Main menu:

Why are You Picking on Royal Caribbean?

Written by: Paul Motter

I have seen and heard more negative comments about Royal Caribbean than any other cruise line lately, and frankly I just don’t get it. Royal Caribbean has been getting knocked by stock market analysts, the cruise media, message board posters and even loyal cruisers. Just two days ago our own Kuki blasted them for some of their recent policy changes. As a result of this and the economy, their stock price has dropped almost 85% in the last two years. Are we really seeing missteps coming from RCL management, or are we missing the big picture?

Before I start this editorial I want to give full disclosure; I am currently a shareholder of Royal Caribbean stock and the editor of this web site where Royal Caribbean is a sponsor. However, I do not work for Royal Caribbean and I bought the stock with my own money – it was not given to me as a perk. This is not a recommendation to buy any stock *, it is just a personal opinion of recent events.

My esteemed colleague (giving him all the deference he would receive in British Parliament), Kuki, wrote a piece on Wednesday in which he points out all the recent policy changes Royal Caribbean has made, which in the context of the current economy he contends are boneheaded and damaging to the company’s reputation.

I love a cruise enthusiast, and so does the cruise industry, these days most ships are filled by at least 60% repeat cruisers. But I have a different view and I contend only an avid cruise enthusiast like Kuki, or a Wall Street analyst, would put Royal Caribbean under the microscope as he has done. I congratulate Kuki for being a very discriminating shopper, but I want to address Royal Caribbean’s recent moves one at a time.

Kuki’s list of recent Royal Caribbean missteps appears as a tempest in a teapot to me. I believe these transgressions will go largely unnoticed except by the most avid cruise line watchers. Meanwhile, the story of Royal Caribbean running the newest, most innovative and exciting cruise ships in the world is about to ferociously dominate the cruise news cycle – as soon as Oasis of the Seas is unleashed on the travel world.

But let’s look at the current state of Royal Caribbean. The main thread of recent announcements is that RCL is charging more for some things, and reducing what it gives away for free. Why is Royal Caribbean now taking things back? In its first years, in assessing the almost miraculous success of Carnival Cruise Lines, RCL noticed Carnival didn’t supply its customers with much beyond towels, sheets and perhaps a bar of soap. So, RCL decided to become the cruise line that gave more.

Early customers received a full basket of cosmetic products, fruit bowls, ice buckets, fresh flowers and gifts at bedtime. For many years, RCL successfully tagged Carnival as “The K-Mart of Cruise Lines,” by making their passengers feel more special on Royal Caribbean ships.

But time moves on.

Today, Carnival has cunningly figured out a way to give each guest a “starter kit” of bathroom amenities in a basket of free samples supplied to them by the soap and notions makers. They installed body wash and shampoo dispensers in the showers. The is a great example of how cunning Carnival can be as a competitor.

Meanwhile, Royal Caribbean realized what it was giving away was costing them more than necessary, so over the years it has scaled back, but not as much.

As we learned from the Peter Greenberg CNBC special, onboard revenue is the differential that puts a cruise into profit-making territory. Every cruise line lives by onboard revenue. The Royal Caribbean moves are meant to increase onboard revenue, hopefully without hurting the sensibility of its customer base.

Here are Kuki’s complaints – and why they don’t matter to me:

Richard Fain’s proclamation of no deep discounting.

CEO Richard Fain recently made a statement that he would prefer not to lower Royal Caribbean’s cruise prices because it takes so long to get them back up again. I agree with him, but I don’t actually believe he means it. I have seen Royal Caribbean discounting. Perhaps not as much as other lines’ deep discounts, but in those cases it is possible that they don’t need to discount as much.

In normal practice, every cruise line lowers its rates as much as it takes to fill its ships. But watching the daily strategy of cruise line CEOs can be very entertaining. Quite possibly, Fain’s comments were nothing more than a head fake to the other cruise lines.

Carnival has been discounting, and its last quarter’s earnings surprised to the upside by a large amount, at $.33 per share vs. $30 last year; beating analyst expectations of $.19 per share. In a regular market that might be considered a blowout quarter, far better than expected. However, Carnival and Royal Caribbean both lowered earnings estimates going forward, something many companies have done lately. In truth, no one knows where this economy is going and it is always better to surprise to the upside than the downside.

