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How WIll RC Limit Capacity?


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I just read the article by Matt about RC considering limiting capacity on their ships, at least initially.

I hope they do this but I hope it is done fairly. I was initially booked on Allure OTS when it was going to sail out of Galveston. I L&Sed my cruise to Symphony OTS out of Miami for the same price (except for minor port fees). I booked my cruise as soon as Allure was announced and got a really good price. When I moved to Symphony I did a mock booking and the price was $3000 more than what I am paying, for the same cabin. 

I sure hope that RC doesn't decide to limit occupancy by cancelling my cruise and keeping the higher profit bookings intact. 

I am probably just being paranoid but that is the first thing that came to mind. After all, they have to get their lost revenue back somehow.

Steven

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If they are limiting inventory, you can count on the low margin product to be limited. You can also count on bookings being cancelled on cruises that sail. You can count on prices going up. I don't see a way for them to recover lost revenue. I do see that they will seek not to lose money and sustain the company for the time when people and governments stop freaking out.

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With cancellations and lift and shift I would think if they still needed to reduce, they’ll dangle another carrot instead of booting people. 150% FCC? Attractive OBC? 

I poked around my October Symphony today and there are still several interior cabins open for booking. The majority are forward cabins. 

Since it’s been somewhat out there that crew will have their own cabins, you’d think they’d pull interior cabins and give those to crew. 

As always, this is all speculation and we just have to wait and see. Although it’s fun to play the “what’ll they do” game! 

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52 minutes ago, Jill said:

With cancellations and lift and shift I would think if they still needed to reduce, they’ll dangle another carrot instead of booting people. 150% FCC? Attractive OBC? 

I poked around my October Symphony today and there are still several interior cabins open for booking. The majority are forward cabins. 

Since it’s been somewhat out there that crew will have their own cabins, you’d think they’d pull interior cabins and give those to crew. 

As always, this is all speculation and we just have to wait and see. Although it’s fun to play the “what’ll they do” game! 

 If they are indeed looking into reducing the number of passengers they should stop accepting new reservations on cruises sailing September 15 thru lets say the rest of the year for starters.

  That's a good thought with the carrot dangling. Perhaps something somewhat similar when airlines want to bump someone because they over sold the flight. Make some kind of great offer to see who volunteers. If enough want to get "bumped" to a different cruise somewhere down the line to satisfy Royal then great. If not then maybe a little more of a "push" or slightly pressure people to re-schedule (you know like emails every day, possibly calls too). If not enough volunteer after that, then they'll force cancel people based on ????? with proper extra compensation of course.  

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On 6/30/2020 at 4:36 PM, stevendom57 said:

I sure hope that RC doesn't decide to limit occupancy by cancelling my cruise and keeping the higher profit bookings intact.

Ever since this article came out, this has been a big concern for me, as well. If this is what happens, I can't help but feel like we'll be punished for taking advantage of a good deal.

Our next cruise (Late January '21) continues to be available for booking and I'm starting wonder if someone that books MUCH later at a higher cost will be accommodated while loyal customers that book early, like myself, are left standing on the pier, so to speak.

I certainly hope the determinations would not just be made by initial booking costs. We like to book cheaper fare so that we can spend more in other areas of the overall vacation experience. (i.e. Dining, drinks, casino, excursions, spa, onboard shops, activities, etc.)

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I sure hope RCL will not be looking to bump low-profit margin cruisers on my Nov 1st Harmony cruise.  My cruise was "free" by using my BOA RCL CC and is fully paid for.  I did pay the customary port charges and an upgrade to balcony, so the cost was about $650.  I have already decided to stop using my RCL visa card.  Many of the new 2% cards are a better deal w/o the risk.  I guess there is always the fact that Nov cruises might get cancelled too, but with my cruise fully paid for, I would like to sail.  As far as new bookings for my cruise, they are still available and the prices do not look inflated.  Maybe RCL still has not figured out social distancing yet?  Matt's article (link above) says no decision has been made yet.  Even inside rooms are still available - I just don't know what to think.  I still need to buy airfare... 

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I would guess they focus on keeping the higher priced rooms.   Balcony/Concierge/Suites as they have a higher margin.   I think those with "outside" air will get priority.   Will be interesting to see what that translates into capacity - 50%, 75%?   If you get on-board with the lower loading, obviously no fighting over deck chairs.  It could end up being a more pleasant experience with a better passenger to crew ratio.   If shuttering lower deck cabins, the ships would not need as many in housekeeping, so could save some labor.

 

This will be very interesting.

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On 6/30/2020 at 5:35 PM, Ampurp85 said:

i think it depends on the ship, date and ports. Obviously they can fit more people on an Oasis class, so maybe they push people to sail in balconies or higher. This would only be in the beginning of the restart I believe, so 2021 should be regular sailings.

