Cruise Talk: Brain Teaser?

Cruise Talk

Cruise News

Welcome to Cruise Talk the Internet's most popular discussion forum dedicated to cruising. Stop by Cruise Talk anytime to post a message or find out what your fellow passengers and industry insiders are saying about a particular ship, cruise line or destination.

>>> Reader Reviews
>>> CruisePage.com Photo Gallery
>>> Join Our Cruise Club.

Latest News...Disney Cruise Line announced today that the honorary role of "godparent" for its new ship, the Disney Treasure, will be held by The Walt Disney Company cast, crew, Imagineers and employees around the world. The profound declaration is a heartfelt tribute to the more than 200,000 dreamers and doers who make every Disney entertainment, vacation and at-home experience possible. Disney Cruise Line is proud to celebrate...

Latest News...Carnival Cruise Line is adding to its line-up of 2026/27 deployment with sailings from New York City on Carnival Venezia, and more Long Beach sailings on Carnival Firenze and Carnival Radiance. “Our two Carnival Fun Italian Style ships offer great options from the east and west coasts, conveniently connecting New York and Long Beach to popular destinations, while delivering unique experiences on board...

Latest News...Vacationers are in for more ways to make memories across Royal Caribbean’s latest combination of tropical and Northeast 2026-27 getaways. The lineup of 12 Royal Caribbean ships rounds out a variety of adventures across Florida, Texas, Puerto Rico and the Northeast for every type of family and vacationer to get away any time of year. Crown & Anchor Society loyalty members...

More Cruise News...

my profile | register | search | faq | forum home

»	Cruise Talk » Ocean Liners and Classic Cruise Ships » Brain Teaser?

UBBFriend: Email this page to someone!

Author

Topic: Brain Teaser?

Malcolm @ cruisepage
Cruise Director
Member # 301

posted 05-06-1999 05:24 PM

Does anyone know how long it takes for a new Cruise ship to break-even? (Earn it's construction cost back) I realise that it depends on the cost of the Ship, the type of cruise, the fare structure etc...but can anyone estimate it, using ball-park figures?

Malcolm, London

Posts: 19210 | From: Essex (Just Outside London) | Registered: A Long Time Ago!

Malcolm @ cruisepage
Cruise Director
Member # 301

posted 05-06-1999 05:35 PM

....to make the maths more possible we could assume that the ship carries 2000 passengers, we could calculate an average fare and even ignore staffing and operating cost...

Anu ideas?

Posts: 19210 | From: Essex (Just Outside London) | Registered: A Long Time Ago!

Barryboat
First Class Passenger
Member # 33

posted 05-06-1999 05:49 PM

Let's take a 200Million ship with a pax capacity of 2000 and a crew of 900. The way the cruiselines pay for their ships is of course through selling their cabin space. It costs approximately $1500 per month per crew member just to cover the expense of crew, Cabin, Food, Insurance, partial salaries. Each month the cruise line has to put out an estimated $1,350,000 to maintain crew. I'm estimating that supplies per month would be about $1,000,000 not to mention the cost of fuel which is easily another million per month. The line brings in about $3,600,000 per week on cabin sales which is $14,400,000 per month. Less the supplies, less the cost of crew, less the cost of fuel, your looking at an income of about $11,050,000 per month. With these approximate figures it would take probably more than 18 months to cover the costs of a 200 Million ship. However, when you figure in the costs too of the shore-side staff that need to be paid, drydockings, repairs, refurbishments, interest, I believe it would be more like two years for a ship to pay for itself.

Posts: 1851 | From: Bloomington, Minnesota (Home to the Mall of America) | Registered: Mar 99

Malcolm @ cruisepage
Cruise Director
Member # 301

posted 05-26-1999 11:35 AM

Thanks Barry!

Lets not forget that the drinks, gambeling, spa treatments, photographs, onboard shops and excusions generate a very large income too for the cruise line.

Posts: 19210 | From: Essex (Just Outside London) | Registered: A Long Time Ago!

Renegade4
First Class Passenger
Member # 392

posted 05-26-1999 12:26 PM

The only addition that I would make to the cruise line income would be the potential interest on the cruise deposits that could acrue for up to 15 months, much longer for the deposits on the millenium cruises. This is assuming that these deposits were allowed to remain static.

Posts: 57 | From: Kingston, MA, USA | Registered: Apr 99

Malcolm @ cruisepage
Cruise Director
Member # 301

posted 05-30-1999 05:52 PM

So all I have to do is save up and get a Cruise ship built, then within two years I break even. By three years I'm rich...cool!

