Cruise Ship Profits

[Sparky74]

With recent changes to the numbers of ships sailing from Australia ports as well as the impending rebranding of the P&O ships, not to mention the deletion of the Pacific Explorer, one can’t help but wonder how this will affect local cruise prices. Will reduced supply drive up the prices or will increased prices drive down demand? Time will tell. 
Someone pointed me in the direction of this article. 
https://sherwood.news/business/the-economics-of-a-carnival-corp-cruise/

We know that the cruise lines haemorrhaged money and took on massive debt during the lockdown but I didn’t realise how slim the margins are on a cruise ship. No wonder they continue to dial back services and increase prices while positioning ships in areas of the world which will give a slightly better return.  

[Sparky74]

It’s also interesting to compare the share price of the big three: Carnival Corp, RCCL, and NCL. 

They all too a massive hit in 2020. While Royal Caribbean shares have recovered, the other two are yet to do so. 

[MicCanberra]

Interesting.

[JJK2008]

Good post. 

[Jean C]

Very interesting, thank you. We do very little on board spending, other than OBC and occasional shore tours when private ones are inadvisable or not convenient, so we're not profitable passengers.  I doubt though that the top brass in these corporations carefully squeeze out, dry and get a second using from their budget brand tea bags!  No doubt they still get eye-watering bonuses bi-yearly or yearly.  Whenever big businesses plead poverty I am reminded of the quote "Most people use statistics like a drunk man uses a lamp posts - for support rather than illumination".  If demand remains high with reduced ships Down Under, prices are bound to increase. It's a lot more expensive for passengers to sail from these dropped home ports as it is and I am sure that is demand driven 😩

[chengkp75]

Nothing really new here, certainly not much post-covid.  Those margins have been like that for a long time.  The cruise fare basically covers the expenses, and the onboard revenue generates any profit.

[Chiliburn]

15 hours ago, Sparky74 said:

It’s also interesting to compare the share price of the big three: Carnival Corp, RCCL, and NCL. 

They all too a massive hit in 2020. While Royal Caribbean shares have recovered, the other two are yet to do so. 

Carnival needs money to build new fuel efficient ships . 

[Sparky74]

33 minutes ago, Chiliburn said:

Carnival needs money to build new fuel efficient ships . 

I wonder why there appears to be much stronger investor confidence in RCCL than the other two. 
 

Recently we’ve been enjoying shareholder OBC on our P&O cruises. I figure it’s a pretty good return on our investment in 100 shares even though they’re not paying an actual dividend. The share price doesn’t particularly bother me inasmuch as we probably won’t sell the shares while we're able to keep cruising, hopefully for another 30 years!

 

I wish I’d bought some RCCL shares when they were low although we’re not cruising so much with them these days as DW prefers mid-sized ships. But I guess all investors look at prices and wish they’d bought various shares when they were low. 🤣

[Chiliburn]

8 minutes ago, Sparky74 said:

I wonder why there appears to be much stronger investor confidence in RCCL than the other two. 
 

Recently we’ve been enjoying shareholder OBC on our P&O cruises. I figure it’s a pretty good return on our investment in 100 shares even though they’re not paying an actual dividend. The share price doesn’t particularly bother me inasmuch as we probably won’t sell the shares while we're able to keep cruising, hopefully for another 30 years!

 

I wish I’d bought some RCCL shares when they were low although we’re not cruising so much with them these days as DW prefers mid-sized ships. But I guess all investors look at prices and wish they’d bought various shares when they were low. 🤣

Was going to buy some RCG shares at $70 but it seemed to much hassle.

I think you have to put in a U.S. tax return.

 

Royal Caribbean said at the start of the downturn. The biggest mistake we made was to cancel new ship ,last time.So they just kept building them right though the pandemic. Even new terminals like Ravenna Italy.

Carnival has a lot of old assets and they will have to borrow big .

[reeves35]

1 hour ago, Chiliburn said:

Was going to buy some RCG shares at $70 but it seemed to much hassle.

I think you have to put in a U.S. tax return.

 

Royal Caribbean said at the start of the downturn. The biggest mistake we made was to cancel new ship ,last time.So they just kept building them right though the pandemic. Even new terminals like Ravenna Italy.

Carnival has a lot of old assets and they will have to borrow big .

With current order backlogs, the major shipyards in Germany, Finland and Italy are pretty much booked solid until 2027.  Following the delivery of Queen Anne and Sun Princess this year, Carnival Corp currently has 3 ship orders outstanding with two more Excel ships for Carnival due in 2027 and 2028 whilst Princess will receive Star Princess next year.

 

RCI has 4 ships outstanding, 2 Icon class, 1 Oasis class and an Edge class for Celebrity.  Norwegian has 2 more Prima Class on order plus a new 169K  type in 2028. Meanwhile, MSC has 3 super-sized ships on order.  Other outstanding orders include 1 more for Virgin and a couple for TUI's German Mein Schiff operation.

 

Interesting to note that. apart from Virgin, all of this ships on order are in excess of 150K RT.  The continuation of the megaship generation means there is not much chance of any newbuilds coming to Australia anytime soon with nearly all port facilities both here and in our region unable to accept such large vessels.

 

 

 

[Jim_P]

I read somewhere that by 2026 Australian cruising capacity will have reduced by 30%. Worse still is that that particular report didn't even include the loss of Cunard and Virgin, so it's even more than that.  

 

Given the popularity of cruising in Australia which has only been growing, much higher prices and less deals are inevitable. 

[arxcards]

2 hours ago, Sparky74 said:

I wonder why there appears to be much stronger investor confidence in RCCL than the other two. 
 

