RCCL stock price

[weregoingcruising]

Will a recession cause cruise fares to come down or cause cruise lines to file  bankrupcy?

[Arizona Wildcat]

2 minutes ago, weregoingcruising said:

Will a recession cause cruise fares to come down or cause cruise lines to file  bankrupcy?

Bookings are down compared to historic norms.  That is what determines cruise fares (airlines too).

BK is another completely different thing.  If one knew if stock prices would go up.or down they could become a millionaire.   Again BK would not really effect passengers, only stock and bond holders.

[wrk2cruise]

3 minutes ago, Arizona Wildcat said:

Again BK would not really effect passengers

 

Tell that to the Crystal people who lost entire cruise fare to bankruptcy.  If I remember correctly RCL typically is holding ~1 billion in deposits.

 

My belief is the cruise lines are going to do everything possible to hold prices at these elevated levels.  As you can see from the current "deals" for sailings through the end of 2022 bookings are not where they need to be.  But the big deal they offer is maybe a couple hundred in OBC (which is spent onboard on very high margin stuff).  

 

I've not seen any significant last minute deals.   They would rather give the room comp to someone who has maybe spent a few dollars in the casino in the past but doesn't have sailings booked.  Then they hope they will add the over priced drink and wifi packages, spend on shore excursions etc.

[canderson]

31 minutes ago, Arizona Wildcat said:

Bookings are down compared to historic norms.  That is what determines cruise fares (airlines too).

That comparison isn't working for me...

 

Aircraft:  Prices are up above pre-COVID levels.  Airlines are currently capacity constrained on many routes.

 

Cruise ships:  Prices are up above pre-COVID levels.  Cruise ships are not capacity constrained on many routes.

 

Which of these is following bookings with price more closely?  Pretty obvious.

 

What could account for a smaller number of people willing to pay considerably more for a Celebrity cruise?  Perhaps we're still burning through a year and a half of FCC where holders look at that as 'sunk' money and are supplementing it with additional funds?

 

Let's watch what happens to bookings once the FCCs have been burned through more thoroughly.

 

 

Edited September 30, 2022 by canderson

[Arizona Wildcat]

31 minutes ago, wrk2cruise said:

 

Tell that to the Crystal people who lost entire cruise fare to bankruptcy.  If I remember correctly RCL typically is holding ~1 billion in deposits.

 

My belief is the cruise lines are going to do everything possible to hold prices at these elevated levels.  As you can see from the current "deals" for sailings through the end of 2022 bookings are not where they need to be.  But the big deal they offer is maybe a couple hundred in OBC (which is spent onboard on very high margin stuff).  

 

I've not seen any significant last minute deals.   They would rather give the room comp to someone who has maybe spent a few dollars in the casino in the past but doesn't have sailings booked.  Then they hope they will add the over priced drink and wifi packages, spend on shore excursions etc.

The fares with RCCL are held in a trust account.  Crystal did not do that as a privately held company was not required to do so.

[Lastdance]

48 minutes ago, weregoingcruising said:

Will a recession cause cruise fares to come down or cause cruise lines to file  bankrupcy?

One honest answer is we really do not know; this is a different animal with inflation at a 40 year high.  

 

[Arizona Wildcat]

16 minutes ago, canderson said:

That comparison isn't working for me...

 

Aircraft:  Prices are up above pre-COVID levels.  Airlines are currently capacity constrained on many routes.

 

Cruise ships:  Prices are up above pre-COVID levels.  Cruise ships are not capacity constrained on many routes.

 

Which of these is following bookings with price more closely?  Pretty obvious.

 

What could account for a smaller number of people willing to pay considerably more for a Celebrity cruise?  Perhaps we're still burning through a year and a half of FCC where holders look at that as 'sunk' money and are supplementing it with additional funds?

 

Let's watch what happens to bookings once the FCCs have been burned through more thoroughly.

 

 

Interesting.

 

As for the airlines they are capacity constrained mostly because of staffing issues.  Westjet is flying about 30% less seats for example.

 

Cruise ships have always had routes fully booked and others that had last minute availability.   Demand as you said was fueled by FCCs.  Those according to Carnival and HAL are mostly used.  Bookings are falling because of many reasons beyond FCCs.  These include chaos in airlines, cost of food and utilities (especially in Europe).

 

Let's see if bookings hold for 2023 and beyond.  Would think cancellation rates will increase in the current uncertain time and rates falling accordingly at some future time.

