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Showing posts with label Royal Caribbean Cruises. Show all posts
Showing posts with label Royal Caribbean Cruises. Show all posts

Sunday, January 31, 2010

Setting Sail on a Haitian Pleasure Cruise

Newsweek
The moral and economic dilemmas of Royal Caribbean's Labadee Port.


In the weeks since the Jan. 12 earthquake that leveled Port-au-Prince, cruise ships full of mostly American tourists have continued to dock in Labadee, a private resort 60 miles north of Haiti's devastated capital city. "It was a bit surreal knowing that the center of the world's focus was only 100 miles away," says passenger Becky O'Connor, who visited the island on a recent cruise. On the television in her stateroom, Fox News broadcast the first airdrops over Port-au-Prince amid a background of apocalypse. Off the side of her balcony, she could see aid supplies—water, powdered milk, dried beans—being unloaded onto the pier and piled into trucks. But surrounding her and the other 3,000 or so passengers who had booked mid-January cruises on Royal Caribbean International (the only cruise line with a port in Haiti) were all the amenities one would expect of a luxury vacation. On board: 17 decks' worth of buffets, swimming pools, casinos, miniature golf, and a 1,200-seat theater. Ashore: a Dis-neyesque pseudotown with pristine beaches, lovely cabanas, and quaint cafés and shops.

At first, passengers were uneasy about the visit—mulling over safety concerns and discussing among themselves the ethical quandary of so much wealth and luxury amid such devastation. But by midday, most had overcome their reservations and were venturing ashore. "The idea to relax so close to the death and destruction was definitely awkward," says Daniel Melleby, another passenger. "But it became clear pretty quickly that the people there were very happy and relieved to see us."

While many have criticized the cruise line's decision to proceed with planned trips to the Haiti port just days after the quake, many more have argued that canceling scheduled stops would only hurt the already struggling Haitian economy. The passengers themselves have held both views. Some note surges of pride as they watched pallets of supplies being unloaded from the cruise ship, others say they spent more on local wares than they normally would have, and most describe the stop as more somber than others along the same route. "I believe it was the right decision to support Haiti financially," says one passenger, who gave her name only as Linda. "But I could not bring myself  to enjoy anything on Labadee." The ambivalence underscores what some say is a persistent, if not always obvious, uneasiness between wealthy vacationers and the struggling countries they like to frequent.

Labadee—a former slave plantation on the northern coast of Haiti, named for the Frenchman who settled it in 1600—is the only Haitian port open to cruise ships. In 1986 Royal Caribbean International leased the spot from the Haitian government and transformed it into a pri-vate resort, one of several stops along its Caribbean route. Last year, at the urging of President Bill Clinton, who traveled to Labadee to promote tourism in the region, the company spent $55 million upgrading the port to accommodate its newest fleet member, Oasis of the Seas, the world's largest passenger ship. The company made Labadee the ship's maiden destination.

After the earthquake, the Haitian government urged Royal Caribbean to proceed with its scheduled stops on the island. The company complied, and on Jan. 15 delivered nearly 40 pallets of food and water, along with roughly 3,000 tourists, who spent at least some of their money stimulating the local economy. More ships followed on the 18, 19, and 22; so far, the cruise line has brought nearly 400 pallets of ur-gently needed goods ashore. In addition, the company promised to donate all money made at the Labadee resort to the relief effort, at least until Feb. 1. Combined with passenger donations, they expect to reach $2 million in contributions. Royal Caribbean has also augmented an existing crew-welfare fund to provide up to $2,500 in grant money to any Haitian employee seeking to rebuild homes or find loved ones. Compassion leave has been extended from two weeks to indefinitely. But while no one disputes the value of sending food, water, and cash donations in the wake of a disaster, larger questions—about whether the company and its policies are the best option for Haiti—persist.

To be sure, Royal Caribbean is among Haiti's largest foreign investors. According to the company, it employs 200 locals at Labadee and allows another 300 to sell their wares on the premises. They also pay the Haitian government a "head tax" of $6 per tourist. With roughly 365,000 tourists visiting the site each year, that adds up to slightly more than $2 million in revenue for the beleaguered country, whose 2008 GDP was estimated at $6.9 billion. But critics say that a nonprivatized port could yield far more in publicity and profits for the local community. The tiny peninsula is currently sequestered from the surrounding area by a 10-foot-high fence and a private armed security force; passengers are not allowed to leave the property. And because the company owns all the restaurants and concession stations, most payments for food and beverages are made not in cash, but via room keys or cruise cards, which means no tips for employees.

