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Royal Caribbean Cruises Ltd.

Company Profile

Publication Date: 9 Oct 2009

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Royal Caribbean Cruises Ltd.

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Royal Caribbean Cruises Ltd.
TABLE OF CONTENTS

TABLE OF CONTENTS

Company Overview..............................................................................................4
Key Facts...............................................................................................................4
Business Description...........................................................................................5
History...................................................................................................................6
Key Employees.....................................................................................................9
Key Employee Biographies................................................................................10
Major Products and Services............................................................................14
Revenue Analysis...............................................................................................15
SWOT Analysis...................................................................................................16
Top Competitors.................................................................................................20
Company View.....................................................................................................21

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Royal Caribbean Cruises Ltd.
Company Overview

COMPANY OVERVIEW

Royal Caribbean Cruises (RCC) is a global cruise vacation company operates 38 cruise ships with
approximately 78,650 berths in about 425 selected destinations worldwide. It also offers land-tour
vacations in Alaska, Asia, Australia, Canada, Europe, Latin America and New Zealand. It is
headquartered in Miami, Florida and employed about 4,400 people.

The company recorded revenues of $6,532.5 million during fiscal year ending December 2008
(FY2008), an increase of 6.2% over FY2007. The operating profit of the company was $832 million
during FY2008, a decrease of 7.7% over FY2007. The net profit was $573.7 million in FY2008, a
decrease of 4.9% compared with FY2007.

KEY FACTS

Head Office Royal Caribbean Cruises Ltd.


1050 Caribbean Way
Miami
Florida 33132
USA
Phone 1 305 539 6000
Fax 1 305 374 7354
Web Address http://www.royalcaribbean.com
Revenue / turnover 6,532.5
(USD Mn)
Financial Year End December
Employees 4,400
New York Ticker RCL

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Royal Caribbean Cruises Ltd.
Business Description

BUSINESS DESCRIPTION

RCC is a global cruise vacation company. It operates 38 cruise ships with approximately 78,650
berths in about 425 selected destinations worldwide. It also offers land-tour vacations in Alaska,
Asia, Australia, Canada, Europe, Latin America and New Zealand.

RCC operates five cruise brands: Royal Caribbean International, Celebrity Cruises, Pullmantur
Cruises, Azamara Cruises and CDF Croisieres de France.

Royal Caribbean International brand offers cruise itineraries ranging from two to 18 nights. It operates
with 20 ships that have a combined passenger capacity of 51,200. It caters of the premium and
contemporary customers of the cruise vacation market. Royal Caribbean International offers a variety
of itineraries to destinations worldwide including Alaska, Asia, Australia, the Caribbean, Europe,
Hawaii, Latin America and New Zealand. Royal Caribbean International offers an array of onboard
services, amenities and activities; it also offers a variety of shore excursions at each port of call.

Celebrity Cruises offer various cruise itineraries ranging from two to 16 nights. The Celebrity Cruise
brand operates with eight ships that have a combined passenger capacity of about 16.650 berths.
The Celebrity Cruises brand offers cuisine, entertainment, staterooms, spa facilities and personal
service with a staff-to-passenger ratio. Celebrity Cruises operates mainly in seasonal markets,
namely, Alaska, Australia, Bermuda, Europe, Hawaii, New Zealand, the Panama Canal and South
America.

Pullmantur Cruises is a Madrid based cruise and tour operator that has two primary businesses:
cruises and tour operations. Pullmantur operates four cruise ships with approximately 8,650 berths
in Europe and Latin America serving the contemporary cruise vacation segment. Its tour operations
sell land based travel packages to Spanish guests, including hotel and flights primarily to Caribbean
resorts, and sells land based travel packages to Europe aimed at Latin American customers.

Azamara Cruises offers deluxe cruise services and consists of two ships, Azamara Journey and
Azamara Quest. Azamara Cruises has approximately 1,400 berths and offers various cruise itineraries
that range from seven to 24 nights. Azamara Journey and Azamar Quest feature two specialty
restaurants, amenities, spa and wellness center, a coffee cafe, a piano bar and a wine bar, and live
entertainment.

CDF Croisieres de France is designed to serve the contemporary segment of the French cruise
market. It has Holiday Dream, a 750-berth ship. CDF Croisières de France offers seasonal seven
to ten night itineraries to the Mediterranean and the Caribbean. CDF Croisières de France offers a
variety of onboard services, amenities and activities, including entertainment venues, exercise and
spa facilities, fine dining, and gaming facilities.

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Royal Caribbean Cruises Ltd.
History

HISTORY

Three Norwegian shipping companies, Anders Wilhelmsen & Co, I.M. Skaugen and company, and
Gotaas Larsen founded Royal Caribbean Cruises (RCC) Line in 1968.

