Royal Caribbean Cruise Lines 2011 Annual Report Download - page 15

PART I
ROYAL CARIBBEAN CRUISES LTD. 11
facilities, fine dining, spa and wellness, butler service
for suites, as well as interactive entertainment venues.
Azamara Club Cruises also includes as part of the
base price of the cruise certain complimentary
onboard services, amenities and activities which are
not normally included in the base price of other cruise
lines including wine with lunch and dinner, bottled
water, soda, premium coffees and teas, gratuities for
housekeeping and dining/bar staff, self-service laun-
dry and shuttle buses for certain ports.
Pullmantur
As of December 31, 2011, we operated five ships with
an aggregate capacity of approximately 7,650 berths
under our Pullmantur brand, offering cruise itineraries
that range from four to 12 nights. In February 2012, we
entered into an agreement to bareboat charter our
ship Ocean Dream to an unrelated party for a period
of six years from the transfer date. The charter agree-
ment provides a renewal option exercisable by the
unrelated party for an additional four years. We antic-
ipate delivery of Ocean Dream will take place in April
2012. In addition, in March 2012, Horizon will be rede-
ployed from Pullmantur to CDF Croisières de France
to replace Bleu de France which was sold in November
2010. Pullmantur serves the contemporary segment
of the Spanish, Portuguese and Latin American cruise
markets. Pullmantur also has land-based tour opera-
tions and owns a 49% interest in an air business that
operates four Boeing 747 aircrafts 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 Brazil, the Caribbean, Europe and the
Middle East. Pullmantur offers a wide array of onboard
activities and services to guests, including exercise
facilities, swimming pools, beauty salons, gaming
facilities, shopping, dining, certain complimentary
beverages, and entertainment venues. Pullmantur’s
tour operations sell land-based travel packages to
Spanish guests, including hotels and flights primarily
to Caribbean resorts, and land-based tour packages
to Europe aimed at Latin American guests.
CDF Croisières de France
CDF Croisières de France is designed to serve the
contemporary segment of the French cruise market
by providing a brand custom tailored for French cruise
guests. CDF Croisières de France offers seasonal itin-
eraries to the Mediterranean and a variety of onboard
services, amenities and activities, including entertain-
ment venues, exercise and spa facilities, fine dining,
and gaming facilities.
Starting in the second quarter of 2012, CDF Croisières
de France will begin operating the 1,350-berth Horizon.
This ship is currently operated by Pullmantur and will
be redeployed to CDF Croisières de France in March
2012, following a revitalization to incorporate signature
brand elements. Until November 2011, CDF Croisières
de France operated Bleu de France under a one-year
charter agreement following the sale of the ship from
CDF Croisières de France to an unrelated third party
in November 2010.
TUI Cruises
We also have a joint venture that operates TUI Cruises,
which is designed to serve the contemporary and
premium segments of the German cruise market by
offering a custom-tailored product for German guests.
All onboard activities, services, shore excursions and
menu offerings are designed to suit the preferences
of this target market. TUI Cruises operates two ships,
Mein Schiff I and Mein Schiff II, with an aggregate
capacity of approximately 3,800 berths. In 2011, TUI
Cruises entered into a construction agreement to
build its first newbuild ship, scheduled for delivery in
the second quarter of 2014. TUI Cruises has an option
to construct a second ship of the same class, which
will expire on October 31, 2012. Our joint venture
partner is TUI AG, a German tourism and shipping
company that also owns 51% of TUI Travel.
INDUSTRY
Cruising is considered a well established vacation sec-
tor in the North American market, a growing sector in
the European market and a developing but promising
sector in several other emerging markets. Industry data
indicates that a significant portion of cruise guests
carried are first-time cruisers. We believe this presents
an opportunity for long-term growth and a potential
for increased profitability.
We estimate that the global cruise industry carried
20.2 million cruise guests in 2011 compared to
18.8 million cruise guests carried in 2010. We estimate
that the global cruise fleet was served by approxi-
mately 417,000 berths on approximately 285 ships
at the end of 2011. There are approximately 20 ships
with an estimated 62,000 berths that are expected
to be placed in service in the global cruise market
between 2012 and 2016, although it is also possible
that ships could be taken out of service during these
periods. The majority of cruise guests have historically
been sourced from North America and Europe.
North America
Although the North American cruise market has histor-
ically experienced significant growth, the compound
annual growth rate in cruise guests for this market
was approximately 3.2% from 2007 to 2011. This more
limited growth is attributable in large part to the recent
international expansion within the cruise industry. We
estimate that North America was served by 138 ships
with approximately 201,000 berths at the beginning
of 2007 and by 143 ships with approximately 248,000