What do Celebrity do to manage their financial situation

[Ken the cruiser]

15 minutes ago, LGW59 said:

Still hovering there in MA as well.  I think I read someplace that it can cost upwards of $10MILLION to fill er up, as it were.  With diesel prices they way they are, it's no wonder everything is so damn expensive, especially when it has to be hauled all across the country by the truck drivers.

If the price was originally say $5-6 million for a fill up and now it’s $10 million, the cruise lines have got to make up that shortfall somewhere. You would think one of the most likely places would be to raise the cruise fares on new bookings, especially since they can’t raise them once you book a cruise.

 

Edited January 9, 2023 by Ken the cruiser

[LGW59]

4 minutes ago, Ken the cruiser said:

If the price was originally say $5-6 million for a fill up and now it’s $10 million, the cruise lines have got to make up that shortfall somewhere. You would think one of the most likely places would be to raise the cruise fares on new bookings, especially since they can’t raise them once you book a cruise.

 

A large cruise ship of over 1,200 feet in length can hold up to 2 million gallons of fuel. With diesel prices of $4.959 at the time of the article, it costs approximately $10 million to fuel a cruise ship fully.

[Ipeeinthepools]

3 minutes ago, Ken the cruiser said:

If the price was originally say $5-6 million for a fill up and now it’s $10 million, the cruise lines have got to make up that shortfall somewhere. You would think one of the most likely places would be to raise the cruise fares on new bookings, especially since they can’t raise them once you book a cruise.

 

 

Doesn't Celebrity still have the option to impose a fuel surcharge to offset the increase in fuel costs?

[Ipeeinthepools]

1 minute ago, LGW59 said:

A large cruise ship of over 1,200 feet in length can hold up to 2 million gallons of fuel. With diesel prices of $4.959 at the time of the article, it costs approximately $10 million to fuel a cruise ship fully.

 

I don't think the Captain waits until the red light comes on to get fuel.  I'm sure it's much less than a full tank.  Perhaps they don't carry a full tank to reduce weight.

[LGW59]

1 minute ago, Ipeeinthepools said:

 

Doesn't Celebrity still have the option to impose a fuel surcharge to offset the increase in fuel costs?

Good grief Ipee, can just imagine the threads here if that happens!

[LGW59]

Just now, Ipeeinthepools said:

 

I don't think the Captain waits until the red light comes on to get fuel.  I'm sure it's much less than a full tank.  Perhaps they don't carry a full tank to reduce weight.

back when I was a kid the gas tank gauge in my car didn't work, it was stuck on always a full tank...I hope the captain has a better sense of how much is left in the tank than I did

 

[Ken the cruiser]

So let’s do the math. If there are 2000 passengers on a cruise and it costs $10 million to fill the tank, that would be $5,000 per person. Obviously, that’s not the case, but I’m sure it’s not cheap, especially with the price increases over the past year. So I asked Ms Google. Any idea what a ton of fuel costs? 😂

 

Average-sized cruise ships can have a daily fuel consumption of between 140 and 150 tons. This means that the ship will be consuming 30 to 50 gallons per day per mile traveled. Cruise ship lines are not forthcoming with fuel cost information.

 

https://boatinggeeks.com/how-much-does-it-cost-to-fuel-a-cruise-ship/

 

 

[Ken the cruiser]

21 minutes ago, Ipeeinthepools said:

 

Doesn't Celebrity still have the option to impose a fuel surcharge to offset the increase in fuel costs?

Good question. Maybe that’s one of the main reasons their future cruise prices have gone up? 🤔

 

[LMaxwell]

One thing Celebrity has done is add more 3 and 4 night cruises as a regular spot in their itinerary. They can woo in younger couples that might otherwise spend a weekend in Miami, Fort Lauderdale, or Palm Beach at a trendy hotel or B&B. These cruises don't go very far or go very fast, they burn minimal amount of fuel. They are meant to attract people with low come on fares and then lots of upgrade options. Newer, younger people, especially on a short weekend cruise, are more likely to be ok with specialty dining, 100++ pd/pp alcohol packages, etc.  I wouldn't be surprised if the spend per person, per day, on those short cruises is through the roof for alcohol, dining, casino, spa while expenses to run the cruise are relatively low (less fuel, don't need as big a rotation of menus to stock for).  Lower loyalty numbers on those cruises, and if you are loyalty on a 3 day cruise you can't even use HH for 1/3 of the cruise, but since it's party time, you are more likely to just order a la carte anyways. They don't need to do much during the day except have some pool band music and have the lunch buffet and satellite cafe and quick serve open. Don't need a ton of activities 

Edited January 9, 2023 by LMaxwell

[LGW59]

8 minutes ago, Ken the cruiser said:

So let’s do the math. If there are 2000 passengers on a cruise and it costs $10 million to fill the tank, that would be $5,000 per person. Obviously, that’s not the case, but I’m sure it’s not cheap, especially with the price increases over the past year. So I asked Ms Google. Any idea what a ton of fuel costs? 😂

 

Average-sized cruise ships can have a daily fuel consumption of between 140 and 150 tons. This means that the ship will be consuming 30 to 50 gallons per day per mile traveled. Cruise ship lines are not forthcoming with fuel cost information.

