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Royal Caribbean Case Study

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Maria Mayboroda

on 9 March 2015

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Transcript of Royal Caribbean Case Study

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$ 12.00 – ROYAL CARIBBEAN por persona por noche

Presented by Camilo Orjuela, Julia Smirnova, Thuy Nguyen and Maria Mayboroda
Royal Caribbean Cruises Ltd. (RCL)
Royal Caribbean International (RCL) owned by Royal Caribbean Cruises Ltd., is a cruise line brand founded in Norway and based in Miami, Florida in the United States of America.
Was incorporated on July 23, 1985 and is the world's second-largest cruise line.
The company operates under 5 brands: Royal Caribbean International, Celebrity Cruises, Pullmntur, Azamara Cruises and CDF Croisieres de France. RRC also holds a 50% ownership interest in TUI Cruises, which caters to German –speaking customers.

RCL

comprises 22 ships with 62,000 berth.
- The cruises are marketed to adults and families, who are looking for a quality cruises at a value price.
- Unique offer - first line to serve Starbucks on board
- 100 ports of call globally
- Obtains customers through the brand's website (www.royalcaribbean.com), social media, traditional advertising.



Celebrity Cruises
- Premium destination cruise line that consists of 10 ships and calls on a veriety of global ports.
- The only cruise line to operate a ship in the Galapagos Islands.
- Offers personalized service, including 2:1 guest-to-staff ratio and high-end dining experiences.
- The target market is experienced cruisers and vacationers who want a high-end vacation and luxury accommodations.
Azamara Club Cruises
- Was launched in 2007 to reach high-end travelers. The line has 2 ships and features 187 ports of call.
- ACC is an affluent, luxury brand. Ships offer private butlers for each suite and many other services.

Pullmantur
- Madrid-based cruise line, operates 5 ships, caters to customers in Spain, Portugal and Latin America.
- Line is focused on Spanish and Portuguese-speaking customers. All employees are fluent in Spanish/Portuguese.
- Pullmantur owns 49% inyerest in Pullmantur Air, who serves cruise line and provides the opportunity for passengers to book air travel through website.


CDF Croiseres de France (CDF)
- Based in France and targets French contemporary customers and French is the only one spoken on board.
- CDF has 1 ship, the Bleu de France (sold to Saga, British cruise line)
- Markets exclusively to French -speaking paseengers and travel agents.

TUI Cruises
- Formed in 2009, as a geman-based line.
- Operates 2 ships: "My Ship 1" and "My Ship 2" exclusivelly for geman speaking passengers.
The cruise industry is a multi-billion-dollar global entertainment and leisure indusrty that caters to multiple customers’ bases, from middle –class families to high-end socialites. The North American cruise market has grown 0.9% 2006-2010. The real growth opportunity appears to be in Europe, with increase of 12.4%.
The advent of “short” cruises (as short as 3 days) and activities that appeal to specific age groups have helped make cruising one of the most popular forms of vacation.
“Mega ships” and low prices have plenty of choices when it comes to “luxury” cruising. RCC offers land-tour vacations in Alaska, Asia, Australia, New Zealand, Canada, Europe and South America.
Incorporated in the Republic of Liberia, a country that has zero corporate income taxes, RCC is headquartered in Miami, Florida, and has offices around the world to service customers who wish to travel to the 420 destinations on all 7 continents.
Perspectives in management and service portfolio are outlined as:

1. Support innovation and enhance business agility
2. Continuously improve the guest experience
3. Optimize resource utilization and cost control



Customers

Only 45% of the US population has ever taken a cruise
Cruisers tend to be 45 years and older; have higher household incomes (average $93,000) and have at least a college degree
Most vacation with a spouse and many bring children under 18 years of age
They spend an average of $1,880 per person for the cruise, airfare and onboard expences.
How are we unique?
Serve different markets
Unigue destinations
Cruise lines range from contemporary to luxury, which brings more customers with different income

Consumers are more comfortable booking vacations online (Expedia, Hotwire, etc.) so RCL website is easy to operate.
Travel agencies still generate the majority of RC bookings. RC offers a website for travel agencies.
Cruisers use Facebook and Twitter. Consumers expect to see promotions and special offers on company's Facebook page. Advertizing is less expensive and very effective.

RCC's vision statement is as follow:

Our vision is to empower and enable our Employees to deliver the best vactions experience for our Guests, thereby generating superior returns for our Shareholders and enhancing the well-being of our Communities.
RCC's Mission statement is as follow:
We always provide service with a friendly greeting and a smile.
We anticipate the needs of our customers.
We make all efforts to exceed our customers' expectations.
We take ownership of any problem that is brought to our attention.
We engage in conduct that enhances our corporate reputation and employee morale.
We are ommitted to act in the highest ethical manner and respect the rights and dignity of others.
We are loyal to Royal Caribbean and Celebrity and strive for continuous improvement in everything we do.
Improved Vision Statement:

Our vision is to change the way you think about cruise vacations. We deliver high-end vacation experience for our guests, provide excellent service and customer satisfaction. We are responsible to show you the world with experience you will never forget and memories you will cherish forever.
Improved Mission Statement:
To provide our customers with amazing cruise vacation ideas, great customer service and unforgetable experience.
To listen and undertand the needs of our customers and exceed their expectations.
To take responsability for all the operations and problems brought to our attention, be loyal to our employees and shareholders.
Royal Carribean Cruises Ltd. is leading cruise line in the world. We establish high level of services and operations, changing the way people think about cruise vacations and constantly exceeding.