The cruise industry is amazingly homogenous, rarely do you see one cruise line doing remarkably well while the competition is struggling. This is because every line keeps close tabs on the competition – adjusting pricing and special offers accordingly.

When Royal Caribbean announced they would prefer not to lower cruise fares it meant three things:

1) They still would drop them, they just weren’t happy about it.
2) They would not drop them as much as their competitors (Princess and NCL are under $380 in Alaska) possibly because they do not have to. I do not believe the part about not caring if they fill their ships. Every cruise line still needs to fill its ships.
3) Travel agents, who sell 90% of cruises, stand to make more selling the average Royal Caribbean cruise as long as the fares remain higher than the competition, giving them an edge in the important sales channel.

- the cessation of dividends paid to shareholders.
Obviously, this only affects shareholders. OK, it was bad for value shareholders, but anyone looking for dividends isn’t in leisure stocks. It was a good move if you are looking for higher earnings. It was amazing how much this move hurt both stocks, as if the dividend was ever a reason to buy them.

The stock price of RCL has dropped from its high of over $50/share two years ago to about $9/share today. I am not an analyst, but I can tell you the “opinions” by analysts as to how Royal Caribbean will do this quarter and in 2009 are all over the place. Some have said their stock is going to $1, some have said it will go higher than the current level.

Kuki notes Royal Caribbean “Reducing shareholder benefits” when those owning a minimum of 100 shares were able to receive a shipboard credit, they are still able to, but it is no longer combinable with other onboard credit offers, general loyalty offers, “dollars off” promotions and savings certificates. Guests have the option to choose between the shareholder benefit or the other offer.”

This is a “remains to be seen situation,” since the conditions are vague, but this is not enough to disenfranchise the average cruiser and it does not change the onboard experience. The credit is still there for those who care, they just have to be more careful when shopping. I chalk this up to the media. I recommended people should try this, and it looks like they did.

Kuki cites $3.95 Room service fees for room service orders after Midnight.

I agree this is a bad PR move. Like the others it is meant to make a difference in “yield” – the amount of profit per passenger per day. But this makes them look cheap and “nickel and diming” is a bad reputation for a cruise line. I doubt it will change anyone’s mind about a Royal Caribbean cruise, but they could have found a less controversial way to deal with wee-hour room service issues.

Kuki notes “a price increase for Johnny Rockets Diners onboard – to $4.95 per guest

So it now costs a dollar more than it did. The line to get in was snaking down the deck. Who would have ever guessed Johnny Rockets would be such a hit on a cruise ship? Good for them, they are able to raise the price. I wasn’t even aware of this one.

$14.95 for a “better quality” steak in the Dining Room

I have no idea how this is working out, but I guess it adds a few hundred dollars per cruise. Was it worth the public relations tarnishing? No, it makes the regular steaks look bad by comparison. Carnival offers a delicious flat iron steak on the menu nightly. Still, only the most rabid cruise fans are going to notice this and no one is required to pay the $14.95.

Kuki cites, “A $7.95 charge for a children’s lunch and play program for those ages 3-11.” I have no comment here because I don’t have kids and don’t know how this compares. I can tell you this, kids LOVE Royal Caribbean ships. It’s the only cruise line that rates as high as Disney for children’s programs and fun factor.

Kuki notes that many of the recent announcements involve changed amenities for people in its loyalty program, the Crown & Anchor Society. First is “no longer offering complimentary cocktails at the Crown & Anchor repeaters party” This affects the “Crown & Anchor Society” members who cruise repeatedly to earn these loyalty points. However, as a shareholder I am thinking, “if they have so many loyal cruisers they feel they can cut this amenity without losing (m)any of them, they are very confident in their loyalty cruiser base.”

Another reduction of benefits to the most loyal members is no longer allowing “Diamond members” of the program (those with more than 9 cruises) access to their Concierge Lounges.

Free drinks in the Concierge lounge will continue for Diamond+ members, suite guests and upon the Freedom and Oasis-class ships. Loyalty-club members now have a reason to prefer the newest, biggest and most exciting Royal Caribbean ships. They also have a new reason to try for the next level in the program.