[BigAl94]

This today re Carnival highlights the industry challenges  which are affecting the whole industry https://www.reuters.com/business/autos-transportation/carnival-corp-misses-revenue-estimates-inflation-dampens-travel-plans-2022-09-30/

[Baron Barracuda]

20 minutes ago, BigAl94 said:

This today re Carnival highlights the industry challenges  which are affecting the whole industry https://www.reuters.com/business/autos-transportation/carnival-corp-misses-revenue-estimates-inflation-dampens-travel-plans-2022-09-30/

 

"The cruise operator's cumulative advance bookings for the current quarter are below the historical range and at lower prices"

 

Meanwhile over at X, despite not being a gambler Blue Chip Club keeps sending me free cruise offers.  Last one was good on 70 4q '23 Caribbean sailings.  Must be lots of empty cabins.

[hawkesbaynz]

The fashion that sterling has collapsed this year against the dollar cruises will be getting very expensive for Brits. Holidays in Orlando😨. 
 

My current crop of cruises were booked at approx. $1.35 to the pound. Now it is $1.10. 
 

Staycation for us in 2024 unless sterling does not improve. 

[D C]

21 minutes ago, hawkesbaynz said:

The fashion that sterling has collapsed this year against the dollar cruises will be getting very expensive for Brits. Holidays in Orlando😨. 
 

My current crop of cruises were booked at approx. $1.35 to the pound. Now it is $1.10. 
 

Staycation for us in 2024 unless sterling does not improve. 

I presume UK-based sailings are booked in USD as well for you?

From our perspective, we're looking at it as Europe being on sale.  We were paying over $1.70 per £ back in 2014.  Happened to be in Guernsey when the Brexit vote happened and everything was suddenly on sale for us when it dropped from $1.50 to $1.33 per £.

$1.10 will limit the number of Brits sailing for sure. 

 

[mnocket]

RCL seems to be in better shape than CCL & NCLH, but that's not saying much.  CCL just issued a pretty dire earnings update causing all cruise line stocks to tank.  Most interesting to me is that CCL is now trading below its Covid low!  Imagine that...  investors now think CCL is worth less than it was during the Covid shutdown.

 

Advanced bookings are down - the reopening surge is waning.  Pricing power seems to have disappeared.  Labor shortages remain.  Worst of all, rising interest rates along with faltering financial performance will make refinancing their huge debts much more expensive.

 

6 months ago I bought some cruise line stocks because I thought the worse was over.  Mistake.  I now feel one or more major cruise line bankruptcies is more likely than not in 2023.  

[canderson]

 

I see a very definite positive trend with regard to cash flow now.  Even with weaker bookings through June 30, the 2nd quarter came back to just about break-even.  Granted, -$50,000,000 isn't on the right side of the ledger, but beats the heck out of over nearly a billion in losses for many previous quarters.

 

• Royal Caribbean Cruises cash flow from operating activities for the quarter ending June 30, 2022 was $-0.050B
• Royal Caribbean Cruises cash flow from operating activities for the twelve months ending June 30, 2022 was $-4.130B

 

• Royal Caribbean Cruises annual cash flow from operating activities for 2021 was $-1.878B
• Royal Caribbean Cruises annual cash flow from operating activities for 2020 was $-3.732B
• Royal Caribbean Cruises annual cash flow from operating activities for 2019 was $3.716B

[D C]

32 minutes ago, mnocket said:

RCL seems to be in better shape than CCL & NCLH, but that's not saying much.  CCL just issued a pretty dire earnings update causing all cruise line stocks to tank.  Most interesting to me is that CCL is now trading below its Covid low!  Imagine that...  investors now think CCL is worth less than it was during the Covid shutdown.

 

Advanced bookings are down - the reopening surge is waning.  Pricing power seems to have disappeared.  Labor shortages remain.  Worst of all, rising interest rates along with faltering financial performance will make refinancing their huge debts much more expensive.

 

6 months ago I bought some cruise line stocks because I thought the worse was over.  Mistake.  I now feel one or more major cruise line bankruptcies is more likely than not in 2023.  

Makes the RoI on a stock ownership OBC pretty nice.  $100 OBC for ~$700 invested

[SunNFunCruzer]

6 minutes ago, canderson said:

 

I see a very definite positive trend with regard to cash flow now.  Even with weaker bookings through June 30, the 2nd quarter came back to just about break-even.  Granted, -$50,000,000 isn't on the right side of the ledger, but beats the heck out of over nearly a billion in losses for many previous quarters.

