China

6 interesting facts from Royal Caribbean's second quarter earnings call

In:
01Aug2017

Each quarter, Royal Caribbean's management gets on the phone with investors to discuss its quarterly earnings.  Much of the call is dedicated to the discussion of rather uninteresting fiscal reports, however, there are a number of tidbits that Royal Caribbean fans can glean during the discussion.

During Royal Caribbean's second quarter 2017 earnings call with investors, we picked up on five interesting points worth noting.

New trend: People are buying memories

Royal Caribbean Cruises Ltd. Chairman and CEO Richard Fain started off the earnings call with an observation on the changing ways consumers are spending their money.  A strong cruise market seems to suggest to Mr. Fain that consumers have less they need to buy, and are instead investing in their memories.

"People have bought all the stuff that they need, and they're now looking towards gaining more experiences. Instead of buying TVs and cars, they seem to be buying memories as never before. Since we're in an industry that specializes in providing great memories, that trend plays to our sweet spot. Even better, the trend shows no respect for borders and seems to be occurring all around the world.  Our sailings in the U.S., Europe, Alaska, Asia, all demonstrate this fabulous phenomenon."

Smart phone app update

Royal Caribbean provided another sneak peek at what it's working on for its new smart phone app and digital strategy, dubbed internally as Project Excalibur.

While no additional information was provided in terms of what Project Excalibur will do, Richard Fain did provide an idea of how many ships will have the new feature ready for use. 

"We expect to have Excalibur functioning on 15% of our fleet within in 5 months of today, and half of our fleet by the end of next year."

Moreover, Fain elaborated on the importance of developing Project Excalibur to the long-term sustainability of the cruise line, "I've said before that our efforts in this arena are not nice to have, they are vital to keeping cruises relevant as a great vacation experience."

Price Integrity Policy rewarding those that book early

Richard Fain provided an update on its no last-minute price drop efforts, known as the Price Integrity Policy.

"As we have predicted, the early stages cost us revenue in both 2015 and 2016.  That hurt, but once we established our consistency and credibility with the travel agents, with the public, and with our own revenue managers, the benefits started flowing in.  Today, it's clearer that the program is accomplishing our goal of rewarding those who book early, while disincentivizing those who push for last minute discounts."

"The key to this consistency has been consistency. We don't do it only when it's painless or convenient. We maintain the program, even when it hurts, and sometimes, we have to let cabins sail empty. That goes against every one of our instincts. But the focus and the discipline have proven their value."

"Ironically, the program has been so successful, that we're now expecting to achieve a record load factor this year. That in turn, causes slightly higher operating costs per lower berth, but obviously, the bottom line impact is very positive."

Strategy of premium hardware in China

Earlier this year, Royal Caribbean announced the first Quantum Ultra class ship will be sailing in China, and that is in line with the cruise line's plan to bring new and impressive ships to sail from China. 

Fain explained, "With the Quantum Class of ships, we're giving the most technologically advanced hardware to a market that is very digitally focused. This move is a continuation of our strategy to have premium hardware in China.  And that strategy is what has enabled us to gain, and to hold, a leadership position in the eyes of the Chinese consumers, such that today, Quantum is essentially synonymous with cruising in China."

North American passengers are cruising more than ever

Cruisers from the United States and Canada have always been a strong source of Royal Caribbean's market, but the cruise line is seeing even higher demand for its cruise products from North American consumers.

Royal Caribbean Cruises Ltd. Chief Financial Officer Jason Liberty elaborated as to how North Americans are cruising now more than ever, "North America remains our largest sourcing market, and the strength and demand we have seen from U.S. and Canadian guests have been unwavering for both sides of the Atlantic."

"While we most itineraries have benefited from strength of the North American consumer, we have seen particularly strong trends on European sailings, both in the Mediterranean and the Baltics. Fewer geo-political events and stable air pricing have contributed to a surge in demand from our higher paying North American guests. As a result, North American guests will account for a larger percentage of Europe itinerary sourcing than in any other recent year."

"The North American consumer does not only spend more on the ticket, but they also spend quite a bit more on the ships, and the driver of that has to do with the shore excursion side, because it's more of a bucket list vacation experience for them.  So they tend to more onboard than the European guest. It's a more profitable opportunity for us if we are sourcing more North American guests versus European guests. As the North American consumer is eating up a lot of that capacity, that also puts the European consumer in a position where they have to spend more in order to get onto the ships."

