Royal Caribbean Cruise Lines 2014 Annual Report Download - page 19

18 Royal Caribbean Cruises Ltd.
PART I
primarily source guests for our global brands from
North America. We also continue to expand our focus
on selling and marketing our cruise brands to guests
in countries outside of North America by tailoring
itineraries and onboard product offerings to the cul-
tural characteristics and preferences of our interna-
tional guests. In addition, we explore opportunities
that may arise to acquire or develop brands tailored
to specific markets.
Passenger ticket revenues generated by sales origi-
nating in countries outside of the United States were
approximately 47% of total passenger ticket revenues in
2014 and 48% and 49% in 2013 and 2012, respectively.
International guests have grown from approximately
1.8 million in 2010 to approximately 2.2 million in 2014.
Cost Efficiency, Operating Expenditures and
Adequate Cash and Liquidity
We continue our commitment to identify and imple-
ment cost containment initiatives. Our most recent
initiatives relate to realizing economies of scale and
improving service delivery to our travel partners and
guests by restructuring and consolidating our global
sales, marketing, general and administrative structure.
We also continue our initiatives to reduce energy con-
sumption and, by extension, fuel costs. These include
the design of more fuel-efficient ships as well as the
implementation of more efficient hardware, including
propulsion and cooling systems incorporating energy
efficiencies.
We are focused on maintaining a strong liquidity posi-
tion, reducing our debt and improving our credit met-
rics. In addition, we continue to pursue our long-term
objective of returning our credit ratings to investment
grade. We believe these strategies enhance our ability
to achieve our overall goal of maximizing our return
on invested capital and long-term shareholder value.
Fleet Upgrade, Maintenance and Expansion
We place a strong focus on product innovation, which
we seek to achieve by introducing new concepts
on our new ships and continuously making improve-
ments to our fleet. Several of these innovations have
become signature elements of our brands, such as
the “Royal Promenade” (a boulevard with shopping,
dining and entertainment venues) for the Royal
Caribbean International brand and enhanced design
features found on our Solstice-class ships for the
Celebrity Cruises brand.
Our upgrade and maintenance programs enable us to
incorporate many of our latest signature innovations
throughout the brand fleet and allow us to benefit
from economies of scale by leveraging our suppliers.
Ensuring consistency across our fleet provides us with
the flexibility to redeploy our ships among our brand
portfolio.
We are committed to building state-of-the-art ships
and our brands, excluding our 50% joint venture TUI
Cruises, currently have effective agreements for the
construction of four new ships. These consist of two
Quantum-class ships, which are scheduled to enter
service in the second quarters of 2015 and 2016 and
two Oasis-class ships, which are scheduled to enter
service in the second quarters of 2016 and 2018,
respectively. We also reached conditional agreements
with STX France to build two ships of a new generation
for Celebrity Cruises, which are scheduled to enter
service in the second half of 2018 and the first half
of 2020. The addition of these six ships is expected
to increase our passenger capacity by approximately
25,000 berths by December 31, 2020, or approxi-
mately 25.1%, as compared to our capacity as of
December 31, 2014.
TUI Cruises, our 50% joint venture, currently has
effective agreements for the construction of three
new ships. These ships are scheduled to enter service
in the second quarter of 2015, third quarter of 2016
and second quarter of 2017, with an expected total
capacity of 7,500 berths.
We continuously evaluate opportunities to order new
ships, purchase existing ships or sell ships in our cur-
rent fleet.
Markets and Itineraries
In an effort to penetrate untapped markets, diversify
our consumer base and respond to changing economic
and geopolitical market conditions, we continue to
seek opportunities to optimally deploy ships to new
and stronger markets and itineraries throughout the
world. The portability of our ships allows us to readily
deploy our ships to meet demand within our existing
cruise markets. We make deployment decisions gen-
erally 12 to 18 months in advance, with the goal of
optimizing the overall profitability of our portfolio.
Additionally, the infrastructure investments we have
made to create a flexible global sourcing model has
made our brands relevant in a number of markets
around the world, which allows us to be opportunis-
tic and source the highest yielding guests for our
itineraries.
Our ships offer a wide selection of itineraries that call
on approximately 480 destinations in 113 countries,
spanning all seven continents. We are focused on
obtaining the best possible long-term shareholder
returns by operating in established markets while
growing our presence in developing markets. New
capacity allows us to expand into new markets and
itineraries. Our brands have expanded their mix of
itineraries while strengthening our ability to further
penetrate the Asian, Australian, Caribbean, and Latin
American markets. Additionally, in order to capitalize
on the summer season in the Southern Hemisphere