 

• Royal Caribbean Cruises cash flow from operating activities for the quarter ending June 30, 2022 was $-0.050B
• Royal Caribbean Cruises cash flow from operating activities for the twelve months ending June 30, 2022 was $-4.130B

 

• Royal Caribbean Cruises annual cash flow from operating activities for 2021 was $-1.878B
• Royal Caribbean Cruises annual cash flow from operating activities for 2020 was $-3.732B
• Royal Caribbean Cruises annual cash flow from operating activities for 2019 was $3.716B

 

In 2019 when Royal was cash flow positive, the corporation had much less debt and interest rates were at historical lows. Now, they are carrying much more debt, debt is much more expensive, and refinancing that debt -- kicking the can down the road -- will be even more expensive, digging the debt hole deeper and deeper. 

 

Our current trip on Solstice is our first trip on Celebrity post covid. This is not the typical Celebrity product and we won't be rebooking Celebrity for at least a year or two if not more. The more people who have experiences and attitudes like us post covid, the less likely the line and stock will recover.

[canderson]

Wow, I have a stalker!  Cool!

 

1 hour ago, SunNFunCruzer said:

 

In 2019 when Royal was cash flow positive, the corporation had much less debt and interest rates were at historical lows. Now, they are carrying much more debt, debt is much more expensive, and refinancing that debt -- kicking the can down the road -- will be even more expensive, digging the debt hole deeper and deeper.

 

 

The good news is that a great deal of their current debt was taken on at some historically low rates. 

 

Actually, it isworth looking at RCG's debt before and after the pandemic, not quite 2X at the end of 2021 (by which time they were barely getting restarted) vs. what it was in 2019.  These E class build-outs came at a bad time in terms of cash flow.  Income will have improved a good bit since Q4 2021, though.  Will be good to see the 2022 EOY report.

 

 

 

 

 

[D C]

What's surprising is that they didn't cancel or postpone the new ship builds.  High risk and lots of capital, plus adding to their capacity. 

[canderson]

20 minutes ago, D C said:

What's surprising is that they didn't cancel or postpone the new ship builds.  High risk and lots of capital, plus adding to their capacity. 

 

Actually, they did.  Chantiers de l'Atlantique was expected to complete Ascent in 2022, and that did get pushed out to late 2023.  Perhaps still not an ideal time to be shelling out those kinds of $, but delaying any further might have caused even more $ contract issues.  And the schedule for the 5th E class, though ordered and originally scheduled for 2025, is in limbo at the moment.

 

 

 

[SusieAV8R]

9 minutes ago, canderson said:

 

Actually, they did.  Chantiers de l'Atlantique was expected to complete Ascent in 2022, and that did get pushed out to late 2023.  Perhaps still not an ideal time to be shelling out those kinds of $, but delaying any further might have caused even more $ contract issues.  And the schedule for the 5th E class, though ordered and originally scheduled for 2025, is in limbo at the moment.

 

 

Concur.  Contracts were entered pre-covid ("boom" times) and contracts of these types generally carry an expensive penalty (oops, redundant 🙂 ). 

[intr3pid]

6 hours ago, canderson said:

Actually, it isworth looking at RCG's debt before and after the pandemic, not quite 2X at the end of 2021 (by which time they were barely getting restarted) vs. what it was in 2019.  These E class build-outs came at a bad time in terms of cash flow.  Income will have improved a good bit since Q4 2021, though.  Will be good to see the 2022 EOY report.

 

Operating cash flow isn't affected by the ship buildouts.  And it's this dwindling operating cash flow that's freaking the street out right now.  Revenues going down and costs up.

 

On the revenue side, squeezed folks are balking at the upfront price tag of a cruise.  The cruise lines are trying cruise-only fares - and hoping for a higher-margin spend out of those on board.  But that doesn't work well for the likes of CCL - 80% of whose brands are now mid-market or lower.  NCL is better placed with Oceania and Regent.  RCL somewhere in the middle.

 

The costs.  This inflation was supposed to be temporary, but, boy, the stubbornness.  Food prices are up, fuel prices are up, interest rates are up, and a lot of crew (from India, Indonesia, Philippines) is finding easier opportunities back home.  Some source markets - Eastern Europe, for instance - are now off limits. 

 

To me, for the cruise stock prices to recover, the inflation has to come down.  A lot.  Summer is typically the most profitable quarter, yet the stubborn inflation broke it for CCL. 

 

That said, cruising is a secular growth product, and the industry an oligopoly.  If the cruise lines can ride it out till the next next spring/summer, we might just see a huge recovery in these share prices.

