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Royal Caribbean: Alaska was good this year

Record numbers for parent of Royal Caribbean, Celebrity cruise lines

Posted: October 28, 2011 - 12:06am
Cruise ship line Juneau downtown harbor in July.  Michael Penn / Juneau Empire
Michael Penn / Juneau Empire
Cruise ship line Juneau downtown harbor in July.

Royal Caribbean Cruises Thursday announced strong results for the summer cruise season, including a new record for its Alaska operations.

The Miami-based company is the second largest cruise line operating in Alaska, and includes ships under its own name and as well as Celebrity Cruises.

It is the first company to report results for the entire summer cruise season, which ended in September. The news overall was good, but was stellar out of Alaska, the company said.

The number of trips the company’s ships make to Alaska is set two years in advance and the ships always travel full, but this year berths didn’t have to be discounted to fill the ships.

That meant Royal Caribbean’s net revenue yield, a measure of profitability per passenger after subtracting some associated costs, rose markedly.

Net yields are one of the key measures used in the cruise industry.

“Our yields in Alaska this year were the highest in our history,” said Brian Rice, Royal Caribbean’s chief financial officer, in a teleconference with industry analysts after the earnings were released Thursday.

The company doesn’t release Alaska-specific numbers, but it said overall its revenues rose to $2.3 billion for the quarter ended Sept. 30, compared to $2 billion for the same quarter the previous year.

Royal Caribbean’s profit rose to about $400 million for the quarter, up from $350 million in the same quarter in 2010.

While Alaska was among the places doing well, the company struggled in less stable areas.

“Itineraries in places like the Caribbean and Alaska performed better than expected and these improvements even offset areas that were hurt by the bad economy and other political turmoil,” said Richard Fain, Royal Caribbean’s Chairman and CEO.

The yields in Alaska and the Caribbean each increased by more than 15 percent, he said.

Various problems in the Mediterranean Sea countries where there has been revolt and financial instability resulted in reduced sailings and diminished profits, the company said.

Some of that European dislocation seems to have benefited Alaska, the company said.

In North America, Royal Caribbean also saw increased spending by passengers in its “onboard and other” category, things such as alcohol purchased on the ship and tours booked through the ship. The company said that while its North American guests were spending more, Europeans were spending less.

During the recently ended recession, that extra spending shrank considerably as people still traveled but closely watched their expenses.

“Onboard and other” is a key measure watched by some in Juneau, where much of the economy is based on passengers being willing to spend extra on local tours and attractions.

The company also said it expected this year’s strong results to continue next year in Alaska, with one executive saying he had a “good feeling” about 2012, but it was way too early in the booking season to know for sure.

“My sense is that we’ll have another good year in Alaska,” said Daniel Hanrahan, president and CEO of Celebrity Cruises, on the teleconference with the Royal Caribbean executives.

• Contact reporter Pat Forgey at 523-2250 or at patrick.forgey@juneuaempire.com.

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