NCLH Earnings Release (CY22) and Conference Call . .

[Pcardad]

51 minutes ago, seasickphil said:

How or why do you think luxury lines will escape any cost cutting measures?

Why do you think they killed the Pool Deck Grill for dinner? To save money.

[slidebite]

4 hours ago, Pcardad said:

With expected 100% - 103% booking rates, there will always be someone to take the rooms....but do you honestly think Regent is going to tank the experience? Really? 

 

I genuinely don't think so, but then again stranger things have happened the past few years.

 

Companies can do some pretty questionable things in the name of ~shareholder value~  at times....

[pingpong1]

In the not-too-distant-past, a quick "back of the envelope" price estimate (in the U.S. market) for an "average" Regent cruise to Northern Europe or the Mediterranean, was to estimate paying about $1K per person/per night, and even a bit less.  That estimate is now too low.  I just did a quick check a moment ago of Regent's latest "Upgrade Your Horizon" offer for this summer in northern Europe on Splendor and Voyager.  This is the promotional where Regent is offering a "free" 2-level suite upgrade, reduced deposits, and $1,000 in OBC's.  This offer also presumably applies to specific itineraries that are not yet sold out (even this close to the sailing dates).  There are 5 northern Europe itineraries listed for this promotion.  For the "cheapest/starting  fares" (2 Voyager cruises) are $1,200 and $1,260 PP/PN.  For the 3 Splendor cruises, the "starting fares" are $1,300, $1,500, and $1,638 PP/PN.

 

Perhaps if we look carefully, we might still find some selected $1K (or slightly less) PP/PN itineraries for Alaska, NE/Can, and the Caribbean.  But those are undoubtedly going to go up in price as well, in the future.  Along with prices creeping up, it's not too much of a stretch to anticipate a subtle (but noticeable to longer-time customers) declines in once-offered amenities, as well (llike unlimited king crab-legs and top-shelf "included" liquor brands no longer offered/stocked, etc.).  It's bound to happen, I think.  It's a simple matter of business economics.  Something has to "give" somewhere as Regent's operating costs continue to increase.  Regards.

 

 

[seasickphil]

1 hour ago, Pcardad said:

Why do you think they killed the Pool Deck Grill for dinner? To save money.

My point was to mnocket when he said:

I'm hoping that the cost cutting that has become very apparent on the mainstream lines (e.g. Celebrity, et. al.) doesn't start to rear its head on the luxury lines.  Those cost cutting measures are what has driven me to RSSC. 

I was asking him why he thought luxury cruise lines would be exempt from any cost cutting measures.

[mrlevin]

pingpong, did you subtract air from your per diem costs?  That is only way to get apples to apples.

[pingpong1]

1 hour ago, mrlevin said:

pingpong, did you subtract air from your per diem costs?  That is only way to get apples to apples.

Hi Marc - Yes, I "sort of did" as I used my own circumstance to come up with those cost comparisons (the "past" average nightly costs for me - compared to what the future published listed fares would be).  For all of our own past Regent cruising we've always declined Regent's air, taken the credit, and booked/paid for our own air separately - either with cash or with FF miles; both for domestic and overseas flights.  We always fly F/C in the U.S. and B/C overseas. It seems like the Regent fares are really "heading north".  🤪  Have you found the same thing to be true or am I just becoming unnecessarily alarmed?

Edited March 2, 2023 by pingpong1

[Kwaj girl]

4 hours ago, Pcardad said:

Why do you think they killed the Pool Deck Grill for dinner? To save money.

 

Due to underutilization.   Why put all that food out and staff a venue for so few passengers that took advantage of it?  We rarely saw more than a few couples.....

[Pcardad]

14 minutes ago, Kwaj girl said:

 

Due to underutilization.   Why put all that food out and staff a venue for so few passengers that took advantage of it?  We rarely saw more than a few couples.....

The two are not mutually exclusive. I would expect them to cut in areas that have the least possible impact to their clients.

[papaflamingo]

15 hours ago, pingpong1 said:

.... For the "cheapest/starting  fares" (2 Voyager cruises) are $1,200 and $1,260 PP/PN.  For the 3 Splendor cruises, the "starting fares" are $1,300, $1,500, and $1,638 PP/PN.

....a subtle (but noticeable to longer-time customers) declines in once-offered amenities, as well (llike unlimited king crab-legs

You might want to recheck your daily rate.  We have 5 cruises booked and we are nowhere near $1200 or more per person on any of them,  and that includes a 70 night Grand Cruise in a Penthouse.  

As for King crab, the crab population is really down right now.  It's probably not a matter of cutting back and more a matter of unavailable supply.  The crab population has been very low for a year now. 

Also not sure what liquor you're looking for, but my cruise last June-July I had no issues getting what I wanted, of course that certainly is a function of "taste."  