Royal Caribbean is not the only company to turn a chunk of foreign land into a private tourist spot. Disney, Princess, and Norwegian Cruise Lines have each claimed various segments of beach in the Bahamas. Once bought or leased, experts say these tracts of land are typically recast as private beaches and staffed by private work-forces. "Unlike other port calls, on a private island [or in a private port like Labadee] the revenues and profits remain largely with the cruise line," says Ross Klein, a sociologist who has written three books about the cruise industry. "While it's quite profitable to the cruise line, the benefit to the local economy is relatively small and very limited."

The cruise industry in general has been subject to a rash of criticism over the years, for unfair labor practices, dismal environmental records, and shoddy safety practices. But Royal Caribbean Cruises has come under special criticism for its policies in Haiti. Labadee, with its high fences and armed guards, is far more closed off to the surrounding community than other resorts like it. And, as The Christian Science Monitor reported, advertisements for the port tend to avoid any mention of Haiti, describing it as a private island rather than as a peninsula contiguous with the rest of the country.

Given the scale of the current disaster, some passengers feel the company's contributions to the relief effort did not go far enough: "These ships hold thousands of customers and crew. They often have five different buffets at a time and huge amounts of food are wasted," writes one woman—who visited the port with her family last year—on an Internet listserv. "If Royal shut down just one eating option per boat and donated all the food, they could feed hundreds."

Still, most passengers and cruise enthusiasts seem to support Royal Caribbean's decisions: a company representative said that 85 percent of guests who docked at Labadee ultimately went ashore. And in a survey of some 4,700 people done by the Web site Cruise Critic, two thirds of respondents agreed with the company's decision to proceed with scheduled cruises. After all, as many have pointed out, Haiti was no oasis before the earthquake hit.

Monday, January 25, 2010

Haiti Cruise Stops: 'Without This, We Don't Eat'

AP

With the Celebrity Solstice cruise ship anchored just offshore this beautiful expanse of white sand Friday, vacationers stretched out on beach chairs in the sun, sipped cold beer and pina coladas with pineapple slices on the rim and listened to Haitian folk music.


The beach resort of Labadee is just 60 miles (100 kilometers) from Port-au-Prince, but it's a world away from the devastation of the Haitian capital, where some 200,000 people are believed dead in an earthquake.

The cruise ships that stop here have become the center of a controversy: Should vacationers relax and have fun with so much suffering elsewhere on the island? Or would it be worse to halt the port calls and deprive locals of what they earn from tourism?


Royal Caribbean is also donating $1 million, delivering food and water on every call and pledging net revenue from Labadee to the relief effort


Jameson Charitable, 20, stood near the pier with a sign offering tours. "Without this," he said, motioning toward the boat, "we don't eat." He said he makes $15 every time a Princess Cruises ship comes in.

About 200 people work here, and a few hundred more vendors and service providers are allowed in whenever ships arrive. The resort enclave, which has a beach, a zipline in the mountains and other activities, is leased by the Haitian government to Royal Caribbean International, which also owns the Celebrity cruise line.

Royal Caribbean allowed a team of journalists from The Associated Press to visit Labadee on Friday, but the cruise company's spokeswoman, Tracy Quan, would not allow them to interview or photograph cruise passengers.

Carol Myers, 53, a nurse from New Jersey, was not on the cruise ship but was enjoying the beach. She had spent an intense week tending to earthquake victims in a hospital in the nearby town of Milo, and was decompressing for a few hours before her scheduled return to the U.S. on Saturday.

"I almost feel guilty for being here after what happened," Myers said, sitting in a beach chair in blue scrubs. "But the people need a job, the people need to eat."

Royal Caribbean President and CEO Adam Goldstein said the decision to continue with scheduled stops in Labadee was an easy one. The site sustained no damage, and he said the Haitian government welcomed the ship. The country reaps a fixed cost per passenger, plus annual fees and the cash tourists spend on local goods at a marketplace where artisans and artists sell trinkets and crafts.

Royal Caribbean is also donating $1 million, delivering food and water on every call and pledging net revenue from Labadee to the relief effort. Maryse Kedar, president of Royal Caribbean's Haitian subsidiary, SOLANO, said the cruise visits are "the only substantial commerce taking place in northern Haiti."

