Tom Stieghorst
Free cash is increasingly being funneled into information technology at Royal Caribbean Cruises Ltd. In particular, RCCL is putting more money into trying to reach consumers with new one-to-one communications.
That has the attention of Wall Street analysts, who hope that it translates into more direct bookings.
But in a conference call last week, RCCL executives did their best to wave off any expectations that using newer technologies, such as social media, to communicate with consumers would necessarily reduce reliance on travel agents or bring commission costs down.
Royal Caribbean International CEO Adam Goldstein said the company was eager to exploit the changing media landscape.
“We clearly want to invest in the new available ways of doing target marketing, of reaching people on a one-to-one basis and engaging with them in conversations that weren’t possible even five or 10 years ago,” he said.
Goldstein made his comments during the company's conference call to discuss Q4 and 2012 results. He said tight cost controls are needed to free up dollars to be used to build expensive technology platforms.
CFO Brian Rice said this year’s $700 million capital budget will be split three ways between ship revitalizations, progress payments on newbuilds and IT upgrades.
The point of the IT spending is to make more sales, and drive revenues higher, Goldstein said.
RCCL Chairman and CEO Richard Fain emphasized that communicating directly with consumers doesn’t necessarily mean they will respond in the same fashion.
“The bulk of our business continues to come through travel agents,” Fain said. “Travel agents are key to help people understand what cruising is all about. And particularly, as we look at growing the business, the need to do a better job of communicating with people is important, and the travel agent is particularly good at that."
“So I would not, in terms of your model,” he told the analysts, “think in terms of this making a dramatic difference in the distribution costs in terms of commissions.”