They can social space on the larger ships.  I'm curious on operations cost.  Read one place that the newer ships are more efficient from a fuel perspective.  Guess you pick the ships that you can make the most profit with the lowest number of people.  I'm sure they'll fill the sub-capacity ships - lots of penned up demand to get back on the seas.

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1 hour ago, cruisellama said:

Guess you pick the ships that you can make the most profit with the lowest number of people.  

It costs a lot of money to move a ship to a new home port and that cost goes up with distance.  A new ship may be more efficient but if another ship is in the right place at the right time and can start carrying guests right then, in the bigger picture it might be more cost effective to let that ship sail.

Empress carries 1,600 and it never feels crowded.  At 50% capacity that 800 guests.  Very easy to manage 800 on that ship and that ship is paid for (no loan payment) so the fact that it might burn more fuel per guest mile doesn't mean it makes her less cost effective versus a new ship especially if she is in the right place.

Some foreign countries might feel more comfortable with just 800 arriving on a ship versus 3,000.  Oasis at half capacity is 3,300.  From this perspective it may be small ships have a place as well.   

At the end of the day it's not just one factor such as fuel efficiency that will drive the return to cruising.  There's a lot of factors in play.  

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2 hours ago, twangster said:

It costs a lot of money to move a ship to a new home port and that cost goes up with distance.  A new ship may be more efficient but if another ship is in the right place at the right time and can start carrying guests right then, in the bigger picture it might be more cost effective to let that ship sail.

Empress carries 1,600 and it never feels crowded.  At 50% capacity that 800 guests.  Very easy to manage 800 on that ship and that ship is paid for (no loan payment) so the fact that it might burn more fuel per guest mile doesn't mean it makes her less cost effective versus a new ship especially if she is in the right place.

Some foreign countries might feel more comfortable with just 800 arriving on a ship versus 3,000.  Oasis at half capacity is 3,300.  From this perspective it may be small ships have a place as well.   

At the end of the day it's not just one factor such as fuel efficiency that will drive the return to cruising.  There's a lot of factors in play.  

Actually being on a ship at 50% capacity could be a good deal.   Less lines, more space, no need to hog deck chairs - probably better service.

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That is true @twangster there will be a lot of factors to consider.

Having the right ship in play, coupled with demand and cost, will probably be the biggest criteria. I keep thinking about everything from RCCI POV when it comes to capacity limitations. But I have to also remember that many places may not want to have 5,000+ visitors a day. Even if they only do private islands for a while, there will still be contact with the locals. So while Oasis and Quantum class can hold more pax, they also hold more risk.

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My L&S was a cruise that was paid for with FCC from a previous cancelled sailing. I can't see them bumping us or anyone who Lifted and Shifted. They've already proven that they're having a hard time keeping any of this straight (e.g., excess refunds, partial refunds on whole payments, CP purchases credited to cruise fare, etc).

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14 hours ago, crisgold52 said:

Flights on the other hand are  a bit of a different model since while it's TRUE people are packed closer together...by their nature flights last hours not days and they have the ability to touch down anywhere Plus lesser head count per aircraft capacity wise compared to a ship. All in all, from a risk and practical stand point I feel most likely that the 2020 cruise season... at least in America is done.

A couple U.S. based airlines have moved past the distancing concept.  They are back to normal seating.

People at a pool outdoors or a house party indoors for a couple hours are spreading it.  It's a lottery right now.  Pick the right seat on a plane next to someone who is asymptomatic and you'll probably be infected by the the end of the flight.  The airline industry needs to be grounded.  They should just stop pretending.  

At least on a cruise ship the maximum time I spend next to a stranger is at a show or muster drill.  I can choose to skip a show or leave 10 minutes in.  Stop the shows and that's solved.   In the WJ I can be in and out in 20 minutes, if I take it to go 1/3 of that.  

Walking through a grocery store isn't the primary source of spread.  That's kind of what a cruise is like.  Walking past people but not sitting beside them for hours and hours.  That pretty much is an airplane ride.  

On a plane I'm stuck next to a stranger with no escaping it.  If they start coughing or sneezing all I can do is scream inside.  Every time you board a plane it's spin the wheel and see if you get the virus.  It's much safer on a ship.

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10 hours ago, twangster said:

The airline industry needs to be grounded.  They should just stop pretending.  

I SO agree.  It was easy for the airlines to feign concern when nobody was flying.  But once people started flying again all of the pretense fell away without another thought.  To be fair, I think the cruise lines will do the same thing once they can, but at least on a ship you have a chance to distance if you want to.