But the cruise line found itself on the defensive after criticism spread online. Melissa Bacchus, a Brooklyn, N.Y., teacher, was among several veteran cruisers to dominate message boards on sites like Cruisecritic.com with the debate.

"I do think morally it is wrong for Carnival Cruises to go (to Labadee), where less than 60 miles away people are suffering," Bacchus said in an interview. "And because we have the resources, we have the wealth, we can frolic using the beauty of their island?"

Bacchus suggested Royal Caribbean pay Haiti its regular port fees, but not actually stop there. She said they could also give local artisans money to go back home and assist in the relief effort.

Haiti Tourism Minister Patrick Delatour said Royal Caribbean continuing the trips was "courageous" and important to his nation's recovery. "We applaud this decision and feel the criticism they are receiving in the media is not only unfair but conveys a complete lack of understanding of the overall condition in Haiti following this horrific disaster," he said.

Still, public relations experts quoted by AdAge.com said Royal Caribbean Cruises had made a mistake by mixing leisure business with humanitarian efforts. "The brand will take a hit," Paul Gallagher, managing director of WPP's Burson Marsteller's issues and advocacy practice, was quoted as saying.

Haiti shares the island of Hispaniola with the Dominican Republic. The Dominican Republic suffered no damage from the earthquake, but the government is clearly worried that vacationers may cancel trips on Celebrity Cruises here because of the disaster on the other side of the border.

The Dominican Ministry of Tourism has issued repeated statements that it was unaffected by the quake, including pointing out that Port-au-Prince is hundreds of miles (kilometers) and several mountain ranges away.

That message was lost on travelers like Debbie Ulin, a 39-year-old mother of two in Hillsdale, N.J., whose family and two others canceled a group trip planned to the Dominican beach resort of Punta Cana for February.

"With everything happening as it did, we sort of all came to the realization that it's probably not the best time to be traveling to the Dominican right now," Ulin said. "As selfish as I feel when I say that, it's not so important, my vacation. We didn't feel like it would be the safe place to go with the families this soon after the devastation has occurred."

Arthur Applbaum, a Harvard University professor of ethics and public policy, said that while it shows "moral sensitivity to be disturbed by the thought that one is vacationing on the beach when others are suffering nearby ... it also shows insufficient moral reflection to think that proximity makes a moral difference.

"The people of Haiti are suffering whether you take your beach vacation in the Dominican Republic or in Hawaii," he said, "and it is a failure of the moral imagination not to be equally troubled in Waikiki."

Monday, January 4, 2010

Smooth Sailing Ahead For Carnival

Barron's



INVESTORS THINKING OF TAKING the plunge and buying cruise-line operator  Carnival Corp. (ticker: CCL) should get on board.

This morning, JPMorgan analyst Kevin Milota upgraded shares of Carnival and its smaller peer  Royal Caribbean Cruises (RCL) from Neutral to Overweight.

Milota wrote that the move was prompted by a recovery in fundamentals for the cruise industry as well as in consumer confidence and the macroeconomic environment.

Milota also noted that shares are trading at discounts to historical valuations despite recent gains. His new target prices for Carnival and Royal Caribbean are $43 and $34, respectively (See Stocks to Watch Today).

Carnival was recently up 1% to a recent $34.12, and Royal Caribbean was 5% higher to $27.25. As Milota noted, the shares have gained 73% and 332%, respectively, since the beginning of March, when many stocks hit new lows.

Royal Caribbean Cruises still trades at 19 times forward earnings, so while not glaringly overbought, it is not as cheap as Carnival, priced at just over 15 times.

Likewise, Carnival has substantially higher operating and profit margins, as well as average returns on assets and equity. Carnival has more debt -- $10.1 billion versus Royal Caribbean's $7.3 billion -- but a much stronger cash position too, with nearly one billion on its balance sheet.

Carnival has also been able to turn in a steadier performance throughout the downturn than Royal Caribbean. The former has beat analysts' expectations every quarter since the recession began in late 2007, and done so by a double-digit margin each quarter since mid-2008. Conversely, Royal Caribbean has had a choppier history, as it turned in high double-digit misses when it reported in January and July.

