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Royal Caribbean Cruises Ltd.

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Royal Caribbean Cruises Ltd. Megan Dow, Kristin Belanger Ang le Bourgoin Overview of Royal Caribbean Overview of WAL-Mart History Stocks Stock Information The ... – PowerPoint PPT presentation

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Title: Royal Caribbean Cruises Ltd.


1
Royal Caribbean Cruises Ltd.
  • Megan Dow, Kristin Belanger
  • Angèle Bourgoin

2
Overview of Royal Caribbean
  • Overview of WAL-Mart
  • History
  • Stocks
  • Stock Information
  • The Divisions
  • BCG
  • Their Mission and Vision Statement
  • New Mission and Vision Statement
  • External Opportunities and Threats
  • CPM
  • EFE
  • Internal Strengths and Weaknesses
  • IFE
  • Analysis
  • SWOT Matrix
  • SPACE
  • IE Matrix
  • Grand Strategy Matrix
  • Key Ratios
  • Different Strategies
  • QSPM
  • Decisions
  • EPS/EBIT Analysis
  • Implementation
  • Evaluation
  • Update!
  • References
  • Questions?

3
Overview
  • Operates 26 ships under two brands
  • Royal Caribbean International
  • Celebrity Cruises
  • Over 200 destinations
  • Caribbean
  • North America
  • South America
  • Europe

4
History
  • 1968
  • Three Norwegian shipping companies
  • Anders Wilhelmsen Company
  • I.M. Skauge Company
  • Gotaas Larsen
  • 1970
  • First Royal Caribbean Ship sails
  • 1971
  • Concept of air/sea vacations
  • Fly guests to Miami from all over N.A.
  • 1972
  • Three ships offer 7 and 14 night cruise vacations
    from Miami to Caribbean
  • 1978
  • Passenger boat was split and mid-section was
    added from 700 passengers to 1,000

5
History Cont.
  • 1986
  • Labadee, Royal Caribbeans own exclusive
    destination, opens cost of Hispaniola
  • 1988
  • Royal Caribbean and Admiral Cruises merge
  • A 73,192-ton ship for 2,350 guests sets sail as
    Royal Caribbean triples in size
  • 1991
  • CruiseMatch 2000 a fully automated cruise
    vacation reservations system with access to over
    29,000 travel agents
  • 1993
  • Royal Caribbean goes public under ticker symbol
    RCL
  • 1995
  • 25th Anniversary
  • 1997
  • Royal Caribbean Cruise Lines changes name to
    Royal Caribbean International
  • Celebrity Cruises merges with Royal Caribbean
    Cruises Ltd.

6
Important Facts
  • It is the 51st consecutive quarter Royal
    Caribbean's Board of Directors has voted to
    declare a dividend to shareholders. April 28th
    they decided to give a dividend of 15 cents.
  • Royal Caribbean executive nets 6.6M in sale of
    shares.
  • A new ship is going to sale soon, Freedom of the
    seas.
  • Only 10 of vacationing public in the United
    States.

7
RCL
  • Services Sector
  • Industry General Entertainment
  • Full Time Employees 111,690
  • Index Membership NYSE

8
RCL
9
RCL vs. Industry
10
RCL Competitors
11
RCL Historical
12
Organizational Structure
13
Important Facts
14
Their Mission Statement
  • Royal Caribbean Cruises LTD. Strives to
  • Compete principally on the basis of quality of
    ships, quality of service, variety of
    itineraries, and price.
  • Improve our competitive position with respect to
    the quality and innovation of our on-board
    product and state-of-the-art cruise ships.
  • Serve markets and provide itineraries worldwide
  • Value its employees as the companys most
    valuable asset. They are counted on to represent
    the company professionally and do the utmost to
    serve the companys customers.
  • Value the environment and remain committed to
    protecting and preserving environmental resources
    and preventing pollution.
  • Maintain strong relationships with travel
    agencies, the principal industry distribution
    system.
  • Participate in and make grants to numerous
    community charity organizations with priority to
    those helping children and families and education
    and the environment.

15
Their Vision Statement
  • Royal Caribbean Cruises LTD. will build on its
    reputation of an unwavering commitment to service
    and a desire to deliver the best cruise vacation
    possible. Our 27,300 employees are singularly
    focused on one goal providing the highest level
    of service and the best vacation experience on
    land or sea.

