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.

[jtl513]

That's a repeat show, and there was quite a long thread about it when it first aired back in late March:

http://boards.cruisecritic.com/showthread.php?t=954605

[Typhoon1]

It will probably be rebroadcast every holiday during the next few years. That seems to be the CNBC pattern with these specials.

[LVSue]

Stevesan, thanks for the succinct summary of facts and figures. If Beverage breaks even at $7.25 pp/day, they're way ahead with me! I find the percentage of Shorex amazing because I don't think the cost of shorex booked on your own is in general much less than onboard bookings .

[tomc]

I watched that show. My first, and lasting, impression is that the line fudged the figures a little to make it seem they merely broke even on the cruise.

 

I really, really doubt they would admit they make lots of $$ even on the cruise mentioned. Better to claim it's a rough life and we're barely making it.

 

My opinion. Could be wrong, but I think I'm right.

[jhannah]

I'm with you, Tom. Maybe that one sailing was "break even," but overall they are still making good money.

[bepsf]

Indeed Jim--

 

Breaking even is alot better than many businesses have been doing in the past year or so...

[world~citizen]

I'm with you, Tom. Maybe that one sailing was "break even," but overall they are still making good money.

 

I suppose it depends what you mean by good money.

 

Under these economic circumstances, I would think overall they would be quite happy to break even.

 

Ships appear to be sailing at less than full capacity and pax are spending less while onboard. This comes as no surprise I think.

 

Smooth sailing....

[world~citizen]

I watched that show. My first, and lasting, impression is that the line fudged the figures a little to make it seem they merely broke even on the cruise.

 

I really, really doubt they would admit they make lots of $$ even on the cruise mentioned. Better to claim it's a rough life and we're barely making it.

 

My opinion. Could be wrong, but I think I'm right.

 

I thought I saw fudging too, but in the other direction.

[Pettifogger]

Stevesan:

Thank you for providing some figures about which I had been wondering for a long time.

Was anyone else surprised by the figure of $7.25 for booze per passenger per day?

Even if we assume that one-third of the passengers don't drink and another third sneak whisky, rum, vodka, gin, etc. aboard, that would mean that, even without allowing for the wine purchases of the sneakers, the other third of the passengers would be only drinking $21.75 per passenger per day.

One bottle of wine for a couple at dinner would use up most of that and I would have expected that the dedicated drinkers would raise the average well beyond $21.75 even without any provision for the wine purchases of the sneakers.

[tomc]

Unless something really bad happens on a cruise, short of the ship sinking in shark-infested waters or such, I'm sure they make money on every sailing. How much, varies.

 

As for the figures, at the end of the day they would not tell Peter Greenberg what the total was. They can pack as much fudge into the story as they want, but I remain unconvinced.

[woody73]

 

. . . Pearl sailed with 2200 pax, 92% capacity.

 

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

I wonder what difference another 8% capacity would have made.

 

Woody

[Jemima]

Stevesan:

Thank you for providing some figures about which I had been wondering for a long time.

Was anyone else surprised by the figure of $7.25 for booze per passenger per day?

Even if we assume that one-third of the passengers don't drink and another third sneak whisky, rum, vodka, gin, etc. aboard, that would mean that, even without allowing for the wine purchases of the sneakers, the other third of the passengers would be only drinking $21.75 per passenger per day.

One bottle of wine for a couple at dinner would use up most of that and I would have expected that the dedicated drinkers would raise the average well beyond $21.75 even without any provision for the wine purchases of the sneakers.

 

No, and HAL probably makes less. We've only had a few tablemates order wine. We notice most passengers don't have wine with dinner. In the evening only some passengers go to the lounges and many do not drink or have only one drink.

[nchank]

No, and HAL probably makes less. We've only had a few tablemates order wine. We notice most passengers don't have wine with dinner. In the evening only some passengers go to the lounges and many do not drink or have only one drink.

 

Perhaps they should have a non-drinker supplement charge, similar to the single supplement. :eek:

[Himself]

To add to TOMC's latest post, no one is in business to loose money. Frequently there are "deals" to fill ships at the last minute but they know once on board most PAX will spend and they make money. If they don't they go the way Commodore did--belly up.

[JimVrhovac]

First thing you have to assume is that CNBC was telling the truth.

 

I have my doubts as to their integrity.

 

Ruth & Jim

[tomc]

It was the cruise line doing the talking and the "gee, we just broke even this time" stuff. Which I do not believe. CNBC, which I don't care about one way or the other, didn't put the words into their mouths. After a few minutes, I was adding on a percentage just to make up for the b.s. from the crew.

[world~citizen]

 

First thing you have to assume is that CNBC was telling the truth...I have my doubts as to their integrity.

 

Ruth & Jim

 

i suppose we can disagree without casting aspersions on someone's integrity.

 

Just a thought, cruiselines have actually failed under much more favorable economic circumstances than this.

 

There is no evidence CNBC is attempting deception here.

[Pete Jackson]

I can certainly believe the Shoreex markups. On our last TA on Rotterdam, we could (two of us) go around ports by taxi for about the same price and time as taking a shoreex. Since it shouldn't cost more than about $10 an hour per person to ship people around by bus, I would guess that HAL keeps about 75% of the shoreex cost.

[brucory]

No, and HAL probably makes less. We've only had a few tablemates order wine. We notice most passengers don't have wine with dinner. In the evening only some passengers go to the lounges and many do not drink or have only one drink.

 

I think you are right about HAL cruisers drinking less, but the model is different... Fare, amount spent on shore excursions etc is different...

 

Back to the OP's discussion of the tv show... I was really keen to watch that program many months ago... However, after seeing it, I wasn't enthusiastic about ever taking a NCL cruise... The grab for the buck put me off...

[Stevesan]

To me, two numbers stood out:

 

First was the $7.25 B/E for the beverage department.

Isn't that about the price for one cocktail? Maybe NCL cruisers are a bunch of tee totalers. :p

 

The second is the $600K revenue that DI took in while the Pearly was in port. That's amazing!!

 

I didn't know the program know was previously aired. I guess I don't watch enough TV. Sorry about that.

[skankycat]

Thanks for your initial post - we were on spring break when it first aired - so we enjoyed watching it yesterday at the CNBC website.

[bepsf]

I didn't know the program know was previously aired. I guess I don't watch enough TV. Sorry about that.

 

Stevesan--

 

Please don't apologize - It's still a worthy discussion...

...plus, I often see things on the 2nd or 3rd airing that I missed the first time around.