Facebook twitter followgram pinterest

Royal Caribbean’s ceo Richard Fain stated he was “deeply disappointed” to report a breakeven 2008 fourth quarter. Weak demand, currency changes and higher fuel costs led to Royal Caribbean Cruises Ltd’s 1 cent per share profit in the fourth quarter, down from 33 cents from the same quarter in 2007.

The penny profit falls short of Wall Street’s 7 cents per share estimate. The company’s 2009 forecast projects net yields down 9-13 percent, with earnings expected in the range of $1.40 per share. Analysts had been forecasting $1.67 per share. A loss of 30 cents to 35 cents per share is projected in the first quarter of 2009. Yesterday, Barclays Capital lowered its 2009 earnings estimate for Royal Caribbean from $1.98 per share to a loss of 92 cents per share and initiated a 2010 estimate of negative $1.22. That news caused Royal Caribbean shares to plummet 15 percent.

Going forward Royal Caribbean said the revenue outlook for 2009 remains weak, with both ticket sales and onboard spending affected by the economy. “Forecasting demand is as tough as it has even been in my 20 years at Royal Caribbean,” said Fain. The line stated it was using “substantial discounts” to rev up sales and that the line’s average passenger now books 4 months in advance. ‘The fourth quarter was an extremely difficult operating environment and we expect even more challenges in 2009,’ said Fain.

Still Fain said he was pleased with how the company responded early to the “approaching storm.” Cost containment and other actions largely offset higher than anticipated fuel and insurance expenses — net costs (excluding fuel) will fall 5-7 percent in 2009. The line stated that they are 58 percent hedged in fuel. Fain said he is “encouraged” by recent bookings during wave period.

One thing that’s likely to raise eyebrows among die hard Royal Caribbean cruisers is Fain’s statement that the line has reduced costs without compromising the guest experience. The line caused an uproar last year when it began charging for steak in its dining rooms and recently announced a charge for room service after midnight. Royal Caribbean said that 20-25 percent of its revenue is from onboard sales. With falling yields and stock price and enormous expenditures for new cruise ships odds are the company will only increase onboard charges.

Tweet us! Did you know that ExpertCruiser is now on Twitter. Follow us at twitter.com/ExpertCruiser.

Filled Under Blog

6 Responses to “Royal Caribbean’s penny per share earnings likely to lead to more onboard nickel and diming”

  1. MyName says:

    It would be nice if you folks could get your facts straight. I’ve heard so much yelling about the so called $14.95 steak it isn’t funny! The facts are – the steak was limited to a couple of ships as a test. A steak remained on the menu at no extra charge. This was purely an “option” and nobody was forced to purchase it.

    As for the room service charge – more screaming about nothing for most people. Heck, I tip more than $3.95 for room service in the morning! They are actually giving me a reason to reduce my costs! Also, there is only a charge from midnite until about 5:00 am. Not exactly prime time for the majority of folks. Besides, you can always find free food somewhere on board.

    So, how about just reporting the news FACTS, and leave it at that. People are more than capable of forming opinions on their own.

    Let’s try this: If you simply delete the final paragraph of your “news” story, you have a TRUE news piece. The last paragraph is nothing but added fluff and opinion. When did it become a requirement for the news reporting agencies to start adding their opinion to everything?

  2. Hi MyName,
    You sure sound like a “Royal Champion”. Let’s get to the facts, shall we?

    Royal Caribbean is cutting back. They kept the 7oz “Top Sirloin” steak on the menu at no charge, but started charging $14.95 for the 10oz New York Strip steak. They also cut back their prime rib portion to 6oz — down from 9.5 oz. Then the room service charge. Sure, some cruise lines are doing that. But, why is Royal Caribbean doing that? Simply put, those new, beautiful ships are killing their bottom line — they have to make it up somewhere, right? Hence, that’s why I think you’ll see more onboard charges.


  3. My Name says:


    I do not disagree with anything you stated in your comment. I simply disagree with half truths. Why didn’t you tell all of the story on this site without being poked?

    Not exactly a “Royal Champion” (whatever that is), just a “whole truth” champion.

  4. Hi My Name,
    If you are truly a “whole truth champion” then you will appreciate various points of view.

    I appreciate and welcome your point of view!


  5. royalsuks says:



Leave a Reply

Your email address will not be published. Required fields are marked *