News

CRUISE BUSINESS COMMENTARY – Why Fred. Olsen’s Poison, Murder and Mystery cruise is worth a few lines

Details: Written by Kari Reinikainen Kari Reinikainen; Category: Top Headlines Top Headlines; Published: 25 July 2014 25 July 2014

When the top brass of Fred. Olsen Cruise Lines – including its chairman Fred. Olsen Snr. that rarely appears in public - on 24 July took to the stage at the Tower of London, they wanted to talk about one cruise only: The Poison, Murder and Mystery cruise (see separate article under More News for details) that is scheduled to depart from the Scottish port of Rosyth on 10 July next year.

Also present at the event was Her Grace The Duchess of Northhumberland, whose idea the cruise actually was. The Duchess told Cruise Business that she had met Olsen and it emerged that they both had poison garden, Her Grace at the ducal family’s country seat at Alnwick in the North East of England and Olsen in Teneriffe in the Canary Islands in Spain.

Professional actors will set the pace to the events on board the 880 passenger Boudicca as it sails south from its Scottish base to Spain, Portugal and the Atlantic islands. A professional author will write a storyline, based on developments of the murder mystery that forms the backbone of the entertainment of the cruise. Passengers are active encouraged to participate in the story by assuming a character in it and dressing in 16^th century Florentine dress, the period and location in which the story is set.

It is here that the concept becomes interesting.

Passengers on cruise ships are largely consumers of entertainment: they watch shows, comedians and listen to concerts and singers etc. True, activities like sport include active participation by the passengers, but these are mainly daytime functions. In the evening, an overwhelming majority of the passengers watch professional entertainers to perform.

The Poison, Murder and Mystery cruise promises to change that. Nathan Philpot, marketing director at Fred. Olsen Cruise Lines said the company has contacted Guinness Book of Records to make this cruise with the largest number of participants in on board entertaining ever seen on any ship.

Fred. Olsen operates a fleet of four medium sized vessels. In recent years, it has diversified its product by offering longer stays in port, often overnight in key ones, plus widening further its already extensive portfolio of cruises by adding shorter ones, with extended port stays.

The company’s ships were built between 1973 and 1994, so none of them is exactly new and as they range in size from 23,000 to 45,000 gross tons, they are not particularly large either. Hence they cannot provide a Wow! effect with stunning size and facilities of the ships, no matter how well they are maintained and how well they are run. And they are, both.

Instead, their smaller size invites more interaction between those on board for the simple fact that you are more likely to meet the same passenger or crew member than on a megaship.

The company arranged a Titanic memorial cruise in 2012, when it became 100 years from the tragedy. Passengers were encouraged to dress in period attire, many did and it is on this positive experience the company wants to capitalise as well.

The cruise industry is supply driven: lines that build new ships market them aggressively and usually gain a large degree of interest from the public as a result. What Fred. Olsen Cruise Lines is planning to do is to take a completely different tack: as its old slogan used to say, “It’s All About the People.”

Fred. Olsen Cruise Line enjoys strong recovery in advance bookings

Details: Written by Kari Reinikainen Kari Reinikainen; Category: Top Headlines Top Headlines; Published: 24 July 2014 24 July 2014

A recovery in the British economy has resulted in a strong recovery of advance bookings at Fred. Olsen Cruise Lines, the UK based destinational operator of four medium sized ships, Mike Rodwell, Managing Director of the company, told Cruise Business Online. The company has made losses since the start of the financial crisis, but Rodwell would not elaborate on how quickly the recovery in bookings would turn the company back to profitability.

Royal Caribbean reports second quarter results, updates 2014 guidance and introduces Double-Double program

Details: Written by Teijo Niemelä Teijo Niemelä; Category: Top Headlines Top Headlines; Published: 24 July 2014 24 July 2014

Royal Caribbean Cruises Ltd. today reported second quarter results, updated full year guidance and introduced its Double-Double Program, a new three-year profitability initiative.