Kuki notes RCL now “reserves sun-loungers by the main pool for Suite guests only, as well as seats in the theatres and Studio B for ice shows (where applicable)- which naturally means restricting access for those who are not Suite guests.”

In fact, RCL is one of the first cruise lines to do this and it is one of the most commonly mentioned perks that suite passengers and loyalty cruisers want, but most cruise lines do not give to them. I think it is perfectly acceptable. If they choose not to use them the ship can give the seats to other guests.

Yes, I hear the shouts of “it’s not democratic”, but in fact it compels people to spend more to get more. That is good business.

Any cruise line that has so many loyal customers they must cut back on what they give away has more loyal customers than they know what do with. This suggests Royal Caribbean is in pretty good shape when it comes to loyalty.

What choices does the RCL current loyalty program cruiser have? They could go to a different cruise line and start from scratch, but this is still a good program for the mainstream market. Other cruise lines have also cut back, so starting from zero anywhere else is probably a worse idea than working for the next level in the Royal Caribbean program.

The Bottom Line

Kuki is correct that Royal Caribbean has recently made a series of announcements that some cruisers have chracterized as “bone-headed.” But I believe these announcements are going unnoticed by the vast majority of cruisers. Only the most loyal will notice these small changes and they aren’t enough to compel them to leave.

For Royal Caribbean to announce things like this in such a competitive environment and before Oasis debuts tells me two things: 1) Royal Caribbean is smartly getting all the bad news out of the way while the economy and their stock is down anyway. 2) They wouldn’t be doing this if their bottom line was not healthy enough to take these self-inflicted blows.

This current economic climate has certain companies being cast as corporate villians. In the cruise industry this year, it appears to be Royal Caribbean. Why? I truly don’t know. Perhaps it is jealousy or just the penchant of certain people to indulge their skepticism. Royal Caribbean is investing heavily in the future during tough economic times. Some people just don’t understand how they can do that.

In fact, history shows slow economic times have spawned some of the world’s most successful companies. The disasterous 1970s, which were worse than current times (high inflation, interest rates at 20%, 10% unemployment and a flat stock market for ten years) created Microsoft, Southwest Airlines, Fedex, Apple Computers, Genentech and Oracle.

The one aspect for which I give Royal Caribbean the most credit is “having the long view.” The opposite of short-sightedness which is so common now. Yes, we are living in uncertain times, but there are still people who believe in the future and are invested in it. I respect that.

Oasis of the Seas will pierce the public psyche in a way that has never happened before. I believe Oasis and Allure will do for cruising what Disneyland did for amusement parks, what the Superbowl did for football. The image of cruising is about to change forever and Royal Caribbean is the reason.

There is already a group of cruisers who say the upcoming Oasis-class ships are “too big” and will never sail on them. But Oasis is not just a regular cruise ships on steroids. It is a revolutionary ship design that can easily accomodate its 5400-passenger load and offer a world of innovation at the same time.

I would bet every single one of the Oasis naysayers takes a cruise on her within the next five years. Some things feel too big when they’re new, especially to curmudgeons, but some things actually get better when they get bigger. I have had a 65-inch TV and HDTV for six years now. At first people said “wow” when they walked into my living room. Today it is common.

One thing you will never hear about the new Royal Caribbean ships is “the ship was boring.” Oasis of the Seas and her sister ship, Allure, will break the mold for cruise ships. The Freedom-class will become the new standard for good cruise ships. By comparison, the smaller Voyager-class and mega-ships from competing cruise lines are going to become average. The cruise experience will still be in demand on all ships, but the definition of a cruise ship is about to change.

Naturally, I am referring to the mainstream cruise market. I fully recognize mainly people prefer small ships and leisurely days at sea with no distractions. But that is not the sweet spot of selling cruises. When it comes to redefining the cruise experience, Royal Caribbean is the line taking the lead.

* One final note: this is not a recommendation to buy Royal Caribbean stock. This is still an uncertain market and one new ship is not enough to guarantee anything. This is just one person’s opinion and I buy and sell stocks frequently. Investing and trading should be done with care, and while I disclosed that I currently own these shares it does not mean I will announce when I sell them.