Royal Caribbean's marketing strategy targets those new to cruising and Millennials (and it's working)

It is no secret that Royal Caribbean (and really the entire cruise industry) has been targeting those that have never taken a cruise before, but we got a bit of insight into Royal Caribbean's marketing strategy in today's earnings call.

Royal Caribbean International CEO Michael Bayley elaborated how the cruise line targets the American cruise market, "We have been quite focused on developing the new to cruise and the Millennial market, and we've have been making very good progress over the past couple of years.  If you look back over time, you'd see a decrease year over year in new to cruise and Millennial to Royal Caribbean International, but over the past two years, we've seen a good increase.  Part of that's related to our messaging and our marketing strategy, where we've moved from really traditional marketing to more digital, and we're seeing a good pickup from new to cruise."

Royal Caribbean has absolutely no plans to move cruise ships out of China

In:
Category: 
02Aug2016

During Royal Caribbean's second quarter earnings call with investors, Royal Caribbean reiterated it had absolutely no plans to reduce or transfer capacity from the Chinese cruise market.

Royal Caribbean Chief Financial Officer Jason Liberty summarized the quarter's earnings and provided guidance for the future, where he mentioned there has been some "softness in close-in demand in Shanghai in recent weeks". 

Royal Caribbean Ltd Chairman Richard Fain added, "Softness in China is being driven by huge capacity growth rather than faltering demand."

Royal Caribbean International CEO Michael Bayley spoke more about the role of China within Royal Caribbean's business, "With the softness we've seen, still, China continues to generate above-average yields and it's accretive to our business."

"Certainly, we are optimistic about the overall future in terms of the market potential, and we have been very actively engaged in the broadening and broadening of channels in the marketplace.  There is no issue with demand. The demand is there and the market is there. It's the building of the distribution quickly enough to handle the capacity."

When concerns arose from investors about a shift in capacity from China to the Caribbean, Richard Fain flat out ruled out any such change in the foreseeable future, "We are a long-term industry. This is an industry where our horizon is long-term, we plan long-term. We see a very powerful market and don't see any real change in that.  The idea that because of relatively modest discounting in one year, and in the face of a more profitable environment even with that discounting, that we would suddenly change the way we've operated forever in the industry just doesn't seem to me to be realistic."

"There are concerns that if China doesn't develop, all the capacity will turn left and head towards the Caribbean and saturate the Caribbean. It would require an enormous change in the fundamentals of China to even begin to contemplate that.  I will just tell you, within our company, the subject has literally never arisen in any deployment discussion that I am aware of.  We are so far from it that we just think that would require a level of change that none of us think is likely or remotely likely."

Royal Caribbean signs deal with China's Forbidden City Imperial Palace to showcase Chinese culture on Ovation of the Seas

In:
19Jan2016

Royal Caribbean and the Chinese Imperial Palace Museum (the Palace Museum) held a joint press conference today at a signing ceremony for a Memorandum of Understanding (MOU) agreement in the Forbidden City’s Jianfu Palace. 

As part of the agreement, experts from different research fields selected by the Palace Museum will be invited to give lectures of Chinese history and culture to guests on Ovation of the Seas. 

The Palace Museum also will provide professional consultation of the ship’s interior décor and art program. In addition, signature pieces from the collections of the Imperial Palace Museum will be on display to promote the traditional culture and arts of China. Paintings and art pieces created by artists from the Palace Museum will be available for guests to purchase at auctions held onboard.

Ovation of the Seas, Royal Caribbean’s newest ship that debuts in April, will be the first to homeport in China immediately after its delivery and will begin service from Tianjin beginning June 2016.

The signing ceremony officially launches the “2016 – Let’s Ovation” campaign in China and marks the countdown to Ovation of the Seas’ maiden voyage in China.

“We are proud of the extensive collection of art and relics that represent the imperial treasures of the Ming and Qing Dynasties and it is our goal at The Palace Museum to showcase the traditional Chinese culture to people all over the world,” said Shan Jixian, Director of the Imperial Palace Museum. “This partnership with Royal Caribbean International and our programs on Ovation of the Seas will help to further these objectives. We are excited to promote the rich heritage of the Forbidden City and China to the guests of the world’s largest global cruise line and we hope to continue to expand on these efforts.”

