Royal Caribbean talks changes to ship design, cultural shifts, millennials and more


During Royal Caribbean's third quarter 2017 financial call with investors, the company shared some interesting anecdotes, facts, and insight into the ever changing cruising environment.  While most of the information discussed in these earnings calls deal primarily with financial indicators, cruise guests can glean some insight into how Royal Caribbean runs its business.

Cultural change to responding to major events

Royal Caribbean Chairman and CEO Richard Fain took a few minutes to talk about the response the company has noticed from the general public, when it comes to major events like a hurricane disrupting the flow and life of the islands visited, and the cruise itineraries planned.

"We've noticed a significant change in the way people in general seem to respond to unusual events, whether those events are weather, geo-political acts, or something else.

Years ago, a bad incident would have a bad and lasting impact.  Whenever something happened, our bookings would fall and they would stay down for an extended period. People seemed to curl up in a ball and obsess about whatever the issue was.  It could, and did impact bookings, for a really long time. Even after the event left the front page, people would persist in focusing on it.  Eventually, they would move on and bookings would recover, but that process seemed to take forever.

More recently, we have seen a much more sanguine response. Instead of the incident lingering for a long time, the recovery seems much quicker. People seemed to be more apt today to see such events as ordinary, with little impact. The events still aren't normal, but they are seen as less relevant to the broader audience.  In effect, the public appears to become inured to such one off events.  They are still interested in the event, and concerned about it, but people seem to continue living their lives with less change. They move on.

From a societal point of view, I have to say that it's discouraging that we've reached such a point. It's distressing that incidents are now so common, that society seems to have formed a thicker skin towards them. On the other hand, as a response to the actual events, it's probably more constructive if society doesn't allow such things to interfere with our normal day-to-day existence.

From a purely commercial point of view, this cultural shift is very helpful.  It's much better for us if the negative impact of such incidents are so much more fleeting than in the past. "

Design changes in ships over decades

Over the last couple of years, Royal Caribbean Chairman and CEO Richard Fain has been fond of noting a cultural shift among consumers, where they are tending to prefer buying experiences over buying things. In the past, consumers seemed to be focused on buying things like new televisions, appliances, or other items of the like. More recently, Mr. Fain believes the focus has shifted to people looking for experiences, especially ones that include the whole family.

This shift has made Royal Caribbean change as well, to meet the needs and habits of consumers.

"Over the years, as people's habits and tastes, we've shifted our product to take advantage of these new consumer buying practices. For example, in the 1970s and 1980s, there was a dramatic shift in the way ships were designed and built. Instead of ships being designed as a form of transportation, we shifted to ships that were designed specifically for cruising. Our aspirations at the time were for ships to be more yacht-like. Now, that change really brought cruising into the modern era.

But in the '80s and '90s, there was another change in people's expectations.  The public's vacation desires changed, and we needed to shift with them. We shifted our design focus from trying to be yacht-like, to be more like hotels.  We started to design ships with more spacious public areas, better outfitting, and more amenities onboard.  We wanted the ships to feel more open, to have more things to do and to have a more luxurious feel of a modern hotel.  Our design metaphor changed from trying to seem like a yacht, to feeling more like a full service hotel.  Again, that fit in nicely with trends in consumer interests, and it resulted in better sales.

Now, over the last decade or so, travel habits have further changed and our ship designs have shifted yet again. Consumers now want a more active vacation, a more things to do and to experience. In response, we changed our design metaphor, from trying to be like hotels to be more like cities. Today, our ships have more features of cities, with a cornucopia of activities, amenity, and design.  We don't simply check the box with bars and restaurants and discos, we talk about designing parks, and gardens, and neighborhoods and quiet spaces. We model our medical facilities on urgent care facilities. Our specialty restaurants compare to anything you will find on land.  We have every stripe of nightlife, you can sail with us for seven nights and never experiencing the same things twice.

