Forecasting for the Love Boat: Royal Caribbean Cruises in 1998(

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Demand for a Cruise VacationTo date only 11% of the U.S. population has ever taken a cruise. However, a recentcruise industry survey of people over the age of 24 found that 56% are interesting incruising sometime in the future and 31% responded that they will definitely take a cruisein the next five years. Demographic trends also favor the cruise industry. As thedemographic profile showed, 42% of recent cruise passengers are between the ages of 40and 59. As the baby boomers age, this segment of the U.S. population is estimated togrow at more than three times the national population growth rate over the next threeyears, as seen in the figure below.3.50%annual population growth rates by age3.00%2.50%2.00%1.50%1.00%0.50%0.00%-0.50%-1.00%-1.50%-2.00%1999 2000 2001age 24 and under age 25-39 age 40-59 age 60 and overAlong with growth in the US population, it is possible that the amount of vacationtime per individual will increase over time. Numerous studies have shown that the babyboomer generation values recreation more highly than previous generations. This isillustrated in the next figure that plots grow rates in the U.S. gross domestic product(GDP), personal consumption and recreation expenditures. As figure shows, growth inpersonal consumption maps closely to growth in the gross domestic product (GDP). Bycomparison, recreation spending has grown faster than personal consumption in everyyear since 1980, with the gap between the two increasing dramatically after the 1991recession. This increase is widely attributed to the consumption tastes of the babyboomer generation. The figure also shows the 1998 Congressional Budget Office’sforecasts for future GDP growth.
12.010.08.06.04.02.00.01980198119821983percentage growth198419851986198719881989199019911992199319941995199619971998E1999E2000E2001E-2.0-4.0Real GDP Personal Consumption Expenditures Recreation ExpendituresFinally, U.S. residents vacation far less than the citizens of all other developed countries,averaging just 13 days per year. As the figure below illustrates, even the hard-workingJapanese and Koreans vacation almost twice as much as Americans. Italians, living thegood life, vacation more than three times as much. It is certainly possible that Americanswill increase their vacation expenditures even more in the future.45Average Number of Vacation Days4035302520151050Italy France Germany Brazil Austria UK Canada Korea Japan USA
Page 2 and 3: North America, but may fly to any p
Page 4 and 5: Who’s OnboardObviously different
Page 8 and 9: Appendix 1Cruise Industry, Demograp
Page 10 and 11: -----------------------------------
Page 12 and 13: According to CLIA and other trade p
Page 14 and 15: Technological DevelopmentThe Compan
Page 16 and 17: Cruise PricingThe Company's cruise
Page 18 and 19: The Company has nine ships on order
Page 20 and 21: In March 1998, the Company issued $
Page 22 and 23: ROYAL CARIBBEAN CRUISES LTD.CONSOLI
Page 24 and 25: ROYAL CARIBBEAN CRUISES LTD. CONSOL
Page 26 and 27: Information about geographic areas
Page 28 and 29: The Company's debt agreements conta
Page 30 and 31: FORM 10-KSECURITIES AND EXCHANGE CO
Page 32 and 33: The Company has signed agreements w
Page 34 and 35: Depreciation and amortization incre
Page 36 and 37: CARNIVAL CORPORATIONCONSOLIDATED ST
Page 38 and 39: CARNIVAL CORPORATIONNOTES TO CONSOL
Page 40 and 41: SELECTED FINANCIAL DATAThe selected
Page 42 and 43: Company NameROYAL CARIBBEAN CRUISES
Page 44: Company NameCARNIVAL CORPActual Act

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