;-)

Posts: 19210 | From: Essex (Just Outside London) | Registered: A Long Time Ago!

Vaccaro
First Class Passenger
Member # 465

posted 05-31-1999 02:08 PM

Malcolm:
I hope you're going to invite all of us on your "next cruise ship"!.........not to have a good time cruising.....but only to allow our monney to make you more and more rich!
Bye!

Posts: 1193 | From: France ...where the greatest liners ever are born, ...by far! | Registered: Feb 99

CCLines
First Class Passenger
Member # 60

posted 05-31-1999 06:56 PM

Barryboat, I gotta hand it to you, you are very smart and you know alot about ships. And your figures were great!! I can pretty much give you a ball park figure on how long it takes to break even, but i'm not aloud too say any kinda figures outside of The Carnival. There are really alot of ways to look at it cause its gonna depend on which cruise line it is and how many ships they have because for example, your fuel bill is gonna depend on how much you use, the more ships you have the more fuel your gonna use which means you get it at a "cheaper" price because you are buying large volumes in BULK. Another thing is paint. At Carnival we like to keep our ships in tip top shape and see that they impress our passengers so keeping them painted is a expense also which again is gonna depend on how much paint you buy because the more you get the cheaper it cost. At Carnival we pretty much buy everything at bulk rate consider we order so much of everything. But to give you some kinda idea on a 200 Million Dollar Ship your gonna be looking at around 27 months to break even. Which keep in mind what Barryboat said around 2 years and thats only about 3 months off....Good Job Barry!

Tommy Johnson
Carnival Cruise Lines
Miami,FL

Posts: 38 | From: Miami,FL United States | Registered: May 99

Malcolm @ cruisepage
Cruise Director
Member # 301

posted 06-01-1999 06:22 AM

Thanks for the advice Barry and Tommy. I knew when I posed the question that there would not be an exact answer - but I am very impressed! (All I need to do is borrow 200 million dollars for 3 years!)

Tommy, I here that the Carnival Destiny may visit the UK soon, is this true?

Malcolm, London, UK.

Posts: 19210 | From: Essex (Just Outside London) | Registered: A Long Time Ago!

fluctuant nec mergitur
First Class Passenger
Member # 577

posted 06-01-1999 01:27 PM

Barryboat,
Nice effort but I would have to strongly disagree with your numbers and the basic payoff rate. The basic payoff time for a ship to pay for itself using the very best business model would have to be more like 4 to 5 years. Most in the industry don't accomplish that quick of a rate as a general rule. As I mentioned, an all in cash Operations Payback of 4~5 years would be based on the very best working model. The average ship would cost more like $350~400Million. The cruise line normally takes out a $1Billion dollar LOC (Line Of Credit)to smooth out cash flow and pays down approximately $300Million cash right away taking the debt off the books in the first few months and then paying back the LOC from the cash flow debt structure. The exact details of cost and expenses are not broken down exactly as that would make the company highly vulnerable. Also the lagging non profitable parts of the business are offset by the profitable parts of the business. But for the sake of answering the question posed of the ship paying for itself not taking in account for the fact that other parts of the profitable business are paying down the LOC. The dynamics of the recouping of the cost of the individual cruise ship are much more complicated than the highly simplistic outline given by Barryboat. I would have liked to get you Berry for my business accountant if you honestly believe you could pay off that sort of debt in 2 years as I think most every cruise line would also like to see and implement your working model . May I suggest you looking more carefully at the 10K of any cruise line's annual report and you will see the big fault in your excellerated payoff rate.
Here are some figures which may be of related interest to those interested in the financials of the Cruise industry:

http://www.cruise2.com/FinancialMarketShare.html Market Share

http://www.cruise2.com/FinancialEarnings.html Earnings

I hope this gives a more realistic understanding of the financial structure of a ship. It is no easy venture for any cruise line to accomplish and the time may be clouded by other information's which may be released outside of the true numbers found in an annual report. I hope this was helpful, and I meant no irrespect to you my friend Barryboat, but I couldn't let the misinformation go silent.

fluctuant nec mergitur

Posts: 42 | Registered: May 99

joe at travelpage
Administrator
Member # 622

posted 06-01-1999 05:44 PM

Those of you interested in reading the company reports filed with the SEC (from the EDGAR online database) can click on the links following the company name below:

Please note - these are large text files some of them over 100 pages printed!