16
New Mission Statement
  • Royal Caribbean International is for everyone
    ranging from active adults to families who are
    vacation enthusiasts interested in exploring new
    destinations and seeking new experiences. We
    serve markets and provide itineraries worldwide,
    which we plan to expand more in, as well as
    capital expansion. Our new technological
    software will make our operations run better in
    keeping our unwavering commitment to service and
    a desire to deliver the best cruise vacation
    possible. Employees are of great significance to
    the companies well being. We value being
    environmentally safe and helping out the
    communities by donating to charities.

17
New Vision Statement
  • To be the leading Cruise Line and leader in
    market share by providing the highest level of
    service and the best vacation experience both on
    land or sea.

18
Fleet Deployment (2003)
  • Domestic
  • Baltimore, MD
  • Boston, MA
  • Charleston, SC
  • Fort Lauderdale, FL
  • Galveston, TX
  • Honolulu, HA
  • Jacksonville, FL
  • Los Angeles, CA
  • Miami, FL
  • New Orleans, LA
  • New York, NY
  • Philadelphia, PA
  • Port Canaveral, FL
  • San Diego, CA
  • San Francisco, CA
  • Seward, AK
  • Tampa, FL
  • International
  • Barcelona, Spain
  • Buenos Aires, Argentina
  • Dover, England
  • Ensinada, Mexico
  • Hamburg, Germany
  • Harwich, England
  • Oslo, Norway
  • Rome, Italy
  • San Juan, Puerto Rico
  • S. Hampton, England
  • Stockholm, Sweden
  • Valparaiso, Chile
  • Vancouver, B.C.
  • Venice, Italy

19
Issues
  • Global
  • Capital Expansion Issues
  • Passenger Safety Issues
  • Finance Issues
  • Marketing Issues
  • eCommerce Issues
  • Economic Issues
  • Suppliers Issues
  • Natural Environment Issues
  • Capacity Issues

20
Global Issues
  • AAA increase in vacationers driving to
    destinations
  • Adding more and new itineraries departing in
    different locations
  • Expanded itineraries in Alaska and Europe
  • Offered land-tour programs
  • Motorcoach or rail with railcars in Alaska and
    Canadian Rockies

21
Capital Expansion Issues
  • Driving revenue growth
  • Purchase new and larger ships
  • Expanding the ships average size
  • Expanding Celebrity Cruise Line

22
Passenger Safety Issues
  • Safety, health, security risks
  • Accidents, illnesses, and other incidents
  • War, terrorist attacks, hostilities
  • Heightened security
  • 100 screening of luggage, carry-ons
  • 100 photo identification of passengers and crew
  • Passengers are prescreened
  • Certain areas on boat restricted

23
Passenger Safety Issues cont.
  • Aboard Magic 100 people aboard contracted
    Norwalk virus
  • Amsterdam
  • 450 passengers on four cruises suffered flu
  • Boat was sanitized by Center for Disease Control

24
Finance Issues
  • Prices for cruise lines depends on luxuries
  • Destination, cruise length, cabin style, time of
    year
  • Revenue from each passenger per day in 2002 was
    190
  • Suffered a 9 decrease in net income
  • Due to weak U.S. economy Middle East conflicts

25
Marketing Issues
  • Contemporary segment
  • 7 days or shorter
  • Out of season vacationers
  • Premium Segment
  • 7 to 14 days
  • Celebrity Cruises
  • Families eager to explore new destinations/experie
    nces
  • Spent 97.9 million on advertisement in 2002

26
eCommerce Issues
  • Online booking
  • Virtual tour capabilities
  • Electronic documents for passengers
  • Online access to shore excursion
  • CruiseManager
  • Software packages
  • Pricing, inventory, marketing actions
  • First company in industry to develop automated
    booking system

27
Economic Issues
  • U.S. economy recession in 2001
  • U.S. inflation rates in 2003 low
  • Unemployment steady at 6
  • Hurts cruise industry
  • Lower operating margins and profits
  • Fuel costs
  • Rising about 60
  • Better euro-dollar exchange

28
Suppliers Issues
  • Suppliers include
  • Travel agency commissions
  • Food and related items
  • Port facility utilization
  • Airfare
  • advertising,
  • Fuel
  • Hotel supplies
  • Products related to guest accommodations
  • Shipyards
  • Sometimes make poor quality, delay in ships,
    mechanical problems

