Royal Caribbean Cruise Lines 2008 Annual Report Download - page 26

10 Royal Caribbean Cruises Ltd.
PART I
Passengers and Capacity
Selected statistical information is shown in the following table (see Terminology and Non-GAAP Financial Measures under Item 7. Management’s
Discussion and Analysis of Financial Condition and Results of Operations, for definitions). (Amounts include Pullmantur effective January 1, 2007):
Year Ended December 31, 2008 2007 2006 2005 2004
Passengers Carried 4,017,554 3,905,384 3,600,807 3,476,287 3,405,227
Passenger Cruise Days 27,657,578 26,594,515 23,849,606 23,178,560 22,661,965
Available Passenger Cruise Days (APCD) 26,463,637 25,155,768 22,392,478 21,733,724 21,439,288
Occupancy
104.5% 105.7% 106.5% 106.6% 105.7%
Cruise Pricing
Our cruise ticket prices include accommodations and a wide variety
of activities and amenities, including meals and entertainment. Prices
vary depending on the destination, cruise length, cabin category
selected and the time of year the cruise takes place. Although we
grant credit terms to certain travel agencies and tour operators outside
of the United States, our payment terms generally require an upfront
deposit to confirm a reservation with the balance due prior to the sail-
ing. During the selling period of a cruise, we continually monitor and
adjust our cruise ticket prices for available passenger cabins based on
demand, with the objective of maximizing net yields. Historically, we
have opened cruises for sale at least one year in advance, and often as
much as two years in advance. Additionally, we offer air transportation
as a service for guests that elect to utilize our transportation program.
Our air transportation program is available from major cities in the
United States and Canada, and from select cities in Europe, mainly in
the United Kingdom. Prices vary by gateway and destination. Gener-
ally, air tickets are sold to guests at prices close to cost. Passenger ticket
revenues accounted for 72.4%, 72.0% and 73.4% of total revenues in
2008, 2007 and 2006, respectively.
Onboard Activities and Other Revenues
Our cruise brands offer modern fleets with a wide array of onboard
services, amenities and activities, including swimming pools, sun decks,
lawn decks, spa facilities (which include massage and exercise facilities),
beauty salons, bungee jumping trampolines, gaming facilities, lounges,
bars, a wide variety of dining options and venues, Las Vegas-style
entertainment, hot glass shows, retail shopping, libraries, dedicated
recreational areas for youth of all ages, cinemas, conference centers,
internet cafes and shore excursions at each port of call. Royal Carib-
bean International offers rock climbing walls on its ships, additional
activities including ice skating rinks and in-line skating on its Voyager-
class and Freedom-class ships, sports courts, a surf simulator and an
interactive water park called the H2O Zone™ on its Freedom-class ships.
While many onboard activities are included in the base price of a cruise,
we realize additional revenues from, among other things, gaming, the
sale of alcoholic and other beverages, specialty restaurants, gift shop
items, shore excursions, photography, spa/salon and fitness services
and art auctions. Royal Caribbean International, Celebrity Cruises and
Azamara Cruises offer enhanced functionality on our internet sites
for selecting shore excursions, specialty dining and amenities prior
to embarkation. Royal Caribbean International and Celebrity Cruises
also offer a catalogue gift service, which is now offered via the inter-
net to provide travel agents and others the opportunity to purchase
gifts for guests.
In conjunction with our cruise vacations, we offer pre- and post-cruise
hotel packages to our Royal Caribbean International, Celebrity Cruises
and Azamara Cruises guests. We also offer escorted, premium land-
tour vacation packages in Alaska, Asia, Australia, the Canadian Rockies,
Europe, New Zealand and Latin America. These escorted, premium land-
tour vacations are offered exclusively in conjunction with our cruises
marketed to our Royal Caribbean International, Celebrity Cruises and
Azamara Cruises guests through our cruise-tour operations, Royal
Celebrity Tours. Pullmantur also offers land-based tour packages to
Spanish and European vacation travelers including hotels and flights
to Caribbean resorts and sells land based packages to Europe aimed
at Latin American guests. In addition, we sell cruise vacation protection
coverage, which provides guests with coverage for trip cancellation,
medical protection and baggage protection. Onboard and other
revenues accounted for 27.6%, 28.0% and 26.6% of total revenues
in 2008, 2007 and 2006, respectively.
SEGMENT REPORTING
We operate five cruise brands, Royal Caribbean International, Celebrity
Cruises, Pullmantur, Azamara Cruises and CDF Croisières de France. The
brands have been aggregated as a single reportable segment based on
the similarity of their economic characteristics as well as products and
services provided. (For financial information see Item 8. Financial State-
ments and Supplementary Data.)
EMPLOYEES
As of December 31, 2008, we employed approximately 4,400 full-time
and 650 part-time employees worldwide in our shoreside operations.
We also employed approximately 44,600 shipboard employees. As of
December 31, 2008, approximately 80% of our shipboard employees
were covered by collective bargaining agreements. We believe that our
relationship with our employees is good.
INSURANCE
We maintain insurance on the hull and machinery of our ships, which
includes additional coverage for disbursements, earnings and increased
value, which are maintained in amounts related to the value of each
ship. The coverage for each of the hull policies is maintained with
syndicates of insurance underwriters from the British, Scandinavian,
French, United States and other international insurance markets.
We maintain liability protection and indemnity insurance for each of
our ships through either the United Kingdom Mutual Steam Ship Assur-
ance Association (Bermuda) Limited or Steamship Mutual Underwriting
Association (Bermuda) Limited. Our protection and indemnity liability
insurance is done on a mutual basis and we are subject to additional
premium calls in amounts based on claim records of all members of
the mutual protection and indemnity association. We are also subject
to additional premium calls based on investment shortfalls experienced
by the insurer.