Bloomberg News Reports: NCL's guests spend more in extra fees than most other lines.

[KeithJenner]

I've never done the version of CruiseNext that gives you OBC. I do the one that gives you double-deposits. On each cruise, we have spent $500 to receive $1000 in deposits. So maybe they do not count that as on board spending then?

 

It's basically the same thing. You are still paying $500 for $1,000 of deposits.

 

From an accounting point for view, you can't take that as income now. It is a deposit for a future cruise, and becomes income then. The question is whether you carry forward $500 or $1,000 as future income. As I see it (and I am from the UK, so accounting rules are different), you can justify either. Therefore, when you spend $500 for $1,000 of cruise next deposits then the impact on the amount that is stated as Onboard Income in the Annual Report will either be nothing, or a reduction of $500. I can't see how it could ever be reported as positive Onboard Spend (in the financial statements at least - what you use in a newspaper report may be something else completely)

[KeithJenner]

I think the key take away is that in NCLH's eyes onboard spending by passengers has increased, regardless of which particular line items are considered to be "onboard spending" and since that was one of Del Rio's stated goals when he took over it has to be considered a win from that perspective. But since at least some of that increase is from an increase in prices for things onboard or charging for things that used to be free from a passenger point of view this isn't necessarily a good thing.

 

Yes, I'd largely agree with that. However, I'm still not convinced that there isn't some element of making the figures work for best effect.

 

For example, as I stated earlier, if they are including an element of the promo's into onboard spend then this will increase that number without any of the customers spending anything extra onboard (in fact, most spending less).

 

The fact that passenger ticket revenue is also increasing makes this something off a moot point, as overall results are also improving, but it does make the achievement of FDR's stated aim quite a lot easier.

 

I'm not criticising how the figures are being presented, by the way. I don't actually know how they are getting to these numbers, and I personally would include some element of the promo UBP into onboard spend, for consistency.

[Something fun!]

While YOU may be spending less onboard, the entire point of the article (something that is also mentioned in NCLH's annual reports) is that onboard spending is increasing. So my point still stands. With all of the free drinks, and all of the free meals, and all of the OBC that the previous poster mentioned, what is causing people to actually INCREASE their spending over and above what they used to spend when all of those things were NOT included??

 

Sorry, but the entire point of the article is that NCL passengers are spending more on board per day than RCCL and CCL passengers per day.

 

While I have no doubt that onboard spending on NCL has been increasing over time, the article was not about that.

 

So the question is why do NCL passengers spend more on board than RCCL and CCL passengers?

 

-There are more specialty dining options

-Shore excursions cost more

-Drinks cost more without a package

-Drink packages cost more

-Deal or No Deal available

....to name a few

 

Other considerations...

-Spa and Vibe pass sales

-Spa prices

-Number of high rolling gamblers onboard

 

And a big one noone mentioned...

 

The Haven could be attracting a higher income demographic with more disposable income. On my Boston to Bermuda cruise, people were buying the Tom Brady Tag Heuer watch. I also know for a fact that one account spent nearly $50,000 on art.

[sparks1093]

Yes, I'd largely agree with that. However, I'm still not convinced that there isn't some element of making the figures work for best effect.

 

For example, as I stated earlier, if they are including an element of the promo's into onboard spend then this will increase that number without any of the customers spending anything extra onboard (in fact, most spending less).

 

The fact that passenger ticket revenue is also increasing makes this something off a moot point, as overall results are also improving, but it does make the achievement of FDR's stated aim quite a lot easier.

 

I'm not criticising how the figures are being presented, by the way. I don't actually know how they are getting to these numbers, and I personally would include some element of the promo UBP into onboard spend, for consistency.

 

Since the annual report is aimed primarily at investors I would be surprised if they didn't make the figures work for best effect.

[KeithJenner]

Since the annual report is aimed primarily at investors I would be surprised if they didn't make the figures work for best effect.

 

Absolutely.

 

And a surprising number of investors don't actually understand some of the decisions that are made during the production of accounts, so fail to see realise (or even suspect) the reasons why these numbers increase or decrease.

Edited June 13, 2018 by KeithJenner

[SeaShark]

Sorry, but the entire point of the article is that NCL passengers are spending more on board per day than RCCL and CCL passengers per day.

