CNBC Reviews The Business Side Of Cruising

[Stevesan]

CNBC’s “Money” aired a one-hour program “Cruise Inc” July 3, 2009.

Featured ship: Norwegian Pearl.

The narrator sailed a seven-day, four port, W. Caribbean cruise.

He interviewed the ship’s officers and crew from Captain on down, as well as a corporate financial officer at home office.

 

I took away a few interesting numbers, some that we frequently speculate about:

 

Pearl sailed with 2200 pax, 92% capacity. Goal is 104%. Pax & crew Totaled 4000.

 

On board spending accounts for 25% of revenues.

 

The cruise line takes 20% of Art Auctions and 50-60% of Shorex. On average about two- thirds of pax purchase one shore tour, one-third of whom prebook on line.

There were no numbers reported for other outside contract venues such as the casino or spa.

 

Beverage department breaks even at $7.25 p/pax p/day.

 

Diamonds International at Roatan realized $600k revenue in 6 hours. The cruise line shares in that, but no mention of percentage.

 

Stewards make ~$2500 p/month (quote from steward). Ten-month contract.

 

I suspect each cruise line has it’s own targets, but they’re probably not very different from NCLs.

 

There’s a specific goal for every department. This cruise missed its shorex takings due to weather, but the spa benefited and came in 68% over.

Each department head is daily aware of revenue taken vs the goal. For example, the beverage department knew it had to make up $22,000 going into the last day. They did.

This cruise was a financial break even, primarily due to low pax load.

[karmacruiser]

CNBC’s “Money” aired a one-hour program “Cruise Inc” July 3, 2009.

Featured ship: Norwegian Pearl.

The narrator sailed a seven-day, four port, W. Caribbean cruise.

He interviewed the ship’s officers and crew from Captain on down, as well as a corporate financial officer at home office.

 

I took away a few interesting numbers, some that we frequently speculate about:

 

Pearl sailed with 2200 pax, 92% capacity. Goal is 104%. Pax & crew Totaled 4000.

 

On board spending accounts for 25% of revenues.

 

The cruise line takes 20% of Art Auctions and 50-60% of Shorex. On average about two- thirds of pax purchase one shore tour, one-third of whom prebook on line.

There were no numbers reported for other outside contract venues such as the casino or spa.

 

Beverage department breaks even at $7.25 p/pax p/day.

 

Diamonds International at Roatan realized $600k revenue in 6 hours. The cruise line shares in that, but no mention of percentage.

 

Stewards make ~$2500 p/month (quote from steward). Ten-month contract.

 

I suspect each cruise line has it’s own targets, but they’re probably not very different from NCLs.

 

There’s a specific goal for every department. This cruise missed its shorex takings due to weather, but the spa benefited and came in 68% over.

Each department head is daily aware of revenue taken vs the goal. For example, the beverage department knew it had to make up $22,000 going into the last day. They did.

This cruise was a financial break even, primarily due to low pax load.

 

 

Thanks for the info. It looks like it replays on 7/6 and 7/31, we'll have to catch it then. We always wondered what some of the costs and goals were.

 

Thanks again.

 

Karma

[mizbear]

You can also watch this via the CNBC website -- it's about 45 minutes long. Just watched it -- very interesting information not just on NCL but the cruise industry.

-Mizbear

[strmygm]

Very insightful program. One question: the steward income of $2500/mo - assume that is over and above room and board?

[chipmaster]

104% capacity, how does that work? Funny accounting as I'd think that a quad capable rooms would be counted as 4/4 = 100% or they have some creative accounting :confused:

 

$2500/month sounds good but remember that poor steward is working what 7am - 11pm :( for every day the ship is sailing. Figure he gets maybe one 1/2 day off every 5-12 days depending on the ships schedule.

 

Finally I will reconfirms why ship excursion are almost always 2x what you can find on independent :eek:

[raydon]

This program has aired several times over the past few months. It must have really good ratings.

