FManke Posted February 25, 2020 Report Share Posted February 25, 2020 At what point does RC start to make money on a cruise cabin? How much does it actually cost RC per day, including all wages, food, expenses, etc, to operate a cabin? I know years ago for example, I worked for an upscale hotel chain and it cost $25 per occupied hotel room, so anything over that was technically profit. I've been thinking about this lately with the coronavirus fears and such, as cruises have been cancelled and cruise fares refunded, exactly how many cabins on any given cruise must be occupied to turn a profit, for any given cruise. Quote Link to comment Share on other sites More sharing options...
WAAAYTOOO Posted February 25, 2020 Report Share Posted February 25, 2020 Certainly nobody on this board can answer that question...but I will repeat a cruise-ism that I heard once. It is absolutely not quantitative. I heard from a ship's officer a number of years ago that the cruise line makes pretty much nothing on the cruisefare....and that all of the profit comes from onboard sales - everything that has an extra $$. I have no basis to back this up and no verification. It's just what I 'heard'. Similarly, I have heard the same thing about movie theaters - that they make no profit on the film itself and all of the profit comes from concessions sales. Again....no data to validate. Quote Link to comment Share on other sites More sharing options...
Ampurp85 Posted February 25, 2020 Report Share Posted February 25, 2020 I use to manage an IHOP, it cost us $.50 in total for a stack of pancakes that ran $4.99. Our weekly sales could be anywhere from $14-26,000. Essentially with labor, utilities and general cost we went black by the second week every month.Of course they always want you to make more, so having $65,000 in monthly revenue is not as great as having $86-100,000. As far as what RCC needs to make in order to be black...My guess would be all of Star class on Oasis and Quantum ships and all the suites, minus jr, on the other classes. Lets say an average of 4000 pax at about $500 per person would be about $2 million. I would imagine that cost, labor and overhead would be under $100 million for the year. So on the low average of $2 million per sailing, RCC just needs 50 cruises to break even. There are some ships that do more than that just on their own in a year. I have found that 35-41%(the maximum percentage of cost they are willing to spend to provide great services) is the medium when it comes to hotel and traveling. So my guess would be about $176 per cabin, maybe even a little less depending on the ship. WAAAYTOOO 1 Quote Link to comment Share on other sites More sharing options...
twangster Posted February 25, 2020 Report Share Posted February 25, 2020 It's complicated and not widely published. A significant portion of total revenue comes from onboard sales so you have to look beyond the cabin. That's why they have people selling dining and drink packages, photo packages, $20 t-shirt sales, watches, art, spa, etc. It's also why solo supplements exist and babies can cost the same as an adult - one less wallet or purse on board to buy stuff. The solo supplement makes up for lost revenue having fewer guests in a cabin. Certain regions are higher margin. Cuba was a high margin destination. Alaska remains high margin. Royal is one of the few lines that was making money in China but how much money versus other regions is a tightly kept secret. Some other cruise lines may be quick to abort China because they weren't making a lot of money there. Since Royal had better success in China it hurts them more although if that money is in reserves now it will help them weather through this. Bottom line - not every cruise is the same, you can't make it so simple as to say a cabin equals this amount. Ampurp85 1 Quote Link to comment Share on other sites More sharing options...
Matt Posted February 26, 2020 Report Share Posted February 26, 2020 14 hours ago, twangster said: A significant portion of total revenue comes from onboard sales so you have to look beyond the cabin. That's why they have people selling dining and drink packages, photo packages, $20 t-shirt sales, watches, art, spa, etc. I believe those elements are what actually generate a significant profit for the cruise line. As others said, we can only speculate on RC's bottom line, but I've always gone with the assumption that cruise fare primarily is a break-even or slightly profitable premise. Quote Link to comment Share on other sites More sharing options...
GregD Posted February 26, 2020 Report Share Posted February 26, 2020 Here is a good article that breaks down the info you were asking about https://www.cruzely.com/heres-how-much-money-cruise-ships-make-off-every-passenger-infographic/ tmp916 1 Quote Link to comment Share on other sites More sharing options...
Matt Posted February 26, 2020 Report Share Posted February 26, 2020 1 minute ago, emsff02 said: Here is a good article that breaks down the info you were asking about https://www.cruzely.com/heres-how-much-money-cruise-ships-make-off-every-passenger-infographic/ It's a good educated guess, but I wouldn't go as far to say that it is should be taken as gospel. Quote Link to comment Share on other sites More sharing options...
GregD Posted February 26, 2020 Report Share Posted February 26, 2020 3 minutes ago, Matt said: It's a good educated guess, but I wouldn't go as far to say that it is should be taken as gospel. Exactly, Its a guess using as they describe in another article "back of the envelope math" based on assumptions gleaned from their financial statements for stock holders. Its an average across the whole fleet Matt 1 Quote Link to comment Share on other sites More sharing options...
Thrifty99 Posted February 26, 2020 Report Share Posted February 26, 2020 You could also look at the company’s financial statements to get a general idea. RC has a trailing net profit margin of 17.55%. So for the past 4 quarters they have made 17.55% profit (after all expenses, taxes, etc). So IN GENERAL for every $1,000 you spend on a cruise they are making $175. But those profit margins vary by ship, cabin type, sailing itinerary, time of year, etc. It also varies by the “extras” you purchase. Internet, alcohol beverage plan, soda plan, excursions, the Key... they will all have different profit margins. So if you have a cruise where you have a suite and buy a lot of extras your profit margin for the company may be 25%+ versus a person who buys an inside cabin and pays for nothing extra on the ship may be at a 15% profit margin. Quote Link to comment Share on other sites More sharing options...
Ampurp85 Posted February 26, 2020 Report Share Posted February 26, 2020 I think @Thrifty99 and the article@emsff02 cited could be both right..or we could be all wrong. Let me preface this by saying I am not a conspiracy theorist. Through some insane legal, but morally questionable, loopholes......RCC could have like a 77% profit margin. I say this because my IHOP was a franchise and they did questionable things..accounting-wise. Everything doesn't make it to report...I know they were just named an ethical company....again but I said this to say who really knows. As long as I don't feel scammed and they continue to provide a great product, with great service Quote Link to comment Share on other sites More sharing options...
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