Forecasting for the Love Boat: Royal Caribbean Cruises in 1998(
Forecasting for the Love Boat: Royal Caribbean Cruises in 1998( Forecasting for the Love Boat: Royal Caribbean Cruises in 1998(
Who’s OnboardObviously different types of cruises attract different types of customers.Nonetheless, certain demographic profiles are most likely to take a cruise. The tablebelow compares the demographic profile of those who have taken a cruise with the entireU.S. population over the age of 24. Generally, the population of past cruisers is older,wealthier and better educated than the entire population.DemographicProfileGender:Age:MaritalStatus:HouseholdComposition:Education:HouseholdIncome:MaleFemale25-under 40 years40-59 years60 years or olderAverageMedianMarriedNot MarriedHave childrenunder 18Adults onlyEver Cruised49%51%27%42%32%51 yrs.51 yrs.76%24%Past 5 YearCruisers51%48%28%42%30%50 yrs.51 yrs.78%22%Populationover Age 2450%49%43%44%13%43 yrs.42 yrs.69%31%37%63%35%65%54%46%Occupants 3 3 3Some College orless42% 36% 54%College Graduate or 58% 64% 46%more$20,000-$29,999$30,000-$39,999$40,000-$59,999$60,000-$99,999$100,000 or moreAverageMedian8%12%32%28%20%$72,600$58,5005%10%31%30%25%$79,100$64,50013%17%31%29%9%$60,400$51,800Examining those who have cruised most recently reveals a few different types ofcustomers, as the figure below illustrates, but most seek the relaxation and pamperingthat a cruise can provide. Indeed, when the recent cruiser population was asked whatcruising offered that was superior to other types of vacations, the top three responseswere “being pamper,” “fine dining” and “hassle free.”
Restless Baby Boomers are newest to cruising. They are at a point in time when they may be tryingdifferent vacation experiences.Enthusiastic Baby Boomers are already convinced about cruising and its many activities. They liveintense, stressful lives and look to vacations generally, and cruises in particular, for the escape andrelaxation they offer.Luxury Seekers can afford, and are willing to spend money for deluxe accommodations and pampering.Consummate Shoppers are looking for the best value in a vacation and in a cruise.Explorers are well-educated, well-traveled individuals with an intellectual interest and curiosity aboutdifferent destinations.Ship Buffs are the most senior segment: they have cruised extensively and expect to continue becausethey find the on-board experience of cruising so pleasurable and comfortable.Supply of Available BerthsThe supply of available berths as of 1998 was shown in the market share figure givenearlier. Further, because the lead-time necessary to design and build a cruise ship isapproximately three years, a reasonably accurate forecast of future supply is available forthe next three years, as seen in the figure below (more detailed information about RoyalCaribbean’s new ships is available later in the case). It is more difficult to estimate theamount of capacity that will be retired in the future. Over the past five years, 48 shipswith a total of 28,900 berths have been retired or moved out of the North Americanmarket. However, many of these retirements occurred because of a 1997 deadline tomeet the heightened safety requirements imposed by the International MaritimeOrganization. From 1994 through 1996, retirements exceeded 7000 berths per year buthave slowed considerably since then.NEW Capacity 1999 1999 2000 2000 2001 2001total totalnew newships berths ships berths ships berths ships berthsCarnival Cruises(includes Holland brand)3 5480 2 6180 2 3900 7 15560Royal Caribbean Cruises(includes Celebrity brand)1 3100 2 5100 3 6100 6 14300All Other Cruise Lines 7 7794 2 2800 4 6296 13 16890Total New Ships/Berths 11 16374 6 14080 9 16296 26 46750
- Page 2 and 3: North America, but may fly to any p
- Page 6 and 7: Demand for a Cruise VacationTo date
- Page 8 and 9: Appendix 1Cruise Industry, Demograp
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- Page 14 and 15: Technological DevelopmentThe Compan
- Page 16 and 17: Cruise PricingThe Company's cruise
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- Page 20 and 21: In March 1998, the Company issued $
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- Page 24 and 25: ROYAL CARIBBEAN CRUISES LTD. CONSOL
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- Page 38 and 39: CARNIVAL CORPORATIONNOTES TO CONSOL
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- Page 42 and 43: Company NameROYAL CARIBBEAN CRUISES
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Restless Baby Boomers are newest to cruis<strong>in</strong>g. They are at a po<strong>in</strong>t <strong>in</strong> time when <strong>the</strong>y may be try<strong>in</strong>gdifferent vacation experiences.Enthusiastic Baby Boomers are already conv<strong>in</strong>ced about cruis<strong>in</strong>g and its many activities. They live<strong>in</strong>tense, stressful lives and look to vacations generally, and cruises <strong>in</strong> particular, <strong>for</strong> <strong>the</strong> escape andrelaxation <strong>the</strong>y offer.Luxury Seekers can af<strong>for</strong>d, and are will<strong>in</strong>g to spend money <strong>for</strong> deluxe accommodations and pamper<strong>in</strong>g.Consummate Shoppers are look<strong>in</strong>g <strong>for</strong> <strong>the</strong> best value <strong>in</strong> a vacation and <strong>in</strong> a cruise.Explorers are well-educated, well-traveled <strong>in</strong>dividuals with an <strong>in</strong>tellectual <strong>in</strong>terest and curiosity aboutdifferent dest<strong>in</strong>ations.Ship Buffs are <strong>the</strong> most senior segment: <strong>the</strong>y have cruised extensively and expect to cont<strong>in</strong>ue because<strong>the</strong>y f<strong>in</strong>d <strong>the</strong> on-board experience of cruis<strong>in</strong>g so pleasurable and com<strong>for</strong>table.Supply of Available BerthsThe supply of available berths as of <strong>1998</strong> was shown <strong>in</strong> <strong>the</strong> market share figure givenearlier. Fur<strong>the</strong>r, because <strong>the</strong> lead-time necessary to design and build a cruise ship isapproximately three years, a reasonably accurate <strong>for</strong>ecast of future supply is available <strong>for</strong><strong>the</strong> next three years, as seen <strong>in</strong> <strong>the</strong> figure below (more detailed <strong>in</strong><strong>for</strong>mation about <strong>Royal</strong><strong>Caribbean</strong>’s new ships is available later <strong>in</strong> <strong>the</strong> case). It is more difficult to estimate <strong>the</strong>amount of capacity that will be retired <strong>in</strong> <strong>the</strong> future. Over <strong>the</strong> past five years, 48 shipswith a total of 28,900 berths have been retired or moved out of <strong>the</strong> North Americanmarket. However, many of <strong>the</strong>se retirements occurred because of a 1997 deadl<strong>in</strong>e tomeet <strong>the</strong> heightened safety requirements imposed by <strong>the</strong> International MaritimeOrganization. From 1994 through 1996, retirements exceeded 7000 berths per year buthave slowed considerably s<strong>in</strong>ce <strong>the</strong>n.NEW Capacity 1999 1999 2000 2000 2001 2001total totalnew newships berths ships berths ships berths ships berthsCarnival <strong>Cruises</strong>(<strong>in</strong>cludes Holland brand)3 5480 2 6180 2 3900 7 15560<strong>Royal</strong> <strong>Caribbean</strong> <strong>Cruises</strong>(<strong>in</strong>cludes Celebrity brand)1 3100 2 5100 3 6100 6 14300All O<strong>the</strong>r Cruise L<strong>in</strong>es 7 7794 2 2800 4 6296 13 16890Total New Ships/Berths 11 16374 6 14080 9 16296 26 46750
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