The mission of Royal Caribbean Cruises Ltd. is:


Financial Information of RCL
Objectives
In the future:
RCC has 2 new Solstice ships on order ( delivery slated for 2012 and 2014).
A measured approach with a long-term payoff.
Royal Caribbean International is excited to be adding a third Oasis-class vessel during the second quarter of 2016. The combination of these three vessels will increase our capacity by about 3.5% per year on average from 2013 through 2017.
An enduring passion to bring our mission to life (to create happy guests, happy shareholders and happy employees—a joyful task. The economic environment the past few years has pressured aspects of that mission, but RCC the right things structurally and methodically to continue moving in the right direction.
RCC employees, Board of Directors and travel agents all pulling together, RCC confident of continued successes in the future.
Differentiaying RCC lines from competing cruise line is a priority.
Prepare a three-year strategic plan for RCC that will enable the firm to cruise into 2012-2013 in calm waters.


Over the past year, RCC has made considerable progress on a number of fronts:
- RCC global footprint is more diverse;
- Brands have debuted impressive new marketing programs;
- Introducing new technologies that help work more closely than ever before with both guests and travel agent partners;
- The subject is of the utmost importance, also worked with counterparts in the industry in improving transparency regarding our continuously improving focus on safety.

Conclusions and Recommendations for the company:
• RCC holds the second-largest market share. New “mega-ships” have created additional publicity for the cruise industry, and as cruise lines bring in the lrger ships, smaller ships offering “short” cruises are able to serve the smaller ports.
• North america is still the largest market for the cruise inductry. Cruising is a small part of the European vacation industry, more consumers are booking cruise vacations each year.

• The demand for cruises is affected by international,national and local economic and geopolitical conditions.The slow pace of the economic recovery coupled with continued instability in the global economic landscape has had and continues to have an adverse effect on vacationers’ discretionary income and consumer confidence.
• This, in turn, has resulted in cruise booking slowdowns, decreased cruise prices and lower onboard revenues for us and for others in the cruise industry as compared to more robust economic times. Although the cruise industry continued to recover in 2012, recovery has been slow and has been hindered by ongoing economic instability, including the continuing European sovereign debt crisis and financial market volatility.


• Demand for our cruises is also influenced by geopolitical events. Unfavorable conditions, such as
cross-border conflicts, civil unrest and governmental changes, especially in regions with popular ports of call, can undermine consumer demand and/or pricing for itineraries featuring these ports.
• Incidents or adverse publicity concerning the cruise vacation industry, unusual weather conditions and other natural disasters or disruptions could affect our reputation as well as impact our sales and results of operation
References:
1. Strategic Management: Concepts and Cases, 14/E. Fred R. David (pp. 123-131)
2. Retrieved from http://www.ca.com/~/media/Files/SuccessStories/ca-css-royal-caribbean-310312-gp-final.pdf
3. Retrieved from http://en.wikipedia.org/wiki/Royal_Caribbean_Cruises_Ltd.
4. Retrieved from http://yahoo.brand.edgar-online.com/displayfilinginfo.aspxFilingID=10507444-158625-260312&type=sect&TabIndex=2&companyid=6117&ppu=%252fdefault.aspx%253fcik%253d884887
5. Retrieved from http://finance.yahoo.com/q/ae?s=RCL+Analyst+Estimates
6. Retrieved from http://www.foxnews.com/travel/2011/02/04/royal-caribbean-takes-competition/


External analysis
The direct competitiors are:
1. Carnival Corporation & plc ( the largest cruise line in the world)
2. Disney Cruise Line (desighned for families)
3. Norwegian Cruise Line (innovative in cruise insustry)

Opportunities:
1. Growth in the U.S. economy (51% of ticket sales)
2. New ship "Allure of the Sea"
3. Strong potential in family market.
4. Asia (large population, growing middle class, growing population)
5. 77% of the past cruisers want to cruise again
6. Investors are confident in company's future prospects
7. People believe in security on cruses rather than travel
8. Increasing popularity
9. Earns revenue from third-part (sells goods & services onboard)
Threats:

1. More efficient competitors
2. Weather concern (storms etc.)
3. High cost of the fuel
4. People are financially-consious
5. Crisis in European countries
6. Since 9/11 security of the world has been changing, cruises down on average
7. Increase of the inflation in the world (increase in maintanance & prices)
8. Market is highly volatile and uncertain
Internal analysis:
Strengths:
1. Strong market position
2. Brand recognition
3. Increasing revenues
4. Customers ratings are high
5. Qualified executives, designers & machinists
6. Designed "Allure of the seas" the largest ship in the world
7. Advanced technology & energy efficient systems of cruises
Weaknesses:

1. Uses its old system of accounting
2. Primary seen as a luxury vacation
3. Depends on a high cost fuel
4. Slowing demand in european economy

SWOT
7. Retrieved from: http://yahoo.brand.edgar-online.com/displayfilinginfo.aspx?FilingID=10507444-158625-260312&type=sect&TabIndex=2&companyid=6117&ppu=%252fdefault.aspx%253fcik%253d884887
8. Retrieved from: http://finance.yahoo.com/q/ae?s=RCL+Analyst+Estimates
9. Retrieved from: http://www.foxnews.com/travel/2011/02/04/royal-caribbean-takes-competition/
10. Rudi Sodamin, (2013), Royal Caribbean Holiday Entertainment, Rizzoli, page 192
Full transcript