Royal Caribbean Cruise Lines 2014 Annual Report Download - page 14

Royal Caribbean Cruises Ltd. 13
PART I
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,
depending on the context, Royal Caribbean Cruises
Ltd.’s consolidated subsidiaries and/or affiliates. The
terms “Royal Caribbean International,” “Celebrity
Cruises,” “Pullmantur,” “Azamara Club Cruises,” “CDF
Croisières de France,” and “TUI Cruises” refer to our
cruise brands. However, because TUI Cruises is an
unconsolidated investment, our operating results and
other disclosures herein do not include TUI Cruises
unless otherwise specified. In accordance with cruise
vacation industry practice, the term “berths” is deter-
mined 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
We are the world’s second largest cruise company. We
own Royal Caribbean International, Celebrity Cruises,
Pullmantur, Azamara Club Cruises, CDF Croisières de
France and a 50% joint venture interest in TUI Cruises.
Together, these six brands operate a combined 43
ships in the cruise vacation industry with an aggre-
gate capacity of approximately 105,750 berths as of
December 31, 2014.
Our ships operate on a selection of worldwide itiner-
aries that call on approximately 480 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
primarily 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 upgrade of our fleet to, among other things, incor-
porate our latest signature innovations, allows us to
continue to attract new and loyal repeat guests.
We believe cruising continues to be a popular 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 dependent on a single
market or demographic.
Royal Caribbean was founded in 1968 as a partner-
ship. 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.
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 tailored to serve the cruise markets in
Spain, Portugal and Latin America; our CDF Croisières
de France brand, which provides us with a tailored
product targeted at the French market; and our 50%
joint venture, TUI Cruises, which is specifically tailored
for the German market. The operating results of all of
our brands are included in our consolidated results of
operations, except for TUI Cruises, which is accounted
for under the equity method of accounting. See Note 1.
General and Note 6. Other Assets to our consolidated
financial statements under Item 8. Financial Statements
and Supplementary Data for further details.
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 64,150 berths under our
Royal Caribbean International brand, offering cruise
itineraries that range from two to 18 nights. In October
2014, Royal Caribbean International took delivery of
the 4,150 berth Quantum of the Seas, its first new-
build since 2010 and the first of a new generation of
cruise ships. In addition, we currently have four ships
on order for our Royal Caribbean International brand
with an aggregate capacity of approximately 19,200
berths. These include our second Quantum-class ship,
which is scheduled to enter service in the second
quarter of 2015, our third Oasis-class ship and third