Related posts:

  1. Cruise Sales for Carnival, NCL and Royal Caribbean The truth is, the cruise industry always experiences a doldrums...
  2. Columbus Day Cruise Updates Happy Columbus Day! It makes sense for cruisers to celebrate...
  3. Oasis of the Seas? Kuki is ALL WET! Kuki knocking Oasis of the Seas?  It isn’t how big...
  4. Is Oasis of the Seas Going To Ruin the Cruise Industry? I may be the only writer in the cruise industry...
  5. Cruising and Election Season Hello CruiseMates… This is your editor, Paul. I just want...

Comments

Comment from Mike M
Time April 2, 2009 at 8:04 pm

Paul,

I like your optimism. However, I don’t share it to the extent you do. I do feel that the cuts in services, stock price, dividends and additional revenue producing initiatives gives a knowledgeable or even a fairly regular cruiser a bad taste in the mouth.

It looks like Royal Caribbean and you are putting a lot of faith and hope into the Oasis and Allure. I don’t know if they will revolutionize cruising. Freedom was supposed to do that and other than adding a flow rider it didn’t revolutionize cruising. If Oasis and Allure don’t sail full for quite awhile Royal Caribbean will be in far worse trouble than they are now.

I want Royal Caribbean to succeed and I believe, in the long run, they will but their current tactics are more “duck and cover” than long term vision. Hopefully ducking and covering will give them the time to look to the future. In the interim I’ll probably be sailing Carnival and NCL a lot more.

Take care,
Mike

Comment from Tiffani W
Time April 3, 2009 at 12:53 am

I understand that things need to be cut to make them sustainable in the future. I would still rather be sailing on RCCL than on the other choices of cruiselines. I am a member of crown and anchor and will continue to cruise only on RCCL… I have a Med. cruise booked for this summer on the Navigator and am still super excited about it despite the changes. I believe a lot of crown and anchor members feels the same way as you do Paul. I know I do.

Keep on cruising,
Tiffani

Comment from Paul Motter
Time April 3, 2009 at 2:27 am

Freedom class was just a Voyager-class on steroids, it wasn’t revolutionary at all, but Oasis is a truly revolutionary design. If you have not studied it yet I urge you to do so. I have never seen a more perfect layout for passenger distribution, even with 5400 of them.

And I also believe it is a fallacy that they must sail full or else. Companies sometimes have bad times. I don’t believe RCL will but if they do, a few bad quarters, it isn’t going to put them “under water” so to speak.

Some tech company lost a $billion last year. They are still in business. RCL was still in the black last time I checked, and Carnival surprised to the upside in earnings. It is this gloom & doom talk I don’t agree with.

NCL was fully in bankruptcy in the 1993, they emerged. Not that RCL is even close to that, I am just saying.

Comment from Darlene (Ready2gonow)
Time April 3, 2009 at 7:29 am

We sailed on the Liberty of the Seas in January and didn’t have an issue with any of the cuts. I had steak from the menu a couple of times (not the “upgrade”) and it was very good. Was it 4 star… no, but I enjoyed it, just the same. The only thing that they have changed, that annoyed me, was the OBC you get for booking a future cruise, while on the ship. It is no longer combinable with other OBC’s….. o.k. so I’ll get over it! It wasn’t a make-or-break decision maker.

I don’t book RCCL exclusively (I’ve sailed on 4 different cruise lines) and I have usually found that RCCL is higher. That hasn’t stopped me from booking them. I don’t book them for the room service, or the loyalty program, or the other things that have been mentioned. I like the ships! Pure and simple!

Comment from MrPete
Time April 3, 2009 at 7:46 am

I enjoy reading a point/counterpoint (so tempted to throw the word SLUT in here), but I started cruising almost 10 years before reading ANY internet cruising message boards, and really didn’t need to be reading what I already saw as changes occuring even back then.

The ones happening now are WAY TOO DRAMATIC to miss

Point?

Only the cruising newbies will not notice the changes, except when they are trying to price and compare what’s out there. I did that back in 1988, and RCCL didn’t even end up as my final two.