Song of Norway, the RCC's first ship, started services in 1970. It was the first passenger ship built
specifically for warm weather cruising rather than point-to-point transport. The company's Nordic
Prince and Sun Viking started services in 1971 and 1972, respectively.

In 1982 the first new generation of larger cruise ships, the 1,413 passenger Song of America, twice
the size of Sun Viking, entered service. In 1984, ShipShape became the first program to incorporate
fitness incentives into a schedule of on-board activities.

RCC created its own exclusive destination, Labadee, on the secluded north coast of Hispaniola in
1986. In 1988, RCC and Admiral Cruises merged. Anders Wilhelmsen & company bought out its
original partners and gained full ownership of RCC. Subsequently, Anders Wilhelmsen & company
entered a joint ownership agreement with an entity of the Pitzker family, and the Ofer family.

RCC became a public company and started trading on the New York Stock Exchange; and Song of
America began summer cruises to Bermuda from New York City in 1993.

Royal Caribbean Cruise Line, the company operated by RCC changed its name to Royal Caribbean
International, to reflect its global operation and itineraries in 1997. The company launched its first
Voyager-class ships Voyager of the Seas in 1999.

Royal Celebrity Tours joined USTOA (United States Tour Operators Association) in 2001. Following
this, the company signed an agreement with Seattle's Best Coffee to provide its products on the
fleets. The program was expanded to Radiance of the Seas, Voyager of the Seas and Enchantment
of the Seas.

The company introduced automated booking for its cruises in 2002. In the following year, RCC
entered an agreement with the Bayonne Local Redevelopment Authority (BLRA) to construct and
operate a new cruise port facility at the former Bayonne Military Ocean Terminal in New Jersey. The
company also launched its new web site, royalcaribbean.com with more information and tools
designed for cruisers in 2003.

The company opened its Cape Liberty Cruise Port in Bayonne, New Jersey in 2004. Subsequently,
it expanded its presence in Boston by adding two new ships. RCC launched a Spanish language
web site also during the year.

Later in 2004, the company renovated and re-launched its cruise ship, Sovereign of the Seas with
an additional dining room, new balconies and entertainment options. Following this, Celebrity Cruises
deployed a new ship called Century to Europe. In 2005, RCC added its third Freedom Ship and

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Royal Caribbean Cruises Ltd.
History

launched the online check-in service for its cruise customers. In November 2006, RCC purchased
the Madrid based cruise and tour operator, Pullmantur.

In February 2007, Royal Caribbean International announced plans to deploy Independence of the
Seas, the third in its new Freedom class of ships, in the UK, when she debuts in May 2008. In the
same month, The Scholar Ship announced the lease of a 29,000-ton ocean liner that would become
the first oceangoing education program developed specifically for an international student body.

Royal Caribbean International, in March 2007, announced plans to transfer Empress of the Seas to
Pullmantur, the Madrid-based cruise and tour operator that parent company, Royal Caribbean Cruises
which was purchased in November 2006.

Celebrity Cruises partnered with Las Vegas based Blau and Associates, a restaurant planning and
development firm, to serve as the line's new culinary consultancy across the fleet in June 2007. In
July 2007, RCC established its Asia-pacific headquarters in Singapore, Royal Caribbean Cruises
(Asia) to support its marketing efforts in the Asia-Pacific region for three of the company's cruise
brands: Royal Caribbean International, Celebrity Cruises and Azamara Cruises.

In September 2007, company launched a new cruise brand, CDF Croisieres de France, for the
French market. Royal Caribbean Cruises announced, in October 2007, that Royal Caribbean
International's Sovereign of the Seas would be reassigned to the company's Pullmantur fleet, and
the Los Angeles-based Monarch of the Seas will assume Sovereign of the Seas' sailings out of Port
Canaveral. These changes would take place in October and November 2008. In December 2007,
TUI and Royal Caribbean Cruises announced the launch of a new joint venture for serving the
German cruise market.

Royal Caribbean Cruise and TUI announced that they have successfully closed on their joint venture
to form TUI Cruises, a cruise line specifically designed to serve the German cruise market in April
2008. In October 2008, RCC agreed to sell its 50% interest in Island Cruises to First Choice Holidays,
the other 50% owner in the joint venture and a subsidiary of British-based tour operator TUI Travel.
As part of the transaction, RCC and TUI Travel agreed to an early termination of the charter of Island
Star, one of two ships in the Island Cruises fleet. RCC is the owner of Island Star and had chartered
it to Island Cruises. The deal is subject to regulatory approval in Ireland. RCC is expected to recognize
a small gain on the sale of its interest in Island Cruises and the early termination of the Island Star
charter.

Royal Caribbean International announced in October 2008 its entry into Dubai, UAE with the
deployment of Brilliance of the Seas in 2010. From January to April 2010, the cruise line will offer
its signature style of cruising for active vacationers to an international mix of guests, on seven-night
sailings from this increasingly popular destination.