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14 hours ago, twangster said:

At least on a cruise ship the maximum time I spend next to a stranger is at a show or muster drill.  I can choose to skip a show or leave 10 minutes in.  Stop the shows and that's solved.   In the WJ I can be in and out in 20 minutes, if I take it to go 1/3 of that.  

I agree.

The big joke among people who know me is why would I want to go on a cruise ship surrounded by people when I don't like crowds?  It's hard to explain to someone who has never been on a cruise that, with just a couple exceptions, I can always find plenty of personal space.  

 

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So here’s something that I Think I remember reading......
 

Didn’t RC say when they start it’ll be the most popular ships going to the most popular ports from ports that are “driveable.” Do you think they would cancel those that have to fly to the port? Flying obviously raises the risk of virus. I’m not sure how they could enforce that though. How would they know if you drove or flew? I mean it could be very obvious (airport shuttles  showing up at the port). 
 

Just some Monday morning musings.....

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30 minutes ago, Jill said:

So here’s something that I Think I remember reading......
 

Didn’t RC say when they start it’ll be the most popular ships going to the most popular ports from ports that are “driveable.” Do you think they would cancel those that have to fly to the port? Flying obviously raises the risk of virus. I’m not sure how they could enforce that though. How would they know if you drove or flew? I mean it could be very obvious (airport shuttles  showing up at the port). 
 

Just some Monday morning musings.....

I don't see Royal using a person's zip or postal code to ban people from cruising.   Royal hasn't offered a company policy on the matter.

. . . . . . . . . . . . . . . . . .

Now that I've answered I'm going to be lengthy in my response because I think you've touched upon an important area:  Listening to a snippet of an answer during a question and answer session and then deriving company policy from it. 

There was a Q&A session during an investor call where this "drive market" idea originated.

Keep in mind calls with investors are standard when a company is publicly traded.  They occur on a periodic basis and they give investors an opportunity to understand how the executives of a company are managing the company with respect to the money the investors have placed into the company.  

These calls tend to open with various company executives making statements then they move into a Q&A where someone can ask a question.  On the spot someone from Royal answers the question.  They have a split second to consider the question and say something.  However when listening to the answer we need to keep in mind the purpose of the call - it's a call with investors.  This wasn't a call with the the CDC.  This wasn't a call with a government task force on the virus.  Everything on these calls is centric to investors of the company.  

Executives aren't given the questions beforehand.  They have no idea what questions will be asked during the Q&A portion of the investor call.  However based on these answers some people are turning these comments into official company policy or extrapolating positions from the answers.  Before people do so they should consider the context and overall flow of the Q&A session. 

The answer that ports will be driveable is a good example.  In a call with an investors a question was asked.  Let's look at the question:

Felicia Hendrix

  • Jason, just getting back to the liquidity question. It seems like so many companies across different sectors, not just cruise are assessing the market as much as they can, given that the window is open now. So, some may view your decision to wait as risky. So, I'm just wondering, should we read into the fact that you haven't secured any incremental liquidity on top of what you've already done that you feel more optimistic than others regarding the recovery? And then, also, can you just help us understand how you're thinking about your rollup? You're mentioning that -- you did mention that you're starting to see demand for fourth quarter. So, just wondering how we should think about the amount of capacity that you'll roll out as the industry opens.

I bolded the last sentence because that's the part of the question that creates the answer involving drive markets.

Jason Liberty is the company Chief Financial Officer.  He's the money person.  Here is his response:

Jason Liberty

  • Yes. So, I'll take the first one. I think, the way that you would read it is, I don't think we're overly optimistic. I think we are being -- looking at the reality of the situation. And when we kind of evaluate our different Return to Service plans and different scenarios; that was the emphasis for us raising the capital all that we did this past week. So, again, I think we have to see how things play out. And I think that we have a lot of good quality brands, quality assets. And I think that we would evaluate the markets if we see circumstances change outside of the different scenarios that we're evaluating. So, I won’t read into it at all that we're optimistic. I think, I would read into it that we think we've taken the actions on the capital raising side based off of what we currently think. And we also think that there's more opportunity for us to do, on the cost and capital side to further reduce our burn rate.

Clearly his answer is financial in nature but from a cruiser perspective there isn't much of interest there.  Richard Fain decides to jump in an add something addressing the last part of the question.

Richard Fain

  • And, Felicia, this is Richard, and I'll just comment on the process of returning to service. I think, we don't expect that this is going to be that someday somebody blows a horn and all the ships start operating right away. We think that it will be a gradual start, a little bit like societies in -- is opening up gradually. And so, we would imagine that we would start with -- smaller with fewer shifts and more likely to be more drive markets in the beginning, and they would then evolve and grow from there.
  • I also think, coming back to the earlier question that such being differences between what's happening in different countries, what's happening in the local society with different mix of where the ships are and where they're going. So, I also think that you'll see that high degree of variability depending on what area of the world you're talking about. But to answer your second question, we see that as a slow and gradual thing, not suddenly a lot of ships coming back in the market.