I simply cruise them because they are the only player getting me where I want to go.

But they DO have stunning ships!

Comment from Paul Motter
Time April 3, 2009 at 7:58 am

Mr Pete: You are referring to the line “Jane, you ignorant slut!” that Chevy Chase used on Saturday Night Live everytime they spoofed “Point/Counterpoint”

I got it, but I was afraid many people wouldn’t.

Comment from Paul Motter
Time April 3, 2009 at 8:27 am

I realize many deep cruise enthusisiasts, like CruiseMates readers, will notice these changes, but I wonder what % of the cruise audience follows the industry daily as we do. And in the long run, most people pick the ships they like, and a few free drinks more or less or a dollar more for Johhny Rockets (a once per cruise option anyway) won’t make a big difference in the decision for the people who really like RCL ships.

Take these announcements one at a time and individually they are all very small. It seems to be more of “principal of the matter” outrage than a real bottom line concern.

To me the biggest one is the shareholder credit. But how many companies give their shareholders ANY kind of break? I was amazed when I first heard the cruise lines gave onboard credit for 100 shareholders. I have been wondering how long that would last. They should have just upped it to 1000 shares, though.

As for the loyalty programs, I am thinking they must have so many people in those programs it isn’t much of a special qualification anymore. Some 60% of cruisers onboard any ship are repeaters now.

Anyway – as a stock market watcher I am saying these announcement probably are not be indicative of what many people seem to think they are – that RCL is desperate. if they WERE desperate their insiders wouldn’t be buying stock in the company, and they would be discounting cruises drastically (they are doing the opposite). They would be laying people off and docking ships.

My point is that when companies need to make changes in policy it is best to make them close together, but not all at once. It is also normal practice to take advantage of bad economic times to make changes like this they have probably wanted to make for years.

It is just a company changing their polices at a time when it will go mostly unnoticed because so many companies are also doing similar things. The airlines are charging for bad food, blankets, pillows & luggage, fer Pete’s sake.

And it surprises me that more people are not as excited about Oasis as I am. It is as if they haven’t seen the pictures or virtual reality tours. You have to see this ship to believe it. No one who has taken a good look would ever compare Oasis to a Freedom-class vessel. Oasis will be a huge draw, in my opinion.

Comment from Todd De Haven
Time April 3, 2009 at 12:27 pm

Paul,
Again I’ll repeat I probably shouldn’t even comment as I am a “newbie” with only two cruises under his belt and a third one due shortly, all three on the same ship (Explorer of the Seas) and on basically the same itinerary.

I would at some point like to sail other lines and various sized ships. That being said, I so agree with you.

A lot of the issues people are having with RCL as related to it’s service cut backs, etc., are I am sure not thrilling to those with a lot of cruises under their belt. That being said, I honestly don’t see where that will make any large difference.

Despite what the individual lines say, I’d love to know what their true vacancy rates (cabins) are currently. I wouldn’t be surprised if they’re all comparable if their overall industry share is factored in.

I know someone who just canceled their cruise but not because of economics. Her daughter who was sharing her cabin moved to another state, couldn’t go and the mother didn’t want to cruise without her.

I agree Paul, that I can’t see that many perople “not booking” based upon the complaints currently being voiced. While I may not have the “experience” I read voraciously about cruising as it has become my passion. Nothing negative that’s been written relative to the above, would ever preclude me from continuing to sail on RCL. This is primarily because either the “give ups” don’t either effect me or are something that would ever be a deal breaker. Although eligible, I wouldn’t attend a Captain’s cocktail partyfor return cruisers simply because of the hoards of people vying for a free glass of whatever. Similarly, even were I to be eligible, I’d probably not utilize the concierge lounge because so many people at least used to be eligible to use them, that I get the distinct impressions that they too became overly crowded. All of which gives testament to RCL’s ability to lure back repeat cruisers.

Of course no one likes to see a reduction in any benefit anywhere, but the economy being what it is, I think such passenger related benefit reductions to be rather trivial and would certainly not influence me from not sailing again on RCL.

I still love the Explorer and am filled with as much excitement and anticipation as I was prior to our first cruise four years ago.