 

https://boatinggeeks.com/how-much-does-it-cost-to-fuel-a-cruise-ship/

 

 

Good fuel usage information but the fuel costs are from 2019, can still use today $$ and get a rough idea and it ain't cheap

[Ken the cruiser]

1 minute ago, LGW59 said:

Good fuel usage information but the fuel costs are from 2019, can still use today $$ and get a rough idea and it ain't cheap

TBH it really doesn’t matter. I was just trying to come up with a logical reason why cruise prices are going up.

[Arubamoose]

This is not just a cruise industry problem - it is rampant throughout the travel industry.

 

We have timeshare in Aruba - two weeks at Thanksgiving.  Not high season. 

Our costs this year for airfare, booze, meals, groceries, car rentals, etc. were 25% higher than last year.  We did not do anything differently.  The service at our resort has been cut.  No more daily maid service, yet our maintenance has gone up.

Our trip in February 2021 (at island wide 35% capacity) in high season was a real bargain.  Airfare alone was less than $300 from NJ.  If I book now for November, I am looking at $1600 in economy!

 

Prices everywhere has gone up and cutbacks in service abound.

[grandgeezer]

1 hour ago, Ken the cruiser said:

If the price was originally say $5-6 million for a fill up and now it’s $10 million, the cruise lines have got to make up that shortfall somewhere. You would think one of the most likely places would be to raise the cruise fares on new bookings, especially since they can’t raise them once you book a cruise.

 

In 2008 the cruise lines did announce a fuel surcharge as oil was well over $100 a barrel and the trigger point was $65. It was $10 p.p. per day for the first two people and $5 p.p. per day for each guest over that. The was a max of $140 and $70 for them. Anything over 14 days were free. B2Bs didn’t count as one cruise. They announced a starting date and everybody had to pay it even if your cruise was paid for. It wasn’t in play too long before it was rescinded.

If you don’t remember it or believe it, Google cruise line fuel surcharge and find out for yourself.

[BigAl94]

Watch the Project Trifecta video here 

 

[chengkp75]

7 hours ago, Ken the cruiser said:

Just curious, but I wonder what the percentage increase in fuel prices for the cruise lines has been since they shot through the roof over a year ago? I’m sure those increases have also had a huge negative impact on their bottom line. I know here in Alabama diesel is still almost $5 a gallon.

Actually, the price of VLSFO (very low sulfur fuel oil), the most common fuel used by the cruise ships (not diesel fuel), has dropped by nearly 50% since June.

7 hours ago, LGW59 said:

A large cruise ship of over 1,200 feet in length can hold up to 2 million gallons of fuel. With diesel prices of $4.959 at the time of the article, it costs approximately $10 million to fuel a cruise ship fully.

That would be the case, if the cruise line used #1 Diesel (what cars use in the US), and if they waited until the ship was empty.  As noted above, the ships primarily use VLSFO, which is running about $340/metric ton now, which equates to $1.43/gallon.  Even MGO (marine gas oil, the name for #2 Diesel), which is used only by ships without scrubbers, while in the US ECA, is running at $4/gallon ($923/mt).  This is down about 25% since June.

 

A cruise ship will not let the fuel go below 50% of capacity, in most cases, so even taking the 2 million gallon figure, you're only taking about 1 million at a time (3800 metric tons, or about 3 weeks worth), using a slightly higher figure than your 130-150 tons/day (170).  So, for a scrubber equipped ship, that would be about $400k in fuel per week. 

Edited January 9, 2023 by chengkp75

[chengkp75]

8 hours ago, eroller said:

Out of curiosity can a major cruise corporation like Royal Caribbean file Chapter 11 under the US Bankruptcy Code?

Any company that does business in the US, regardless of where incorporated, can file for bankruptcy under US law, and many do, since the US has some of the most lenient bankruptcy laws.

8 hours ago, LB_NJ said:

I don't know specifically how RCL structures the ships.  However, the ships might be put in an LLC to protect and isolate the parent company from liability if the ship causes a problem with significant potential economic liability.

This has been done with all ships for a century.  If you look up various cruise ship's Registry details for RCI ships, you will see a multitude of "owners", who make bareboat charters to the parent company for operation.

[JeanieC,Aston]

1 hour ago, chengkp75 said:

Actually, the price of VLSFO (very low sulfur fuel oil), the most common fuel used by the cruise ships (not diesel fuel), has dropped by nearly 50% since June.

That would be the case, if the cruise line used #1 Diesel (what cars use in the US), and if they waited until the ship was empty.  As noted above, the ships primarily use VLSFO, which is running about $340/metric ton now, which equates to $1.43/gallon.  Even MGO (marine gas oil, the name for #2 Diesel), which is used only by ships without scrubbers, while in the US ECA, is running at $4/gallon ($923/mt).  This is down about 25% since June.

 

A cruise ship will not let the fuel go below 50% of capacity, in most cases, so even taking the 2 million gallon figure, you're only taking about 1 million at a time (3800 metric tons, or about 3 weeks worth), using a slightly higher figure than your 130-150 tons/day (170).  So, for a scrubber equipped ship, that would be about $400k in fuel per week. 