29
Natural Environment Issues
  • Environmental groups
  • Stringent regulations on ships
  • Environmental and health and safety regulations
  • Could increase costs of compliance
  • Instituted Safety and Environment position
  • EPA studies on waste water
  • Annual award program
  • Financially supporting ocean conservation groups

30
Capacity Issues
  • Increased 9 over 2002
  • Top 10 cruises carried over 2 million passengers
    on 932 North American cruises

31
External Factors
32
Opportunities
  • Expansion of fleet has allowed RCCL increasing
    amount of destinations, itineraries, and markets
  • Flexible strategy, moving their fleets throughout
    the year to meet the seasonal demand
  • RCCL operates the websites with customer booking
    capabilities for both Royal Caribbean and
    Celebrity Cruises
  • Offers competitive price on goods and services
    offered from suppliers in packaged deals.
  • Demand for cruises has increased and is predicted
    to continue to increase

33
Threats
  • Terrorism
  • Viral outbreaks
  • Decreased tourism since 9/11
  • Challenging U.S. economy
  • Environmental lobbyists
  • Illnesses aboard cruise ships
  • Reports of physical attacks while on board
  • Carnival Corporation

34
EFE
35
CPM
36
Internal Factors
37
Strengths
  • Increase net revenue yields
  • Revenues growing
  • Capital expansion of Celebrity Cruise Line
  • Expanding passenger capacity deal sign Finlands
    Kvaerner-Masa Yards to build bigger Ultra Voyager
    ships with capacity of 3,600
  • Using latest information technology software to
    manage operations

38
Weaknesses
  • During 2002 2003 RCCL experienced weaker
    margins due to pricing pressure caused by a weak
    U.S. economy, traveler safety concerns, and
    increasing capacity
  • Net income falling
  • Higher marketing costs due to reduced demand
    because of weak economy and ongoing conflict in
    the Middle East
  • RCCL financed recent shop acquisitions by issuing
    debt
  • Highly leveraged with LT debt-to-equity ratio of
    1.31

39
IFE
40
SWOT Matrix
41
Space Matrix
42
IE Matrix
43
Grand Strategy Matrix
44
Matrix Analysis and SWOT Summary
45
Key Ratios
46
Key Ratios con.
47
Key Ratios con.
48
Different Strategies
  • Expanding fleet by two boats with larger capacity
    for passengers
  • Capital expansion to increase the amount of
    revenue to surpass the larger competitor Carnival
    Cruiseline

49
QSPM
50
QSPM cont.
51
Decisions
  • We have decided to add two other boats to the
    entire fleet and they will be finished by May
    2006 and 2008.

52
EPS/EBIT Analysis
  • Amount needed 10 Million
  • Stock Price 41.89 (on May 2, 2003)
  • EBIT Range 5 to 8 Million
  • Tax Rate 32
  • Interest rate 5
  • Shares Outstanding 195.6 (million)

53
EPS/EBIT Analysis Royal Caribbean LTD.
54
Implementation
  • We will do debt financing on both the high and
    low because the numbers were equally the same and
    they were the best all around option.

55
Evaluation
  • Annual reports
  • Quarterly reports
  • Stock prices
  • Key Ratios
  • Progress of ship
  • Average number of passengers per cruise

56
In The News
  • George Smith IV, a 26 year old man, tragically
    disappeared while on his honeymoon from the
    Brilliance of the Seas sometime in the early
    morning hours on July 5, 2005. The ship was
    sailing the Mediterranean Sea on a 12 day cruise
    to Turkey.
  • The reason for his disappearance is still being
    investigated by the FBI

57
Update!
  • Is still the second largest cruise line.
  • As of December 31, 2005, it operated 19 cruise
    ships with approximately 44,350 berths. (rooms)
  • A new ship is going to sail Freedom of the Seas,
    and will be the worlds largest cruise ship. Will
    occupy 3,634 passengers.
  • Royal Caribbean believes that bigger is better,
    and ordered to have bigger ships built that can
    occupy 5,400 in the future.

58
References
  • http//www.rcl.com
  • http//finance.yahoo.com
  • http//biz.yahoo.com
  • Business Resource Premier
  • Strategic Management Concepts and Cases

59
Questions?
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