Comment from Leo
Time April 3, 2009 at 8:03 pm

They change wont affect me

I dont really go to a cruise because of points or levels in my crown program , I go because I like it. I read all of the programs level and honetly, they dont impire me. I dont drink alcohol, i can sleep in a suit or inside cabin When i go crusing, my girlfriend and I are so happy that we finished a term in our university that we board the ship as soon as 11 am, we enjoy ourself and dont miss any ship. We always get the best spot and chair for the show and sun deck, and we are always the last to get off the ship. So, other than give you some saving coupon (useless to me ) I dont really user the crown service. Ohhh , yes , they have a fee for room service after 12 or 1 am, guyss , make your our room service by taking some food from the buffett to your room. If u get hungry after 12 am , Well , Im happy with RC but I honestly think that soemtimes they hace ridiculous prices. Have a great day

Comment from Timmy Kerwin
Time April 4, 2009 at 12:47 pm

I cruise because it’s a fun vacation. I have only sailed RCI; however, if I find an itinerary that I like with another line, I may choose to cruise with them. The loyalty program is nice, but it wouldn’t stop me from booking with another line, same as booking a suite. I have booked a suite, and now find out RCI is giving all these nice perks. It is no different than booking first class on an international flight, where you get choices of meals, a lie flat seat, and nice pillow and blanket. You pay for these perks, and now that RCI is giving them; why should people who book inside cabins be upset. The ship is big enough that you can find a seat at the theater, at the pool, and at the bar. RCI is getting smarter with its money, and business is all about making money.

Comment from Mary (CQ)
Time April 5, 2009 at 6:20 am

Good Article Paul! None of the new changes really affect me. I have to agree with Tim and Leo I never book Royal cruises to get to the next level of C&A and I cruise because it is a great cruise. In this difficult time for all businesses I’m not surprised of any cutbacks.
I just booked the Liberty for the summer and the rate was $400. cheaper then it was last year at the same time of year. Liberty was pricing out the same as a Princess and Carnival cruise. I don’t know if I can believe Mr. Fain saying there will be no price drops. If you look good you will find them. However some of the summer cruises are priced very high but that is only because the are not much cabins left.

I’m looking forward to the Oasis and can’t wait to sail.
Many families with kids love the Royal ships.

Happy Cruising Everyone! :)

Comment from kuki
Time April 5, 2009 at 7:29 am

Paul,

I agree Oasis and Allure will quite likely WOW the cruise market for awhile. And there will be lots of folks rushing to pay extra $$$ just to be on those ships… especially when new.

But, that doesn’t make their stragedy that I talked about any less “against the grain” of normal business practices when consumer spending is down, and there’s hyper competition in the marketplace.

In the long term I certainly hope RCI, and all the cruise lines thrive, because I obviously am a cruise enthusiast.

I do think it’s very presumptious of RCI if they’re thinking, as you suggest, that they have so many loyal customer, they can get along fine without some of them.

Loyalty programs are proven to be effective. That’s why they’ve exploded everywhere they can be implemente… from airlines and cruise lines to grocery stores and pharmacies.

To go back to my fishing/swimming analogy :) ……. it seems RCI’s now trying the hook em, and throw em back approach.

Comment from Paul Motter
Time April 5, 2009 at 1:09 pm

Kuki, I guess our difference is in what we see as “normal” business practice during a recession. You are looking at it from the consumer side, I see it from RCL’s side.

Comment from kuki
Time April 5, 2009 at 9:46 pm

Paul,
I thought I was approaching it from 30 years experince in business. When I was in business, if competitors were selling their products for 25% less than I was, I would and did make the decision to compete on price point when times got tough.

I think RCI sometimes think their product is so good it doesn’t matter what they do. And I think that may be somewhat true when talking about the beauty of their ships. Not always so true in delivey of the product…. so they still have to compete, I think.

Comment from Don
Time April 7, 2009 at 9:26 am

They, RCCL, deserves to be picked on; we were on the Jewel of the Seas inJanuary of 2009…had a small amount of money stolen from our cabin, did not receive a bottle of champagne that I won at a art auction and had a complimentary fancy glass taken from our cabin. They’ve also done away with the chocolate treats at turn down.

