Richard Fain

Royal Caribbean Chairman says North Americans wont be leading demographic anymore


North America has been the perennial leader in cruising for so many years now but Royal Caribbean's Chairman Richard Fain thinks that will change.  During the launch of Celebrity Cruise's newest ship (Royal Caribbean owns Celebrity Cruises), Fain made this profound prediction, "Next year, the rest of the world will book more cruises than North America".

Given how Royal Caribbean has distributed its fleet in recent years, it's really no surprise.  Half of Royal Caribbean's fleet is based in Europe.  In addition, Royal Caribbean is adding capacity  in Asia and Australia and they're also opening sales offices in the countries from which its ships will cruise.

With high airfares, many North Americans chose not to cruise in Europe this year, and many believe the strength in the Alaska market is a result of that reluctance.

Royal Caribbean CEO "embarrassed" by accounting error


Royal Caribbean held its conference call today to announce the company's second quarter financial results, Royal Caribbean chairman Richard Fain characterized an accounting error from the previous quarter as being "embarrassed".

Nonetheless, Fain was excited about the company's short term future and was overall positive about the direction Royal Caribbean is going in, "It still looks like this will be one of the best years in our history".

As a result of the error, Royal Caribbean lowered its full-year earnings per share prediction by 30 cents at the midpoint to a range of $2.90 to $3.20, mostly in order to reflect a revision to how it accounts for interest expense.

Despite Fain's and other executives attempts to diffuse the accounting error situation, Royal Caribbean's stock took a hit following the call, with the price dipping as low as 11% from its market open price.

The interest-expense accounting error related to the amortization of certain financing fees, and caused the revision of some prior results and lower guidance for the rest of the year. The revision is a noncash item, and Fain said the team that made the error also found it and quickly reported it.

During the call, Brian Rice, Chief Financial Officer for Royal Caribbean, called the mistake a human error and like Fain, was embarrassed by the situation.

Richard Fain talks about Royal Caribbean's emphasis on Australia


Royal Caribbean Chairman Richard Fain spoke with CruiseMates about the company's decision to move more of its ships to Australia and the reasons for the change.  

In 2012, 2 Royal Caribbean ships (Rhapsody of the Seas, Radiance of the Seas) and 2 Celebrity ships will call upon Australia for a number of cruises.

Asked about the potential for over-saturing the Australian cruise market, Fain seemed confident that Royal Caribbean could easily adjust, "Keep in mind the flexibility of our product. If something does not work out we can always change our plans and put our ships somewhere else."

Asked if Royal Caribbean considers what other competitors are doing or if the decision to move ships to an area is based purely on Royal Caribbean, Fain responded, "We really just look at our own brand."

Royal Caribbean's CEO's compensation rises 59%


Royal Caribbean's Chairman and Chief Executive Richard Fain received a 59% increase in his salary in 2010, which brought his annual paycheck to $8.6 million.

The reason for the increase in pay was mostly due to a cash incentive payment of nearly $4.1 million, about $2.9 million more than the previous year's amount.

Fain's base salary remained the same for the third straight year at $1 million and the cruise line's financial results were better in 2010 than in 2009.

In a proxy filing with the Securities and Exchange Commission, Royal Caribbean stated, "Executives were rewarded for their contributions to this positive performance through payment of performance based annual bonuses above target levels".

The other four executives for Royal Caribbean saw their 2010 bottom lines rise as well from 18.5% to 48.9% thanks to increases in cash incentives.  Royal Caribbean Cruise Line's CEO Adam Goldstein saw the biggest increase, who received $4 million and was second to Fain in total compensation for the year.

Interview with Royal Caribbean Chairman Richard Fain


Royal Caribbean chairman Richard Fain sat down with Smart Money for a question and answer session to talk about the state of Royal Caribbean today.  Here are a few of the questions of particular interest.

SmartMoney: Historically, cruises have been cheaper than vacations on land. Has the gap narrowed?
A cruise is still a better value. It frustrates me that [so many people] haven't cruised. Eighty percent of Americans haven't taken a cruise!

SmartMoney: Asia has the growth everyone wants. You have done little there.
We are getting to that point. The Chinese government in particular has made a decision that cruise tours are good for the country. They have started making investments in port facilities. [Our participation] couldn't have come much earlier.

You can read the entire interview here

Royal Caribbean makes new ship official


Royal Caribbean has signed a letter of intent with German shipyard Meyer Werft to build the cruise line its newest ship, a 4,100-passenger, 158,000-ton ship with an expected delivery of fall 2014.