In December 2008, RCC announced opening of two new offices in China, in the cities of Beijing and
Guangzhou. These offices will widen the company's reach into more regions of China.

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Royal Caribbean Cruises Ltd.
History

The new offices, which will open in the coming weeks, will be the second and third the company
operates in China, joining its Shanghai facility, which opened earlier in July 2007. The new offices
will highlight the growing importance of the China marketplace and its role in the company's
international growth strategy.

In April 2009, RCC temporarily suspended its port calls in Mexico. The decision was made in an
abundance of caution, and allows additional time to better understand the full impact of the Swine
Flu.

In May 2009, DUBAILAND, a member of Tatweer, and Royal Caribbean International, a division of
RCC, signed a memorandum of understanding towards the formation of a strategic marketing
partnership. This agreement is expected to provide a substantial boost to the cruise industry and
the destination of Dubai.

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Royal Caribbean Cruises Ltd.
Key Employees

KEY EMPLOYEES

Name Job Title Board Compensation


Richard D. Fain Chairman and Chief Executive Executive Board 5781241 USD
Officer
Morten Arntzen Director Non Executive Board 29318 USD
Bernard W. Aronson Director Non Executive Board 162858 USD
William L. Kimsey Director Non Executive Board 210194 USD
Laura Laviada Director Non Executive Board 162858 USD
Gert W. Munthe Director Non Executive Board 185058 USD
Eyal Ofer Director Non Executive Board 175058 USD
Thomas J. Pritzker Director Non Executive Board 166258 USD
William K. Reilly Director Non Executive Board 163858 USD
Bernt Reitan Director Non Executive Board
Adam M. Goldstein President and Chief Executive Senior Management
Officer, Royal Caribbean
International
Daniel J. Hanrahan President and Chief Executive Senior Management
Officer, Celebrity Cruises and
Azamara Cruises
Brian J. Rice Executive Vice President and Chief Senior Management 1799079 USD
Financial Officer
Harri U. Kulovaara Executive Vice President, Maritime Senior Management
Gonzalo Chico Barbier President and Chief Executive Senior Management
Officer, Pullmantur SA
Larry Pimentel President nd Chief Executive Senior Management
Officer, Azamara Cruises

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Royal Caribbean Cruises Ltd.
Key Employee Biographies

KEY EMPLOYEE BIOGRAPHIES

Richard D. Fain

Board: Executive Board


Job Title: Chairman and Chief Executive Officer
Since: 1988
Age: 61

Mr. Fain has been the Chairman and Chief Executive Officer of RCC Since 1988. He is the Chairman
of the Cruise Line International Association, an industry trade organization consisting of 16,000 travel
agencies and 21 cruise lines. He has been involved in the shipping industry for over 25 years.

Morten Arntzen

Board: Non Executive Board


Job Title: Director
Since: 2008

Mr. Arntzen has been a Director of RCC since 2008. He is currently the President and Chief Executive
Officer and a director of Overseas Shipholding Group, Inc., a diversified global energy transportation
company. He is also the Chairman of OSG America LP, a master limited partnership listed on the
New York Stock Exchange and affiliated with Overseas Shipping Group, Inc.

Bernard W. Aronson

Board: Non Executive Board


Job Title: Director
Since: 1993
Age: 62

Mr. Aronson has been a Director of RCC since 1993. He is currently the Managing Partner of ACON
Investments. Prior to that, he served as the International Advisor to Goldman, Sachs & Co. From
1989 to 1993, he served as Assistant Secretary of State for Inter-American Affairs. Prior to that, he
served in various positions in the private and government sectors. He also serves as a Director of
Liz Claiborne, Global Hyatt and Mariner Energy.

William L. Kimsey

Board: Non Executive Board


Job Title: Director
Since: 2003

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Key Employee Biographies

Age: 66

Mr. Kimsey has been a Director of RCC since 2003. He was employed for 32 years through 2002
with the independent public accounting firm Ernst & Young. From 1998 through 2002, he served as
the Chief Executive Officer of Ernst & Young Global and Global Executive Board member of Ernst
& Young and from 1993 through 1998 as the Firm Deputy Chairman and Chief Operating Officer.
He also serves on the board of Western Digital, Parsons, Accenture, and NAVTEQ. He is a certified
public accountant and a member of the American Institute of Certified Public Accountants.

Laura Laviada

Board: Non Executive Board


Job Title: Director
Since: 1997
Age: 58

Ms. Laviada has been a Director of RCC since 1997. She sits on the board of several public and
not-for-profit companies in Mexico, including Telmex, and Grupo Financiero Inbursa, as well as Pro
Mujer (an organization that provides mircro credit for women in Mexico) and the Museum of San Il
defonso. Recently, Ms. Laviada acquired a controlling stake in Grupo Aeroportuario del Pacífico
which operates 12 airports in Mexico's Pacific region, including those in Puerto Vallarta, Guadalajara,
Los Cabos and Tijuana. Prior to 2000, she was the Chairman and Chief Executive Officer of Editorial
Televisa, de C.V.