And again, adjusting our products to suit the changing wishes of the consumer has paid off in a very nice way. Our guests really enjoy the broader choice and amenities that the new ships offer.  And again, accommodating these wishes has resulted in improved demand for our product. "

Winning the perception war

One of the "battles" that Royal Caribbean (and the cruising industry) has faced over the years have been old stereotypes about what a cruise experience is all about.  It has been a stumbling point for the cruise industry, but Mr. Fain believes things are changing now and consumers are far more educated than ever.

"Many consumers thought of cruising through the lens of outdated stereotypes. We in the industry often complained about the inaccuracies of such misconceptions and our marketing was geared to correct the image. This sense of not being properly understood pervaded our industry, and profoundly influenced all of our communications.

But then, a strange thing happened. The evolution of consumer's changing tastes, and of our changing product, converged. The prevalence of these old, erroneous perceptions has waned. In effect, we have won the perception war.  We have crossed a tipping point, and moving beyond it.

Yes, there are still many people out there who suffer from these old misperceptions, but their numbers are dwindling everyday. Today, while this issue remains an issue at the margin, cruising has now firmly established itself as a relevant and a desirable vacation option for consumers generally."

Rethinking retail spaces

With the shift in consumers looking for experiences instead of products, and the news that particularly higher guest spending on shore excursions and internet packages, an investor asked if Royal Caribbean was going to rethink its allocation of retail space onboard their cruise ships.

Royal Caribbean International CEO Michael Bayley spoke to this question, "When we talk about the two programs, Celebrity Revolution and Royal Amplified, really a lot of thinking going into that is really thinking  through how our guest spend is changing. You will start to see that when we bring these ships out of the moderinzation programs that we have really reallocated space to generate better revenues in areas that we see guests now naturally gravitating towards."

Millennial cruising is on the rebound

When asked about new to cruise guests, and millennial demand, Royal Caribbean CEO Michael Bayley talked about the reversal in fortunes the cruise line has seen over the last few years, "In fact, if you go back before that three year period, we were actually in a situation where year over year we saw a decline in new to cruise and millennial.  Over the past three years, we've seen a very good increase year over year.  That's very much part of our marketing and communication focus on new to cruise and millennial, and we are seeing good progress."

Royal Caribbean Cruises Ltd Chief Financial Officer, Jason Liberty, provided a bit more feedback on what those numbers look like, "Over the past several years, we are carrying about 30-33% more millennials than we did several years ago."

Royal Caribbean hints at big reveal next week


Royal Caribbean has posted a new teaser hinting at an announcement coming next week.

Royal Caribbean alerted travel agents to the news that will be announced next Tuesday, with simply the tag line of, "Mark your calendars and tune in on November 7, 2017! The Thrills are about to get even bigger."

A couple of observations that may or may not have any relationship to the announcement:

  • The teaser image does not have a cruise ship in it, just land (although there is a beached boat on the left side).
  • The image file is named 17059107_Deployment_Tease_1024x640.jpg.
  • The word "thrills" is prominently mentioned.

What do you think this announcement will be about? Share your ideas in the comments!

Top 10 Royal Caribbean stories of 2016


With 2016 nearly complete, it's time to look back on the year and see which news stories generated the most interest.  There's no doubt that 2016 was a busy year for Royal Caribbean and so it is interesting to see which stories rose to the top of people's interest.

This year's top ten list is based on the Royal Caribbean stories we feel generated the most buzz and interest.  There's some stories that made the top ten list that surprised me and others I'm more surprises did not make the list.  Let's dive in!

Anthem of the Seas ran into an unexpected storm

In February 2016, Anthem of the Seas was beginning a normal cruise from the New York area to somewhere much warmer when it ran into a winter storm off the coast of the Carolinas, which generated waves of over 30 feet and hurricane force winds. As you might imagine, that caused quite a bit of motion onboard the ship and even some minor damage.