Isn’t it great to sometimes read a post from someone who really knows what he is talking about.

Thanks chengkp75.

[adolfo2]

20 hours ago, NorthStarStateCruiser said:

Yes, which I agree is not a good strategy.

Overpromising & UNDER-delivering is not a good strategy!

[CruiseRQA]

I would encourage people to read a Value Line report regarding RCL as a business.   Some highlights from their most recent report:

 

The company is set for tremendous growth in 2023. Royal Caribbean is expecting to return to 100% load factors by the end of the year. Bookings for 2023 are at both historic volumes and pricing levels for all four quarters

 

. Monetary tightening by the Federal Reserve should not drastically affect the cruise operator as 70% of its debt has fixed rates. The company ended the period with $3.3 billion in liquidity, as it continues to refinance debt and improve the balance sheet.

 

The long-term horizon has strong recovery promise and margin growth should increase into next year. At its recent quotation, shares are trading well below our 2025-2027 Target Price Range. While the company’s outlook is promising, conservative investors may want to look elsewhere due to recovery uncertainty and balance sheet risks

[paulh84]

10 hours ago, Ken the cruiser said:

TBH it really doesn’t matter. I was just trying to come up with a logical reason why cruise prices are going up.

 

Going back pre-COVID to 2019 there were many industry analysts critical of the low prices mass market cruise lines were charging. They felt they should not have been achieving 100%+ occupancy on nearly every sailing with such ease. Paired with a million other variables post COVID, part of the reason for the price in case is a simple because we can. 

[rcrabb1513]

19 hours ago, NutsAboutGolf said:

1. Is discussing cruise stock or any investments on cruise critic a good idea?  There are dedicated investment forums

2. Many on here already own the stock and have no plans on selling so they can enjoy the OBC

You missed my point.  I was trying to highlight the motivation causing cruise line leaders to increase margins, not discussing investment strategies.

[chengkp75]

4 hours ago, chengkp75 said:

As noted above, the ships primarily use VLSFO, which is running about $340/metric ton now, which equates to $1.43/gallon.

Sorry, this is not quite accurate, blame it on lack of coffee this morning.  VLSFO is $550/mt, or $2.31/gallon.  So, fuel for a week would be $650k.  This is the same price fuel was a year ago.  MGO is about 50% higher than a year ago.

[Ken the cruiser]

10 hours ago, grandgeezer said:

In 2008 the cruise lines did announce a fuel surcharge as oil was well over $100 a barrel and the trigger point was $65. It was $10 p.p. per day for the first two people and $5 p.p. per day for each guest over that. The was a max of $140 and $70 for them. Anything over 14 days were free. B2Bs didn’t count as one cruise. They announced a starting date and everybody had to pay it even if your cruise was paid for. It wasn’t in play too long before it was rescinded.

If you don’t remember it or believe it, Google cruise line fuel surcharge and find out for yourself.

 

4 hours ago, chengkp75 said:

Actually, the price of VLSFO (very low sulfur fuel oil), the most common fuel used by the cruise ships (not diesel fuel), has dropped by nearly 50% since June.

That would be the case, if the cruise line used #1 Diesel (what cars use in the US), and if they waited until the ship was empty.  As noted above, the ships primarily use VLSFO, which is running about $340/metric ton now, which equates to $1.43/gallon.  Even MGO (marine gas oil, the name for #2 Diesel), which is used only by ships without scrubbers, while in the US ECA, is running at $4/gallon ($923/mt).  This is down about 25% since June.

 

A cruise ship will not let the fuel go below 50% of capacity, in most cases, so even taking the 2 million gallon figure, you're only taking about 1 million at a time (3800 metric tons, or about 3 weeks worth), using a slightly higher figure than your 130-150 tons/day (170).  So, for a scrubber equipped ship, that would be about $400k in fuel per week. 

Thanks for clearing the fuel costs issue up. Then I guess I'll move on to my original thinking for the increase in cruise line booking costs, Supply and Demand. With COVID now clearly moving to the rearview mirror, restrictions no longer applicable in many parts of the cruising world, and with all of the pent-up demand created by the pandemic, Demand definitely has the upper hand in the equation. Pure and simple. 

[chengkp75]

I think more than supply and demand, it is rising cost (primarily debt service) that has led cruise lines to raise prices to cover the cost.  Prices were held low to "prime the pump" and get the cruises rolling again.  They will continue to raise prices until the demand slows down (there's your supply and demand), and hold there until either debt service becomes more manageable, or they feel they can try another rise in prices.

[eroller]

3 minutes ago, chengkp75 said:

I think more than supply and demand, it is rising cost (primarily debt service) that has led cruise lines to raise prices to cover the cost.  Prices were held low to "prime the pump" and get the cruises rolling again.  They will continue to raise prices until the demand slows down (there's your supply and demand), and hold there until either debt service becomes more manageable, or they feel they can try another rise in prices.

 

I can live with rising prices and understand the reasoning.  My issue is when they cut services and quality at the same time.  I have a hard time paying more and getting less.