 

While I have no doubt that onboard spending on NCL has been increasing over time, the article was not about that.

 

So the question is why do NCL passengers spend more on board than RCCL and CCL passengers?

 

-There are more specialty dining options

-Shore excursions cost more

-Drinks cost more without a package

-Drink packages cost more

-Deal or No Deal available

....to name a few

 

Other considerations...

-Spa and Vibe pass sales

-Spa prices

-Number of high rolling gamblers onboard

 

And a big one noone mentioned...

 

The Haven could be attracting a higher income demographic with more disposable income. On my Boston to Bermuda cruise, people were buying the Tom Brady Tag Heuer watch. I also know for a fact that one account spent nearly $50,000 on art.

 

You've completely skipped over the fact that under Market to Sell, the majority of passengers have free drinks, or free meals, or discount shore excursions, or free internet or a combination of those. And those higher income Haven folks get ALL of the freebies. Which still leaves the question of how spending onboard goes up when a large percentage of people get these things for free?

[sparks1093]

You've completely skipped over the fact that under Market to Sell, the majority of passengers have free drinks, or free meals, or discount shore excursions, or free internet or a combination of those. And those higher income Haven folks get ALL of the freebies. Which still leaves the question of how spending onboard goes up when a large percentage of people get these things for free?

 

I thought the answers were spelled out in the annual report? You yourself said "They explain exactly what it consists of so that their investors, potential investors, and anyone else reading the annual report can understand exactly how the amount is calculated.". (I am not an investor so I'm not going to take the time to wade through it.)

[SeaShark]

It's basically the same thing. You are still paying $500 for $1,000 of deposits.

 

From an accounting point for view, you can't take that as income now. It is a deposit for a future cruise, and becomes income then. The question is whether you carry forward $500 or $1,000 as future income. As I see it (and I am from the UK, so accounting rules are different), you can justify either. Therefore, when you spend $500 for $1,000 of cruise next deposits then the impact on the amount that is stated as Onboard Income in the Annual Report will either be nothing, or a reduction of $500. I can't see how it could ever be reported as positive Onboard Spend (in the financial statements at least - what you use in a newspaper report may be something else completely)

 

NO...no part of Cruise Next is considered in Onboard Spending. Since they are future deposits, Cruise Next funds are basically put in escrow until used. Then they are accounted for as Passenger Ticket Revenue. This is, unsurprisingly, explained in the annual report.

[drsel]

You've completely skipped over the fact that under Market to Sell, the majority of passengers have free drinks, or free meals, or discount shore excursions, or free internet or a combination of those. And those higher income Haven folks get ALL of the freebies. Which still leaves the question of how spending onboard goes up when a large percentage of people get these things for free?

In NCL, the Cruise next expense is included in the onboard spending account. A lot of people spend $500 to get 2 Cruise next certificates (250 is refunded as a credit to your on board account)

[KeithJenner]

NO...no part of Cruise Next is considered in Onboard Spending. Since they are future deposits, Cruise Next funds are basically put in escrow until used. Then they are accounted for as Passenger Ticket Revenue. This is, unsurprisingly, explained in the annual report.

 

If you are going to carry on discussing this with me then please have the decency to actually read what I am saying.

 

I did not anywhere say that CruiseNext is included in Onboard Spending.

 

I said that they are not included in Onboard Spend. I said they are eventually included in Passenger Ticket Income

 

The OBC you get is a different matter.

[SeaShark]

I thought the answers were spelled out in the annual report? You yourself said "They explain exactly what it consists of so that their investors, potential investors, and anyone else reading the annual report can understand exactly how the amount is calculated.". (I am not an investor so I'm not going to take the time to wade through it.)

 

They are. I know, I've read it. The question I ask isn't meant to obtain an answer for me, but to make the reader consider information that is being glossed over. Spending on alcohol is one of the three biggest parts of onboard spending (Casino, Drinks, Dining). Soooooo, with all of the people getting free drinks and free specialty restaurant meals, logic would indicate that onboard spending would decrease...yet it is actually increasing. Not only is it increasing, but it is doing so at a rate that exceed that of the competition. So you just have to wonder how that is happening. If a movie theater gave everyone free popcorn and soda, one would not except them to see an increase in spending on concessions, yet that is what is happening at Norwegian.