Recently we’ve been enjoying shareholder OBC on our P&O cruises. I figure it’s a pretty good return on our investment in 100 shares even though they’re not paying an actual dividend. The share price doesn’t particularly bother me inasmuch as we probably won’t sell the shares while we're able to keep cruising, hopefully for another 30 years!

 

I wish I’d bought some RCCL shares when they were low although we’re not cruising so much with them these days as DW prefers mid-sized ships. But I guess all investors look at prices and wish they’d bought various shares when they were low. 🤣

The discrepancy only makes sense to those that have taken a position in TCCL stock.

 

Carnival does have upside, but that is held back due to the massive quantity of $8 bonds that were issued in 2020.

 

Neither company is currently returning a dividend. I haven't taken much notice of NCL.

[reeves35]

12 minutes ago, arxcards said:

The discrepancy only makes sense to those that have taken a position in TCCL stock.

 

Carnival does have upside, but that is held back due to the massive quantity of $8 bonds that were issued in 2020.

 

Neither company is currently returning a dividend. I haven't taken much notice of NCL.

Dividends aren't really as much of a thing in USA as they are are in Australia probably because they don't have a franking regime.  In US, shares (or stocks) are more about growth.

[arxcards]

17 minutes ago, reeves35 said:

Dividends aren't really as much of a thing in USA as they are are in Australia probably because they don't have a franking regime.  In US, shares (or stocks) are more about growth.

Somewhat true, depending on the investor. Institutional buyers still like dividends, as that is cashflow while growth is being realised. The other side to a lack of dividends, is that the company is not generating cash. I find it difficult to see why RCCL is bucking the trends when they aren't generating cash.

[Sparky74]

37 minutes ago, Jim_P said:

I read somewhere that by 2026 Australian cruising capacity will have reduced by 30%. Worse still is that that particular report didn't even include the loss of Cunard and Virgin, so it's even more than that.  

 

Given the popularity of cruising in Australia which has only been growing, much higher prices and less deals are inevitable. 

I wonder if the higher prices will then drive down demand. 🤔

[lyndarra]

23 hours ago, Sparky74 said:

With recent changes to the numbers of ships sailing from Australia ports as well as the impending rebranding of the P&O ships, not to mention the deletion of the Pacific Explorer, one can’t help but wonder how this will affect local cruise prices. Will reduced supply drive up the prices or will increased prices drive down demand? Time will tell. 
Someone pointed me in the direction of this article. 
https://sherwood.news/business/the-economics-of-a-carnival-corp-cruise/

We know that the cruise lines haemorrhaged money and took on massive debt during the lockdown but I didn’t realise how slim the margins are on a cruise ship. No wonder they continue to dial back services and increase prices while positioning ships in areas of the world which will give a slightly better return.  

I'm a little confused with the graph as it shows an average ticket revenue but not the average number of days per ticket. e.g. Food = $107. Is that per day or week? Am I missing something?

[Jean C]

I noticed the "total operating profit" of $156 per passenger still adds up to $390,000 for 2500 passengers (per day?) So maybe not too bad afterall as an income. However the ship depreciates at $190, presumably tax deductable, but even so it looks on paper as though they lose more through capital depreciation than they earn as income from passengers 🤷‍♀️ 

[OzKiwiJJ]

12 minutes ago, reeves35 said:

Dividends aren't really as much of a thing in USA as they are are in Australia probably because they don't have a franking regime.  In US, shares (or stocks) are more about growth.

Up until the pandemic Carnival Corp was paying around US$50 per quarter in dividends. 😊 It will be interesting to see when/if they resume paying dividends.

[arxcards]

14 hours ago, Jean C said:

I noticed the "total operating profit" of $156 per passenger still adds up to $390,000 for 2500 passengers (per day?) So maybe not too bad afterall as an income. However the ship depreciates at $190, presumably tax deductable, but even so it looks on paper as though they lose more through capital depreciation than they earn as income from passengers 🤷‍♀️ 

Is not per day. $156pp profit I believe is per average cruise, which should be somewhere close to a week. 

[windsor26]

18 hours ago, OzKiwiJJ said:

Up until the pandemic Carnival Corp was paying around US$50 per quarter in dividends. 😊 It will be interesting to see when/if they resume paying dividends.

My dividends were paid is sterling and were about 110 to 125 per quarter   I actually recouped the cost of my 100 shares bought in 2009 before they stopped paying a dividend and of course I had all those years of obc  Obviously they are valued less than when I purchased them but I still don't feel I have lost

[MicCanberra]

5 hours ago, windsor26 said:

My dividends were paid is sterling and were about 110 to 125 per quarter   I actually recouped the cost of my 100 shares bought in 2009 before they stopped paying a dividend and of course I had all those years of obc  Obviously they are valued less than when I purchased them but I still don't feel I have lost

Likewise, although we bought around 2014.

[arxcards]

8 hours ago, windsor26 said:

My dividends were paid is sterling and were about 110 to 125 per quarter   I actually recouped the cost of my 100 shares bought in 2009 before they stopped paying a dividend and of course I had all those years of obc  Obviously they are valued less than when I purchased them but I still don't feel I have lost

Is that for Carnival UK shares?

[windsor26]

10 hours ago, arxcards said:

Is that for Carnival UK shares?

The same shares but bought in England so everything is in sterling but still CCL

[MicCanberra]

Mineare in USA, so dividends when paid were in USD, around $200 pa.

[colourbird]

Our last two cruises (which we have just completed) on Norwegian Viva had 3,400 and 3,500 passengers on board so that's around half a million dollars profit per 3 days going by the above table. That's just one ship, and so they are raking it in.