Comment from Paul Motter
Time April 7, 2009 at 10:54 am

Kuki…

I based my comments on my years of experience in watching $Billion corporations and how they deal with corporate PR and having to disclose their financials every quarter. I see what they are doing as exactly what I do if I were CEO, (it probably scares Fain to hear that).

They may be less competitive with the RCL of three years ago – but how do they stack up against other cruise lines? Are they really less competitive?

I am saying they have equalized the playing field and setting cruise fares for what they are worth. They have a different product and therefore should price it uniquely – not based on what other cruise lines are doing.

You wouldn’t ask Silversea to compete with Carnival.

I had another thought on credit.

They are absolutely right to be investing deeply right now if the economists are right about where we will be in two years.

Assuming we avert a depression and go into recovery, right now the world is trying to force banks to lend at record low interest rates, all that pressure plus servicing our national debt will eventually turn into hyper-inflation.

Loans being made today are at record low interest rates for products being sold at deflationary prices. Any company (or person) that can get and manage credit right now for investment should be doing so. Like if you qualify for a re-fi on your home now is the time to do it.

In two years, if inflation is at 10%, then the cost of the ship they bought today has effectively gone down in price by 10% because dollars are worth less but the price of the ship remains the same.

Furthermore, the terms of the loan made today will be a bargain compared to the cost of credit in an inflationary market. Plus, the dollar is still almost as strong now as it has been in recent years. Chances are there will pressure to weaken it as our need to pay down debt and boost exports grows.

In order to order new ships in three years, for Carnival to compete with RCL, they will be looking at paying inflated prices and higher interest rates, both due to inflation. The cost of doing business is as cheap today as it has been in years. If you have the wherewithal to do it, you should do it.

That was what I mean about the long view.

Comment from Jaxon
Time April 18, 2009 at 9:28 pm

Just my 2 cents… I agree with you, Paul, about our going into hyperinflation, and building now will mean cheaper loans, but I do not think we will pull out of this, ever, not in the sense that we will return to the good ole days of the 90′s, or the 50′s.

Without finding a way to manufacture something here that the world wants to buy, I just can’t see it happening. The tide that raised all boats was unionized manufacturing — that’s all but gone, now. So, I believe, there will be fewer who will be spending on cruises. Having built a few mega ships on the cheap (but aren’t they having trouble finding the money, even the cheap stuff, now?) that you can’t fill, or that you have to price non-competatively, puts you into the “hurt” zone, imo.

All we boomers heading into our travel years, will be hit with hyperinflation and we will cut back — the cd’s might be making more short term, but the overall value of the nest egg will suffer a loss. The gen X’s, with the absence of pensions except for government workers, will need to stuff even more into their retirement accounts, especially fearing the end of social security, as they hit their higher earning years, and the gen Y’s are well, just lucky if they can find a job and repay their school loans working at Home Depot.

I was struck by Cruise Inc saying that with the ship only 92% full (if I recall correctly), it had to hustle to break even. If a loyal RCI customer ventures out to another line because they are disgruntled, can RCI be so sure they will not find a favorable experience that will keep them from coming back, particularly if the cost was significantly less? Presently, the keeping up with the Joneses is passe, and out frugaling each other is in.

Comment from Randy
Time May 6, 2009 at 6:47 pm

We’ve done 6 cruises, 5 with RCI and 1 with NCL. RCI cruises were always clean beautiful ships that we always enjoyed, cant say anything bad. Were a family of six, did Freedom of the Seas last year, best vacation we ever had. We have booked on Oasis for the Dec 19th cruise and cant wait to set sail. None of these changes effect weather we use RCI or not, we just like them.

Comment from Donna
Time September 17, 2009 at 9:45 am

We (six of us) were to sail on the Adventures of the Seas this week actually, but due to some airline mess ups, we could not make it, which is unfortunate for all of us being our first time cruising. Now RCCL doesn’t want to refund us our money back, needless to say, we probably won’t be sailing with them any time soon. Put a sour taste in our mouths.

