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Royal Caribbean Cruise Line

Acct640 Presentation

Jeff Karasinski

on 19 February 2013

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Transcript of Royal Caribbean Cruise Line

Products and Services Second largest cruise line in the cruise vacationing industry

RCL operates:
Royal Caribbean International
Celebrity Cruises
Azamar Club Cruises
CDF Croisieres de France
TUI Cruises

Present in over 460 ports and operates over 40 vessels Current Situation Market leader: Carnival Corporation & PLC

Disney Cruise Line

MSC Cruises

Norwegian Cruise Line

Oceania Cruises

Other vacation alternatives (resorts/popular sightseeing destinations) Primary Competitors Royal Caribbean offers costumers all package services; which includes booking tickets for customers, excursions, and hotel packages so going on vacation with Royal Caribbean is uncomplicated and hassle free.
Sells branded merchandise such as; t-shirts, cruise models, key chains, pens and etc., and they also sell merchandises of different retail brands such as Roxy, DC, Quicksilver, jewelery. Management Philosophy Normal corporate structure: Board of Directors, CEO, and Hierarchy of Power
They manage their employees based on the code of conduct and ethics
McGregor Theory - Take care of the employees and they will take care of the customers
For all employees, the company provides medical insurance, life insurance, long and short term disabilities, cruising privileges, and paid vacations. Food, living and accommodations are all provided at no cost to each employee.

Work-Life Balance at Royal Caribbean:
By being an employee of the Royal Caribbean, having the opportunity to take long weeks of vacations at a time is a bonus. They may also participate in fun social activities and excursions that is provided on the cruise. Organizational Chart History On board activities
Simulated surfing
Swimming pools
Beauty salons
In-line skating
Rock wall climbing
Miniature golf
At port activities
Zip line
Jet Skiing
Travel Tours Corporate Structure Ethical Conduct Code adopted by board of directors
Financial statements are prepared in accordance to GAAP
A few examples of their code:
•We Comply with the Law
•We Work Together with Respect and Dignity
•We Compete Fairly
•We Protect the Environment
•We Maintain Accurate, True and Complete Business Records
•We Support Human Rights and Core Labor Principles
"No guidelines can cover every issue that may arise, it is the responsibility of the employees / employer to exercise proper conduct at all times and there is no substitute for personal integrity and good judgment to help you do so" - Board of Directors Pricing Strategies Two main pricing strategies
perceived-value pricing strategy
psychological pricing strategy

Perceived-Value Pricing - establishing a price level based on the important benefits customers desire that are apparent in a product’s tangible and associated intangible features

Psychological Pricing - establishing a price for a product that exploits customers’ illusions created by a price level. It is intended to appeal to customers’ emotional rather than rational buying motives Accounting Systems Royal Caribbean International prepares its financial statements following the US GAAP.

- They consolidate entities over which they control

- The deposits received on sales are recorded as customer deposit liabilities and subsequently recognized as revenues.

- The marketable securities have a maturity of less than 90 days.

- The inventory’s account contains provisions, supplies and fuel carried.
Property and equipment also includes the capitalize interest as part of the cost of acquiring assets.
Depreciation rates: Revenues Net Income Financial Ratios Expenses 2007:
Current ratio 0.42
Debt ratio 55%
ROE 8.93% 2008:
Debt ratio 59%
ROE 8.43% 2009:
Debt ratio 59%
ROE 2.03% 2010:
Current ratio 0.29
Debt ratio 60%
ROE 6.53% 2011:
Current ratio 0.32
Debt ratio 57%
ROE 7.22% Operational Strategies Concern for the Environment:
Believes in protecting the marine environment and sustaining the well-being of people and places it serve. It strives to achieve the highest possible standards of environment and community stewardship.

Operating Expenditure and Ensuring Adequate Cash and Liquidity:
Royal Caribbean is focused on cost efficiency and how to improve it. They are researching how to make their ships for fuel efficient. Also, they are trying to reach their objective of returning their credit rating to investment grade by reducing debt and improving credit metrics.

Brand Awareness and Marketing:
Uses their different lines of cruises to target different segments of the market. This way they are covering more segments and at the same time people see these lines as competitors even though they are actually associated Strengths Strong international brand

Dominant market position

Competitive on innovation, fleet quality, vacation itineraries, and destination choice

Brand Versatility

Established relationships with travel agencies Weaknesses The ships are aging and depreciating

Relatively small and slow-growing foothold in Europe

Dependent on consumer discretionary spending

Current credit ratings are not at investor grade Opportunities Threats Volatility of fuel prices

Slowing growth of cruise vacation industry

Competition from other popular cruise lines

Threat to industry sustainability following Costa Concordia tragedy

Volatility of consumer demand Investment in fleet revitalization

Globalization of passenger sourcing

Capture market share of growth in first-time cruisers

Strengthen and improve employee experience to better serve passengers/develop growth Future Objectives Objective #1: Increase penetration of non-US market

Objective #2: Capture greater market share of first-time cruisers
Fleet revitalization process
Leverage relationship with travel agencies

Objective #3: Increase awareness for versatility of RCL brands
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