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

[John&LaLa]

26 minutes ago, bobmacliberty said:

 

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.

 

Unless they get horrible press from an outbreak.

 

I look at it as a huge gamble

 

probably why the short cruises are appealing

[Tree_skier]

12 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.

No one is suggesting they sail at 30% indefinitely.  The original post just noted that the larger ships could do so. This would obviously be temporary as cruise lines begin to return to operation. A more likely realistic scenario is that 30% becomes 40% then become 50% then becomes whatever becomes the mid term reality.  

4 hours ago, PhillyFan33579 said:

Would you still feel the same if your cruise price was significantly higher? I haven’t heard anything specific but common sense tells you cruise prices will go up, especially if demand increases based on fewer available cabins. Of course another big factor will be how long will cruise ships sail with reduced capacities. 

I have 6 cruises booked between Dec 2020 and Feb 2022.  Those prices are locked in... We'll see what prices look like after Feb 2022 and I'll let you know.

[cruiselvr04]

I booked a new 5 night from Florida for October last night.  They were happy to take my deposit.   If they cancel me due to the 50% deal I won't be happy.  I bet they take my final payment too.  Royal should start making plans now for shorter cruises.  I agree that short is probably the way to start back up. We are flying and plan to stay in the keys for a week first, then cruise. Flights are so cheap right now that I bet others will fly in too.  We paid $123 RT from Dallas pp. Since our April cruise was canceled we have considerable credit with Southwest we need to use.

Edited May 23, 2020 by cruiselvr04

[DrivesLikeMario]

3 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. 

 

Sailing at 50% would give them 20% toward those added expenses.  

We don't need anything but a buffet (even non-self service is good), an un-manned gym (no crew to pay) and a Concierge Lounge.  No shows, no venues, nothing else.  

[ThirstyCruiser]

The first few cruises , even operated at perhaps a significant loss, are simply the cost of doing business and getting back profitable business.

 

What will cost RCCL more?

 

A. The first cruises going out 50%, 70%, 90% (gulp!) full, each one breaking even or better but one or more of them becomes the Covid cruise.

-or-

B. The first cruises going out at 50%, 40%, 30% full, each losing money, but no drama on any of them and the learnings from the first cruises get applied to subsequent cruises as occupancy rates creep up week after week.

 

The cost of A would dwarf the cost of B.

 

Just like in blackjack and poker, sometimes you are dealt a crappy hand. Playing a lousy hand well and losing less is just as important as playing the great hands. Those executives are earning their fat paychecks now.

[Tree_skier]

51 minutes ago, suzyluvs2cruise said:

 

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

 

CNBC interview with Richard Fain

Good interview and while it didn't provide any specific information Fain indicating the the numbers would be reduced and then slowly increased as circumstances allow.

[Tree_skier]

interesting graphic during the interview breaking down FCC vs refund and the demographic choosing either.

 

 

[Ourusualbeach]

1 hour ago, John&LaLa said:

 

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

I can see them bringing Oasis down early from Bayonne as well as Allure coming back early and starting 3/4 day itineraries until their regular 7 day ones kicked in.  I don't think they will do anything with HM and SY until they are ready to sail a 7 day reduced capacity

 

TBH I think that a lot will depend on if any ports are open.  Cancelling a whole ship and then finding enough people to book a last minute cruise would be difficult as it would be all last minute.  I think they start with MN and NV, maybe add OA into the mix see how those go then add in the other OA ships doing a 7 day with greatly reduced capacity

[JoeFan]

I have an 8/29/20 Symphony cruise set and I would love to see this sail at 30%.

It has stops in Labadee, Falmouth and CocoCay. I would be fine to see them cancel Falmouth and do a second day at CocoCay. That will be a great stop at 30% capacity.

[Blizzard54]

2 hours 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.

In Fain's remarks he said that when they start up it will be targeted for drive to ports.

[John&LaLa]

38 minutes ago, Blizzard54 said:

In Fain's remarks he said that when they start up it will be targeted for drive to ports.

 

I used to consider a drive to distance was 500 miles, now if they want to eliminate hotel stays from the mix, it would drop to half of that.

 

In my opinion

[Biker19]

1 hour ago, Tree_skier said:

interesting graphic during the interview breaking down FCC vs refund and the demographic choosing either.

One has to remember that the FCC is the default if you do nothing - that ratio may look quite different if the default was the refund.

[LXA350]

1 hour ago, Ourusualbeach said:

I can see them bringing Oasis down early from Bayonne as well as Allure coming back early and starting 3/4 day itineraries until their regular 7 day ones kicked in.  I don't think they will do anything with HM and SY until they are ready to sail a 7 day reduced capacity

 

 

You will not see Oasis even sail from Bayonne this year, hence she will be in the area all the time anyhow.

 

I still see Royal start the "experiment" with starting to cruise again in August out of Europe and maybe Asia as the most likely scenario if things countinue to develop into the right direction as we see it currently. In the key countries where the Med sailings will be happening; France, Greece, Italy and Spain tourism will be allowed, likely restricted to Shengen /EU + Asia select countries but enough to fill the ship with at least 30 or 50%, whatever needed that the operation makes sense.