 

You might not be an investor, or a potential investor, but you are "anyone else"...if you choose not to read the available information, that is your choice, so be it. But it doesn't fall to me to fill in the resulting gaps in your knowledge base.

[SeaShark]

If you are going to carry on discussing this with me then please have the decency to actually read what I am saying.

 

I did not anywhere say that CruiseNext is included in Onboard Spending.

 

I said that they are not included in Onboard Spend. I said they are eventually included in Passenger Ticket Income

 

The OBC you get is a different matter.

 

That is only half true. You DID say:

 

"Therefore, when you spend $500 for $1,000 of cruise next deposits then the impact on the amount that is stated as Onboard Income in the Annual Report will either be nothing, or a reduction of $500."

Your statement above mentions a potential negative impact (i.e. "reduction") to Onboard Income. Something that is not a part of onboard spending can not then reduce it.

[SeaShark]

In NCL, the Cruise next expense is included in the onboard spending account. A lot of people spend $500 to get 2 Cruise next certificates (250 is refunded as a credit to your on board account)

 

No, you are absolutely wrong. This is specifically explained in the annual report. Cruise Next is NOT counted until it is USED at which time it becomes Passenger Ticket Revenue.

[sparks1093]

They are. I know, I've read it. The question I ask isn't meant to obtain an answer for me, but to make the reader consider information that is being glossed over. Spending on alcohol is one of the three biggest parts of onboard spending (Casino, Drinks, Dining). Soooooo, with all of the people getting free drinks and free specialty restaurant meals, logic would indicate that onboard spending would decrease...yet it is actually increasing. Not only is it increasing, but it is doing so at a rate that exceed that of the competition. So you just have to wonder how that is happening. If a movie theater gave everyone free popcorn and soda, one would not except them to see an increase in spending on concessions, yet that is what is happening at Norwegian.

 

You might not be an investor, or a potential investor, but you are "anyone else"...if you choose not to read the available information, that is your choice, so be it. But it doesn't fall to me to fill in the resulting gaps in your knowledge base.

 

I believe in my first post that I did allude to the fact that I take their claim with a grain of salt (for many of the reasons you articulate). It sounds like you don't agree with the narrative they've taken in their annual report. I know that the claim isn't a big selling point for me as a potential future passenger- come sail with us and you'll spend more onboard than you would with our competition.

[KeithJenner]

That is only half true. You DID say:

 

"Therefore, when you spend $500 for $1,000 of cruise next deposits then the impact on the amount that is stated as Onboard Income in the Annual Report will either be nothing, or a reduction of $500."

Your statement above mentions a potential negative impact (i.e. "reduction") to Onboard Income. Something that is not a part of onboard spending can not then reduce it.

 

I am talking about the treatment of the OBC or discount. That does have the potential to impact current income (or could be carried forward). My point was quite clear.

 

Maybe, somewhere in the detail of the Annual Report it does state how they deal with the OBC on CruiseNext. I didn't spot it on my brief look through.

 

It should be pointed out that this is an internet forum about a cruise line. It isn't an accountancy test. People are entitled to comment here without having studied NCL's accounts in great detail. Some things that people state may be correct, some may be wrong. People are entitled to state their opinions (or guesses) though.

 

I do note that you haven't commented on the fact that NCL's financial statements clearly state that they do allocate income between passenger fare income and onboard spend.

 

On that note, I'm out of here. Much better things to do with my time.

[YVRBassElectric]

 

The Haven could be attracting a higher income demographic with more disposable income. On my Boston to Bermuda cruise, people were buying the Tom Brady Tag Heuer watch. I also know for a fact that one account spent nearly $50,000 on art.

 

The Bliss had a bottle of cognac worth $65 per half ounce

[SeaShark]

I am talking about the treatment of the OBC or discount. That does have the potential to impact current income (or could be carried forward). My point was quite clear.

 

Maybe, somewhere in the detail of the Annual Report it does state how they deal with the OBC on CruiseNext. I didn't spot it on my brief look through.