[cruiseerf]

I am waiting to see who MSC buys?  They are Cash Rich....privately owned and the Shipping side of MSC prints their own $$$.  They are the 2nd largest ocean shipping company in the world with 700 ships!   Besides growing their own cruise footprint dramatically over the last few years,  why not pick up one of the established cruislines cheap and give them the toehold in the Caribbean they are gaming for?  I am sure they must  be looking at this.   Time shall tell.  

[canderson]

33 minutes ago, intr3pid said:

 

Operating cash flow isn't affected by the ship buildouts.  And it's this dwindling operating cash flow that's freaking the street out right now.  Revenues going down and costs up.

Not saying cash flow is impacted by builds.  It's that the stock is taking hits from both ends with current cash flow and future debt service.  The timing sucks.

 

Yes, lousy time for increasing costs, but increasing prices don't seemed to have dampened bookings as one might expect.  RCG says bookings in 2023 are strong, even at inflated prices, and my own unsuccessful though anecdotal attempts to bag one of my cabins of choice for late 2023 cruises seems to bear that out.  Honestly, I'm surprised.  It can't all be residual FCC burn that late in the season.  For whatever reason, enough of the X clientele seems to be in "damn the torpedoes" mode to keep bookings up, even with deflated personal portfolios.  COVID whiplash effect after being pinned down for many months?  I dunno.  If Fain meant what he said about break even load %s, it may be a good 2023.

 

Not clear what you mean about Eastern Europe being off limits as a "source market".  Not seeing that effect aboard.  Can you elaborate?

 

 

[NMTraveller]

Hmmm.  If a cruise line disappears it would be CCL.  RCCL would pick up the CCL passengers.  RCCL is the premium brand.  CCL has too much debt.  I would not hold RCCL but would not bet on it going away...  

Edited October 1, 2022 by NMTraveller

[intr3pid]

1 hour ago, canderson said:

Not saying cash flow is impacted by builds.  It's that the stock is taking hits from both ends with current cash flow and future debt service.  The timing sucks.

 

Yes, lousy time for increasing costs, but increasing prices don't seemed to have dampened bookings as one might expect.  RCG says bookings in 2023 are strong, even at inflated prices, and my own unsuccessful though anecdotal attempts to bag one of my cabins of choice for late 2023 cruises seems to bear that out.  Honestly, I'm surprised.  It can't all be residual FCC burn that late in the season.  For whatever reason, enough of the X clientele seems to be in "damn the torpedoes" mode to keep bookings up, even with deflated personal portfolios.  COVID whiplash effect after being pinned down for many months?  I dunno.  If Fain meant what he said about break even load %s, it may be a good 2023.

 

Not clear what you mean about Eastern Europe being off limits as a "source market".  Not seeing that effect aboard.  Can you elaborate?

 

 

Bookings for a year or more out aren't the real issue, but those deposits are small.  In fact, many folks are rolling their 2022 bookings forward now that the FCCs have been made permanent. 

 

The cruise lines instead need more guests to sail in 2022/early 2023 - booking at a higher rate and making full payments.  This is the only way they can (a) recognize revenue and (b) increase the operating cash flow right now.

 

But, prices of the cruises sailing in the next six months are super soft.  I can pick up a 12+ night Xmas/NYE holiday cruise (on Celebrity) from my pick of ports for less than $1,500 per person.  I can sail to Antartica in February for this price.  Or the Panama Canal.  These are supposed to be some of the most expensive cruises of the year.

 

Was referring to the Eastern European staff.  A good portion of the chefs and the mid-level staff was sourced from Eastern Europe before COVID and the war.  Very few of them are returning now.  You will find most of the kitchen and galley staffed by Indian/Asian crew.  Great people, but need to be trained from the ground up.

Edited October 1, 2022 by intr3pid

[Fly and Sail]

11 hours ago, canderson said:

 

Actually, they did.  Chantiers de l'Atlantique was expected to complete Ascent in 2022, and that did get pushed out to late 2023.  Perhaps still not an ideal time to be shelling out those kinds of $, but delaying any further might have caused even more $ contract issues.  And the schedule for the 5th E class, though ordered and originally scheduled for 2025, is in limbo at the moment.

 

 

 

 

Captain Costas had a very informative Captains Corner where he highlighted the lower operating costs and more environmentally friendly aspects of E Class ships so I think getting more of them is a no brainer for Celebrity.

 

Pair that with people liking the new ships more and more and would rather sail on a nice new Edge Class than on the dumpy Solstice or Millennium Class.

 

Quite frankly they probably shouldn't even bother to Revolutionize a 20 year old ship such as Solstice and instead invest in another E-Class.