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More ships, new itineraries coming for Viking River Cruises in 2015

Demonstrating no slowdown in the European river cruise boom, Viking River Cruises has confirmed official plans for the company’s expansion in 2015. Viking has ordered 12 new river vessels for next year – 10 additional award-winning Viking Longships and two unique vessels for the Elbe River. Next year will also see the launch of two new itineraries highlighting the Rhine River. The announcement comes directly on the heels of Viking’s world record-setting christening last month of 18 vessels across four countries in five days and will bring the company’s total fleet size to 64 river vessels in 2015.

“When we started this company 17 years ago, we had two cell phones and no money, but we knew there was an opportunity to do things differently,” said Torstein Hagen, Chairman of Viking Cruises. “By focusing on an audience of like-minded travelers, and designing ships and itineraries that help travelers better explore their destinations, we are proud that river cruising is now the fastest-growing segment of travel.”

New Longships for 2015

Of the 12 vessels on order for 2015, 10 are Viking Longships, which have amassed a long list of prestigious awards since debuting in 2012. They recently topped Condé Nast Traveler’s annual readers’ Cruise Poll for best river cruise ships – with Viking Odin specifically being named the #1 top-ranking river cruise ship – and the entire class of vessels was named “Best New River Ships of 2012” in Cruise Critic’s Editors’ Picks Awards.

Viking Longships integrate a patented corridor design and cutting-edge technology with comfortable amenities that reflect guest preferences and current travel trends. These features include a revolutionary all-weather indoor/outdoor Aquavit Terrace that reinvents the onboard lounge experience by bringing the panoramic outdoor river scenery indoors with retractable floor-to-ceiling glass doors and allows guests to enjoy the views and dine al fresco. Accommodating 190 passengers in 95 staterooms, Viking Longships have a patented layout that allows for two Explorer Suites – the largest river cruise suites in Europe – as well as seven two-room Veranda Suites with a full-size veranda in the living room and a French balcony in the bedroom; 39 Veranda Staterooms with full-size verandas; and 22 French Balcony Staterooms. Additionally, all Longships have green upgrades, such as onboard solar panels and organic herb gardens, and energy-efficient hybrid engines that also reduce vibrations for a remarkably smooth ride.

New ships for the Elbe River in 2015

Viking’s two additional ships on order for 2015 will be designed specifically for the company’s Elegant Elbe itinerary. As a result of high customer demand, the two new ships will join the recently refurbished Viking Schumann and Viking Fontane, doubling the company’s capacity on the Elbe River in 2015. Hosting 98 guests in 49 staterooms, sister ships Viking Astrild and Viking Beyla will be the newest and most modern ships sailing the Elbe River. Smaller than Viking Longships, with customized hulls and engines specially designed to navigate this unique river, these ships will tout many of the same popular features – including an Aquavit Terrace, a wide variety of stateroom choices, hotel-style beds, energy-efficient hybrid engines, onboard solar panels and an organic herb garden, as well as Viking’s signature Scandinavian design aesthetic.

A 10-day cruisetour with hotel stays in Berlin and Prague, Elegant Elbe is Viking’s only itinerary offering the unique opportunity to sail through eastern Germany. Featuring stops in Magdeburg, Wittenberg and Dresden, this itinerary offers the quintessential blend of urban culture, history and scenic cruising – including sailing past the cliffs of Germany’s “Saxon Switzerland.” It also includes visits to six UNESCO World Heritage sites.

New itineraries for 2015

Viking will also introduce two new itineraries in 2015, both of which showcase scenic treasures along the Rhine River during the springtime. Details of the itineraries include:

– Legends of the Rhine - This 8-day journey between Amsterdam and Frankfurt provides a window into some of the historic eras and events that have shaped northern Europe. Cruise through the Middle Rhine Valley, lined with dozens of medieval castles, and take walking tours of castles and cobbled streets. Marvel at the soaring carved interiors and stained-glass windows of Cologne’s iconic Gothic cathedral, and sample the local beers. Stop in Remagen, the site of World War II’s Operation Market Garden, and Nijmegen for a guided visit to the Overloon War and Resistance Museum. Spend a full day enjoying the delightful Golden Age city of Amsterdam, including a canal boat tour. Prices start at $2,356 per person, with 2015 departure dates in April and May.