Carnival Cruise Line (includes Holland America, Cunard, Windstar, Seabourn)10K - http://www.sec.gov/Archives/edgar/data/815097/0000815097-99-000003.txt

Royal Caribbean 20F - http://www.sec.gov/Archives/edgar/data/884887/0000950144-99-004018.txt

Joe at TravelPage.com

Posts: 29976 | From: Great Falls, Virginia | Registered: A Long Time Ago!

Barryboat
First Class Passenger
Member # 33

posted 06-01-1999 07:52 PM

Fluctuant nec mergitur, Yes my answer was simplistic, but it was just a "brain teaser". The question posed wasn't meant to be an actual annual report - accountant reply. I stick to my answer however simplistic it is, becase most people don't want to read an anual report, they just want to read it in layman's language. From talking with cruise line executives in the past - a $200 million ship takes about two years to pay for itself.

Posts: 1851 | From: Bloomington, Minnesota (Home to the Mall of America) | Registered: Mar 99

Joe at PwC
First Class Passenger
Member # 225

posted 06-01-1999 10:38 PM

That actually makes sense to me (not having the proper background in these things), considering that my Mom, who is my travel agent, advised against my booking passage aboard the Grand Princess as her rates would be sky-high for three years or better. Given that she ran up a $450 million price tag, I guess that's one way to have the ship pay for itself. I can't say for certain whether it's standard practice for a line to jack up the rates on new ships to help them break even more quickly, but my Mom has said that new ship passage rates are generally a good deal higher than those charged for, say, a ten-year-old ship.

Posts: 385 | Registered: A Long Time Ago!

Malcolm @ cruisepage
Cruise Director
Member # 301

posted 06-02-1999 05:24 AM

Thanks for all your replies! I only required a 'laymans' answer. Company accounts would have little meaning to me. Anyway, I'm not going to buy a Cruise ship after all, I think I buy a Jumbo Jet instead!

New ships are very attractive to the General Public for a few years, so I would expect the fares to be higher.

Posts: 19210 | From: Essex (Just Outside London) | Registered: A Long Time Ago!

All times are ET (US)

Ultimate Bulletin Board^TM 6.1.0.3

VACATION & CRUISE SPECIALS

Check out these great deals from CruisePage.com

Royal Caribbean - Bahamas Getaway from $129 per person

Description: Experience the beautiful ports of Nassau and Royal Caribbean's private island - CocoCay on a 3-night Weekend Getaway to the Bahamas. Absorb everything island life has to offer as you snorkel with the stingrays, parasail above the serene blue waters and walk the endless white sand beaches. From Miami.

Carnival - 4-Day Bahamas from $229 per person

Description: Enjoy a wonderful 3 Day cruise to the fun-loving playground of Nassau, Bahamas. Discover Nassau, the capital city as well as the cultural, commercial and financial heart of the Bahamas. Meet the Atlantic Southern Stingrays, the guardians of Blackbeard's treasure.

NCL - Bermuda - 7 Day from $499 per person

Description: What a charming little chain of islands. Walk on pink sand beaches. Swim and snorkel in turquoise seas. Take in the historical sights. They're stoically British and very quaint. Or explore the coral reefs. You can get to them by boat or propelled by fins. You pick. Freestyle Cruising doesn't tell you where to go or what to do. Sure, you can plan ahead, or decide once onboard. After all, it's your vacation. There are no deadlines or must do's.

Holland America - Eastern Caribbean from From $599 per person

Description: White sand, black sand, talcum soft or shell strewn, the beaches of the Eastern Caribbean invite you to swim, snorkel or simply relax. For shoppers, there's duty-free St. Thomas, the Straw Market in Nassau, French perfume and Dutch chocolates on St. Maarten. For history buffs, the fascinating fusion of Caribbean, Latin and European cultures. For everyone, a day spent on HAL's award winning private island Half Moon Cay.

Celebrity - 7-Night Western Mediterranean from $549 per person

Description: For centuries people have traveled to Europe to see magnificent ruins, art treasures and natural wonders. And the best way to do so is by cruise ship. Think of it - you pack and unpack only once. No wasted time searching for hotels and negotiating train stations. Instead, you arrive at romantic ports of call relaxed, refreshed and ready to take on the world.

Holland America - Alaska from From $499 per person

Description: Sail between Vancouver and Seward, departing Sundays on the ms Statendam or ms Volendam and enjoy towering mountains, actively calving glaciers and pristine wildlife habitat. Glacier Bay and College Fjord offer two completely different glacier-viewing experiences.

More Vacation & Cruise Specials...