 

For the US, the 3-4 night market might really be the first cruises we see but not before September or October. We might not see any Vision or Radiance Class ships + (Empress and Majesty, if they will ever return at all) all of the Winter season and given how things go with a 2nd wave whatever ships will be in operation at that stage might be taken out of service again.

[HBE4]

7 hours ago, molly361 said:

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

 

Or maybe the priority should be who spent the most: higher priced cabin + excursions + drink package + speciality restaurants.  

 

After all, Royal needs the money. I'm sure the early bookers, who tend to spend less for a cabin, wouldn't mind.  They tend to be the most loyal customers and I'm sure they want what's best for Royal.

 

😇

[Ourusualbeach]

22 minutes ago, LXA350 said:

You will not see Oasis even sail from Bayonne this year,

Which is why I suggested Oasis could do a 3/4 night itinerary once they resume sailing.

[Ourusualbeach]

7 minutes ago, HBE4 said:

 

Or maybe the priority should be who spent the most: higher priced cabin + excursions + drink package + speciality restaurants.  

 

After all, Royal needs the money. I'm sure the early bookers, who tend to spend less for a cabin, wouldn't mind.  They tend to be the most loyal customers and I'm sure they want what's best for Royal.

 

😇

That would backfire horribly on Social media and cause more harm long term.

 

They are already bleeding , doing as you suggested is a very small short-term gain in the grand scheme of things.  people are going to be upset, at least cancelling them by date booked is fair and equitable to all and totally transparent.

[chipmaster]

2 hours ago, Tree_skier said:

interesting graphic during the interview breaking down FCC vs refund and the demographic choosing either.

 

 

 

Not a surprise but what does mostly mean, could be 50.1 percent, LOL 

 

What is more important, was it disclosed, what is the current refund obligation versus future cruise credit.   

 

Actually when I think more, not clear if cruise credit is a plus or not, I guess it is a free no-interest loan paid by lost future revenue.  If demand is really up their revenue to cash tradeoff could actually be less than optimal

[PhillyFan33579]

3 hours ago, Tree_skier said:

No one is suggesting they sail at 30% indefinitely.  The original post just noted that the larger ships could do so. This would obviously be temporary as cruise lines begin to return to operation. A more likely realistic scenario is that 30% becomes 40% then become 50% then becomes whatever becomes the mid term reality.  

I have 6 cruises booked between Dec 2020 and Feb 2022.  Those prices are locked in... We'll see what prices look like after Feb 2022 and I'll let you know.

I only have two cruises booked right now for later this year.  Both cruises are significantly more expensive than when I booked them, which surprised me, since RCI hasn’t officially announced any reduced sailings yet. I will continue to cruise no matter what rules are implemented when cruising resumes.  The only bad part about this virus in my book is we (my wife and I) likely won’t hit cruise number 50 next year like we planned since I will not book any more cruises until after cruise lines resume operating and we have already had several cruises cancelled.   

[molly361]

I'm one of the few that prefer 3/4 night cruises so I'd be very happy with an OA class ship going out of PC on short trips

[Tree_skier]

1 hour ago, Biker19 said:

One has to remember that the FCC is the default if you do nothing - that ratio may look quite different if the default was the refund.

True... Never thought about that angle. Some of that FCC may yet turn into refunds.  

 

I just thought the demographic breakdown was interesting.

Edited May 23, 2020 by Tree_skier

[HxFx]

3 hours ago, Tree_skier said:

interesting graphic during the interview breaking down FCC vs refund and the demographic choosing either.

 

 

I wonder where Gen X is? Many Gen X'ers' kids have grown up so wouldn't fit with Families. Also curious if it is different for other cruise lines.

[Milwaukee Eight]

4 hours ago, John&LaLa said:

 

Unless they get horrible press from an outbreak.

 

I look at it as a huge gamble

 

probably why the short cruises are appealing

Under this theory, would they allow b2b2b.....???

[MaritimeR&R]

54 minutes ago, PhillyFan33579 said:

I only have two cruises booked right now for later this year.  Both cruises are significantly more expensive than when I booked them, which surprised me, since RCI hasn’t officially announced any reduced sailings yet. I will continue to cruise no matter what rules are implemented when cruising resumes.  The only bad part about this virus in my book is we (my wife and I) likely won’t hit cruise number 50 next year like we planned since I will not book any more cruises until after cruise lines resume operating and we have already had several cruises cancelled.   

Oddly enough, some of my cruises in Jan/Fed 2021 and 2022 keep dropping in price from when they were first released.  The most significant is an August 2021 Oasis out of Bayonne -an $1,800. price drop on my GS . I had expected the prices would begin to rise given the lift and shift,  FCC and the state of what this summer's cruising out of Bayonne will probably be.

 

 

 

[molly361]

I'm one and one so I must be a Millennial Baby Boomer with a family😇

[cruiselvr04]

I'm guessing they would not allow B2B.  

 

Ate you suggesting if you fly in they wont let you sail?

 

I know we're all guessing.....I just wish they would decide and move on so we can stop paying to get refunds.  

Edited May 23, 2020 by cruiselvr04