Even if they still make losses but it will be cheaper than having the ship at "warm" layup for instance it will be worth it for them to get going. They will need to have ships in operation in order to get used to the new routine and to implement and enhance the new procesess they are currently discusting and planing to implement.

[Jimbo]

10 hours ago, yogimax said:

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.

They can't be upfront in to as it will be because they don't have a plan. It's a copy cat world, I'm sure Royal Caribbean is in better financial shape then most cruiselines. They will sit back and watch another cruiseline  sail first and then adjust their plans on how best to start when they see what plans worked good and what plans failed.

 

Royal will not be the FIRST Sail.

 

In the long run best to play it safe then make a hasty mistake that may be fatal. Only going to get one shot at this.

Edited May 23, 2020 by Jimbo

[DeltaOne]

1 hour ago, drrich2 said:

I think I saw that, too. They followed the cruise over a week, and toward the end, there was this sort of 'nail-biting suspense' of waiting to see if all the onboard purchasing had tilted the overall cruise profit into the black, so to speak. It gave me the impression that just filling the staterooms wasn't enough; they had to generate a lot of income onboard to push over into profitability. 

 

Yes, that sounds like the same show I remember.

[Ocean Boy]

3 hours ago, LXA350 said:

 

I also highly suggest no one to be on one of the first sailings who is very impatient and not ready for a "new" normal, as even with light loads on ships certain processes that also need to be learned by crews in practice could take longet and be frustrating. hence, patience is probably also needed at the begining.

That is very true. Considering RCI's past history of rolling out something as simple as a coffee card,  allowed C&A drinks at the bars, The Key, etc. If they can't do that without initial confusion I can't imagine what the initial start up is going to look like.

[LXA350]

15 minutes ago, Jimbo said:

They can't be upfront in to as it will be because they don't have a plan. It's a copy cat world, I'm sure Royal Caribbean is in better financial shape then most cruiselines. They will sit back and watch another cruiseline  sail first and then adjust their plans on how best to start when they see what plans worked good and what plans failed.

 

Royal will not be the FIRST Sail.

 

In the long run best to play it safe then make a hasty mistake that may be fatal. Only going to get one shot at this.

 

If we will see MSC and Costa to start sailing in Europe as of July or even if they will delay it to begining of August I guess we will see RCL and X follow the "experiment" in August as well (In Europe, Med). You have to start somewhere.

[Jimbo]

1 minute ago, LXA350 said:

 

If we will see MSC and Costa to start sailing in Europe as of July or even if they will delay it to begining of August I guess we will see RCL and X follow the "experiment" in August as well (In Europe, Med). You have to start somewhere.

Agree but Royal  still will not start  1st.

[flamingos]

So.............this means that they don't need to charge $55/day for the drink package.   😉

[Milwaukee Eight]

3 hours ago, molly361 said:

By when people booked.  Those that booked first get priority  Or they can offer incentives to people to cancel/change

Who knows.....

[PhillyFan33579]

1 hour ago, LXA350 said:

Guys I think you are not getting it, it's not about the cruisline to block ship's capacity at 30% or 50%. It's about the begining once RCL deciides to start offering cruises again at what minimum occupancy they need to reach that it economically even makes sense to operate she ship. Even if they still make losses but it will be cheaper than having the ship at "warm" layup for instance it will be worth it for them to get going. They will need to have ships in operation in order to get used to the new routine and to implement and enhance the new procesess they are currently discusting and planing to implement.

Really good post!  Cruise lines need to start at some point and it likely won’t be close to the way cruises used to be, at least initially. 

[Ocean Boy]

15 minutes ago, flamingos said:

So.............this means that they don't need to charge $55/day for the drink package.   😉

Correct, they don't need to. That is why they were trying for $84 on the cruise that I have booked.

[molly361]

16 minutes ago, Milwaukee Eight said:

Who knows.....

[molly361]

10 minutes ago, Ocean Boy said:

Correct, they don't need to. That is why they were trying for $84 on the cruise that I have booked.

Speaking of which ,POOF, , there goes most of the $18 drink packages

[bobmacliberty]

2 hours ago, gatour said:

That number would equal to the cost of fuel, cost of food/beverages, and wage costs along with some ancillary costs.