 

Donna

[born2cruize]

104% capacity, how does that work? Funny accounting as I'd think that a quad capable rooms would be counted as 4/4 = 100% or they have some creative accounting :confused:

 

Finally I will reconfirms why ship excursion are almost always 2x what you can find on independent :eek:

 

All rooms are double occupancy. If you have a third person (child) in a pull out couch that room is 133%.

 

Please avoid using absolutes. I have found many ship excursions are only $5.00 - $10.00 over the same excursion by the same company independently. Remember even independent companies are trying to make a profit, most contracts are for cost or slightly above. The operator expects to make the difference by other sources. He'd rather have a full bus or boat even if the passengers didn't book independently. And when you compare shorex to independent compare apples to apples not apples to oranges.

[strmygm]

$2500/month sounds good but remember that poor steward is working what 7am - 11pm :( for every day the ship is sailing. Figure he gets maybe one 1/2 day off every 5-12 days depending on the ships schedule.

:eek:

 

Actually I was not thinking they were being overpaid by any means. Concern was that figure might be reduced by living expenses. Remember how it used to be with indentured workers.

[leavitt1]

This might be a foolish question, but does that $2500 include tips or no? If it includes tips, it is truly lousy.

[DeepWaterMariner]

Interesting that they only broke even with 92% capacity. I would expect the break even point to be at a lower passenger load. No wonder we see so many amazing sounding deals from NCL...trying to get the capacity to 104%.

[sultan_sfo]

All of it is from tips as often discussed in these boards by those of us who have talked to the stewards. Interestingly, the focus even on this thread is turning to how much stewards make -- an obsession.

 

This might be a foolish question, but does that $2500 include tips or no? If it includes tips, it is truly lousy.

[Gator83]

All of it is from tips as often discussed in these boards by those of us who have talked to the stewards. Interestingly, the focus even on this thread is turning to how much stewards make -- an obsession.

 

I'm not quite sure why anyone cares how much any of the staff makes. And their work hours are well known before they even sign on so that is the choice they make. I truly wonder why people are so concerned over what they make and how much they work.

[kooljamming]

I'm not quite sure why anyone cares how much any of the staff makes. And their work hours are well known before they even sign on so that is the choice they make. I truly wonder why people are so concerned over what they make and how much they work.

 

I do because it would affect how much I tip extra.

I suspect if I am paying $2,100 (total) for a family of four to Alaska, it can't be that much. In the 'real' world labor is a huge corporate expenditure. Working as a waitress my job description was clear but nothing can truly prepare you for people treating you as less because of the chosen profession or $crewing you out of your tip. I would rather pay more and even vacation less, just to know the next person is earning a decent wage. Thank God, my current chosen professions allows that.

I wish for others as I do for myself, a decent paying job but in the meantime I share when I can.

 

Anyway, that's why I care. I knew how much DH made by the second date. Big Mac at McDonalds was expensive 20+ years ago :-).

[Gator83]

CNBC had a documentary on cruises (it aired on 7/3) and will air again and one of the stewards said he makes $2500 a month. I think that is much higher than most of us think that they make. Of course they do work long hours and many days in a row.

[DonahCBrown]

It helps to understand the context from which most of the service staff come - the income levels in their home countries are much less than what they can make on the cruise ships, even with the admittedly long hours and unpleasant conditions. Take a look at the comparative annual incomes here:

http://siteresources.worldbank.org/DATASTATISTICS/Resources/GNIPC.pdf

 

and it becomes more clear as to why these men and women are willing to put up with the less than stellar working conditions. And this doesn't account for the internal income distribution discrepancies, so the annual income that your steward or waiter from Indonesia or the Phillipines could earn working at home is even less that this would indicate.

[Gator83]

I'm watching this documentary right now on CNBC online and it is very interesting.

[Shogun]

Hi folks,

 

shorex has to insure you so will always cost more than going to direct, insurance can be up to $5 million.

 

As to NCL look for a change in ownership,

 

by end of year or sooner if they do not find some cash.