KEY HIGHLIGHTS

Second Quarter 2014 results:

–    Net Yields were up 2.6% on a Constant-Currency basis (up 2.4% As-Reported).
–    Net Cruise Costs ("NCC") excluding fuel were down 4.7% on a Constant-Currency basis (down 4.2% As-Reported), better than guidance mainly due to timing.
–    Adjusted Net Income of $146.7 million, or $0.66 per share, versus Adjusted Net Income of $34.2 million, or $0.15 per share, in 2013.
– US GAAP Net Income was $137.7 million or $0.62 per share versus $24.7 million, or $0.11 per share in 2013.

Full Year 2014 forecast:

–    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).
–    Adjusted EPS is expected to be in the range of $3.40 to $3.50 per share. This is a $0.10 increase from the mid-point of the company's previous guidance.

Double-Double Program:

The Double-Double Program is designed to achieve two important goals by 2017: increasing the company's Return on Invested Capital (ROIC) to double digits and doubling 2014 EPS. The company also believes that articulating clear and specific goals helps guide internal decision-making as well as better informing investors of the path of the business.

"Our focus over the last few years on improving investment returns with moderate capacity growth is clearly paying dividends," said Richard D. Fain, chairman and chief executive officer. "Our brands have never been stronger and we are well positioned for continued step change in performance. The Double-Double Program sets demanding, but realistic targets, against which we will measure our continued progress."

SECOND QUARTER RESULTS

Adjusted Net Income for the second quarter of 2014 was $146.7 million, or $0.66 per share, compared to Adjusted Net Income of $34.2 million, or $0.15 per share, in the second quarter of 2013. US GAAP Net Income for the second quarter 2014 was $137.7 million or $0.62 per share, compared to $24.7 million or $0.11 per share in 2013.

Net Yields on a Constant-Currency basis increased 2.6% during the quarter. This was at the high end of the company's guidance driven by strong close-in booking trends for European and China sailings despite continued softness in the Caribbean. Yields were up double digits in Europe and China offsetting the Caribbean's softness.

"Higher pricing for close-in European sailings propelled us above the top end of our guidance for the quarter," said Jason T. Liberty, chief financial officer. "While the environment in the Caribbean remains promotional, our European itineraries continue to resonate well with strong demand from all markets."

Onboard revenue initiatives continue to deliver positive results with a 3% increase for the quarter. This is the tenth consecutive quarter of onboard revenue growth.

Constant-Currency NCC excluding fuel decreased 4.7%, which is 220 basis points better than the mid-point of guidance mainly due to timing. Approximately $16 million of expenses expected to be incurred during the second quarter were deferred to the second half of the year. Bunker pricing net of hedging for the second quarter was $711 per metric ton and consumption was 341,000 metric tons.

FULL YEAR 2014

The company has raised full year Adjusted EPS guidance to a range of $3.40 to $3.50 driven by a successful second quarter. Outperforming the mid-point of guidance for the second quarter by $0.16, with $0.07 related to the timing of expenses, drove the increase. 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.

"It is gratifying to raise our 2014 EPS guidance again," said Jason T. Liberty, chief financial officer. "Overall business has been solid and our equity investments continue to outperform, allowing us to deliver even better returns to our shareholders."

Bookings since the April earnings call have been up nicely and the company continues to be booked ahead of last year in both load factor and APD. Double-digit yield improvement on European and China sailings is helping offset a continued promotional environment in the Caribbean.

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 expects 2014 Adjusted EPS to be in the range of $3.40 to $3.50 per share.

THIRD QUARTER 2014

Constant-Currency Net Yields are expected to be up approximately 4.0% in the third quarter of 2014. NCC excluding fuel are expected to be flat to up 1% on a Constant-Currency basis. Equity investments for the third quarter are expected to increase, mainly driven by the addition of TUI Cruises' Mein Schiff 3. Based on current fuel pricing, interest rates and currency exchange rates and the factors detailed above, the company expects third quarter Adjusted EPS to be approximately $2.20 per share.

DOUBLE-DOUBLE PROGRAM

In recent years, the company has focused heavily on improving investment returns with moderate capacity growth. Due to the success of this approach, management believes that now is an appropriate time to publicly articulate long-term goals for both ROIC and EPS.

"We are delighted to see how well our brands are doing in the marketplace," said Richard D. Fain, chairman and chief executive officer. "Our teams have worked diligently to solidify the company's market position while maintaining strong cost discipline. This has allowed us to target double digit ROIC and a doubling of earnings within three years."