Many small-caps have outrun larger rivals this year, and Milota wrote that Royal Caribbean will "react at an accelerated pace" to Carnival, in racking up either gains or losses. Yet longer term, Carnival is still projected to outpace Royal Caribbean, 15% to 12.5%, according to analysts' estimates for the next three to five years.

Both companies should of course benefit as the economy begins it slow slog upward. Milota noted that longer booking windows and a pickup in demand should finally allow the industry to clock some positive net yields going forward.

Additionally, Carnival Cruises can use its market-leadership position -- as it has done previously -- to negotiate with greater leverage with vendors to keep costs down.

In sum, all indications suggest that things should be moving full steam ahead for Carnival in the coming months.

Sunday, November 29, 2009

Caribbean Resorts Roll Out Deals To Lure Travelers Back To The Islands

USA Today



ST. THOMAS, U.S. Virgin Islands — Ocean-view rooms steps from the sand at Bolongo Bay Beach Resort are selling for $265 on a mid-November Monday. But this one costs just 25 cents daily, plus tax, in a special deal.

The promotional package – $337.68 bottom line for three nights' lodging and airfare from Washington, D.C., plus $50 in dining and activities credits – is a steal. Billed as a celebration of the new U.S. quarter honoring the Virgin Islands and offered in October by BookIt.com, it was partly subsidized by the U.S. Virgin Islands Department of Tourism. The idea: to help fill rooms and airline seats in a slow period when the Caribbean is jittery about what winter high season will bring.

"I had friends who called me and asked if I'd lost my mind," says Bolongo Bay general manager Paul Doumeng, 47, sitting in its tiki hut-style beach bar, where Jimmy Buffett is on the sound system and rum punch flows.

The government didn't cover all the cost of the now-finished promotion, "but the idea was to capture" visitors, he says. "Once they're here, they spend money" on food, drink and sunset sails.

Coming off a generally dismal 2009, "it's a crapshoot (for the Caribbean) this winter in terms of tourism," says Gay Myers, Caribbean editor for the Travel Weekly trade publication. The year has been bad "for just about every island," says Myers, though budget-all-inclusive-packed Cuba, Jamaica and the Dominican Republic reported upticks.

Visitors to St. Thomas – 2.4 million in 2008, most of them cruisers and Americans – were down about 12% through September, says Allegra Moorehead of the U.S. Virgin Islands Department of Tourism (visitusavi.com). But seats on non-stop flights from Puerto Rico and the States to St. Thomas in December will be up 13.8%, a USA TODAY analysis of schedules from OAG –Official Airline Guide finds. More cruisers are expected this season, mainly because 6,296-passenger Oasis of the Seas is due to call weekly.

How low can they go in high season?

There are other auspicious signs across the Caribbean as tourism enters its high season, from Thanksgiving to April. Islands escaped hurricane devastation. New or upgraded hotels are opening. Seats on non-stop flights from the USA are up 12.4% December through March vs. the same period last year, the OAG analysis finds.

Discounting, free nights and resort credits abound, as lodgings and tourist boards do all they can to have a better year.

St. Maarten, for instance, is stimulating bookings with a $50 daily credit a room ("SXM Bucks") that can be used at participating businesses. Bookings must be made by Monday.

Resorts such as the El San Juan Hotel & Casino are goosing business with discounts for prepaying – under $150 on slow days. The Westin Resort, Aruba, gave early-booking discounts and has a more than 50% increase in holiday-season reservations than 2008, it reports.

"People are leery" of spending unless they think they're getting value, says Bolongo's Doumeng, whose low-rise, friendly but unfancy family-run resort caters to the budget-minded.

English spoken, and the dollar still speaks

The U.S. Virgin Islands – which include St. Thomas, St. Croix and St. John – have been doing better than some because of their much-promoted "no passport required" policy and the fact that the dollar is the currency and English the official language. It doesn't hurt that free shots of flavored rum are handed out as visitors arrive at the St. Thomas airport and at cruise-ship docks aboard discount Caribbean cruises.

Still, St. Thomas cabdriver Ivan Nicholas (a service-oriented charmer who calls himself "Ivan the Terrific") says his earnings have declined 15%-20% this year.

Driving a visitor on a $50, two-hour island tour in his Ford van, Nicholas, 46, points out thrifty tourist options such as green-shuttered Duffy's Love Shack in a parking lot by the St. John ferry. It's advertising $1.50 beef tacos Tuesday and pours free drinks for women after 9 p.m. Wednesdays.

