The Norman Transcript

Nation/World

June 8, 2014

Cruise lines find new business tough

(Continued)

NEW YORK —

Fain became CEO in 1988 and over the past 26 years grew the company into the world’s second-largest cruise operator. Today, Royal Caribbean has 41 ships across its six brands, including its namesake line and Celebrity Cruises. The company earned a $474 million profit last year.

The passengers have returned but Fain says prices aren’t yet back to pre-recession levels.

“It’s less expensive than a comparable land vacation,” he says. “The truth is I’d like to have it be a little less unbelievable value.”

New ships help Fain get closer to that goal. They have more rooms with balconies — which cost more — and include more amenities. For instance, the Oasis of the Seas has 26 different places to dine, some which charge an extra fee. Overall, passengers spend 25 percent more than those on older vessels. New ships are also more fuel efficient, costing Royal Caribbean 20 percent less, per passenger, to operate.

More than half of Royal Caribbean’s customers now come from outside the U.S. And they tend to pay more than Americans.

China is home to a quickly-growing middle class, heavily concentrated in cities along the coast. The country generates Royal Caribbean’s highest margin business. The company is going to base its newest vessel— the 4,905-passenger Quantum of the Seas — in Shanghai in May 2015.

“Historically, to the extent that Chinese took vacations, it was to visit family and maybe historical monuments,” Fain says. “The idea of going on a vacation just to relax, like a beach or a cruise, without a purpose, is relatively new.”

Back home, Fain continues to push cruising. Sixty percent of the U.S. population lives within a 300-mile drive of the company’s 14 domestic ports. But only 24 percent of Americans have ever taken a cruise.

Royal Caribbean advertises in the U.S., and it relies on travel agents — who are paid hefty commissions — to steer people to cruises instead of tropical islands, Las Vegas or Walt Disney World.

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