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Old March 31st, 2001, 06:14 PM
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Join Date: Aug 2000
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Default Cruise Ship profits??

I watched the NBC piece on new cruise ships entering the market this year yesterday on NBC. In it an analyst said that these ships must be paid for in full within 4-5 years of launch since they will no longer be marketable (newer, bigger, nicer ships coming online..). I am not an accountant, but I did sharpen my pencil and came up with these startling numbers.

Millennium and Infinity each cost $350m each. They each carry 1950 (double) passengers. So if I am conservative and apply only a 7.5% interest rate to the loan over a 5 year period I come out with $830 per passenger per week just to pay for the ship. Then there is maintenance, food, entertainment, staff, advertising, commissions, etc. Granted there are some really expensive cabins, but the majority are not that expensive. Even if I take off the interest it comes to $690 per passenger. Although the ships do often carry many more than 1950 passengers, there are times when they are 80% full as well.

I for one consider this a real bargain and cannot for the life me understand how they can also have such great food and entertainment. Since I generally cruise for $100/day or less, there must be lot of people out there paying a lot more.

What are your thoughts?

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  #2 (permalink)  
Old April 8th, 2001, 02:14 PM
William N
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Default Re: Cruise Ship profits??

You're right, it doesn't appear to add up with those items factored in. There are other factors to consider though. The onboard revenues from the drinks, the shops, the spa, shore excursions etc, add up very quickly. When you add all of that in, and the fact that most people do pay more than $700 for a 7 day cruise, I would guess the average daily expenditure would be closer to $200 per day per person. And then there's the airfare, and pre and post cruise packages that some people book through the cruise lines that provide additional revenue.

Also, I'm guessing these ships are not 100% financed, and the interest on what is financed can be written off. The older ships in a fleet that are paid off, provide ample cash flow to the company as well.

These are just my thoughts. I am not an accountant either, and can't pretend to know the cruise lines accounting methods.

Here's a link to Carnival's financial statments. Take a look at the income section and you'll see revenues, costs, interest they paid,,, all totalling to a net income of over a billion dollars in 1999.

Take care,

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