As the van snakes around curves on the lush, hilly 13-mile-long island, he ticks off some positives. St. Thomas remains a big cruise destination, and there's excitement that Oasis of the Seas' multitudes will be lying on the white sand at Magens Bay and bargaining for jewelry and electronics at dozens of duty-free shops that line the streets and alleys in the capital of Charlotte Amalie. Shopping is a huge draw, though visitors also can snorkel, dive, sail and fish.

While his passenger frets at the jam of taxis and open-air "safari buses" at scenic spots such as (Sir Francis) Drake's Seat on a high point where you can spy surrounding islands, Nicholas smiles at the crush of camera-toting cruisers and the traffic jam heading into Charlotte Amalie. Four cheap Caribbean cruises are in today, he announces. Good for business.

Back at Bolongo, only 46% full on this pre-Thanksgiving weekday, some guests choose to dine in and drink till they can't on the resort's optional all-inclusive plan. St. Thomas at night is viewed with trepidation, because of the island's reputation for crime. Even Nicholas is hesitant to go into some neighborhoods.

This visitor enjoys Bolongo's calypso and limbo night, but can't resist heading to Duffy's – for a tab under $15, non-stop music and dancing. Cabs are hailed with some haggling over prices, which are set by the government but can be a matter of dispute.

When it comes to an early-morning airport run for departure, the call goes to Ivan the Reliable. He's at Bolongo at 6:45 a.m. – 15 minutes early – and points his van toward the airport.

"What drives our economy is you," he says. "We like Americans, because they spend money." Europeans generally aren't good tippers, he says.

"If people come here and tell their family and friends it is a nice place," he says earnestly, "then other people will come."

Wednesday, November 11, 2009

Short And Long-Range Prospects For Royal Caribbean

Reuters


After a nine-month surge, can Royal Caribbean's stock keep cruising?

Shares of Royal Caribbean Cruises have more than tripled since early March, spurred by an upswing in the broader market and signs that ticket prices are starting to stabilize.

While Royal Caribbean executives said last week that there was still little evidence of an economic rebound in its business, they do not see a need to discount prices to the levels seen earlier this year. [ID:nN02460627]

The world's No. 2 cruise operator expects to post a loss for the fourth quarter -- missing Wall Street expectations for a profitable quarter, but reiterated its outlook for positive net revenue yields in 2010.

FULL STEAM AHEAD

Of the 24 analysts who cover Royal Caribbean Cruises, 15 rate the stock the equivalent of a "buy" or a "strong buy," according to StarMine data. That figure has grown in the past 90 days, reflecting growing bullish sentiment about the stock.

"We're starting to see the initial signs of pricing firming," said William Blair & Company analyst Sharon Zackfia, who has an "outperform" rating on the stock. This is the first step to improved earnings, she said.

Zackfia noted that the cruise operator is also positioned to benefit from a rebound in spending from wealthier consumers, which the company caters to through two of its cruise lines: Royal Caribbean and Celebrity.

"What's very apparent in our coverage is that the upper middle-class consumer has started to rebound pretty markedly," Zackfia said.

Susquehanna Financial Group analyst Robert LaFleur said in a research note last week that he forecasts the company will double its earnings per share in 2010.

ROUGH SEAS?

But while shares have surged in recent months, short interest has also risen, suggesting that some investors are banking on a drop in the stock price.

Short interest represented 14.1 percent of the overall float as of Oct. 12, according to the most recently available data from the New York Stock Exchange.

Goldman Sachs analyst Steve Kent points out that the company has cut its outlook four times in the past five months. Kent, who has a "sell" on the stock, maintains that the cruise industry is still facing some serious long-term risks, including rising fuel costs and oversupply.

"We believe the company's visibility into future bookings remains low and its leverage remains high," he wrote in a research note.

Societe Generale analyst Simon Mezzanotte, who also rates the company a "sell," noted that U.S. consumer confidence has not seen substantial improvement and pricing power next year remains "very limited."

Industry capacity will grow 7 percent in both 2009 and 2010 and another 4 percent in 2011, wrote Kent, who also has a "sell" on Carnival Cruises Corp.

That growth "will further pressure results and Street estimates will continue to come down," he said.

The maiden voyage of Royal Caribbean's Oasis of the Seas, the world's largest cruise liner, is slated for early December.