 

I think that's exactly the 30% number they're quoting.  Sailing at 30% capacity covers the variable costs associated with sailing.  If they're above the 30% point, they lose less money by sailing than they do parked somewhere.  Even if they aren't making a profit, losing less money is better than losing more money.

[John&LaLa]

3 hours ago, Ourusualbeach said:

Personally I think that very little if all this speculation of people getting their reservations cancelled and who gets kicked off will ever see the light of day.

 

Several points.

 

Whatever % they start sailing with whether it’s 30, 50 or 70% it won’t last forever.  Will we ever get back to 100%.....unknown but it will go up from what they initially start with.
 

Currently if you look at pretty near any sailing that’s within a month of the first day of sailing the occupancy level of that cruise is already below 50% or will be as soon as final payment date hits.  Of  those that make final payment many have just done so to get either a cash refund or the 125% FCC and really have no intention of sailing and would bail using the 48 hour CWC policy once they realized the ship was actually sailing.

 

No one here knows Whether Royal has already put caps in place to limit bookings.  Yes I know there are a few sailings that are almost sold out yet they still have the odd cabin for sale but maybe Royal knows those sailings will never sail anyway so why not get another deposit (that’s a different thread).  It would not surprise me at all that for some of the short sailings that they anticipate will sail that there is already caps in place but I doubt that we will ever hit them. 

 

 

 

What is your speculation or opinion on Oasis ships converting to 3/4 schedule in the beginning?

 

I just saw an article this morning. It was referring to a second wave this summer.

 

Here is a quote

 

Other models released in recent days captured a similarly mixed picture. The PolicyLab at Children’s Hospital of Philadelphia used county-level forecasts that found much of the country was in decent shape for reopening, but worrisome areas remain, including Houston, Dallas, South Florida and Alabama.

 

That doesn't bode well for Miami, Ft Lauderdale, and even Galveston

Edited May 23, 2020 by John&LaLa

[John&LaLa]

2 hours ago, Ocean Boy said:

I was not arguing that point.

 

 

Well, then Fain gave us insight into sailing at 30-50 percent on the Oasis Class

[Ocean Boy]

4 minutes ago, John&LaLa said:

 

What is your speculation or opinion on Oasis ships conveting to 3/4 schedule in the beginning?

I think they had better have a large local population ready to jump on board. I don't think many people will be willing to fly for that.

[ownedbypets]

4 hours ago, molly361 said:

By when people booked.  Those that booked first get priority  Or they can offer incentives to people to cancel/change

 

I hope you're right. We booked our next cruise almost 2 years ago.

[John&LaLa]

2 hours ago, BirdTravels said:

They can "kind of" break even on the cruise, but that does not pay all the bills for non-operational ships and crew. 

 

@ 50% load, you can expect a lot fewer crew, closed bars, few/no bar servers, fewer onboard activities that cause crowds, less entertainment, shorter hours on non-revenue generating activities (setup and tear down pool), intentional gaps in programming to get people into the stores and casino, and high price cruises. To make a 50% load cruise break even, you won't go far (save gas); short cruises Miami - Key West - Coco Cay - Miami. 

 

I have my money on Pt Canaveral - Coco Cay

 

You could base Oasis and Harmony at T1 with sailing for 3/4 on Friday / Monday and do Coco Cay and Nassau

 

They could also do a 5/5/4 scheduel on Saturday/Thursday/Tuesday and maybe pick up Labadee or Freeport

[suzyluvs2cruise]

11 minutes ago, John&LaLa said:

 

 

Well, then Fain gave us insight into sailing at 30-50 percent on the Oasis Class

 

Richad Fain's May 21 CNBC interview.  Check out what he says at about minute 4:50 

 

CNBC interview with Richard Fain

Edited May 23, 2020 by suzyluvs2cruise

[John&LaLa]

4 minutes ago, Ocean Boy said:

I think they had better have a large local population ready to jump on board. I don't think many people will be willing to fly for that.

 

42 million people within 8 hours, 20 million within 4 hours

 

The beauty/curse of PC is that all the drive in customers for Miami/Ft Lauderdale are in the same geographic are for PC

[John&LaLa]

1 hour ago, Milwaukee Eight said:

Who knows.....

 

Something like Royal Up 😉