Friday, 25 October 2013

Royal Caribbean's increase in on-board revenue attributed to cruise ship revitalizations

Royal Caribbean's increase in on-board revenue attributed to cruise ship revitalizations


Royal Caribbean reported third quarter financial results today and the big "star" of the results was the on-board spending, with a 7% increase overall.  So what is Royal Caribbean's secret?  They think it's all about the revitalization program.
During the financial results conference call, Royal Caribbean Chief Financial Officer Jason Liberty pointed to a few key factors that are part of the fleet-wide renovations to why the company is seeing better guest spending on-board their ships.
  • Speciality Restaurants
  • Casino
  • Internet
  • Unlimited alcohol packages
  • Shore excursions
"We benefited from new on-board venues introduced as a result of our revitalizations, and we saw further strength in spending from our U.S. customers, which helped generate improvement in gaming, beverage, speciality dining and shore excursions," Liberty said during the conference call.

Royal Caribbean CEO Adam Goldstein elaborated on how the company is looking to get more on-board spending, "So as I believe we mentioned earlier, gaming, beverage, shore excursions, retail and also some of the smaller revenue streams, internet has been doing well for us, which we wanted to see because we made a significant investment in, I think, 7 or 8x more bandwidth to the ships this year, and that seems to be paying off. 

So a number of the investments that we have already made, we would expect to continue to pay dividends and revenue growth into 2014 and beyond. And we continue to look under every stone for on-board revenue opportunities that don't conflict with the satisfaction of the product offering."

Basically, guests are spending more money in all these aspects and most of these venues are areas of the cruise ships that get upgraded or added as part of the revitalization program
When each ship is refurbished, more restaurants are added and wifi is spread out to more areas across the ship. Add to that the new drink packages and Royal Caribbean is offering its guests more opportunities to spend money.