Royal Caribbean Cruise Lines 2013 Annual Report Download - page 5

DEAR FELLOW SHAREHOLDERS,
During 2013, we began to see the coming together of all our efforts
over the last years. We realized material gains in our key financial
metrics and set the stage for achieving the improved profitability and
higher returns on investment that we need. All of this gives us a great
sense of confidence as we sail into an exciting future.
Material Gains with Key Financial Metrics
We continue to strengthen our balance sheet as we
progress toward investment grade metrics, and in
2013 we leveraged the improving banking market to
strengthen our liquidity position and to lower our financ-
ing costs with a series of constructive refinancings. We
closed out 2013 with $1.9 billion in liquidity, reduced our
debt by $400 million and doubled our quarterly dividend
to $0.25 per share. We know keeping our capacity
growth moderate is also prudent and that is why we
announced no ship delivery for our consolidated brands
in 2017. The cumulative effect of these actions reflects
our focus on returns for our shareholders with increas-
ing investment returns and profitability.
Cost Discipline in Our Culture
One of our major focus areas has been on controlling
costs and the results have been gratifying. Efforts at
all levels of the organization enabled us to beat our
budgets across the board in 2013. Control of our big-
gest single expense item—fuel—was particularly con-
structive as we maintained our position as having the
lowest energy consumption per berth in the industry.
It is especially gratifying to see that our people are
accomplishing all this while investing in our product and
infrastructure. Guest satisfaction in 2013 reached record
levels which will drive improved pricing in the future.
And, just as importantly, our annual survey of crew
satisfaction and engagement are at its highest level in
our history.
Revenue Yields Remain Key
As critical as controlling our costs are, the biggest
potential improvement in our bottom line will come from
improving revenue performance and we see great
opportunity in this key area. Yields are still too low, but
we are very encouraged by recent trends. Revenue
yields grew by 3.2% which almost precisely equaled our
prediction at the beginning of the year (a prediction that
preceded all the bad press of 2013). Ticket yields were
an important driver with the US market proving partic-
ularly strong and Europe providing some upside. Our
ship upgrading efforts, technology and other enhance-
ments drove transformative onboard revenue results.
While we don’t expect such step changes to occur
every year, 2013 performance demonstrates how
aggressively we manage this element.
We now face 2014 with perhaps the clearest hori-
zon we have seen in some time. The worst of the
economic turbulence appears to be behind and we
are hopeful that the upward trend continues. While still
challenged, the global economy is showing improve-
ment, with moderate growth in North America, slow but
measurable recovery in Europe, and opportunity in
emerging markets like China.
All of our brands are upping their game in the mar-
ketplace. Royal Caribbean International’s market posi-
tioning and newest ship are attracting great attention;
Celebrity’s Modern Luxury positioning and marketing
concentration are driving increased demand; Azamara
Club Cruises’ destination intensification is changing the
OUR MESSAGE
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