Royal Caribbean Cruise Lines 2008 Annual Report Download - page 18

2 Royal Caribbean Cruises Ltd.
PART I
Celebrity Cruises’ products and service have broad appeal for a global
audience. Celebrity Cruises delivers an intimate experience onboard
upscale ships that offer a high staff-to-passenger ratio, extensive spa
facilities, fine dining, personalized service, and on Celebrity Solstice,
unique onboard attractions such as the “Lawn Club,” a half acre venue
featuring live grass and the “Hot Glass Show,” a fully functional glass
blowing studio.
Pullmantur
Pullmantur serves the contemporary segment of the Spanish and Latin
American cruise markets. Pullmantur operates six ships with approxi-
mately 8,650 berths, offering various seven-night cruise itineraries. In
addition, Pullmantur has tour operations, and owns a 49% interest in
a small air business that operates three Boeing 747 aircraft in support
of its cruise and tour operations.
Pullmantur’s strategy is to attract cruise guests by providing a variety
of cruising options and land-based travel packages. Pullmantur offers
a range of cruise itineraries to the Caribbean, the Mediterranean, Brazil
and the Baltic. Pullmantur offers a wide array of onboard activities and
services to guests, including exercise facilities, swimming pools, beauty
salons, gaming facilities, shopping, and dining and entertainment venues.
Pullmantur’s tour operations sell land-based travel packages to Spanish
guests including hotels and flights primarily to Caribbean resorts, and
sell land-based tour packages to Europe aimed at Latin American guests.
Empress of the Seas and Sovereign of the Seas were redeployed
from Royal Caribbean International to Pullmantur in March 2008 and
November 2008, respectively. The ships currently sail under the names
of Empress and Sovereign, respectively. Before redeployment to Pull-
mantur, each ship underwent renovations including the expansion of
public areas and restaurants, the redesign of the Atrium and incorpora-
tion of Pullmantur’s signature elements.
Azamara Cruises
Azamara Cruises is designed to serve the emerging deluxe cruise
segment between the premium and luxury segments of the North
American cruise markets, along with the U.K. and German markets.
Azamara Cruises operates two ships with a total of approximately
1,400 berths, offering various cruise itineraries that range from seven
to 24 nights and appeal to the more experienced guest who is usually
more affluent.
Azamara Cruises’ strategy is to attract experienced travelers who enjoy
cruising and who seek a more intimate onboard experience, a high
level of service and itineraries to a variety of unique destinations.
Azamara Cruises completed its first full year of operation offering
global itineraries to many ports not accessible by larger ships. Europe,
South America, the Caribbean, Asia, and the Panama Canal were all
visited by either Azamara Journey or Azamara Quest in 2008.
Azamara Cruises offers a wide array of onboard services, amenities
and activities, including gaming facilities, fine dining and interactive
entertainment venues.
CDF Croisières de France
CDF Croisières de France is designed to serve the contemporary seg-
ment of the French cruise market and increases our global presence
by providing us with a brand custom-tailored for French cruise guests.
In April 2008, Holiday Dream, a 750-berth ship, was redeployed from
Pullmantur to CDF Croisières de France and is currently sailing under
the name Bleu de France as the brand’s only ship. Before redeployment
to CDF Croisières de France, Bleu de France underwent renovations to
customize the ship for French guests.
CDF Croisières de France offers seasonal seven to ten night itineraries
to the Mediterranean and the Caribbean. CDF Croisières de France
offers a variety of onboard services, amenities and activities, including
entertainment venues, exercise and spa facilities, fine dining, and
gaming facilities.
TUI Cruises
In April 2008, we closed on our joint venture agreement with TUI AG,
a European tourism and shipping company which owns 51% of TUI
Travel. The joint venture operates TUI Cruises, designed to serve the
contemporary and premium segments of the German cruise market by
offering a custom-tailored product for German guests. Celebrity Galaxy,
a 1,850-berth ship currently part of Celebrity Cruises, will be sold to
TUI Cruises to serve as its first ship and will sail under a new name
beginning in May 2009.
Other
In November 2008, we sold our 50% investment in a joint venture
with TUI Travel PLC (“TUI Travel”), formerly First Choice Holidays PLC,
which operates the brand Island Cruises. As part of this transaction,
we agreed to an early termination of the charter of Island Star to Island
Cruises. We anticipate the return of Island Star in April 2009 and intend
to redeploy the ship to Pullmantur. The ship will sail under the name
Pacific Dream. Before redeployment to Pullmantur, the ship will undergo
renovations to incorporate Pullmantur’s signature elements. This ship
will be dedicated to the Latin American market in support of Pullman-
tur’s Latin American expansion.
INDUSTRY
Over the past several years, cruising has represented a small but
growing sector of the overall vacation market. Industry data indicates
that a significant portion of cruise guests carried are first-time cruisers.
We believe this could present an opportunity for long-term growth
and a potential for increased market share through the expansion of
our fleet.
We estimate that the global cruise industry carried 17.2 million cruise
passengers in 2008 compared to 16.6 million cruise passengers carried
in 2007. We estimate that the global cruise fleet was served by approxi-
mately 354,000 berths on approximately 240 ships by the end of 2008.
There are approximately 34 ships with an estimated 86,000 berths that
are expected to be placed in service in the global cruise market between
2009 and 2012.
North America represents the primary source of our cruise passengers
and has experienced a compound annual growth rate of approximately
8.7% since 1970. From 2004 to 2008 North America has experienced
a compound annual growth rate in cruise passengers of approximately
4.4%. We estimate that North America was served by 132 ships with
approximately 194,000 berths at the beginning of 2004 and by 150
ships with approximately 257,000 berths by the end of 2008. There
are approximately 27 ships with an estimated 68,000 berths that are
expected to be placed in service in the North American cruise market
between 2009 and 2012.