Outlook is not good either, analysts are saying that the downturn in cruising has been UNDER estimated.

RCI are saying 09 will be very difficult and predicting another drop in results.

Another 3% drop in earnings pushes RCI into a loss.

Target price for shares now in the region of $5-$8 s.

Oouch.

I suppose no sector will be unaffected by the economic circumstances however this is bad for RCI and could well see their ratings downgraded meaning that their cost of borrowing increases thus making it even more expesnive to finance ships etc. They must be hoping for a siginificant unturn in bookings etc soon.

It would be interesting to see the results of each individual line, Celebrity, RC, Pullmantur, Bleu de France all next to each other for comparison.

RCI have cancelled all Alaska sailings for 2010 and will redeploy Serenade OTS elsewhere.

High end still seems to be doing reasonably well. We just booked a trip to the Four Seasons-Punta Mita in Mexico for March and we thought we'd get a better deal being repeaters at the resort. The best rooms are already booked and any discounts are few and far between.

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Originally posted by lasuvidaboy:

Speaking of holding back, some companies are doing extremely well during this downturn. Hershey's Chocolates and their divisions are up 51%! I guess comfort food is in

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Exactly. McDonalds is doing exceptionally well right now!

Bottom line is that Royal Caribbean is still profitable. That is more than a lot of companies can say right now, especially in the travel industry.

I wish them the best and hope they pull through this, and hopefully in a few years they will be an even stronger company.

I dont think it is a good idea for lines like Carnival to work out who earns the least revenue and dump them and only keep the ones earning big dollars.

Like running a business the consumer (passengers) have a budget to balance, bills to pay, money to make interest on, and consumers will only go on a cruise that is the best deal for them and will only spend what they can afford.

If Carnival starts closing down the lower revenue generating brands then they will lose a loyal following who will go elsewhere. A radical unintelligent idea like that would only cause those loyal passengers to defect to brands which another company operates and will happily take. It would be unwise to risk losing any passengers to the competition.

Closing down lower revenue generating brands will only give more passengers to smaller lesser known cruise lines who will grow and become more of a competition threat.

Cruise lines are a leisure industry that is consumer driven and they are at the peril of the consumer in times like this. That is one of the reasons I consider it unwise to hold shares in them.

If anyone is going to quote my statements then quote in the entirity + my justifications. Only a trouble maker would quote a small fraction, ignore the punch line and criticise a small text out of a wider argument.

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Originally posted by mike sa:
With RCI shares trading at $7-8 today does anyone recall what they were at their peak ?

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The peak for RCL was 54.44 in December of 2004. Here's a chart showing both RCL and CCL over the past 15 years.

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Originally posted by Malcolm @ cruisepage:
It's interesing how closely the perfomace of both companies shares mirror each other [...]

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Here are some examples (1/21/08 compared to 1/21/09):

Carnival -48.5%
Royal Caribbean -72.5%
Star Cruises -73.7%
Disney -23.0%
MGM Mirage -86.9%
Starwood -54.8%
American Express -60.2%
Ambassadors Intl -94.9%
InterContinental -45.5%
Marriott -46.3%
Wyndham -66.1%
Wynn Resorts -65.5%
Avis Budget -91.3%
Air France/KLM -63.6%

The list goes on and on. No one ever said there was no risk when investing in stocks.

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Originally posted by Ernst:

Be aware that it's a logarithmic plot.

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Good point, here are the stock prices plotted on the same scale since May of 1993:

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Originally posted by eroller:
Bottom line is that Royal Caribbean is still profitable. That is more than a lot of companies can say right now, especially in the travel industry.

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Originally posted by Globaliser:
That's very true.

But profits are only part of the story. What I'd also be interested in seeing is analysts' take on the company's cash flow, cash requirements and debt load into the foreseeable future.

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I really don't have much faith in what Wall Street analysts have to say.

Being that RCCL is a publicly traded company, you can do your own analysis and formulate your own conclusions based on the financial results each quarter. If you are really interested in the company, or planning to invest, that would be my recommendation.