Comment from Kari Martinez
Time September 19, 2009 at 4:50 pm

This e-mail is due to a vacation of a lifetime I will not be taking.
Last Saturday my husband I and 2 other couples were to be taking a Delta flight to Puerto Rico to catch my fisrt ever cruise.
Unfortunately afer a year of planning and savings it wasnt meant to be.
We found out early afternoon our original flight had been cancelled and rebooked on a flight that would not allow us to catch our cruise ship in time.
Believe me not we tried everything to find another flight to get us to ship.
I am thus writing to you to pull on your heart strings to please redeem us our cruise payment.
I know we should have made contact with the ship but we were all quite a mess from disapointment, ( at least I was.)
Anyway I hope you will give careful consideration to our request.
I truly appreciate your time and consideration.

Kari Martinez

Comment from Russell
Time September 20, 2009 at 12:35 pm

We had been saving for a year and some months, getting ready to go on are first trip of a life time, and then we get ready to go are airline delta, said are flight to puerto rico was canceled, we are very upset and mad????

Comment from Paul Motter
Time September 20, 2009 at 3:09 pm

Hi…

I see three messages here from people who seem to have missed the same flight. is that correct or not?

I am very sorry this happened, but I have to ask exactly WHAT happened.

If the flight was cancelled then there still should have neem a way to get you to the ship.

Was it the airline’s fault the flight was canceled? If so – why are you blaming Royal Caribbean. The flight has nothng to do with the cruise line, unless you booked it through the Royal Caribbean choice air program in which case they say they will work with the airline to get you to the ship.

Most of us cruisers know how risky it is to fly to the ship the same day as it sails. most of us arrive a day early and spend the night, especially if the destination is a small place like San Juan with a limited number of flights daily.

If the flight was canceled due to mechanical issues then the airline should have given you another flight. Maybe it would have been late, but you could have flown there and to th next port and caught your ship.

In any case – we need more details before we can say any more about your situation and whose fault it was and how it may have been salvaged.

Comment from Henry
Time January 4, 2010 at 7:10 pm

I think the hatred towards RCCL reflects their treatment of loyal customers who contact them with a problem.

Just finished a cruise on Explorer over Christmas. Had a problem with our membership meaning we were classed as diamond members rather than Diamond plus. Been in Owners suites for the past few cruises so didn`t really keep a track of our points.

Miami head office were not at all interested when I emailed them from the ship (at $0.55 a minute on the slowest connection imaginable). The Diamond bar is now limited to Champagne and wine. Beer and other drinks are chargable. Go figure – free champers (of a fashion), chargable draught beer or spirits.

The lounge was always a quiet haven and on this cruise we could have escaped the hoards of uncontrolled children. Even our 9 year old daughter stopped going to the kids club because she said it wasn`t properly controlled.

Alexa the loyalty and future cruise consultant was very helpful though. she quoted a fare so high on Oasis for July that it made us shop around and for the same price we can cruise either Seabourn or Silverseas. I kid you not !!

I never thought I`d hear myself say it having recommended them to all and sundry but if you want a quality cruise then avoid Royal Caribbean Cruise Lines (RCCL), and opt for another company.

If you`re new to cruising or looking for a budget $80-100 a day bucket cruise then go for it.

The company are trying to steer us towards their luxury brand Celebrity but out of principle I`m not sure I want to line their pockets with any more money. A simple concierge key would have probably saved my future business. The head office had a chance, emailed me to say p*ss off and leave us alone, Sir. They did suggest we email photos of cruises they didn`t have listed. Not easy when you`re in the middle of the Atlantic.

Have a look around. Seabourn and Silverseas. All inclusive drinks including premium brands, concierge service, no tipping expected or required (as opposed to RCCL who constantly remind you of your obligations to pay their staff`s wages at the end of your Holls).

I wish you all the best with your financial investment. Based on their service a few years ago I`d say it was a good spend of your money. My tip – get out whilst the going is good.

Comparing RCCL with Carnival is like comparing a Mercedes with a Ford. There should be a noticable difference. Unfortunately in this case you can buy a Bentley or a Rolls Royce for the price they charge for their Mercedes.

Good luck for the future.

Write a comment