$14 Million for Royal Caribbean Cruises CEO Fain

$14 Million for Royal Caribbean Cruises CEO Fain

Royal Caribbean Cruises reported executive compensation for a record 2019 financial year in a Friday evening SEC filing, just two days following the announcement the company was laying off approximately 26 percent of its U.S. workforce.

CEO and Chairman Richard Fain saw a $14.4 million payday in 2019, mostly driven by stock awards. Fain has agreed to forgo his base salary through September of this year due to the COVID-19 pandemic.

Other key company executives also enjoyed a robust pay check-in 2019, with Michael Bayley, president and CEO of the Royal Caribbean brand, taking in just over $7 million, up from $5.7 million the year prior.

Lisa Lutoff Perlo, president and CEO, Celebrity Cruises, saw compensation at $4.4 million.

The company noted it will consider the business and financial impact to the company, shareholders and employees in evaluating 2020 performance in early 2021, citing COVID-19.

Compensation Table:

Royal Caribbean boss vows to cut out last-minute discounting

By Lucy Huxley

The chief executive of Royal Caribbean is stamping out last-minute discounts on his cruises in the US and says he would look to extend the new policy to other markets including the UK if it is a success.

The line currently reduces fares 30, 20 and 10 days from departure, a practice that Michael Bayley says "devalues the whole product".

"From 2016, the price will never drop. There will be no discounts beyond 30 days from departure," he said.

Bayley accepted the new stance could lead agents to sell other cruise lines which "continue to discount all the way to departure", but said he would rather lose that business and improve his yields and margins.

"Last-minute discounting just devalues the product and nobody, neither us nor the travel agents, is making any money," he told Travel Weekly during the two-day naming celebrations of Anthem of the Seas in Southampton.

"We are not doing anybody any favours by discounting. We work too hard developing these phenomenal products to then charge too little for them," Bayley added.

"We believe we have the best vacation products in the entire industry, offering customer the best value anywhere, and we believe it's time for our customers to pay a little more for them."

Asked if he felt this would encourage the whole cruise sector to stop devaluing its product, Bayley replied: "This is not about cruising in general. This is purely a focus on Royal Caribbean and what we feel is right for our brand."

Royal Caribbean launched Anthem of the Seas this week and also has Explorer of the Seas coming back from a multi-million dollar refit tomorrow (Thursday).

The line also has Harmony of the Seas launching in spring 2016 and a third Quantum-class ship, Ovation of Seas, coming into service in 2018.

The connecting-cabin conundrum

MSC connecting Balcony Cabin.

One frustration for travel agents is when clients want to book a cruise on short notice with the expectation that they’ll be able to stay in connecting cabins. It can sometimes be hard to find rooms that adjoin or are on the same deck, much less those that connect.

But cruise lines could do more to help the situation, some travel agents say. The issue came to light at a recent travel agent forum on Royal Caribbean International’s Freedom of the Seas.

Agents said that Royal often allows connecting rooms to be booked online as singles, negating the advantage of having the connecting door between the two cabins.

“Royal Caribbean is great for families, but it is a real struggle on some of your popular sailings to find connecting rooms that do not have one already booked,” said Elise Aust, of Custom Cruise & Travel, Omaha, Neb.

Aust suggested that Royal hold the cabins back from full inventory to ensure that people who actually need them get to use them. “The last thing I’d want if I was booking a single cabin is a door to another room if I didn’t need it,” she said. “I think you would get a lot more families.”

Royal President Michael Bayley agreed that the idea made a lot of sense. “We’ll take a look at it and speak to our revenue team and see what we can do.”

Aust’s other suggestion, by the way, was to put magnifying mirrors in the bathrooms, an idea that seemed to confound Bayley.

“Really? That sounds horrifying,” he said. But he added that Royal would take a look at it for its new ships.

The ‘horrible mess’ of shore excursions

By Tom Stieghorst

Cruise lines are starting to see declines from one of their most important revenue streams, shore excursions. That was one of the admissions made by newly named Royal Caribbean International President Michael Bayley at a forum for agents onboard the Freedom of the Seas.

Bayley gasped in mock horror after asking the group of about 250 agents whether they sold Royal Caribbean’s branded shore excursions or somebody else’s. In unison, they chanted “Somebody else’s.” When he asked for a show of hands, well over half the group responded.

