Royal Caribbean Cruise Lines 2014 Annual Report Download - page 16

Royal Caribbean Cruises Ltd. 15
from two to 17 nights throughout South America, the
Caribbean and Europe. Additionally, we announced
that Majesty of the Seas will be redeployed from
Royal Caribbean International to Pullmantur in 2016.
Pullmantur serves the contemporary segment of the
Spanish, Portuguese and Latin American cruise mar-
kets. Pullmantur’s strategy is to attract cruise guests
from these target markets by providing a variety of
cruising options and onboard activities directed at
couples and families traveling with children. Over the
last few years, Pullmantur has systematically increased
its focus on Latin America and has expanded its pres-
ence in that market.
In order to facilitate Pullmantur’s ability to focus on
its core cruise business, on March 31, 2014, Pullmantur
sold the majority of its interest in its non-core busi-
nesses. These non-core businesses included Pullmantur’s
land-based tour operations, travel agency and 49%
interest in its air business. In connection with the sale
agreement, we retained a 19% interest in each of the
non-core businesses as well as 100% ownership of
the aircraft which are being dry leased to Pullmantur
Air. 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.
CDF Croisières de France
We currently operate two ships with an aggregate
capacity of approximately 2,800 berths under our
CDF Croisières de France brand. CDF Croisières de
France offers seasonal itineraries to the Mediterranean,
Europe and Caribbean. During the winter season,
Zenith is deployed to the Pullmantur brand for sailings
in South America. CDF Croisières de France is designed
to serve the contemporary segment of the French
cruise market by providing a brand tailored for French
cruise guests.
TUI Cruises
TUI Cruises is a joint venture owned 50% by us and
50% by TUI AG, a German tourism and shipping com-
pany, and is designed to serve the contemporary and
premium segments of the German cruise market by
offering a product tailored 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 three
ships, Mein Schiff 1, Mein Schiff 2 and Mein Schiff 3,
with an aggregate capacity of approximately 6,300
berths. In addition, TUI Cruises currently has three
newbuild ships on order at the Finnish Meyer Turku
yard with an aggregate capacity of approximately
7,500 berths: Mein Schiff 4, scheduled for delivery in
the second quarter of 2015, Mein Schiff 5, scheduled
for delivery in the third quarter of 2016 and Mein
Schiff 6, scheduled for delivery in the second quarter
of 2017.
Other
In November 2014, we formed a strategic partnership
with Ctrip.com International Ltd. (“Ctrip”), a Chinese
travel service provider, to operate a new cruise brand
known as SkySea Cruises. SkySea Cruises will offer
a custom-tailored product for Chinese cruise guests
operating the ship purchased from Celebrity Cruises.
The new cruise line will begin service in the second
quarter of 2015. We and Ctrip each own 35% of the
new company, Skysea Holding, with the balance being
owned by Skysea Holding management and a private
equity fund.
INDUSTRY
Cruising is considered a well-established vacation
sector in the North American market, a growing sec-
tor over the long term in the European market and
a developing but promising sector in several other
emerging markets. Industry data indicates that market
penetration rates are still low and 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.
The following table details market penetration rates
for North America and Europe computed based on
the number of annual cruise guests as a percentage
of the total population:
Year
North
America() Europe()
  
  
  
  
  
() Source: Our estimates are based on a combination of data
obtained from publicly available sources including the Interna-
tional Monetary Fund and Cruise Lines International Association
(“CLIA”). Rates are based on cruise guests carried for at least
two consecutive nights. Includes the United States of America
and Canada.
() Source: Our estimates are based on a combination of data
obtained from publicly available sources including the Interna-
tional Monetary Fund and CLIA Europe, formerly European
Cruise Council.
We estimate that the global cruise fleet was served
by approximately 457,000 berths on approximately
283 ships at the end of 2014. There are approximately
33 ships with an estimated 98,650 berths that are
expected to be placed in service in the global cruise
market between 2015 and 2019, although it is also
possible that ships could be ordered or taken out of
service during these periods. We estimate that the
global cruise industry carried 22.0 million cruise guests
in 2014 compared to 21.3 million cruise guests carried
in 2013 and 20.9 million cruise guests carried in 2012.
PART I