Gert W. Munthe

Board: Non Executive Board


Job Title: Director
Since: 2002
Age: 52

Mr. Munthe has been as a Director of RCC since 2002. Since 2002, he has served as managing
partner of Ferd Private Equity, a private equity company that focuses on mid-cap companies in the
technology area. From 1994 through 2000, he was a Director of Alpharma, a life science company
active in animal health and generic pharmaceuticals, and served as its Chief Operating Officer from
1998 until 1999 and as its Chief Executive Officer in 1999. From 1993 through 1998, he was the
President and Chief Executive Officer of NetCom, a leading wireless telecommunication operator
in Norway that was listed on the Oslo and London Stock Exchanges. He served in the Royal
Norwegian Navy and was previously with McKinsey & Co.

Eyal Ofer

Board: Non Executive Board


Job Title: Director

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Key Employee Biographies

Since: 1995
Age: 58

Mr. Ofer has been a Director of RCC since 1995. He has served as the Chairman of Carlyle MG
since 1991.

Thomas J. Pritzker

Board: Non Executive Board


Job Title: Director
Since: 1999
Age: 58

Mr. Pritzker has been a Director of RCC since 1999. He is the Chairman of Global Hyatt and Marmon
Group. He is the Chairman and Chief Executive Officer of The Pritzker Organization. He is a member
of the Board of Trustees of the University of Chicago and the Chairman of the Art Institute of Chicago.

William K. Reilly

Board: Non Executive Board


Job Title: Director
Since: 1998
Age: 69

Mr. Reilly has been a Director of RCC since 1998. He is the Founding Partner of Aqua International
Partners, an investment group that finances water and renewable energy companies. From 1989
to 1993, he served as the Administrator of the US Environmental Protection Agency. He has also
previously served as the Payne Visiting Professor at Stanford University's Institute of International
Studies, President of World Wildlife Fund and of The Conservation Foundation. He is the Chairman
Emeritus of the World Wildlife Fund and the Chairman of the Board of Advisors to the Nicholas
Institute for Environmental Policy Solutions at Duke University, and also serves on the board of
trustees of the American Academy in Rome, National Geographic Society and the Packard
Foundation. He serves as a Director of E.I. Du Pont de Nemours and Company, ConocoPhillips,
AgraQuest and Eden Springs.

Bernt Reitan

Board: Non Executive Board


Job Title: Director
Since: 2004
Age: 60

Mr. Reitan has been a Director of RCC since 2004. He is an Executive Vice President of Alcoa and
is the Group President for the Global Primary Products division. He joined Alcoa in 2000 as the

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Key Employee Biographies

General Manager of Alcoa World Alumina and Chemicals and was named the President of Alcoa
World Alumina and Chemicals in 2001. Later in 2001, he was elected a Vice President of Alcoa. In
2003, he was appointed the President, Alcoa Primary Metals. In 2004, he was named the Executive
Vice President of the company. Before joining Alcoa, he was employed for 20 years in a number of
positions with Elkem ASA in Norway.

Adam M. Goldstein

Board: Senior Management


Job Title: President and Chief Executive Officer, Royal Caribbean International
Since: 2005
Age: 49

Mr. Goldstein has been the President and Chief Executive Officer of Royal Caribbean International
since 2005. He has been working with RCC since 1988 in a variety of positions, including the Senior
Vice President, Total Guest Satisfaction and the Senior Vice President, Marketing. He served as
the National Chairman of the Travel Industry Association of America in 2001.

Brian J. Rice

Board: Senior Management


Job Title: Executive Vice President and Chief Financial Officer
Since: 2006
Age: 50

Mr. Rice is the Executive Vice President and Chief Financial Officer of RCC since 2006. He has
served as the Senior Vice President, Revenue Performance since 1999. He has been employed
with the company for over 15 years.

Harri U. Kulovaara

Board: Senior Management


Job Title: Executive Vice President, Maritime
Since: 2005
Age: 56

Mr. Kulovaara has been the Executive Vice President, Maritime of RCC since 2005. He has been
employed with RCC since 1995 in a variety of positions, including the Senior Vice President, Marine
Operations, and the Senior Vice President, Quality Assurance. He is a Naval Architect and Engineer.

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Major Products and Services

MAJOR PRODUCTS AND SERVICES

RCC is an international cruise company. The company's services include:

Services:

Cruise vacations
Tour and holiday packages

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Royal Caribbean Cruises Ltd.
Revenue Analysis

REVENUE ANALYSIS

The company recorded revenues of $6,532.5 million during FY2008, an increase of 6.2% over
FY2007. For FY2008, the US, the company's largest geographic market, accounted for 60% of the
total revenues.