Dr. Zinan Liu, President of North APAC and China, Royal Caribbean International said: “Cruising is becoming increasingly popular with Chinese travelers and Royal Caribbean’s award-winning and state-of-the-art ships with features found only on Royal Caribbean are very appealing to those consumers looking for a high quality vacation experience. Quantum of the Seas has been very well received by our Chinese guests and we are excited to now bring Ovation of the Seas to Tianjin. Sailing two of the world’s newest and most technologically advanced ships in China demonstrate our leadership and commitment to the market and this partnership with the Palace Museum showcasing China’s rich heritage will bring yet another unique element to our vacation offering.”

Ovation of the Seas will be officially launched in April 2016, when she departs Southampton for Tianjin, China on a 53-day Global Odyssey. She will begin her first homeport sailing season in China from Tianjin in June 2016. Ovation of the Seas, together with Quantum of the Seas, Mariner of the Seas, Voyager of the Seas and Legend of the Seas, will make up the largest fleet of any cruise line sailing in China.

Angry Chinese passengers forcibly removed from Royal Caribbean Quantum of the Seas

In:
01Sep2015

About 300 passengers from Royal Caribbean's Quantum of the Seas had to be forcibly removed because they were upset about an itinerary change.

Quantum of the Seas was slated to make stops in three Japanese cities, but concerns about Typhoon Goni forced the ship to make stops in South Korea instead.

The passengers were upset about the change and wanted to receive compensation for the change in their route.

When Quantum of the Seas returned to the Wusongkou International Cruise Terminal in Baoshan District, the angry passengers refused to disembark until 1pm, when the final few were removed by crew members.

Royal Caribbean had given passengers free Wi-Fi and lobster dinners during the voyage to try to make up for the change.

Royal Caribbean took the upset passengers to a nearby hotel, where negotiations reconvened.

Royal Caribbean said it was willing to communicate with tourists based on international and Chinese regulations.

However, it said it would not accept “irrational and illegal behavior,” including threats affecting other tourists’ vacation.

Royal Caribbean makes changes to Quantum of the Seas for the Chinese cruise market

In:
26Aug2015

Royal Caribbean has nearly completed updates to Quantum of the Seas that will better suit her for her role in offering cruises in China.

Since arriving in Shanghai back on June 24, the ship had some venues and areas of the ship changed to better accomodate the Chinese guests that will be sailing on her.

All photos by Royal Caribbean

Some changes include

  • Johnny Rockets was changed to a Kung Fu Panda Noodle Shop
  • Dynamikc Dining was removed and dining changed to traditional dining
  • Duty free shop was relocated to make room for luxury leather boutique
  • Sunglass shop replaced by high-end Italian footwear shop
  • Royal Caribbean branded marketing inserts in some store windows were swapped out to comport with Chinese tastes
  • Mamma Mia! was replaced with a one-hour show called "Sequins and Feathers"

Royal Caribbean director of revitalization operations, Fabien Teissonniere, estimates that 95 percent of the changes to Quantum of the Seas for the Chinese cruise market is complete and a few more changes will be made later this year or in early 2016.

Royal Caribbean's Quantum of the Seas arrives in Shanghai to begin cruises from China

In:
24Jun2015

Royal Caribbean's Quantum of the Seas arrived in Shanghai (Baoshan), China today, which will be her new homeport.  Quantum of the Seas will offer three- to eight-night, roundtrip cruises, year-round from Shanghai to North Asia destinations.

Chinese officials from the port authority from Baoshan district together with executives from Royal Caribbean joined the welcome ceremony for Global Odyssey guests at Wusong International Cruise Terminal this morning.

Quantum of the Seas's arrival completes a 53-night global odyssey cruise from New York that took the ship to the Atlantic Ocean, Mediterranean Sea, Indian Ocean and finally, China.

Royal Caribbean President and CEO, Michael Bayley, spoke about the impact of Quantum of the Seas' arrival, "Chinese consumers have grown to expect the best the world has to offer, and Quantum of the Seas meets that standard like no other ship – this is a cruise from the future,  The addition of Quantum of the Seas has increased our brand’s capacity to the highest ever in the region. There is incredible potential in the Chinese market, and bringing our newest and most technologically advanced ship to China will cement our leadership position in the area."

Royal Caribbean promotes Dr. Zinan Liu as new President for the China and North Asia Pacific region

In:
Category: 
15Jun2015

Royal Caribbean announced today it was promoting Dr. Zinan Liu as its new President for the China and North Asia Pacific region.