I've bolded the answer that so many people are using to interpret and glean policy from.  

"...and more likely to be drive markets in the beginning"

From an investor perspective they are indicating where they think the majority of their customers will come from in the restart phase of cruising.  This lets investors know not to expect the entire market of consumers that existed before the virus to be available to consume the product during the initial restart.  Basically investors should expect fewer consumers which will translate into lower revenue.

When you look at the overall answer it gives you context to understand what the he thinks will occur as cruising resumes from an investment perspective.

Some people took this to mean that Royal was going to develop new cruise ports and sail from new coastal cities so that more people can drive to a ship.  People offered Charleston, SC or Norfolk, VA as the cities that Royal will move into to support this official company plan to develop new drive markets.  Many other cities were offered as potential drive markets.

Some people took this to mean that flying to a cruise won't be allowed by policy.

I don't see either viewpoint in the ten words within the answer.  This wasn't a policy statement.  It's ten words off the top of his head inside of two full paragraphs of an answer.

The ten words within the answer doesn't equate to a company policy.  

His real answer is summarized in his last sentence:

"But to answer your second question, we see that as a slow and gradual thing, not suddenly a lot of ships coming back in the market." - nothing in that to derive policy from, it's simple.  Investors should not expect full past revenue once cruising resumes.   Revenue will be lower initially and increase slowly from there.

Royal has never stated a company policy or offered an official methodology for their return to cruising.  Royal has no idea if I or anyone else will drive to a port or fly on plane if that guest doesn't book airfare through Royal.  They don't know if I have a second home in Florida where I spend my winters.  Nor do they care.  

So to answer your question, I don't see Royal using a person's zip or postal code to ban people from cruising but Royal hasn't said anything officially on the matter.

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I just want to know when are they going to make this decision. How long will we have to react to it and what will be our choices? I mean if I don't L&S and then they cancel me after I have had this cruise booked for almost 2 yrs I will be pissed. Even at 125% FCC I got a great deal booking so early. 

Now I will understand if they move the re-open date and push everyone back but just to pick and choose and leave me behind while the ship sails, that is a slap in the face.

I dont want to do a L&S and then they sail...i want to go on my scheduled booked cruise.

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On 7/4/2020 at 9:42 PM, twangster said:

On a plane I'm stuck next to a stranger with no escaping it.  If they start coughing or sneezing all I can do is scream inside.  Every time you board a plane it's spin the wheel and see if you get the virus.  It's much safer on a ship.

THIS is the reason if I fly in the near future (which is highly unlikely), especially with my wife, splurge to first class where it'll just be us in the two seats. If solo, still first and isle seat (I'm an isle guy so it works out anyway), it'll just be one person next to me & I can easily get up and walk away from a cough/sneeze/etc (sorry seat belt light)... might not increase my odds, but gives me some false sense of security. 

On 7/4/2020 at 9:42 PM, twangster said:

At least on a cruise ship the maximum time I spend next to a stranger is at a show or muster drill.  I can choose to skip a show or leave 10 minutes in.  Stop the shows and that's solved.   In the WJ I can be in and out in 20 minutes, if I take it to go 1/3 of that.  

I think stopping shows wouldn't be a bad idea, at least for the first few months when sailing resumes. I agree, I am no closer to someone in the Windjammer than a grocery store (maybe in line, but if we are 6 feet apart), and on a sea day, I like to take my lunch to the pool. 

On 7/4/2020 at 9:42 PM, twangster said:

The airline industry needs to be grounded.  They should just stop pretending.  

I agree. Especially with the rise of cases around the U.S. it's time (overdue honestly) but instead, as you stated, some airlines will go back to full bookings.  

Edited by sk8erguy1978
remove "for leisure" as that's 99% of my air travel
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@twangster I have touched on this before. People taking things as absolute word and getting upset when things don't pan out.

It is alright to speculate but a lot of people form theories off of almost no evidence. We can speculate that capacity would be limited......but there is no way to quantify how. A lot of people assume it will be limited among the ships. Maybe RCCI will stop bookings or try to entice people off. What if it is sailings instead of ships? Or specified ships? While bookings may be okay for 2021, who knows how close to capacity they are 2020. I doubt they will have to do anything because between cancellations, L&S, and consumer demand; bookings probably at even at 60%. The world outside a few cruise blogs, is not about that cruise life.

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