“You know, we do have to change the system,” Bayley said in a half-joking, half-serious tone. “It’s a horrible mess.

“We must spend more time talking about this than I don’t know what else,” Bayley added. “We’re always trying to find the right solution.”

Elliott Finkleman, owner of an Expedia CruiseShipCenter outlet near Ottawa, said both Royal Caribbean and travel agents could make more money if Royal paid a commission on excursion sales.

“You’re losing out because it forces me to sell alternate product,” Finkelman said. “I don’t want to spend a lot of time on shore excursions, going port by port, and get nothing back from that.”

Vicki Freed, Royal’s senior vice president of sales, trade support and service, said that the line does pay commission on group shore excursions and that guests with excursion tickets sold through Royal get first priority in getting off the ship at port.

And Bayley reminded agents that there are some risks with third-party providers.

“If they’re selling at lower prices, they’re paying these commissions, chances are they do not have the same liability coverage and they have not gone through the process of safety for the guest that we go through,” he said.

Bayley said excursions have always been an important part of the cruise revenue pie.

“We all have revenue streams and we all try to protect them,” he said. “We have seen an erosion over the past couple of years, and it’s pretty obvious where that erosion is coming from, after our show of hands.”

Royal Caribbean tests Internet capability by offering free WiFi

Royal Caribbean International has given away Internet access for the past couple of weeks on its newest ship, Quantum of the Seas.

The ship is one of three to be rigged for communications with the O3b mid-level satellite network, that provides for greater bandwidth and communications speeds.

The debut of a new, faster Internet service on Royal Caribbean International ships is only weeks away.

Royal Caribbean Cruises Ltd. Chairman Richard Fain said in a conference call with Wall Street analysts on Thursday that the system is now in testing on Oasis of the Seas, and full rollout is expected in early summer.

Provider O3B is using a series of mid-orbit satellites for the service, rather than one geostationary satellite orbiting at 22,000 miles. That means signals travel shorter distances, increasing speeds.

Fain said that the change will give Oasis “more Internet bandwidth than every other cruise ship of every other cruise line in the world combined.” 

The service is initially targeted for Oasis of the Seas and the upcoming Quantum-class ships.

Internet service with speeds closer to those on land will help Royal Caribbean attract Millennial generation cruisers (ages 14-34) in particular, Fain said.

Royal Caribbean President Michael Bayley said guests were encouraged to use as much Internet capacity as they wanted or needed at no charge during recent cruises. 

"On Quantum, because we have so much bandwidth, over the past three weeks we’ve given out free WiFi. I mean free, free, free all the time,” Bayley told a group of travel agents on Freedom of the Seas over the weekend.

Royal Caribbean officials said the experiment was a kind of “stress test” to see just how much demand the system can handle.

"So we’ve been monitoring the consumption of bandwidth when we let everybody have free bandwidth — the crew, the guests, everybody — and we’ve only used a fraction of it,” Bayley said.

The standard charge on most Royal Caribbean ships for Internet access is 65 cents a minute.

Cruise line officials said it is unlikely that Internet access will become free on ships equipped with O3b. The current working model is to charge like many land resorts a fee of $10 to $15 a day for unlimited access, Royal Caribbean spokesman Harry Liu said.

There will be a premium package for large-bandwidth usage like streaming video, and Bayley said the line is exploring what it can do with such applications. 

"Soon we’re going to start speaking more about this capability,” Bayley told the agents. "Because of the scale and size of this bandwidth, we could do streaming videos. It’s genuinely as good as being in a city somewhere in the United States. It is better than that."

Longtime executives promoted to lead Celebrity, Royal Caribbean

By Jerry Limone

Royal Caribbean Cruises Ltd. (RCCL) has named Michael Bayley president and CEO of Royal Caribbean International, transferring to the company’s largest brand from the helm of Celebrity Cruises.

Lisa Lutoff-Perlo replaces Bayley as Celebrity’s president and CEO, promoted from her position as Royal Caribbean’s executive vice president of operations.

Each executive has 30 years of experience in the industry.

Bayley had been Celebrity’s president and CEO since July 2012. At that time, Bayley had been promoted from his position as Royal Caribbean’s executive vice president of operations, and Lutoff-Perlo was promoted to replace Bayley.