 

It should be pointed out that this is an internet forum about a cruise line. It isn't an accountancy test. People are entitled to comment here without having studied NCL's accounts in great detail. Some things that people state may be correct, some may be wrong. People are entitled to state their opinions (or guesses) though.

 

I do note that you haven't commented on the fact that NCL's financial statements clearly state that they do allocate income between passenger fare income and onboard spend.

 

On that note, I'm out of here. Much better things to do with my time.

No...I'm not commenting because your interpretation is incorrect. In fact, you weren't even reading the correct section. However, I do understand your confusion given that you only gave it a "brief look through".

[KeithJenner]

It’s a shame, this could have been an interesting discussion.

 

However, discussion involves two way dialogue. When one person is basically saying “you’re wrong but I’m not going to lower myself by bothering explaining why I think that” then it isn’t a discussion any more.

 

 

Sent from my iPhone using Tapatalk

[Gampy1967]

What about the lack of straws and poor straw snorting turtles?

[KarlChilders]

A couple of questions arise. Do they count the gratuities on the Free at sea promos as onboard spend? How about those who upgrade their 3 meal SDP to more meals. That could certainly account for an increase. Another possible is that perhaps with the shore excursion credit, more folks are booking NCL tours instead of private tours.

[KeithJenner]

In fact, you weren't even reading the correct section.

 

Sorry, but I can't ignore that..

 

You can't spend all this time telling everyone to read the annual report and then when something is pointed out that you don't agree with, say that it is the wrong section. That is laughable.

 

I think that in itself says everything that needs to be said about your argument here.

Edited June 13, 2018 by KeithJenner

[KeithJenner]

And a big one noone mentioned...

 

The Haven could be attracting a higher income demographic with more disposable income. On my Boston to Bermuda cruise, people were buying the Tom Brady Tag Heuer watch. I also know for a fact that one account spent nearly $50,000 on art.

 

I've found the ignore list function on cruise critic, so can carry on discussion on here without unnecessary distractions. :)

 

 

Whilst I may not have studied the annual report in quite the detail that would qualify me to comment ( :) ),things like Art Auctions are carried out by external companies and NCL are paid a commission. My guess (shock horror, only a guess), is that only the commission is introduced into the accounts as onboard spend. If that is the case then those art sales will not impact these figures as much as you would think.

[SeaShark]

Sorry, but I can't ignore that..

 

You can't spend all this time telling everyone to read the annual report and then when something is pointed out that you don't agree with, say that it is the wrong section. That is laughable.

 

I think that in itself says everything that needs to be said about your argument here.

 

Laughable how?

 

Onboard Spending is plainly defined on page 10 of the annual report (there, now you can go read it for the very first time). The paragraph you misunderstood is from page F-9, which is part of the notes for the consolidated financial statements, aka the wrong section.

 

FWIW...I don't have an argument here. This thread is full of supposition about what makes up onboard spend. I am only advocating that instead of arguing and guessing, that it is better to just get the real definition of what makes up the figure...especially since, as a publicly traded company, they publish that in their annual report.

 

I mean, why guess when you can have an actual factual answer? THAT is laughable.:eek:

[SeaShark]

A couple of questions arise. Do they count the gratuities on the Free at sea promos as onboard spend? How about those who upgrade their 3 meal SDP to more meals. That could certainly account for an increase. Another possible is that perhaps with the shore excursion credit, more folks are booking NCL tours instead of private tours.

 

Good questions....No, the gratuities on the promos do not count. First, they are pre-cruise and not onboard spend and gratuities can't be counted as corporate income...that said, the DSC does count since service charges belong to the employer.

 

You are right about meals and additional excursions, you also have to consider that the free drinks, free meals, shore excursion discounts, and free internet also represent a decrease since no money will be spent on those items. Is the cost of a few extra meals and a few more tours enough to not only cover the losses from the freebies, but to end up being a net gain sufficient enough to beat out both RCCL and CCL?

[KateQ22003]

 

 

The Haven could be attracting a higher income demographic with more disposable income. On my Boston to Bermuda cruise, people were buying the Tom Brady Tag Heuer watch. I also know for a fact that one account spent nearly $50,000 on art.

 

The Boston to Bermuda cruise does not have a haven.