At first, the plan was to continue with the sailing but the news of the encounter with the storm generated a ton of negative coverage in the media, and Royal Caribbean decided to cancel the remainder of the sailing and offer refunds to guests.

This event was as noteworthy for the storm it encountered, as much as the negative publicity the event generated. Luckily there very few injuries, and Anthem of the Seas was back in operation very quickly.

Harmony of the Seas and Ovation of the Seas arrived

Royal Caribbean took delivery of two new cruise ships this year, which made for a very busy spring.

Ovation of the Seas, the cruise line's third Quantum class ship, was delivered to Royal Caribbean in April 2016 and then promptly headed to Southampton, England, where she offered a few quick cruises. Following those getaway cruises, Ovation began a 52-night “Global Odyssey” cruise that culminated in the arrival to her homeport in Tianjin, China.

Just one month later, Harmony of the Seas was delivered to Royal Caribbean, and she spent the summer in Europe before heading to the United States in November 2016.

Political protests in Haiti prevent Royal Caribbean guests from going to Labadee

The year started off with a series of unexpected protests in Royal Caribbean's private destination of Labadee.  Civil unrest related to the Haitian political situation caused some locals to protest in the waters of Labadee. 

Royal Caribbean decided to skip the scheduled stops in Labadee because of the protests. Although the protest was peaceful in nature, Royal Caribbean felt it was clear that if the protest continued, there would be a significant impact on our guests’ ability to enjoy Labadee.

The protests continued for a few more days before subsiding, and cruise ships were able to resume visits shortly thereafter.

Three Oasis class ships met in one place

It was an undeniably fun sight to witness Royal Caribbean's three Oasis class cruise ships meeting each other for the first (and perhaps only) time.

The three ships rendezvoused off the coast of Fort Lauderdale, Florida in a celebration of the arrival of Harmony of the Seas to her new homeport of Port Everglades. It was the kind of cruise eye candy that any Royal Caribbean fan relished seeing.

Royal Caribbean abandoned Dynamic Dining on Anthem of the Seas

Filed in the "I cannot believe it actually happened" category, Royal Caribbean dropped the bombshell news that it decided to abandon the Dynamic Dining concept on its ships.

Guest feedback proved to be too loud to ignore, and Royal Caribbean decided to offer on Anthem of the Seas My Time Dining program, with traditional and flexible options, as well as introduce new, upgraded dinner menus.

The decision to change how guests dine on Anthem of the Seas marks a tremendous reversal in fortunes for the Dynamic Dining program, which at one time was arguably heralded as the future of cruise ship dining. Nonetheless, the cancelation is a great example of how important guest feedback is to Royal Caribbean.

Royal Caribbean announced Icon class ships

Royal Caribbean made a big impact with the announcement it was ordering two new cruise ships that would be powered by liquefied natural gas and fuel cell technology.

These ships would represent the first two members of the new Icon class of ships. The Icon ships would likely accommodate approximately 5,000 passengers, but details are still being worked out.

The vessels will be delivered in the second quarters of 2022 and 2024. In the meantime, the company said, it will begin testing fuel cell technology on an existing Oasis-class ship in 2017, and will also run progressively larger fuel cell projects on new Quantum class vessels being built in the next several years.

Royal Caribbean began offering cruises to Cuba

Royal Caribbean had been hinting at offering cruises to Cuba for most of this year, but it finally received the go-ahead to offer sailings in December.

In fact, Royal Caribbean had a very quick turnaround from when it received permission from the Cuban and American governments to offer cruises to when sailings on Empress of the Seas went on sale. As expected, Empress of the Seas was the ship chosen to offer the company's first sailings to Cuba, which will take place in late spring of 2017.

Royal Caribbean will build a new cruise terminal in Miami

Royal Caribbean is making a comeback in Miami in a big way, with the announcement over the summer that it will build a brand new cruise terminal.

Terminal A will open in late 2018 and be able to handle Oasis-class ships (which has spawned a great deal of speculation as to which ship might call PortMiami home).