The order is for one ship with the option of a second ship that would be delivered for Spring 2015.

"This next generation will not disappoint," said Richard Fain, chairman and CEO of Royal Caribbean's parent company Royal Caribbean' Cruises, Ltd., in a statement. "It will offer features for everyone," Fain said. "From grand, spectacular spaces to small intimate settings; from active, invigorating activities to the serenity of more personal space; and from a plethora of dining alternatives to a cornucopia of opportunities for families."

The new ship class is being called "Project Sunshine" until a formal name for the new class is decided upon.  

This new ship will be the first of a new class, although its size is very similar to the Freedom Class ships, which are slightly larger (158,000 tons for Project Sunshine vs 160,000 tons for Freedom).

Royal Caribbean chairman confirms new ship on the horizon


In a conference call with investors, Royal Caribbean Chariman and CEO Richard Fain confirmed rumors that Royal Caribbean may be ready to look to building a new ship.

During the call, Fain thinks now may be the time to look at building a new ship, "We feel time may now be right for such a move."  In addition, a new ship would be a new class of ship, meaning it would not be another Oasis class ship or any other pre-existing Royal Caribbean ship class.

There's no timetable yet for placing an order, and Fain added in the short term, Royal Caribbean is focusing on current hardware revitalization, which means they will enhance current ships.  Fain called the program "Oasis-sizing", where they take features from Oasis and Allure of the Seas and roll them out to older ships.  This program was announced earlier this year and will add new features to older ships such as Radiance of the Seas, Splendour of the Seas, Liberty of the Seas and Freedom of the Seas.

UPDATE: (10:30am) Royal Caribbean Chariman and CEO Richard Fain added during a question and answer session that they will remain tight lipped about the new ship, but confirmed the ship will be a Royal Caribbean brand ship and based on the company's previous history of ordering ships for a new class, will likely start with one ship and then add more ships based on that class afterwards

Royal Caribbean Chairman receives lifetime achievement award


The Travel Weekly Lifetime Achievement Award is given to an individual whose efforts have led to extraordinary results within an enterprise and who also has made significant contributions to the industry as a whole," said Arnie Weissmann, vice president, editor-in-chief, Travel Weekly. "Richard Fain's career has provided a model of vision and accomplishment to inspire tomorrow's leaders."

"I am humbled and honored to be the recipient of this award especially because it was awarded by Travel Weekly's readers, most of whom are travel agents. The growth of our industry and its many exciting changes would not have been possible without the biggest driver of Royal Caribbean's overall success - our people - our shipboard teams, as well as our shoreside employees. Accepting this award is especially meaningful as our company is being recognized by the travel agent community with nine awards overall," said Fain. "For 30 years, I've had the privilege to participate in the travel industry, working with talented people while helping travelers experience the world. The legacy of the recipients of the Travel Weekly Lifetime Achievement Award collectively defines the environment that the travel industry operates in today and it is an honor to join such a distinguished group of recipients."

Fain first joined Royal Caribbean in 1979 as an outside director on the company's Board of Directors. He became Chairman and CEO in 1988, and now oversees the global cruise company operating 40 ships under the Celebrity Cruises, Royal Caribbean International, Pullmantur, Azamara Club Cruises and CDF Croisières de France brands. Prior to joining Royal Caribbean, Fain spent 13 years as treasurer, chief financial officer and joint managing director of Gotaas-Larsen Shipping Corp., a London-based owner and operator of cargo ships.

He serves as a member of the Florida 100, the national board of the Posse Foundation and the University of Miami's Board of Trustees. Fain also is former chair of the United Way of Miami-Dade, the Miami Business Forum, the Greater Miami Convention and Visitors Bureau.

He also is a past chair of the Cruise Lines International Association (CLIA), and industry trade association representing nearly 17,000 affiliated travel agencies and the bulk of the world's cruise lines. He holds a B.S. degree in economics from the University of California Berkeley and an M.B.A. from the Wharton School of Business at the University of Pennsylvania.

Previous recipients of the Travel Weekly Lifetime Achievement Award have included: Bill Marriott, Gordon Bethune, Marilyn Carlson Nelson, Arthur Tauck, Tim and Nina Zagat and Bob Dickinson.

Video of the Day: Royal Caribbean Chairman tries to surf on FlowRider


Royal Caribbean Chairman Richard Fain is trying to learn to surf again at the fourth annual "Chairman's Challenge" aboard the Flowride Surf Simulator.