I think people are confusing cutbacks with supply chain issues.  The supply chain is still stretched very thin due to Covid recovery.  Many companies simply shut down, and many workers changed jobs.  Supply dropped significantly and demand rose way faster than expected.  Additionally air fare has gone up "hugely" due to high demand and shortages of crews and higher fuel cost.  Many companies simply aren't going to grow back to pre-Covid numbers so prices will remain high and supply will remain a concern.  

Edited March 3, 2023 by papaflamingo

[mnocket]

22 hours ago, seasickphil said:

How or why do you think luxury lines will escape any cost cutting measures?

Hoping something doesn't happen is quite a bit different than thinking something won't happen. Wouldn't you agree?

[seasickphil]

2 minutes ago, mnocket said:

Hoping something doesn't happen is quite a bit different than thinking something won't happen. Wouldn't you agree?

Certainly i agree but i believe it is wishful thinking to assume luxury cruise lines would be any different to mainline line cruises when it comes to cutting costs, especially after what has happened to the cruise industry since the pandemic.

[mnocket]

26 minutes ago, seasickphil said:

Certainly i agree but i believe it is wishful thinking to assume luxury cruise lines would be any different to mainline line cruises when it comes to cutting costs, especially after what has happened to the cruise industry since the pandemic.

I agree there are financial forces at work that may very well cause the luxury lines to join in the cost cutting exercises that have become common among other segments of the cruise industry.  That said, I do hold out some hope that this may not happen - or may not happen to the extent that is has elsewhere.

 

First, it seems to me that the most drastic changes are happening with the "Premium" cruise lines (Celebrity, Princess, et. al.).  It's just possible imho that this is a deliberate effort to transition the Premium lines to become more akin to the mass market lines.  Essentially, a slow-roll effort to merge the Premium category into the more profitable mass market category.  I think many would agree that the differences between, say Celebrity and RCL are narrowing.  Maybe the future is still two categories, but with similar service levels - the difference being the target demographics.  If this is true, then it's just possible that the luxury lines will be spared major cost cutting.  Maybe it's the Premium lines that are mostly being targeted?

 

Second, and I could be wrong, I believe the luxury lines have greater pricing power than the Premium and mass market lines.  The cruise line calculus may be that luxury travelers are distinct in that they are willing to pay more in order to maintain the service levels that they are accustomed to.  Whereas the other categories are forced to both raise prices and cut service levels, perhaps the luxury lines can avoid the cuts and just raise prices?

 

It may in fact be wishful thinking, but those are the two primary reasons I hold out hope that the luxury lines might avoid the type of cutbacks we are seeing elsewhere.

Edited March 3, 2023 by mnocket

[jeb_bud]

On 3/2/2023 at 9:09 AM, Pcardad said:

Just read their earnings report - page 14.

https://static.seekingalpha.com/uploads/sa_presentations/529/91529/original.pdf

 

Clearly lists FY2023 guidance at 103.5% occupancy. Companies don't typically lie on these documents...the SEC would own them.

 

 

Right.  My problem stems from my Regent-centric viewpoint.  I did a little quick math and even including Grandeur Regent accounts for about 6% of NCLH passenger capacity.  Regent could practically sail empty and not have much impact on NCLH numbers.

[Pcardad]

11 minutes ago, jeb_bud said:

Right.  My problem stems from my Regent-centric viewpoint.  I did a little quick math and even including Grandeur Regent accounts for about 6% of NCLH passenger capacity.  Regent could practically sail empty and not have much impact on NCLH numbers.

True - I wonder what impact they have on profit? 

[alainciao]

19 hours ago, mnocket said:

I agree there are financial forces at work that may very well cause the luxury lines to join in the cost cutting exercises that have become common among other segments of the cruise industry.  That said, I do hold out some hope that this may not happen - or may not happen to the extent that is has elsewhere.

 

First, it seems to me that the most drastic changes are happening with the "Premium" cruise lines (Celebrity, Princess, et. al.).  It's just possible imho that this is a deliberate effort to transition the Premium lines to become more akin to the mass market lines.  Essentially, a slow-roll effort to merge the Premium category into the more profitable mass market category.  I think many would agree that the differences between, say Celebrity and RCL are narrowing.  Maybe the future is still two categories, but with similar service levels - the difference being the target demographics.  If this is true, then it's just possible that the luxury lines will be spared major cost cutting.  Maybe it's the Premium lines that are mostly being targeted?

 

Second, and I could be wrong, I believe the luxury lines have greater pricing power than the Premium and mass market lines.  The cruise line calculus may be that luxury travelers are distinct in that they are willing to pay more in order to maintain the service levels that they are accustomed to.  Whereas the other categories are forced to both raise prices and cut service levels, perhaps the luxury lines can avoid the cuts and just raise prices?