The new terminal features a cutting-edge design and has been nicknamed the ‘Crown of Miami’ because of its distinct shape. The design evokes the points of the symbolic headgear when viewed from the water; the ‘M’ of Miami when viewed from the east or western approaches; and a sense of waves rising or ships passing when viewed from the terminal side. At night, the terminal’s facade will be lit ensuring that the building makes a striking impression and providing a dynamic addition to the PortMiami landscape.

Changes to the unlimited alcohol packages

Royal Caribbean's drink packages have been quite popular since they were first introduced, but in 2016 we saw some big changes to the offerings that seemed to resonate with many guests.

Prior to 2016, drink packages rarely had discounts to them, but early in 2016 we began seeing a steady stream of discounts for the drink packages if they were purchased prior to a cruise. These new discounts helped "push" many guests over the proverbial fence of making that decision to invest in the package.

In addition, Royal Caribbean revamped its drink package options in September 2016, but simplifying the options available. Three unlimited alcohol packages became just one package and the non-alcoholic packages were also reconsidered. The idea behind the change in the drink package options was to make things simpler to understand for guests and crew.  

Liberty of the Seas received a major refurbishment

Speaking of refurbishments, the revitalization of the year goes to Liberty of the Seas, which added a ton of new activities and experiences including water slides and an aqua park way before Harmony of the Seas had one.

Royal Caribbean regularly uses the Galveston cruise market as a "testing ground" for new ideas that make it to the fleet later on, and Liberty of the Seas was the beneficiary of these new ideas.  Chief among them was the new Tidal Wave water slide, which took a bit longer than expected to get working correctly, but has since become quite popular with guests.

Your thoughts

What did you think was the biggest Royal Caribbean news of 2016? Did we miss one? Share your thoughts in the comments below!

Royal Caribbean stops issuing luggage tags


Royal Caribbean is stopping the practice of sending its passengers luggage tags in the mail prior to its cruises, effecting August 8, 2012.

Instead, bag tags will now be included as a page within the eDoc ticket booklets, which can then be printed and attached by the guest.  The exception will be for Crown & Anchor Society Pinnacle members and Suite guests (Grand Suites and above), who will still receive baggage tags in the mail.

At this time, this change only applies to Royal Caribbean International and not its sister companies Celebrity Cruises or Azamara Club Cruises.

Passengers can still get bag tags at the port they embark at, from the porters that handle the bags.  There's no indication as to why the practice of sending luggage tags in the mail is being stopped, although we can assume there's a cost savings benefit for Royal Caribbean.

Increased cruise bookings in US for 2012


The Cruise Lines International Association (CLIA) said more than half of travel agents they polled are claiming to be selling more cruises this year, compared to last year.  Moreover, 25% said by midyear the numbers were similar to 2011.

This is good news for the cruise industry after the Costa Concordia shipwreck hurt bookings, but the industry sees that as an "isolated event".

Travel agents report that 15 percent expected growth of more than 25% this year compared to last year and another 25% predict a rise of 11-15 percent.

CLIA president, Christine Duffy, commented on the news, ""Particularly for the U.S. consumer market, people certainly saw the Costa Concordia as a terrible tragedy that was a very isolated event and not indicative of how the broader cruise industry operates. And I think that bears out in the fact that we are seeing cruise bookings up over the same time last year. There is still a lot of consumer confidence in the cruise product."

Problems with Proposed Royal Caribbean cruise ship terminal in Uruguay


A proposed cruise ship terminal in Montevideo, Uruguay that would be for Royal Caribbean has run into some trouble.

According to reports, port executives evaluated the $40 million cruise terminal proposal but could not commit to the idea, because the port is "multipurpose".  Meaning, they could not guarantee a space for cruise operations.

Royal Caribbean presented the plan to port officials back in March that would give Royal Caribbean an exclusive terminal for their ships at the port of Montevideo, which would include a 200-room hotel, shopping mall and cultural center.