 

yours Shogun

[karmacruiser]

I'm not quite sure why anyone cares how much any of the staff makes. And their work hours are well known before they even sign on so that is the choice they make. I truly wonder why people are so concerned over what they make and how much they work.

 

 

I always wonder what staff makes and profit margins, I think it is interesting part of understanding successful businesses.

[sultan_sfo]

Now if the documentary had the courage to ask the captain much how he/she makes, I would applaud. And also the PSD who are consistently unhelpful. Why this obsession about cabin stewards?

 

I always wonder what staff makes and profit margins, I think it is interesting part of understanding successful businesses.

[rdsqrl]

Now if the documentary had the courage to ask the captain much how he/she makes, I would applaud. And also the PSD who are consistently unhelpful. Why this obsession about cabin stewards?

I agree with you. It's none of our business what the staff -- any of the staff -- makes. I'd be willing to wager that the same people who obsess about the income of their room steward are also the ones who yelped the loudest about Princess's Personalizer daring to ask them their income.

Frankly, I don't wonder or care what the staff is paid, what Princess's profit margin is, or how many days off per month the maitre d' has. I just care that the ship heads out to sea, they serve me three meals a day, and they don't run out of gin.

Perhaps all of you who are so interested in the paycheck of a room steward should just go take a job as a room steward and get yourself some first-hand knowledge?

[kooljamming]

I am willing to work as a cabin steward. Instead of 'New York Goes To Work', it would be Kool Goes to work. CC could vote on how well I clean the cabin and if I earn the tip. I am even more curious about the salary of the ship's captin. Anyone wants to vote for me to try that job on their next cruise.

[tequilatamm]

All rooms are double occupancy. If you have a third person (child) in a pull out couch that room is 133%.

 

Please avoid using absolutes. I have found many ship excursions are only $5.00 - $10.00 over the same excursion by the same company independently. Remember even independent companies are trying to make a profit, most contracts are for cost or slightly above. The operator expects to make the difference by other sources. He'd rather have a full bus or boat even if the passengers didn't book independently. And when you compare shorex to independent compare apples to apples not apples to oranges.

 

If they gauge each room on double occupancy, and there's a third person in the room, wouldn't that room be at 150% occupancy? If you had two children in the room with you, wouldn't it be 200% occupancy?

[tequilatamm]

Interesting that they only broke even with 92% capacity. I would expect the break even point to be at a lower passenger load. No wonder we see so many amazing sounding deals from NCL...trying to get the capacity to 104%.

 

And when we're talking break even and amazing cruise deals, then I would expect that their percentage goal could vary quite greatly between cruises. Maybe they are taking an average price too.

 

Perhaps we can understand all the recent cutbacks in shipboard quality recently if they're running such a tight business!

 

Makes you wonder how much damage is being done by things like H1N1! A couple messed up cruises could really mess up their profit margin!

[tequilatamm]

I do because it would affect how much I tip extra.

I suspect if I am paying $2,100 (total) for a family of four to Alaska, it can't be that much. In the 'real' world labor is a huge corporate expenditure. Working as a waitress my job description was clear but nothing can truly prepare you for people treating you as less because of the chosen profession or $crewing you out of your tip. I would rather pay more and even vacation less, just to know the next person is earning a decent wage. Thank God, my current chosen professions allows that.

I wish for others as I do for myself, a decent paying job but in the meantime I share when I can.

 

Anyway, that's why I care. I knew how much DH made by the second date. Big Mac at McDonalds was expensive 20+ years ago :-).

 

Just remember why you see so many staff faces on a ship from poorer countries, and also remember the average age of cruise workers. Many of those from poorer countries consider what they are making an absolute mint, and are happy to work those hours compared to the job opportunities they would have in their own country. I have talked to stewards before who are very proud of the work they do and very pleased to be able to provide for their family in this way.

[born2cruize]

If they gauge each room on double occupancy, and there's a third person in the room, wouldn't that room be at 150% occupancy? If you had two children in the room with you, wouldn't it be 200% occupancy?

 

Yes your right. My math left me for a moment.