Royal Caribbean Cruise Lines 2011 Annual Report Download - page 13

PART I
ROYAL CARIBBEAN CRUISES LTD. 9
As used in this Annual Report on Form 10-K, the terms
“Royal Caribbean,” the “Company,” “we,” “our” and
“us” refer to Royal Caribbean Cruises Ltd. and the
terms “Royal Caribbean International,” “Celebrity
Cruises,” “Pullmantur,” “Azamara Club Cruises,” and
“CDF Croisières de France” refer to our cruise brands.
In accordance with cruise vacation industry practice,
the term “berths” is determined based on double
occupancy per cabin even though many cabins can
accommodate three or more passengers.
This Annual Report on Form 10-K also includes trade-
marks, trade names and service marks of other com-
panies. Use or display by us of other parties’ trademarks,
trade names or service marks is not intended to and
does not imply a relationship with, or endorsement or
sponsorship of us by, these other parties other than as
described herein.
ITEM 1. BUSINESS
GENERAL
Royal Caribbean was founded in 1968 as a partnership.
Its corporate structure evolved over the years and
the current parent corporation, Royal Caribbean
Cruises Ltd., was incorporated on July 23, 1985 in the
Republic of Liberia under the Business Corporation
Act of Liberia.
We are the world’s second largest cruise company
operating 39 ships in the cruise vacation industry
across five brands with an aggregate capacity of
approximately 92,650 berths as of December 31, 2011.
Our ships operate on a selection of worldwide itiner-
aries that call on approximately 460 destinations on
all seven continents. In addition to our headquarters
in Miami, Florida, we have offices and a network of
international representatives around the world which
focus on our global guest sourcing.
We compete principally on the basis of exceptional
service provided by our crew, innovation and quality
of ships, variety of itineraries, choice of destinations
and price. We believe that our commitment to build
state-of-the-art ships and to invest in the maintenance
and revitalization of our fleet to, among other things,
incorporate our latest signature innovations, allows us
to continue to attract new and loyal repeat guests.
We have also undertaken to expand globally and in
2012, we expect a significant amount of passenger
ticket revenues from outside of the United States.
We believe cruising continues to be a widely accepted
vacation choice due to its inherent value, extensive
itineraries and variety of shipboard and shoreside
activities. In addition, we believe that our products
appeal to a large consumer base and are not depen-
dent on a single market or demographic.
OUR BRANDS
Our global brands include Royal Caribbean International,
Celebrity Cruises, and Azamara Club Cruises. These
brands are complemented by our Pullmantur brand,
which has been custom tailored to serve the cruise
markets in Spain, Portugal and Latin America, and our
CDF Croisières de France brand, which provides us
with a custom tailored product targeted at the French
market. In addition, we have a 50% investment in a
joint venture which operates the brand TUI Cruises,
specifically tailored for the German market.
We believe our global brands possess the versatility
to enter multiple cruise market segments within the
cruise vacation industry. Although each of our brands
has its own marketing style as well as ships and crews
of various sizes, the nature of the products sold and
services delivered by our brands share a common
base (i.e., the sale and provision of cruise vacations).
Our brands also have similar itineraries as well as
similar cost and revenue components. In addition,
our brands source passengers from similar markets
around the world and operate in similar economic
environments with a significant degree of commercial
overlap. As a result, we strategically manage our
brands as a single business with the ultimate objective
of maximizing long-term shareholder value.
Royal Caribbean International
We currently operate 22 ships with an aggregate
capacity of approximately 62,000 berths under our
Royal Caribbean International brand, offering cruise
itineraries that range from two to 18 nights. In addition,
we have two ships on order for our Royal Caribbean
International brand with an aggregate capacity of
approximately 8,200 berths which are expected to
enter service in the third quarter of 2014 and in the
second quarter of 2015, respectively. Royal Caribbean
International offers a variety of itineraries to destina-
tions worldwide, including Alaska, Asia, Australia,
Bahamas, Bermuda, Canada, the Caribbean, Europe,
the Middle East, the Panama Canal, South America,
South Pacific and New Zealand.
Royal Caribbean International is positioned at the
upper end of the contemporary segment of the cruise
vacation industry, generally characterized by cruises
that are seven nights or shorter and feature a casual
ambiance. We believe that the quality of the Royal
Caribbean International brand also enables it to attract
guests from the premium segment, which is generally
characterized by cruises that are seven to 14 nights
and appeal to the more experienced guest who is
usually more affluent. This allows Royal Caribbean
International to achieve market coverage that is among