– Rhine Rhapsody - On this unique new cruisetour, spend 10 days amidst the timeless elegance of Paris and the breathtaking scenery along the Rhine, Main and Moselle Rivers. Take a guided tour of the French capital to see some of its historic locations; then spend some time exploring its neighborhoods, museums and cafés. Scenic cruising takes you to the heart of smaller European towns like Trier, Rüdesheim and Cochem, where there is so much to discover, right through the Rhine Valley, famous for its many riverside castles. Stop in Strasbourg, the perfect marriage of French and German cultures (and cuisines), and explore the market squares of Basel’s charming Old Town area. Prices start at $2,906 per person, with 2015 departure dates in April and May.

The expansion of Viking’s fleet comes as a response to increased traveler demand for destination-focused cruises. In addition to the new Viking Longships and new vessels in Portugal, the company’s first ocean ship, the 930-passenger Viking Star, is currently under construction and will set sail in early 2015.

Royal Caribbean reports first quarter results and updates 2014 guidance

Royal Caribbean Cruises Ltd. today reported first quarter results and slightly raised its outlook for full year 2014.

Overall, the year is developing along the course the company previously anticipated. First quarter results were at the lower end of the company's guidance due to some minor voyage disruptions but this impact is expected to be offset during the rest of the year. Full year Adjusted Earnings Per Share (Adjusted EPS) is expected to be in the range of $3.25 to $3.45, which raises the company's previous guidance by $0.05.

Results for the First Quarter 2014

– Net Yields were down 0.3% on a Constant-Currency basis (down 2.7% As-Reported). Unplanned voyage disruptions within the quarter negatively impacted yields for the quarter by about 0.5%.
– Net Cruise Costs ("NCC") excluding fuel increased 1.3% on a Constant-Currency basis (1.0% As-Reported).
– Adjusted Net Income was $46.1 million, or $0.21 per share, versus Adjusted Net Income of $78.2 million, or $0.35 per share, in 2013.
– US GAAP Net Income, which reflects some restructuring and related charges, and the impact of the operations of the divested Pullmantur non-core businesses, was $26.5 million, or $0.12 per share versus $76.2 million, or $0.35 per share in 2013.  

Full Year 2014

– Adjusted EPS is expected to be in the range of $3.25 to $3.45 per share.
– Net Yields are expected to increase 2% to 3% on a Constant-Currency basis (2% to 3% As-Reported).
 – NCC excluding fuel are expected to be flat to slightly down on a Constant-Currency basis (Approx. flat As-Reported).

The company has completed the sale of Pullmantur's non-core businesses. As previously disclosed, the results of these businesses and the restructuring and related costs associated with the sale of these businesses along with our previously announced global restructuring actions have been excluded from non-GAAP measures to provide better comparability.

For the full year we expect to incur $23 million in restructuring and related charges and approximately $11 million from the first quarter operating loss incurred by the divested Pullmantur non-core businesses, totaling $34 million in 2014. In the first quarter we incurred $19.6 million, leaving approximately $14.4 million for the balance of the year.

"It is gratifying to see 2014 developing methodically along such a positive trajectory," said Richard D. Fain, chairman and chief executive officer. "Our business strategy is proving itself nicely while strength in our global markets is more than compensating for a highly promotional Caribbean."

First quarter results

Adjusted Net Income for the first quarter of 2014 was $46.1 million, or $0.21 per share, compared to Adjusted Net Income of $78.2 million, or $0.35 per share, in the first quarter of 2013.  US GAAP Net Income for the first quarter 2014 was $26.5 million or $0.12 per share compared to $76.2 million or $0.35 per share in 2013.  