RCC generates revenues through two geographic business divisions: the US (60% of the total
revenues during FY2008) and all other countries (40%).

Revenue by Geography

The US, RCC's largest geographical market, accounted for 60% of the total revenues in FY2008.
Revenues from the US reached $3,919.5 million in FY2008, an increase of 1.2% over FY2007.

All other countries accounted for 40% of the total revenues in FY2008. Revenues from All other
countries reached $2,613 million in FY2008, an increase of 14.8% over FY2007.

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Royal Caribbean Cruises Ltd.
SWOT Analysis

SWOT ANALYSIS

RCC is a global cruise vacation company operates 38 cruise ships with approximately 78,650 berths
in about 425 selected destinations worldwide. It also offers land-tour vacations in Alaska, Asia,
Australia, Canada, Europe, Latin America and New Zealand. RCC has strong market presence.
RCC is one of the world's largest cruise companies. A strong market presence enables the company
to boost its revenues and profitability. However, environmental legislation and regulations could
affect the company's operations and may increase company's operating costs.

Strengths Weaknesses

Robust market presence Rising expenses


Broad portfolio of cruise ships

Opportunities Threats

Growing importance of cruising in vacation Environmental legislation and regulations


market Increased minimum wages in the US would
Initiatives to improve international presence impact profitability
Expansion of fleet size Economic slowdown in the US and
Improving technology capabilities Eurozone

Strengths

Robust market presence

RCC has robust market presence. RCC is the world's second-largest cruise company operating 38
cruise ships with approximately 78,650 berths. It operates one of the largest number of berths of
any cruise line in the world. Furthermore, RCC enjoys strong brand recognition in the industry.
Celebrity Cruises, a cruise brand of the company, was the top-rated premium cruise line by Conde
Nast Traveler readers in the "World's Best Large Ships" category of the February 2008 Cruise Poll.
A robust market presence enables the company to boost its revenues and profitability.

Broad portfolio of cruise ships

RCC operates five cruise brands: Royal Caribbean International, Celebrity Cruises, Pullmantur
Cruises, Azamara Cruises and CDF Croisieres de France.

The Royal Caribbean International brand offers cruise itineraries ranging from two to 18 nights. It
caters of the premium and contemporary customers of the cruise vacation market. Celebrity Cruises
offer various cruise itineraries ranging from two to 16 nights. Azamara Cruises offers deluxe cruise

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Royal Caribbean Cruises Ltd.
SWOT Analysis

services. CDF Croisieres de France is designed to serve the contemporary segment of the French
cruise market. A broad portfolio of brands helps RCC in attracting new customers and increases
market penetration opportunities.

Weaknesses

Rising expenses

RCC has been registering steady rise in its expenses since FY2006. For instance, RCC's operating
expenses increased to $5,700.5 million in FY2008 compared to $4,371.1 million in the previous year.
Expenses as a percent of net sales increased to 87.3% in FY2008 compared with 83.6% in FY2006.
The rising expenditure has impacted the company's margins which resulted in its operating margin
declining from 16.4% in FY2006 to 12.7% in FY2008. The net profit margin has also declined from
12.1% in FY2006 to 8.8% in FY2008. Declining operating margins reflects an inefficient cost structure
and is a competitive disadvantage.

Opportunities

Growing importance of cruising in vacation market

Over the past several years, cruising has registered rise in market share of the overall vacation
market. As per the RCC’s estimates, the global cruise fleet was served by approximately 354,000
berths on approximately 240 ships by the end of 2008. There are approximately 34 ships with an
estimated 86,000 berths that are expected to be placed in service in the global cruise market between
2009 and 2012.

The global cruise industry carried 17.2 million cruise passengers in 2008, an increase of 3.6% over
2007.The significant portion of cruise guests carried are first-time cruisers.This present an opportunity
in front of RCC for long-term growth and a potential for increased market share through the expansion
of its fleet.

Initiatives to improve international presence

RCC has been consciously pursuing a strategy to improve its international presence. In this direction,
the company redeployed some of the ships in its Royal Caribbean International and Celebrity Cruises
brands from the North American market to Europe, Latin America and Asia, in FY2008. This
redeployment will contribute to an increase in the growth of its global cruise brands outside of the
North American market. Initiatives like these will help the company to penetrate untapped markets
and diversify its customer base.

Expansion of fleet size

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SWOT Analysis

RCC is plans to expand its fleet by more than 25% from its existing levels by 2012. To achieve this
target, RCC has signed agreements with two shipyards providing for the construction of six new
cruise ships scheduled to enter service between 2009–12.These additions will increase its passenger
capacity by approximately 22,200 berths by December 2012. The acquisition of these ships will
provide it with the flexibility to deploy ships among its brand portfolio and expand into growing
international markets. Additionally, fleet expansion enables the company to increase its average
ship size and number of available berths, which aids it to achieve certain economies of scale.