Personally I have no desire to invest in any travel related stocks. They all tend be somewhat risky and very cyclical at best. You will certainly never get rich off of one, not even Carnival. As much as I love the travel industry, there are better places to invest my money. The travel companies get plenty of money from me as a consumer, and that is enough.

Even if RCCL did get to a point where they must file bankruptcy, I'm sure they would just restructure like so many airlines have. The stockholders lose out, but to the consumer it's pretty transparent. During the process the process much of the company debt is erased or restructured. I'm just not sure if cruise lines can take advantage of US bankruptcy laws? I suppose it depends on how they are structured.

Bottom line, stock investments are always a risk.

I see some of the older tongage (like Sky Wonder) being mothballed, sold or worse. Very bad timing to build those monsters, but 4 years ago it looked like a sure bet.

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Originally posted by eroller:
I really don't have much faith in what Wall Street analysts have to say.

Being that RCCL is a publicly traded company, you can do your own analysis and formulate your own conclusions based on the financial results each quarter. If you are really interested in the company, or planning to invest, that would be my recommendation.

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Originally posted by eroller:
Even if RCCL did get to a point where they must file bankruptcy, I'm sure they would just restructure like so many airlines have. The stockholders lose out, but to the consumer it's pretty transparent. During the process much of the company debt is erased or restructured.

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And the Chapter 11 rules have changed since the last great wave of airline bankruptcy filings. You now have to exit from Chapter 11 in (IIRC) 18 months, or you're toast. The days when Chapter 11 was a golden wand that you could wave to have your past sins forgiven and absolved are well and truly over. (And rightly so, in the case of US airlines, IMHO.)

Does anyone know whether Azamara is making money yet ?

Reading the various "experts" they all seem to agree on one thing, the downturn in cruising has been underestimated by a large margin (probably because none of the cruise lines want to admit it thus causing even more preasure on pricing) and that the cruise market is going to be a huge amount tougher before it gets better.

Whether there will be casualties because of it, well maybe but not the big boys unless it is worse and a lot longer than anyone could possibly foresee, but amongst the smaller players it is quiet likely, those lines with older more expensive tonnage to operate are a definate risk as their margins are already smaller, those with one or 2 ship operations cannot lever best pricing may find they simply become unprofitable if their occupancy drops off, and those who are overextended with weak balance sheets will find the banks take them over.

Another group that might find it harder are those like Voyages of Discovery etc who rely largely on retired persons, the same people whose savings have been hit and because of very low interest rates and markets generally whose income is not as large as it was. Thus they will cruise less often or pay a lot less for it.

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Originally posted by Frosty 4:
I think I could afford to buy $1000 dollars worth of RCL right now. Sure the economy is bad now but most millionaires have made their fortunes buy buying low and selling when the stock balloons up later.
Frosty 4

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The problem for the cruise industry are twofold. The first is the obvious point that cruising is a very discretionary item and is largely supported by self-fund retirees and the middle class with families. Both of these groups are severely affected by this type of recession.

Self-funded retirees have seen their wealth collapse in line with the share and property markets as well as fixed income sink as interest rates fall sharply. Families are not as financially affected but have a large loss of job security and are likely to rapidly curtail their discretionary expenditure.

The second is that the cruise industry is unlikely to receive any special government support. From the government's point of view it is a luxury item for people who can afford it so it does not warrant special support. Likewise it is not essential to the economy like the airline industry so it suffering a major slowdown will not cripple the economy though it will affect cities like Miami significantly. Finally the cruise industry largely spends outside the US economy supporting Caribbean nations and European shipyards and employing foreign workers. Therefore there is no political imperative to support the industry.

All three major cruise companies will suffer from the recession. RCI and NCL are obviously more exposed because they have more geared balance sheets and significant short to mid-term capex. RCI's share price collapse also makes it very hard to de-leverage rapidly as capital raising will not be easy.

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Originally posted by Frosty 4:
Being that most cruises are booked a year in advance...

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