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Share of onboard sales of total revenue develops differently at Carnival and Royal Caribbean

  • Written by Kari Reinikainen
  • Category: Top Headlines

It is often noted that cruise lines add services for which they charge passengers separately in addition to the cruise ticket: the largest two cruise shipping groups depend on more than one-fifth of their total revenue on onboard sales.

However, figures from the annual reports of Carnival Corporation & plc and Royal Caribbean Cruises Ltd (RCCL), the two largest cruise shipping groups in the world, show that the percentage of on board sales from total revenue has developed differently between the two groups over the past three years.

At Carnival, on board sales accounted for 21.5% of its total revenue of $14.47 billion in the 12 months to 30 November 2010, the company’s latest full financial year. In the previous financial year, the figures stood at 21.4% and $13.46 billion respectively, while in the 2008 financial year, on board sales only had accounted for 20.4% of the total revenue of $14.95 billion.

Meanwhile, at RCCL the share of on board revenue fell to 27.3% of total revenue of $6.75 billion last year from 28.6% and $5.89 billion in 2009, respectively.  In 2008, on board sales had accounted for 27.6% of RCCL group’s total revenue of $6.53 billion.

The figures show that from 2008 to 2009, the share of on board sales of total revenue increased at both Carnival and RCCL, by 1.0 percentage points in both cases. Again, both companies recorded a fall in 2010, but in the case of Carnival, this was only 0.1 percentage points (and actually even less if you exclude rounding up of figures to single decimal) , while the fall for RCCL was 1.3 percentage points. This also means that the reading for 2010, of 27.3%, was actually slightly lower than that for 2008 had been (27.6%).

In light of these figures, it seems that RCCL depends more on onboard sales than the Carnival group. On the other hand, Carnival appears to have managed in stabilising the share of on board sales from total revenue better than RCCL last year.

Compagnie du Ponant orders a new cruise ship

  • Written by Teijo Niemelä
  • Category: Top Headlines

The world’s only French cruise line and “Five-star Expedition” specialist Compagnie du Ponant is to build another “latest generation” yacht (132 staterooms and suites) at the Italian Fincantieri shipyard in Ancona.

Sistership to Le Boreal and L'Austral, launched in May 2010 and April 2011 respectively and complying with the “Cleanship” label, the new vessel will join the fleet in June 2013. The fleet currently comprises five yachts of character all flying the French flag: Le Ponant (32 staterooms), Le Levant (45 staterooms), Le Diamant (113 staterooms and suites), Le Boreal and L'Austral (132 staterooms and suites).

The order is another positive sign confirming the relevance of Compagnie du Ponant’s investment strategy, its exclusive positioning, development on the international scene and the strength of its presence on the French market. In 2011, Compagnie du Ponant confidently expects to exceed the 20,000 passenger a year mark, with turnover estimated at €80 million. The excellent results are mainly down to a full year of operation for Le Boreal and L'Austral.

Both cruise yachts bear all the hallmarks of Compagnie du Ponant and have won over loyal clients as well as attracting many new ones. In fact, one in two passengers in 2011 is a new customer for Compagnie du Ponant, while one in four is trying out a cruise holiday for the first time. Customer satisfaction levels (4.5/5) and the high rate of recommendation to friends and family (97% of passengers) are also recognition of the hard work put in by the company’s personnel.

"For Compagnie du Ponant this order is another step towards the future that validates an effective business model, a good and successful bet," says Chief Executive Officer, Jean-Emmanuel Sauvée.

It’s a business model that has also been welcomed by Compagnie du Ponant’s shareholders who have shown their confidence in the crews and land-based teams by investing in this new ship.

Having led the project to build the two previous yachts with such flair, the Fincantieri shipyard has again been entrusted with building the third sistership. French designer Jean-Philippe Nuel will be responsible for the sophisticated modern interior which has contributed so much to the success of Le Boreal and L’Austral.

“In keeping with our concept of cruising, we are again favouring the intimate, friendly environment of a human-size ship, ensuring our passengers receive individual attention and a personalised “tailor-made” service in an outstanding environment,” concludes Véronique Saadé, Deputy Executive Vice-President.

Fincantieri reports rise in first half profit, warns of outlook

  • Written by Kari Reinikainen
  • Category: Top Headlines
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Fincantieri, the Italian state owned shipbuilder that is the biggest builder of cruise liners, has reported an increase in first half profit before non-recurring and extraordinary expenses to €16 million from €12 million at the same time last year, the company said in a statement.

Operating profit (EBITDA) came to €59 million, with a margin of 5%, up from 4.3% in the first half of 2010, also thanks to measures making procurement more cost effective. “At 30 June 2011, the Fincantieri Groups order portfolio  was worth €7,920 million. The associated order backlog, although  a still significant €5,570 million, will continue to be  insufficient to saturate production capacity at all the Group's  shipyards,” Fincantieri noted.

“The shipbuilding industry continued to experience severe  problems in the first half of the year due to the world economic  crisis. The demand for new cruise ships has settled at around 6/8  ships a year (versus an average of 12 in the pre-crisis period), of  which 2/3 ships acquirable by Fincantieri.”

The company noted shipbuilding crisis has significantly intensified  price pressure on new orders. This pressure has been further heightened by the highly aggressive market entry strategies recently  displayed by the cruise market in the Far East. “This market situation will create a mismatch, even prospectively, between Fincantieri’s production capacity and its  order backlog acquired/acquirable. In fact, during the first half of  2011 surplus production capacity resulted in the total closure of  certain shipyards serving the merchant market, while others are  expected to experience problems on a similar or smaller scale in the  near future.”

“Fincantieri is addressing this situation through a block  on staff turnover, with a reduction of 115 in headcount in Italy  since the end of 2010, and through agreement with the unions for the  temporary lay-off of up to 3,000 workers, of whom 1,772 affected as  of the end of June. Furthermore, in order to deal with increasingly fierce  market competition, Fincantieri must continue, ever more resolutely,  down the road of cost reduction by reorganizing and making processes  more efficient and by improving productivity.”

P&O Cruises’ June order includes option for second ship

  • Written by Kari Reinikainen
  • Category: Top Headlines
An  order for a 141,000 gross ton cruise liner that P&O Cruises, which is part of the Carnival Corp & plc group, placed in June with Fincantieri, the Italian shipbuilder includes an option for a second ship, Fincantieri said in a statement.

P&O Cruises, which on 1 June unveiled the news that it had ordered its largest ship so far, did not mention anything about an option for a second ship. However, most shipbuilding contracts do include one or more options for further vessels.

P&O Cruises have not so far either taken up or axed the option. The  ship ordered in June will be delivered in 2015 and it will be a sister vessel to two similar sized vessels the Italian yard is building for P&O Cruises’ sister company Princess Cruises.

Carnival shares rise around 2% on third quarter interims

  • Written by Kari Reinikainen
  • Category: Top Headlines

Shares in the two listed holding companies of Carnival Corp & plc, the world’s largest cruise shipping group, rose about 2% after the company had unveiled its better than anticipated third quarter interims.

Carnival plc shares riose 2.3% to £20.30 in London, outpacing a 0.79% rise of the FTSE 100 share index of leading shares at 3.20pm local time.

In New York, Carnival Corporation rose 1.83% to $32.84, markedly more than the 0.13% rise of the Dow Jones 500 leading share index.

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