Improving technology capabilities

RCC invests in information technology on regular basis to improve its operational efficiencies. For
instance, in 2008, it completed the integration of Pullmantur and CDF Croisières de France into its
reservations and accounting platforms, enabling additional synergies across brands. It also invested
in its shoreside and shipboard systems integration, most notably the Advanced Shipboard Revenue
platform, where it enabled the sale of specialty dining on websites, prior to guests boarding the
vessel. This capability allows its guests to pre-arrange not only shore excursions in advance of their
cruise vacation, but also allows them to make reservations for one of its specialty restaurants. To
further align with its business strategy of improving international presence, it completed a major web
globalization initiative, launching full Royal Caribbean International website with localized content
in a number of major international markets, including the UK, Spain, Latin America, and Brazil.

These technologies will help RCC to provide higher service levels to its guests and at the same time
reduce its operating expenses.

Threats

Environmental legislation and regulations

Environmental legislation and regulations could affect company's operations and may increase
company's operating costs. Some environmental groups have lobbied for more stringent regulation
of cruise ships. The US Congress, the IMO and the US Environmental Protection Agency periodically
consider new laws and regulations to manage cruise ship pollution.

In addition, various other regulatory agencies in the States of Alaska, California, Florida, Hawaii,
Maine, Washington, and European regulatory organizations, have enacted or considering new
regulations or policies, which could adversely impact the cruise industry. Current and future
environmental laws and regulations, or liabilities arising from past or future releases of, or exposure
to, hazardous substances or to vessel discharges, could increase the company's cost of compliance
that could adversely affect its profitability.

Increased minimum wages in the US would impact profitability

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SWOT Analysis

In recent times, tight labor markets, increased overtime, government-mandated increases in minimum
wages and a higher proportion of full-time employees have resulted in an increase in labor costs,
which could materially impact the company's operating margins. The federal minimum wage rate in
the US, which remained at $5.15 per hour since 1997 reached $6.55 per hour in July 2008. It further
increased to $7.25 an hour from July 2009. Increased labor costs will increase overall costs and
affect the company's operating margins.

Economic slowdown in the US and Eurozone

The economy of the US and Europe is likely to slowdown in the short to medium term. According to
the IMF world economy outlook, while the GDP growth of the US economy is forecasted to slow
down from 2.0% in 2007 to -2.6% in 2009, the GDP growth of Eurozone is forecasted to decline
from 2.7% in 2007 to -4.8% in 2009. The profitability of the cursing business is tied to the performance
of the economy in which it operates. Healthy economic growth is therefore a precondition for the
positive growth rate of the business. If Europe and the US continue to display prolonged economic
slowdown in the future, the company's business could be negatively impacted.

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Top Competitors

TOP COMPETITORS

The following companies are the major competitors of Royal Caribbean Cruises Ltd.

Carnival
Star Cruises Limited

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Royal Caribbean Cruises Ltd.
Company View

COMPANY VIEW

A statement by Richard D. Fain, the Chairman and Chief Executive Officer of Royal Caribbean
Cruises Ltd. is given below. The statement has been taken from the company’s 2008 annual report.

If there is one thing that 2008 reminded us, it is how quickly the business environment can change
and how important it is to be proactive and diligent in the management of a business enterprise such
as ours.

Through the third quarter of last year, I had been hopeful that this letter would be prepared against
a backdrop of improved earnings that overcame the challenges of a weak economy and astronomical
fuel prices. What really changed in the equation was the sudden impact that the global economic
recession had on our core cruise guests in the last quarter of the year and the resulting impact on
our business.

Fortunately, the tremendous value proposition we provide our guests is still apparent. Fortunately,
our ships continue to deliver amazing vacations and our brands continue to perform ever more
strongly in the competitive marketplace. And, fortunately, the pricing actions we’ve taken have
resonated with our guests and have stimulated demand – albeit at unacceptably low prices.

Even with a very disappointing end to the year, we were still able to achieve a significant reduction
in our cost structure and a modest improvement in yields despite an accelerating recession. We are
still not satisfied with the returns the company is producing, and the current economic environment
will exacerbate this challenge in the short term.

The economy will eventually recover, but we cannot assume our business will simply go back to
“the way it was.” We must be aggressive in positioning our company not only to respond to those
short-term challenges, but also to position ourselves for a new environment in ways that generate
compelling returns.

In this letter I’ll try to cover some of the steps we are taking to position ourselves for a new and more
profitable future.

The Economy, Cost Controls, and Resiliency

In July, even before the economic crisis and despite the record profitability we achieved in the third
quarter, we announced a basket of initiatives designed to save $125 million annually. While significant,
these reductions were made without jeopardizing product delivery to our guests, our travel agent
relationships, or our marketing activities.

