Tom Stieghorst
A 10-year retrospective is in many ways an artificial time period, but it is useful sometimes to look back to gain some perspective.
In the case of Royal Caribbean Cruises Ltd. (RCCL), which just reported its annual profits for 2017, a comparison between where it is in 2018 and where it was in 2008 is particularly telling.
Financially, it has more than tripled its profit, from $574 million in 2008 to $1.63 billion last year. Revenues have climbed 35%, and RCCL's stock has gone up nearly 20-fold from its low of $6.64 a share in 2008.
Driving the improvements were the introduction of two ships that practically define the modern era at Royal Caribbean. The first was the Celebrity Solstice. Introduced in 2008, the Solstice with its grass lawn and stylish design transformed Celebrity Cruises from something of an adjunct to Royal Caribbean International into a brand with real appeal as a RCCL alternative for grown-ups.
The Solstice was followed a year later by the Oasis of the Seas, the first of a class of ships so singular that despite their profitability and popularity, none of Royal's competitors have copied them.
Hard as it is to imagine Royal without Oasis, back in 2008, the 5,400-passenger ship hadn't even been introduced yet, although its 225,000 gross tons were being pieced together at the shipyard in France.
It's easy to take the current prosperity at RCCL for granted, but a look back at 2008 shows some tough times. The dividend, which sent more than $500 million to shareholders last year, was eliminated in the last quarter of 2008 as a cost-savings measure.
To help sales amid the recession, travel agents were the beneficiaries of an "Agent Support Action Plan" (ASAP) that bumped up commissions by an extra percentage point for every booking made in 2009.
Some 400 shoreside employees at RCCL were laid off in 2008, another prong of the cost-cutting offensive. Contrast that with today when RCCL's 66,000 employees were granted an $80 million bonus which will give them 5% of their salary in RCCL stock over the next three years.
To coax passengers back on the ships, Royal Caribbean created "The Nation of Why Not," surely one of its most inscrutable advertising slogans. Because of the ads, or perhaps in spite of them, RCCL's passenger count has grown from 4 million in 2008 to 5.8 million last year.
Extending the exercise further in the past yields even more startling perspectives. Thirty years ago, Royal Caribbean's entire annual profit was $14 million. Its revenues in 1988, the year Royal launched Sovereign of the Seas, were $523 million.
A decade later, in 1998, RCCL's profit of $574 million exceeded its revenues from 10 years back.
Perhaps the most telling figure is in the growth of the RCCL fleet over the past 10 years. While it has added a net of 12 ships to go from 38 to 50 vessels, it expanded berths by 30% to 102,720, giving it the capacity to carry nearly 6 million vacationers a year.