Net Yields on a Constant-Currency basis decreased 0.3% during the quarter. Excluding the unplanned voyage disruptions, yields were slightly better than flat. Six voyages were shortened or cancelled during the quarter. The net impact from these events is expected to be recovered within the fiscal year.

Ticket revenue was in line with expectations across most key itineraries and as expected, Caribbean yields were down slightly while yields in other itineraries were up nicely. Onboard revenue yields increased 3.4% as we continue to see the benefit of our fleet upgrades and onboard revenue management initiatives.

Constant-Currency NCC excluding fuel increased 1.3% which is better than guidance mostly due to timing. Bunker pricing net of hedging for the first quarter was $713 per metric ton and consumption was 343,000 metric tons.

Full year 2014

The company has raised full year Adjusted EPS guidance slightly to a range of $3.25 to $3.45 from $3.20 to $3.40.  Constant-Currency Net Revenue Yields and Net Cruise Costs excluding fuel are expected to be consistent with our previous guidance of up 2% to 3% and flat to slightly down, respectively.

Booking volumes for the past three months have been up about 16% year-over-year, with bookings for the past 8 weeks up by more than 20%, stronger than typical post-Wave periods. For example, the company experienced a record booking week at the end of February which is an unusual time for so much activity. As a result, load factors and APDs are higher than same time last year. While the promotional environment in the Caribbean has contributed to the strong booking volumes, demand has also increased for other itineraries.

Demand for European sailings from all key sourcing regions and for China sailings remained particularly strong throughout the period and double digit yield improvements are expected for both products.

"Despite pressures in the Caribbean, the diversity provided by our global footprint is proving its value. This model has allowed us to take advantage of the strong demand for our European and Asian products, while successfully navigating pressures in the Caribbean," said Jason T. Liberty, chief financial officer.

In the first quarter we continued to leverage our improving credit profile and a healthy bank market to further reduce our interest costs.

NCC excluding fuel are expected to be flat to slightly down on a Constant-Currency basis and approximately flat on an As-Reported basis. Taking into account current fuel pricing, interest rates, currency exchange rates and the factors detailed above, the company has raised its 2014 guidance for Adjusted EPS to a range of $3.25 to $3.45 per share.

Second quarter 2014

Constant-Currency Net Yields are expected to increase between 1.5% to 2.5% in the second quarter of 2014. NCC excluding fuel are expected to be down 2% to 3% on a Constant-Currency basis. Based on current fuel pricing, interest rates and current exchange rates, the company expects second quarter Adjusted EPS will be in the range of $0.45 to $0.55 per share.

Cruise Business Commentary - Quantum of the Seas' move to China could be game changer for cruising

Royal Caribbean International's decision to base the 167,800 gross ton Quantum of the Seas in Shanghai in May 2015 after an initial winter season in New York marks the first time a cruise brand has decided to operate a ship of its latest class on the Chinese market. And that decision could be a game changer for the cruise industry.

Until now, cruise lines have sent ships that have seen years of service on the North American and European markets to China. However, some critics have noted that as the region has some of the finest hotels in the world, it is unwise to assume that Asians in general and Chinese in particular would flock in great numbers on these sometimes already tired ships.

On the other hand, a decision to send a brand new ship that often carries a price tag in the region of $1 billion to the Far East, only to operate it half-empty, would be a disastrous decision. Quite simply, the volumes have to be built up first and once the market has reached a critical mass, then it is the time to up the ante and deploy a first rate vessel on the Asian market.

The growth rate of China has been very rapid: it was only in 2006 that Costa Crociere, the Italian unit in Carnival Corp & plc group, based the 28,400 gross ton Costa Allegra in Shanghai,which made it the first western cruise line to have a ship based there.