Zinan joined Royal Caribbean International in 2009 and has been spearheading all of Royal Caribbean's commercial and operational activities, and significantly growing the brand in the region, including opening offices in Beijing, Guangzhou and Hong Kong, and bolstering the brand's operations in Shanghai. 

Royal Caribbean President and CEO Michael Bayley commented on the promotion, "These are exciting times for Royal Caribbean International as we continue to build our business in China.  I am confident that Zinan's expertise as a global travel veteran, his strong relationships in the region, and astute business acumen, will put us in a powerful position to reach our goals."

Zinan holds a doctoral degree in economics from the University of London, and also is Chairman of Cruise Lines International Association, North Asia, where he has been an influential spokesman for the cruise industry in the region.

Royal Caribbean wins Best Cruise Operator in China for 7th year in a row

In:
Category: 
13May2015

Royal Caribbean was awarded Best Cruise Operator for the seventh year in a row by Travel Weekly China and TTG China.

Both awards honor the best in the travel industry and recognize leaders in many aspects of travel, such as hotels and resorts, travel destinations, cruise lines, online travel and more.

Royal Caribbean Vice President of North Asia & China Dr. Zinan Liu commented on the award, “We are absolutely thrilled to receive these two prestigious trade awards once again.  As these awards are voted on by travel agents and consumers across the country, it is an honor to have the support and confidence in our brand from our valued travel partners and the market. This is a great accomplishment for the Royal Caribbean International team and we will continue to offer our partners and guests the best products and service.”

“These awards identify the industry’s finest,” said Rebecca Zhang, Travel Weekly’s Publisher in China. “The professionals who read and rely on trade media have the expertise to select those business, destinations and hotels that provide higher level of service to their clients. Our readers can be confident that these winners represent the best this industry has to offer.”

Royal Caribbean is sending Ovation of the Seas to China

In:
25Mar2015

Royal Caribbean will send its third Quantum-class cruise ship, Ovation of the Seas, to China when she debuts in April 2016.

Ovation of the Seas will be home ported in Tianjin, China, 70 miles southeast of Beijing.

Sister ship Quantum of the Seas will be heading to China later this summer and together with Ovation of the Seas and three other Royal Caribbean ships, Royal Caribbean is poised for a monster offering in this new cruising market.

 Once launched, Ovation of the Seas’ maiden sailings will include a 52-night Global Odyssey from Southampton, U.K. to Tianjin. Vacationers can be among the first to experience the new ship on the 2016 Ovation Global Odyssey, which will open for sale on Thursday, March 26, 2015. Five itineraries will take guests to some of the world’s most iconic cities:

  • A seven-night England to Barcelona cruise, departing May 3, 2016 from Southampton
  • 16-night Barcelona to Dubai cruise, via the Suez Canal, departing May 10
  • 14-night India and Southeast Asia cruise, departing May 26 from Dubai to Singapore
  • Three-night Malaysia cruise, departing June 9 on a roundtrip sailing from Singapore
  • And 12-night Exotic Asia cruise, from Singapore to Tianjin.

Royal Caribbean CEO Michael Bayley made the announcement earlier today, “Cruising has become very popular for Chinese consumers and Royal Caribbean is already capturing their imaginations with our industry-leading cruise ships,” said Bayley. “We are furthering our commitment by bringing two of the world’s newest and most advanced Quantum-class cruise ships to the region. In addition, we are significantly expanding our investment in the training and employment of Chinese talent so they can join us in delivering our amazing and distinctive vacations to Chinese travelers.”

The five ships Royal Caribbean will base in China will be homeporting in four metropolitan Chinese cities – Shanghai, Tianjin, Hong Kong and Xiamen – and primarily sailing three- to 12-night itineraries to destinations in Japan, Korea, Taiwan and Vietnam. Royal Caribbean’s summer 2016 Asia adventures will open for booking in August 2015.

The news Ovation of the Seas will be based in China confirms an earlier report we posted that the new mega ship was indeed heading there.

 

Royal Caribbean sets up staff training center in China

In:
Category: 
23Aug2014

Royal Caribbean has set up a staff training center in China.  The new center is at in Tianjin Maritime College in north China's port city of Tianjin.

The new training center will have an area of over 13,000 square meters and offer training rooms for Western and Asian cooking, guest rooms and exhibition halls.

Royal Caribbean chief human resources officer, Maria Del Busto, said the cruise line will have five new cruise ships from China in the next couple of years.

Tianjin gained official approval for a national cruise liner tourism development zone last year.

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