Royal Caribbean Cruise Lines 2011 Annual Report Download - page 54

2011 ANNUAL REPORT 50
PART II
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as compared to a loss of $2.8 million in 2010, for a
net change of $21.7 million.
Net Yields
Net Yields increased 4.1% in 2011 compared to 2010
primarily due to an increase in ticket prices and the
favorable impact of changes in exchange rates, as dis-
cussed above. Net Yields per APCD increased 2.4% in
2011 compared to 2010 on a Constant Currency basis.
Net Cruise Costs
Net Cruise Costs increased 11.4% in 2011 compared to
2010 due to the 7.5% increase in capacity and a 3.7%
increase in Net Cruise Cost per APCD. The increase in
Net Cruise Costs per APCD was primarily driven by an
increase in fuel and other hotel and vessel expenses,
and to a lesser extent, the unfavorable impact of
changes in exchange rates, as discussed above. Net
Cruise Costs per APCD increased 2.7% in 2011 com-
pared to 2010 on a Constant Currency basis. Net Cruise
Costs Excluding Fuel per APCD increased 2.3% in 2011
compared to 2010. Net Cruise Costs Excluding Fuel
per APCD increased 1.3% in 2011 compared to 2010
on a Constant Currency basis.
YEAR ENDED DECEMBER 31, 2010 COMPARED TO
YEAR ENDED DECEMBER 31, 2009
In this section, references to 2010 refer to the year
ended December 31, 2010 and references to 2009
refer to the year ended December 31, 2009.
Revenues
Total revenues for 2010 increased $862.7 million or
14.6% to $6.8 billion from $5.9 billion in 2009. Approx-
imately $654.1 million of this increase was attributable
to an 11.1% increase in capacity. The increase in capac-
ity was primarily due to a full year of service of Oasis
of the Seas, which entered service in December 2009,
the addition of Celebrity Eclipse which entered ser-
vice in April 2010, a full year of service of Celebrity
Equinox which entered service in July 2009, a full
year of service of Pacific Dream, which entered service
in May 2009 and the addition of Allure of the Seas,
which entered service in December 2010. This increase
in capacity was partially offset by the sale of Celebrity
Galaxy to TUI Cruises in March 2009, the removal of
the Atlantic Star from operation in August 2009 and
the sale of Oceanic in April 2009. In addition, approxi-
mately $208.6 million of the increase in total revenues
was driven by increases in ticket prices and an increase
in occupancy from 102.5% in 2009 to 104.3% in 2010.
The increase in occupancy was primarily due to
improving market conditions, certain itinerary changes
and the favorable impact of our newer ships. The
increase in occupancy was also due to the absence
of the adverse effect caused by the H1N1 virus during
the third quarter of 2009 which resulted in selective
itinerary modifications and diminished demand for
our cruises and tours to Mexico. These increases were
partially offset by a decrease in air revenue due to a
reduction in guests booking air service through us
and an overall decrease in air ticket prices, a decrease
in shore excursions revenue on a per passenger basis
related to seasonal redeployments and to a decrease
in charter revenue due to the termination of the char-
ter to Island Cruises in April 2009. These increases
in revenues were also partially offset by the adverse
effect of changes in foreign currency exchange rates
related to our revenue transactions denominated in
currencies other than the United States dollar.
Onboard and other revenues included concession
revenues of $237.0 million in 2010 compared to $215.6
million for the same period in 2009. The increase in
concession revenues was primarily due to the increase
in capacity mentioned above.
Cruise Operating Expenses
Total cruise operating expenses for 2010 increased
$387.0 million or 9.5% to $4.5 billion from $4.1 billion
for 2009. Approximately $452.1 million of this increase
was attributable to the 11.1% increase in capacity men-
tioned above. The increase was also due to an increase
in commissions directly related to the increase in ticket
prices. These increases were partially offset by a
$30.2 million decrease primarily attributable to lower
air expenses, shore excursions expenses and fuel
expenses on a per passenger basis, and to a lesser
extent, our continued emphasis on cost-containment.
The decreases in air expenses and shore excursion
expenses were directly related to the decreases in
revenue as mentioned above. The decrease in fuel
expenses was primarily a result of improved fuel effi-
ciencies related to our newer ships and the favorable
effect of fuel swap agreements despite increasing fuel
prices. The increase in cruise operating expenses was
also partially offset by an estimated $34.9 million
decrease related to the favorable effect of changes in
foreign currency exchange rates related to our cruise
operating expenses denominated in currencies other
than the United States dollar.
Marketing, Selling and Administrative Expenses
Marketing, selling and administrative expenses for 2010
increased $86.1 million or 11.3% to $848.1 million from
$762.0 million for 2009. The increase was primarily
due to an increase in shoreside payroll and benefits
due to higher headcount primarily related to our con-
tinued international expansion and general increases
in compensation.
Depreciation and Amortization Expenses
Depreciation and amortization expenses for 2010
increased $75.5 million or 13.3% to $643.7 million from
$568.2 million for 2009. The increase was primarily
due to the addition of Oasis of the Seas, the addition