The top spot at Royal Caribbean International had been vacant since April, when Adam Goldstein was promoted to president and COO of the parent company.

In a statement, RCCL said Bayley “delivered strong results” at Celebrity “while building the company's ‘modern luxury’ positioning, which resonated successfully with Celebrity's sophisticated customer base.”

RCCL said Lutoff-Perlo “played a critical role in the recent successful launch of Quantum of the Seas.”

Celebrity Cruises orders pair of 2,900-passenger ships

Celebrity Cruises said it has ordered two 2,900-passenger ships from the STX France shipyard in St. Nazaire.

The ships are scheduled for delivery in the fall of 2018 and early 2020.

Celebrity’s most recent ship, the 3,046-passenger Celebrity Reflection, was delivered in the fall of 2012.The line recently agreed to send its oldest ship, Celebrity Century, to a new joint venture in China.

Celebrity's parent, Royal Caribbean Cruises Ltd., said the ships are being built under the Project Edge name. RCCL said they will deliver small-ship itineraries with large-ship amenities.

"STX France designs and builds some of the most innovative and stylish cruise ships in the world, and Project Edge offers them the opportunity to again set a new standard for modern iconic architecture,” said Michael Bayley, presdient and CEO of Celebrity.

Contract costs for the ship were not disclosed. With the addition of the two new orders, RCCL said company-wide capacity is scheduled to increase by 2.4% this year, 5.5% next year, 6.7% in 2016, 3.8% in 2017 and 4.3% in 2018.

The 117,000-gross-ton ships will be part of a new class of vessels for Celebrity. the line currently operates five Solstice-class vessels, including Celebrity Reflection, and four Millennium-class vessels.

Celebrity competes in the premium segment with Holland America Line, which has a 2,650-passenger ship called Koningsdam under construction for delivery in February 2016.

Celebrity Cruises packages combine ocean and river voyages

By Tom Stieghorst

Celebrity Cruises said it will offer 11 itineraries next year that combine an ocean cruise with a river cruise in Europe.

The fully commissionable packages range from 16 to 24 nights and will be available on four well-known rivers: the Danube, Rhine, Rhone and Seine. Celebrity's river cruise partner is Amras Cruises.

“By introducing these river-and-ocean cruise packages, travellers can immerse themselves in Europe more so than ever before, with the ease of choosing a vacation package exclusively created by Celebrity,” said the cruise line's president, Michael Bayley.

The deluxe packages will be sold with airfare, pre-cruise hotel stays, transfers and a beverage package, making them similar to a luxury cruise in concept. 

Tour company in development at Royal Caribbean

By Tom Stieghorst

Royal Caribbean Cruises Ltd. confirmed that it is working on a new subsidiary that would be focused on developing and marketing land tours around the globe.

The company is still in formation, but RCCL has named John Weis, its former vice president of global tour operations, to spearhead development of the unit.

RCCL already offers cruise guests thousands of tours in hundreds of destinations. It said the new subsidiary, to be called TourTrek, will operate in 90 countries.

In a brief statement about the company, Royal Caribbean described TourTrek as a technology company that will be wholly owned by RCCL.

Weis will report to Larry Pimentel, president of Azamara Club Cruises and chief destination experience officer for Azamara, Royal Caribbean International and Celebrity Cruises.

Pimentel has made destination a core attribute of Azamara, starting with Azamazing Evenings, a program of customized night events for guests on Azamara cruises.

Celebrity has also been venturing into more elaborate shore excursions. In March, Celebrity said it would begin offering a a land-sea package this fall that combines five nights in Africa with an 11- or 12-day Black Sea cruise.

The land portion includes bookings at game lodges or four- and five-star hotels in Kenya and three safari expeditions, followed by transfers to Istanbul, where guests board Celebrity Constellation with stops on the Black Sea and in the Greek isles.

Celebrity President Michael Bayley said the tours quickly sold out.

RCCL said that it has hired longtime Carnival Corp. executive Roberta Jacoby to move into the role previously occupied by Weis. Her title will be managing director of global tour operations.

Jacoby retired in 2011 after 35 years with Carnival. Her final job was as senior vice president of corporate special projects.

RCCL said that further details about TourTrek will become available over the coming months.