In addition, port officials said they are not denying the idea completely, but cannot approve the plan proposed.

Royal Caribbean announces memorial service for Mike Semler


Royal Caribbean has announced a memorial service to remember Mike Semler, who recently passed away suddenly last month.  Semler was Royal Caribbean's Wichita call center director.

Royal Caribbean said the public service will take place at 1 p.m. on Saturday, July 7, at the Beech Activity Center, 9710 E. Central in Wichita, Kansas.

Semler, 50, was the director of trade support and service and was director of the facility in Wichita, which he helped to launch in 1999.

An active community leader, Semler held board appointments for United Way of the Plains, Kansas Communities in Schools, Go Witchita, and most was Chairman of the Kansas Chapter of the Make-A-Wish Foundation.

In lieu of flowers, the family has established that donations may be made to either the Make-A-Wish Foundation of Kansas or the Kansas Humane Society. Donations may be sent to:

Make-A-Wish Foundation of Kansas
2016 N. Amidon
Wichita, KS 67203
Please indicate that it is in Memory of Mikel Semler.
Credit card donations may be made via phone at (316) 838-9474.

Royal Caribbean to speak at Cruise Shipping Asia-Pacific conference


Royal Caribbean will be part of the conference line up at Cruise Shipping Asia-Pacific conference and trade show later this year on September 17-18, 2012.  The second annual event will take place in Singapore is set to bring the cruise industry together to look at the emerging Asia-Pacific cruise market.

As part of the conference, Royal Caribbean's Managing Director for Asia-Pacific Gavin Smith and Adam Armstrong, Commercial Manager for Australia & New Zealand will join a panel of other cruise executives to look at the what the Asia market means.

Royal Caribbean releases statement about death of Mikel Semler


Royal Caribbean chairman Richard Fain released a statement about the death of Mikel Semler, who was the Director, Trade Support and Services for Royal Caribbean Cruises.

“It is with great sadness that I report to you that Mikel Semler passed away unexpectedly this weekend. Mike started his career with us 13 years ago (before the delivery of VOYAGER OF THE SEAS) when the concept of our Wichita call center was still just a work in process. He oversaw the creation and development of this important business center. Over the years, Mike built up the size and importance of Wichita as a key part of Royal Caribbean’s ability to handle the needs of our rapidly growing guest base. Currently, the center has over 400 employees handling almost four million calls per year.

At the same time, Mike made sure that the office was a proud supporter of his local community, becoming an active leader and promoter of Wichita and the surrounding community. He was most recently the Chairman of the Kansas Chapter of the Make a Wish Foundation. He also held board appointments for United Way of the Plains (having previously served as its Chairman), Kansas Community in Schools and Go Wichita, a local travel and tourism association.

We will all miss him as a work colleague and friend after his many years of loyal service to Royal Caribbean. His dedication and commitment to our company was an integral part of our success and growth.

It seems hard to imagine it, but Mike was just here in Miami for a two day retreat of the company’s executives. His good humor and focus on the future helped lift all of our spirits and raised the demands we placed on ourselves.

Our heartfelt condolences go out to his family and friends during this most difficult time. They will remain in our thoughts and prayers.” 

Royal Caribbean ship rescues dehydrated sailor


Royal Caribbean's Enchantment of the Seas rescued a sailor racing in the Newport Bermuda Race after he became dehydrated.

The chairman of the 2012 Newport Bermuda Race, John Osmond, said at 3:00 am on Monday Nathan C. Owen reported to be suffering the effects of dehydration.  

Enchantment of the Seas transferred him from his 46-foot sloop "Seabiscuit" at about 200 miles northwest of Bermuda in rough seas.

Enchantment of the Seas was on its way from Bermuda to Boston, Massachusetts when officials at Bermuda’s Rescue Coordination Center contacted the Enchantment of the Seas' captain and requested that the ship be diverted to rescue and treat Owen.