For Royal Caribbean International, the time to send a top rate ship to China has now come. As company executives explained in a conference call, the line needs to seek a balanced view to its ship deployments, so that customer needs and company's interests will both be met in an optimal way. This does not only mean looking for the best yields at all times, but also to factor in long term strategic prospects in the equation. Deployment of Voyager of the Seas and soon afterwards Mariner of the Seas to Shanghai had significantly boosted the line's business there. Clearly, this must have been a major factor to base Quantum of the Seas in Shanghai: the long term strategic prospects appear encouraging and the executives noted they have lots of confidence in the China business.

The decision is likely to have a number of consequences:

-Royal Caribbean's competitors will have accept that the Chinese / Asian markets have become significantly more important regions for the business than what they have been so far,

-Asia will join North America and Europe as key deployment area of first rate cruise ships,

-Dated tonnage will have increasingly limited prospects to trade in the region and

-Major brands will have to factor in the requirements of the Asian market in the design of their new ships.

For Royal Caribbean International, a lot is at stake. Success with Quantum of the Seas could help it to establish itself as the definite market leader in the Chinese source market and pave the way for positioning of the third Oasis class ship, currently under construction, to China. The financial rewards of all this could, in the medium to long run, be phenomenal.

But risks are great as well.

Booking windows are short on the Chinese market, which limits the visibility the management has to foresee the development of the business. The business has substantial seasonal fluctuations and political risks arising from maritime border disputes between China, Japan and South Korea can also upset the business. In case major problems arise that require repositioning ships away from China, the positioning voyages will be long and therefore, expensive.

Royal Caribbean's announcement came a short while after Star Cruises had unveiled a decision to build a second 150,000 gross ton cruise ship at Meyer Werft in Germany that also targets the Asian market. With three 20-year plus old ships in its fleet, Star may have to axe these, perhaps in favour of a newbuilding. A major competitor has just thrown the gauntlet at Star's home turf.

Princess Cruises to feature Diamond Princess in Japan 2015, Sun Princess to stay in Australia

Demonstrating a continuing commitment to developing the Japan cruise market, Carnival Corporation & plc has announced the 2015 Japan cruise program for Princess Cruises which features Diamond Princess returning for the line’s third season, and introduces new cruises as short as three nights to appeal for those local travelers seeking a quick getaway.

Beginning next April, the Japanese-built Diamond Princess will once again offer an exciting season sailing from the two home ports of Tokyo (Yokohama) and Kobe. During the four-month summer season the ship will offer 20 departures on a mix of itineraries visiting more than 20 destinations in Japan, Korea, Taiwan and Russia. The mix of itineraries is designed to have broad appeal, with cruises as short as three nights and up to 17 nights for guests seeking a more in-depth experience in Japan.

“We are very pleased to bring Diamond Princess back to Japan again next summer, this time with a broader variety of itineraries and cruise lengths offering guests a diverse choice of experiences and destinations,” said Jan Swartz, president of Princess Cruises. “In addition to offering local consumers a shorter cruise experience, our longer sailings will offer an enriching and convenient way to explore many of Japan’s most fascinating port cities.”

Swartz added that Sun Princess will not be returning to Japan next summer as it will instead be deployed to Australia where it has long been a popular ship based in the region. “Moving Sun Princess to Australia in 2015 doesn’t diminish our enthusiasm for the Japan cruise market. As demand for cruising grows further in Japan, we will review the opportunity to add additional capacity in the future.”

Diamond Princess will begin the 2015 season on April 29 in Yokohama with an eight-night Golden Week itinerary and a nine-night Taiwan & Korea sailing. The ship will then position to Kobe for a series of three cruises of Princess’ popular eight-night Ryukyu Islands & Taiwan voyages that include calls to Okinawa, Hualien, Kaohsiung and Taipei (Keelung). New for 2015 from Kobe is a 10-night Hokkaido cruise that includes appealing northern destinations of Aomori, Hakodate, Otaru and Abashiri.