These initiatives included some very difficult decisions, such as:

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• Reduction in force of more than 400 shoreside positions,

• Other reductions in personnel costs,

• The elimination of non-core activities, and

• Continuous reviews of our cost structures and activities.

Another difficult decision that directly impacted all our shareholders was the decision to discontinue
our dividend. While this is a short-term disappointment, it was the proper decision in the current
environment and will preserve roughly $130 million in liquidity annually.

Further efforts to reduce our costs spawned our Financial Improvement Teams, or FIT initiative. This
effort captured savings by ensuring that our suppliers passed on to us the cost reductions associated
with a deflationary environment, these efforts resulting in:

• Paying less for the goods that we purchase,

• Improving our payment terms, and

• Realizing savings from lower commodity prices.

Our FIT efforts, coupled with our other savings initiatives, are projected to lower our net cruise costs,
excluding fuel, by five to seven percent per available guest cruise day in 2009. All while maintaining
our excellent product and service.

High and volatile fuel prices also presented us with challenges last year. We took very specific steps
to address these challenges, including a sharp focus on reducing the amount of fuel we use. This
not only assisted us in terms of cost reductions, but it contributes to our ongoing efforts to further
reduce our environmental impact. As a result of these fuel-saving initiatives, in combination with the
improved efficiency of our new hardware, we believe we will continue to use the lowest amount of
fuel per guest day in the cruise industry.

While controlling costs is critical, we also have been diligent in our efforts to drive revenues. To that
end we implemented a program to assist our travel agent partners, who are our primary distribution
channel. Travel agents are responsible for the vast majority of our sales, so in many respects, this
was our own version of an economic stimulus program.

Known as “ASAP,” or Agent Support Action Program, this effort was designed to help travel agents
in selling our cruises during this economic downturn, and to ensure our company emerges from the
recession stronger and better prepared to take advantage of the upturn when it occurs.

The program incorporated a series of special initiatives for travel agents, such as:

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• Opportunity to earn additional commissions,

• Increased marketing funds,

• Easier ways to earn complimentary staterooms for large groups,

• Reductions in deposits for select bookings, and

• Incentives for agents to earn free cruises.

Liquidity and Financing

As the global economic crisis has expanded, greater attention is being paid to the ability of companies
to finance their future activities. Fortunately, this is an area where we have been proactive and as
a result, our liquidity and financing positions are strong.

As of December 31, 2008, we had more than $1.0 billion in liquidity ($402 million in cash and $625
million available on our revolving credit facility) and in 2009, we expect to generate more than $1.0
billion in EBITDA, despite the pricing pressures we’re facing. Financing arrangements, either in the
form of financing commitments or export credit guarantees, are in place on all six of our remaining
ship deliveries.

Furthermore, we anticipate that the combination of our current liquidity, cash flows from operations
and existing financing arrangements will be sufficient to meet all our foreseeable cash flow
requirements. Given the current state of the credit markets, this is an enviable position indeed, but
of course we will keep looking for ways to improve it further.

In times like these, I am often asked about our latest ships which were ordered years earlier. In fact,
our most recent ship classes – Freedom, Solstice and Oasis – are producing and should continue
to produce some of the best returns on capital in our industry. They are generating higher revenues,
lower expenses and better fuel consumption than almost any ship one might compare them to. That
is a performance we can build upon.

Global Growth and Brand Expansion

Expansion of our company’s global footprint continues to be a key tenet in our strategic direction.
Over the next five years, we anticipate our customer sourcing mix will continue to grow outside the
United States and that by 2011 or 2012, a majority of our revenue will be coming from outside the
U.S. As part of our efforts to address this change, we’ve reorganized our international structure. This
reorganization has identified ten key international offices that will operate with far greater autonomy,
making many more local decisions.

With regard to our brands, we were tremendously proud of Royal Caribbean International’s launch
of Independence of the Seas in April. As the third ship in the brand’s Freedom class, it was the

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largest and most innovative ship to ever sail in Europe. As part of our global growth plan, other Royal
Caribbean International ships sailed from Australia, Asia, Brazil, Dominican Republic, and Panama
in 2008. The brand also launched its new advertising campaign, entitled “The Nation of Why Not,”
which has been widely praised. Royal Caribbean International continues to enjoy a preeminent
position as the most widely desired brand in the cruise industry, as demonstrated by its numerous
awards and surveys. As a result, it also generates excellent profitability and returns.

In October, Celebrity Cruises celebrated the arrival of Celebrity Solstice, a new class of ship for the
brand and its first new ship in six years. We knew we had built an outstanding ship, but we were
genuinely amazed by the overwhelming outpouring of accolades and compliments we received from
our guests, our travel partners and the media regarding the ship. While we still don’t feel that Celebrity
is commanding an adequate pricing premium in the marketplace, Celebrity Solstice and her sister
ships will go a long way to improving the brand’s overall financial contribution. Celebrity’s products
continue to earn rave reviews and awards, but we need to do more to ensure this translates into
higher revenues and bottom line performance.