 

It may in fact be wishful thinking, but those are the two primary reasons I hold out hope that the luxury lines might avoid the type of cutbacks we are seeing elsewhere.

I agree with this reasoning.  We can see this same phenomenon in the way the airlines are pricing business class.  Economy fares are still reasonable.  BC thru the roof.

[slidebite]

Viewing it like a hybrid of an airline model is exactly where my mind went too. There are some excellent videos made regarding the logic of the business model.

 

https://youtu.be/BzB5xtGGsTc

 

[mnocket]

4 hours ago, slidebite said:

Viewing it like a hybrid of an airline model is exactly where my mind went too. There are some excellent videos made regarding the logic of the business model.

 

https://youtu.be/BzB5xtGGsTc

 

I read an interesting article a few years back that claimed that airlines make Economy travel miserable for the customer by design.  The idea being that this drives customers to purchase higher-end seats like PE and Business Class that they otherwise wouldn't purchase.  Makes sense to me🤨

[alainciao]

Excellent video!  Thanks.  The increases in Regent fares are big and one of the biggest drivers is the airfares.  However, I believe Regent can provide better fares than individuals which explains why, for the first time, I have used Regent air for my upcoming cruise. Use of miles is much more difficult now.

BUT, we still go.  I believe economists call this price elasticity, as in not having any, i.e., Regent pricing may be inelastic.  The good news is that this allows them to maintain service.  Unless, of course, management is foolish.

[papaflamingo]

16 hours ago, mnocket said:

I read an interesting article a few years back that claimed that airlines make Economy travel miserable for the customer by design.  The idea being that this drives customers to purchase higher-end seats like PE and Business Class that they otherwise wouldn't purchase.  Makes sense to me🤨

 I spent 29 years as a major U.S. airline pilot.  Admittedly I was never involved in any financial decisions but I don't accept the premise that airlines purposefully make economy miserable to force sales to higher priced seats.  Pricing is competitively based.  The airlines charge what the competition allows.  The cost of an economy ticket is extremely low in general, especially if compared to many years ago.  The airlines added seats in order to carry enough passengers to make the flight profitable.  When I got hired in 1987 our break even load factor was 52%.  After the fare dumps in the early 90's the break even load factor climbed rapidly and is now around 72-78%. So the planes need to average that to simply not lose money.  

[mnocket]

4 hours ago, papaflamingo said:

I don't accept the premise that airlines purposefully make economy miserable to force sales to higher priced seats

I'm not saying you're right or wrong, I just find the premise of "Calculated Misery"  interesting and certainly not something I would rule out.  There's a part of me that says "this kinda makes sense".  At any rate, agree or disagree, it's an interesting read.

 

https://www.vox.com/culture/2017/4/14/15275642/united-airlines-calculated-misery-dragging-man-off-plane

 

Edited March 5, 2023 by mnocket

[papaflamingo]

18 hours ago, mnocket said:

I'm not saying you're right or wrong, I just find the premise of "Calculated Misery"  interesting and certainly not something I would rule out.  There's a part of me that says "this kinda makes sense".  At any rate, agree or disagree, it's an interesting read.

 

https://www.vox.com/culture/2017/4/14/15275642/united-airlines-calculated-misery-dragging-man-off-plane

 

The article is written from a very cynical  point of view and ignores the lowering of prices as well as increasing cost.  In 1897 (when I got hired) the average  price to fly was $587.  In today's dollars that is $1542 today.   The average air fare today is $392 which, in 1987 would have been $149.   The airlines added seats because people wanted cheap tickets.  With the fluctuating oil prices and demand for low fares it was all they can do to be profitable.  it has nothing to do with a concerted effort to make people miserable enough to buy higher priced seats.  It simply has to do with rising costs vs. decreasing air fare.  The was driven by multiple events (like 911 or Covid) including demand, fuel costs, Southwest Airlines, etc.  

You can say the same for cruise lines.   In 1987 the cruise experience on major lines was significantly different than today, and significantly cheaper.  Our first cruise in 1998 cost $750 per person for an inside cabin.  Today that would be $1376.  I can get an inside cabin for on the same week, same ship for $470 or in 1998 dollars $256

I doubt the cruise lines purposefully made the experience worse just to drive people into expensive suites.  It was simply a shift in the economy from a "Neiman Marcus" experience to "Walmart."  People want to pay as little as possible so the corporations adjusted to be profitable on as little as possible fares. It's all the wishes of the consumer.  

So sure, "agree to disagree."  But if you really examined how cost structures change, you won't find any discussion or idea about "calculated misery," in fact quite the opposite.  

 

Edited March 6, 2023 by papaflamingo