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Cruise Industry_NEW


Alexandra Cook

on 4 May 2010

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Transcript of Cruise Industry_NEW

Alexandra Cook
Morgan Berger
Amanda Barthelmes
About "Where you're free to whatever." "Freestyle Cruising" "Homeland Cruising" SS Norway Star Cruises Knut Kloster & Ted Arison Flexibility

Freedom -Competitive advantage- Dining Options No dress Code 1966 Fleet Renewal Program -Decrease overall vacation cost- Hawaii expansion Ports: New England New York Year 2000 Year ???? Year 2010 Genting Hong Kong California Florida Pride of America Reducing fleet Chartered Ships New Ship under construction 4200 berths Pride of America Private Beach Experience 1980- Mega Ship Norwegian Cruise Lines Accounting Policies Property, Plant, and Equipment Ships: -Straight line depreciation
30 years-useful life
15% reduction-residual value * improvements are capitalized * Repairs and maintance are expensed Other PPE: 3-20 years-useful life
Revenue and Expense Recongition Revenues & Expenses -Pro-Rata basis over the period of the voyage " Advance ticket sales" :deposits recieved for future voyages " Cruise operating expenses" :direct costs of the voyage Financial Statements CRUISE INDUSTRY Highest demand June-August Apeals to all ages, backgrounds, and interests 10% of North American Vacation Market High barriers to entry Discretionary Income Segments- Premium,Luxury,Contemporary Tourism Hospitality CURRENT ECONOMY linked to AIRLINE industry Consolidated Relevant Issues Substantial indebtness Royal Carribean Our VISION is to empower our EMPLOYEES
to deliver the best vacation experience
to our GUESTS, thereby generating superior
returns to our STAKEHOLDERS and enhancing
the well-being of our communities. Insight 1970- First Ship, Song of Norway Enters Service 1993- RC goes public "RCL" 1986- Labadee, RC first exclusive destination
1997- Changes from RC to RCI 1990- CocoCay Island, second exclusive destination Currently 2nd Largest Cruise Vacation Company
38 Ships in Service
Own & Operate RC International, Celebrity,Pullmantur, Azamara, CDF Croiseres de France
50% Investment in TUI Cruises
Offer 2-24 night cruises
6 Ships under construction
49,000 Employees
Working to reduce costs
Environmentally Friendly
Socially Responsible
Stopped Issuing Dividends Ships: Cost- Acc. Depreciation
Straight line depreciation
-30 years-useful life
-computed net of 15% projected residual value Replace or Refurbished Components- Written Off
Repairs and Maintenance- Expensed as Incurred Drydocking Costs:
Deferral method
Expensed on a straight line basis over the period of next drydock Intangibles-
review goodwill, trademarks, and tradenames whenever circumstances indicate but at least annually Deposits received on sales of passenger cruises are initially recorded as customer deposit liabilities Customer deposits
They are recognized as passenger ticket revenues,so are revenues from onboard and other goods and services and all associated direct costs of a voyage, upon completion of voyages with durations of ten days or less
on a pro rata basis for voyages in excess of ten days.
Royal Caribbean Accounting Policies
Royal Caribbean Financial Statements Threats terrorism
H1N1/Airbourne diseases
Increasing fuel prices
natural disasters
less disposable income Opportunities make cruises a larger sector of vacation market (only 16%)
Increase the amount of international passengers
Environmentally Friendly Carnival Corporation & PLC "Our mission is to deliver exceptional vacation experiences through the world's best-known cruise brands that cater to a variet of different lifestyles and budgets, all at an outstanding value unrivaled on land or at sea." 1972- Founded by Ted Arison, the cruise industry pioneer
1987- Made Initial Public Offering
1989- Entered the Premium cruising market
1992- Entered the Luxury cruising market
1997- Acquired Costa Cruises
1998- Acquired Cunard Cruise Line
2003- Carnival & Princess Cruises, plc enter into a DLC transaction
2007- Entered into an agreement with Orizonia Corporation Companies are combined through a number of contracts & provisions

Two companies act as if they are a single enterprise, but still have seperate legal entity
Maintain a separate board of directors
Common equity of both companies vote as a single body
Permitted to transfer assets between companies, make loans or investments to each other & enter into intercompany transactions 11 Different Cruise Brands & 95 Ships Worldwide
Top 2 in North America & United Kingdom
Single most-recognized in Germany, Italy, France & Spain
Cater to different cultures, languages, and vacation perferences

Accommodate 85% of the world's cruise passengers Reducing Carbon-Footprint
Diesel generators - reduce fuel consumption & air emissions
Marine Coasting Technology - silicone based anti-fouling marine hull coating systems

Carbon Disclosure Project
2008, Carnival ranked 2nd in the Hospitality, Leisure & Business Services sector in both the Global 500 and the S&P 500
Ships represent 78% of Total Assets

Depreciated using straight-line
Average useful life of 30 years
Average residual value equal to 15% of original cost

Ship improvement costs are capitalized over the estimated remaining life of the ship Inventories:
Carried at lower of cost or market

Guest Cruise Deposits:
Recorded as unearned revenue, then recognized together with revenues from onboard & other activies Assets & Liabilities that have functional currencies other than the U.S dollar are translated at B/S date

Revenues & Expenses are translated at weighted-average exchange rates for that reporting period

Equity is translated at historical rates & cumulated adjustments are included in AOCI

In 2009, Dividends were suspended to:
Preserve liquidity
Fund capacity growth
Maintain a strong balance sheet
Maintain high-investment grade credit rating

Dividends will be paid in the first quarter of 2010 Mission Statement Carnival's History What is a DLC Transaction? Company Overview Environmental Management Ship Accounting Accounting For: Overseas Accounting Dividends Royal Caribbean EPS: .75
Carnival EPS: 2.13 Stock Performance 1day to 3 week itineraries Financial Statements Number of Ships Market Share Our Conclusion QUESTIONS ANYBODDDDAAAA?? Industry
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