Diamond Princess will return to Yokohama to spend the balance of the summer sailing north to the island of Hokkaido or around Japan, visiting culturally rich destinations such as Maizuru (for Kyoto), Nagasaki and Aomori. A special feature of the Hokkaido voyages is the late evening departure from Hakodate, which is famous for the nighttime view from the top of Mt. Hakodate, as well as the morning fish market.

Also new for the 2015 season, which runs through mid-September, are three-, four-, five- and seven-night itineraries designed to appeal to those with limited vacation time. Throughout the summer Diamond Princess will sail on a four-night Korea Getaway roundtrip from Kobe, plus a five-night Korea & Japan Getaway roundtrip from Tokyo (Yokohama) and a five-night Korea & Japan Getaway that positions between the two homeports. In August, the ship will sail on a week-long itinerary roundtrip from Yokohama which can be segmented into a three-night Korea Getaway disembarking in Hakata, or a four-night Korea & Japan itinerary embarking in Hakata.

The experience onboard Diamond Princess in Japan will substantially be the same as that offered by Princess Cruises around the world, providing an impressive array of dining and entertainment options in addition to the line’s signature innovations such as its popular Movies Under the Stars poolside theater and The Sanctuary, an exclusive top-deck retreat. However as done during the first two Japan seasons, some changes and enhancements will be made to appeal to the local market. The just-completed refurbishment of Diamond Princess added Izumi Japanese bath – the largest of its kind at sea – as well as a Kai Sushi restaurant. Photos of Diamond Princess post drydock can be found here:

Dining room menus will offer international Princess cuisine, while additional offerings will cater to Japanese tastes, and a la carte sushi bar will be opened. Other amenities such as the spa treatments will also be tailored to Japanese preferences, and onboard collateral items and stateroom information will be translated into Japanese.

An extensive array of shore excursions will be available to complement the itineraries including opportunities to visit the UNESCO World Heritage sites.

Diamond Princess was built by Mitsubishi Heavy Industries in Nagasaki, Japan – the first of two Princess ships built in Japan.

The 2015 Japan cruise program opens for sale April 30.

Strategic decision in changing world to send Quantum of the Seas to China

The decision to send Quantum of the Seas to China in May 2015 was based on strategic considerations in a changing world, said Lisa Lutoff-Perlo, svp operations at Royal Caribbean International, the contemporary market unit of Royal Caribbean Cruises Ltd (RCCL).

"The world is changing, this ship appeals to guests from all over the world and we need to take a balanced view where our hardware is based," she said in as conference call. Ship deployments are not always based on prospects regarding revenue, but also strategic objectives of the company in the long term. "The decisions where to sail from are also of strategic, not always financial nature," she stated.

Certain modifications will be required in retail offerings, galleys and menus before the 167,800 gross ton Quantum of the Seas will be introduced on the Chinese market, with Shanghai as its base. The company would unveil its 2015-16 Asia-Pacific programmes at a later stage, said Chris Allen avp of global deployment and itinerary planning, declining to comment on questions regarding whether Quantum of the Seas would operate cruises from other ports than Shanghai.

Allen said that the Chinese market had seen an acceleration on business following the introduction of Voyager of the Seas and then Mariner of the Seas there and that the company has a lot of confidence in this market and its potential.

Royal Caribbean officials that hosted the conference call said that the deployments of the third Oasis class and third Anthem class ships had not been decided yet, but that a balanced view with regards of what the company can offer to its customers in various parts of the world plus what is in the interest of the company itself would determine these deployments.

The decision to base Quantum of the Seas in Shanghai resulted in a number of other changes in ship deployments, the most important of which being the transfer of Anthem of the Seas, the second unit of the Anthem class from Ft Lauderdale in Florida to Cape Liberty in the New York region for the 2015-16 winter season.

Viking Star