Pullmantur, our Spanish cruise and tour company, was heavily impacted by the global economic
environment as the Spanish economy suffered disproportionately relative to many of our other
markets. We have responded by taking steps that will provide lasting, long-term strategic benefits
to the brand, including upgrading the size and quality of Pullmantur’s fleet and investing in sales,
marketing, and management capabilities. Despite the current economic backdrop, strategic expansion
continues at Pullmantur. Collectively, these actions have strengthened Pullmantur so the brand is
well poised to take advantage of an eventual rebound in the Spanish economy. Pullmantur has
maintained a commanding market position in Spain but the economy has been problematic. It suffered
earlier than other economies and we therefore expect that it will feel the benefits earlier than others.

Safety, Security, and Environment

While continuing to focus on improving our returns, we continue to maintain a keen focus on the
well-being of our guests and the environments in which we operate. Our safety and security efforts
have been extensive in 2008 and some of the highlights include our participation in the Cruise Ship
Safety Forum, which promotes industry cooperation on maritime safety initiatives, having the first
cruise ship to apply new international damage stability regulations, and installing thousands of
cameras throughout the public spaces.

Our environmental initiatives continue to be guided by our desire to minimize our impact wherever
we operate. We are maintaining our focus on these efforts as demonstrated by our installation of 16
new Advanced Wastewater Purification (AWP) systems. These units purify our discharges to higher
purity standards than many municipal water treatment plants. While these units have been more
difficult to install and operate than their promoters promised, we remain committed to continuing
their development and installation. Additionally, we installed “White Box” units to monitor and record
our bilge water cleaning and discharge processes.

We clean bilge water to 99.9995 percent pure, which results in less than five parts per million of
non-water substances, which is three times cleaner than the most stringent limits. And, both Celebrity

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Solstice and Oasis of the Seas have solar panels onboard as we search for new and better energy
sources, especially green energy sources.

Going Forward

The coming year will be challenging and our management team will not waver from its focus on
liquidity, cost control, and revenue maximization to help us get through these unprecedented economic
times. While this focus will be intense, there are a number of milestones we are looking forward to
in the upcoming year:

In March, Pullmantur will grow by a ship as the brand begins sailing Pacific Dream from Mexico.
This will bring the Pullmantur fleet to seven ships and contribute to its evolving global growth.

In May, we look forward to the inaugural sailing of our new German joint venture – TUI Cruises. A
national naming competition was recently held for its first ship and 30,000 entries later, the name
Mein Schiff (My Ship) prevailed.

In July, Celebrity Cruises welcomes its second Solstice-class vessel, Celebrity Equinox. Its guests
will experience the series of brand-defining, industry-first attributes so highly praised in Celebrity
Solstice.

Finally, in November, Royal Caribbean International will launch Oasis of the Seas, one of the most
highly anticipated and revolutionary cruise ships ever built. Oasis of the Seas will have a number of
new features that have never before been offered on a cruise ship, providing our guests with even
more ways to gain exceptional value from their cruise vacation.

In Conclusion

We have covered a lot in this letter, from unprecedented economic challenges, to new global
destinations and sourcing, to the most revolutionary hardware ever to grace the high seas.
Unfortunately, we all bemoan the fact that the short term will likely be marked by challenged pricing,
additional difficult decisions and unacceptable returns. However, I am confident we are taking the
correct proactive actions to manage through this cycle and that smoother sailing and more acceptable
returns will result.

Despite the current economic environment, I am thrilled with the business platform we’ve created –
great brands, superior hardware, talented management, and a strong distribution structure that will
allow us to thrive in the long term. Nor will I allow this environment to detract from our excitement
regarding the delivery of Oasis of the Seas – the most talked about and anticipated vessel, possibly
ever, and the new Celebrity Solstice class – with its unparalleled elegance. In addition to providing
our guests with remarkable and memorable experiences, this hardware provides returns that are
among the best in the industry.

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Lastly, I’d be remiss in not taking note that delivering our amazing product, in any environment, takes
immense focus and teamwork from a broad group of people. I thank our 49,000 employees for their
continued diligence in making each of our guests’ experiences unique and for their special efforts
at improving the product and reducing our costs during these turbulent times. I thank our more than
four million guests for their loyalty and continued recognition of the value we offer in these challenging
economic times. I thank our board of directors for their continued support and guidance, and I thank
you, our shareholders, for your support regarding the difficult decisions that are necessary in this
environment.

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Locations and Subsidiaries

LOCATIONS AND SUBSIDIARIES


Head Office
Royal Caribbean Cruises Ltd.
1050 Caribbean Way
Miami
Florida 33132
USA
P:1 305 539 6000
F:1 305 374 7354
http://www.royalcaribbean.com

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