A fellow cruise enthusiast and I were discussing how profitable cruising is for the company. We surmised that Disney cruises were probably much higher in price than the mainstream lines because they lacked the revenue from gambling and alcohol sales the others enjoy. We discussed the pensions of shoreside employees, gas prices, food costs, maintenance, etc. and this drove me to the financial reports of CCL and RCI.
What would you think the profit would be for an average 7 day trip to the Caribbean? And what kind of profit margin do you think they operate on?
I can't even put together an educated guess, but will be interested to read the replies on this one!
Of course when they are purchasing thousands of everything, instead of just one or two that pricing is far, far different than what we know. As far as pensions, companies like to say the benefit packages for every employee costs thousands and thousands of dollars but they have accounts that the money goes into that gain interest!
Royal Caribbean has 25 ships, including the Celebrity brand. On average, a 7-day cruise nets about $250,000 in profit. The shoreside employees have a pension equal to an expense of $8 million per year and the ship employees, apparently union now, just received in bargaining agreement a pension which accounts for about $3.5 million per year. They have a zero collar purchase agreeement for gas, which from what I can tell is a set price range for fuel purchases which cannot exceed the range which accounts for 4.5% of revenues. Their capital expenditures, after the delivery of the 4 ships under construction for the '03 and '04, will taper off and net income should improve in '05 and beyond. They have options for two ships in '05 and '06 but are not expected to build any new ones those years.
Royal Caribbean operates on a margin of 10.3% and Carnival's margin is 23%. Royal Caribbean just completed it's $20 million renovation of CocoCay. It's occupancy rate for 2002 was 104.5% (100% would be 2 people per cabin).
I didn't get into Carnival's numbers that deep. And since they don't operate in the U.S. (?) they don't pay any U.S. taxes. Imagine what their financial statement would be if they had to pay taxes?
Just think about this. If everyone on a 2000 passenger ship bought one more umbrella drink on a week's cruise, just one more for the week, the company would earn an additional $9,750,000 in profit ! ! (Assuming $3.75 per drink)
Now you know why they try to limit or refuse you bringing your own and/or push them all the time.