"Despite US election clarity, shares dip on economy
5/11/2008
Stocks were supposed to bounce following the US presidential election. But despite the clarity of a decisive Obama win, investors shifted their focus to the economy and shares fell in Wednesday morning trading.
The drop followed Tuesday’s election-day market rally.

In analyzing the market action, the Associated Press cited a Harris Private Bank official, who said investors had anticipated an Obama win so the voting was a ‘non-event’ in today’s trading. The AP added that, with the election over, investors are now focused on the stark economic landscape.

The report also cited a fund manager who sees trading as leveling off after October’s credit market turbulence.

Cruise shares were down across the board late Wednesday morning.

Royal Caribbean was off nearly 6%, falling 89 cents to $14.59. Carnival lost more than 3%, down 79 cents, at $24.16.

Ambassadors International fell nearly 5%, down 8 cents at $1.59. "

So here is the Q.

OK so we understand why but why is it that it seems to me that RCI always drops faster than CCL and gains less than CCL - and if so why don't RCI change their business model ?

I'm sure if they had a fleet of clones across brands they could be more successful like Carnival.

I'm glad they don't and hope they keep their business model exactly as it is.

quote:

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Originally posted by Patsy:
[....]Carnival is just lazy and unimaginative, regardless of their business ethic.

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quote:

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Originally posted by Ernst:

I guess this is 'a bit' too harsh. Don't forget the new of Aida ships or the new Seabourn ships. Also, they actually do vary their interiors quite a bit - Arcadia seems to be very different to Queen Victoria. It might not be to everyone's taste but it's not that much different to what their competitors are doing.

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Ernst,
You are right. Carnival Corp. does have some unique and very innovative ship designs (AIDA, QM2), but generally speaking, they are not as innovative and forward thinking as RCCL.

There is no denying Carnival Corp. has a very successful business model. This being said, I'm glad that not every cruise line follows the Carnival business model. If they did, this would be a very boring industry to follow.

you are unbelievable

if RCCI goes bankrupt tomorrow how can you say that they are forward thinking???

how come that a succesfull business like Carnival Corp is "just lazy and unimaginative"

it seems very much that you translate your liking or disliking of a company to your views upon a business model, i don't care actually which
would run a better business or whatever, as long
as there is diversity and choice...., i might be
able to sail on a non-american language speaking ship!!

i thought you know better than that!

Personally I sailed on a RCL ship, and I liked it very much, the ship Jewel of the Seas was very nice, but, in the end very little kitch, and that being more the contemporary american hotel style, lots of light and sea, and places to relax. For me, RCL has a good business, though i have very very very big doubts about the Oasis thing.

I also sailed on QE2, which technicalle a CCL ship, isn't quite the typical one, and she leaves in less than a week...

quote:

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Originally posted by eroller:

Ernst,
You are right. Carnival Corp. does have some unique and very innovative ship designs (AIDA, QM2), but generally speaking, they are not as innovative and forward thinking as RCCL.

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RCI is indeed building some very nice ships and they indeed introduced many new features. However, many aspects of their ships are not nearly as different as often depicted here in this forum. There is generally not much difference between the ships of the mainstream cruise lines from a more distant point of view.
However, I disagree that Carnival is less 'innovative' or 'forward thinking'. There is quite some variety in the Carnival brands (!) and some concepts are actually pretty innovative. Beside that, the Carnival brands offer an impressive and also 'innovative' range of itineraries. Don't forget, it's not only about the 'hardware'!

quote:

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Originally posted by eroller:

There is no denying Carnival Corp. has a very successful business model. This being said, I'm glad that not every cruise line follows the Carnival business model. If they did, this would be a very boring industry to follow.

Ernie

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quote:

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Originally posted by Ernst:

However, I disagree that Carnival is less 'innovative' or 'forward thinking'. There is quite some variety in the Carnival brands (!) and some concepts are actually pretty innovative.

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I guess we can agree to disagree. For the most part I find that Carnival plays it safe, and this is part of their success.

I would love to know what you find innovative about Carnival? I can think of two things.

1. first ship with Azipods
2. taking the Cunard brand to the next level with QM2

I can't really think of anything else, how about you? Yes, I agree there is plenty of variety within Carnival Corp., but that is only because Carnival purchased the majority market share of the cruise industry. They are superb at buying established brands and expanding them, but not very adapt at starting anything from scratch.

Many of the concepts that exist within Carnival Corp. cannot be credited to Carnival. Aida for instance started well before Carnival purchased the line. Carnival can hardly be credited for the innovative concept of Aida although they were smart enough to buy the line and expand it.

Royal Caribbean on the other hand can be attributed with many innovations onboard their ships. These are innovations that are customer facing (not technical) and not offered on any other brand. The list goes on and on. You may not consider them innovations, but I do. Royal Caribbean has a finesse with incorporating these innovations into the ship design in a seamless way. That in itself I consider very innovative.

quote:

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Originally posted by eroller:

I guess we can agree to disagree. For the most part I find that Carnival plays it safe, and this is part of their success.

I would love to know what you find innovative about Carnival? I can think of two things.

1. first ship with Azipods
2. taking the Cunard brand to the next level with QM2

I can't really think of anything else, how about you? Yes, I agree there is plenty of variety within Carnival Corp., but that is only because Carnival purchased the majority market share of the cruise industry. They are superb at buying established brands and expanding them, but not very adapt at starting anything from scratch.

Many of the concepts that exist within Carnival Corp. cannot be credited to Carnival. Aida for instance started well before Carnival purchased the line. Carnival can hardly be credited for the innovative concept of Aida although they were smart enough to buy the line and expand it.

Royal Caribbean on the other hand can be attributed with many innovations onboard their ships. These are innovations that are customer facing (not technical) and not offered on any other brand. The list goes on and on. You may not consider them innovations, but I do. Royal Caribbean has a finesse with incorporating these innovations into the ship design in a seamless way. That in itself I consider very innovative.

Ernie

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quote:

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Originally posted by VanGogh (Tom...):

Dont forget the innovativeness of Queen Victoria and Queen Elizabeth 3 (or is it?)!

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Oh yes, thanks for reminding me. Those Vista's are very innovative!

quote:

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Originally posted by eroller:

I guess we can agree to disagree. For the most part I find that Carnival plays it safe, and this is part of their success.

I would love to know what you find innovative about Carnival? I can think of two things.

1. first ship with Azipods
2. taking the Cunard brand to the next level with QM2

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Carnival was the first cruise line with a podded vessel but I would not attribute that to Carnival.

It is indeed their strategy to buy cruise lines and take them to 'the next level' - they did that with most of the brand they bought and not only with Cunard. QM2 is IMHO not a good example as she is 'just' fast and large but hardly 'innovative', the new Aida ships (and the were launched when Aida was part of Carnival) on the other hand have many rather innovative features.
Being innovative is however not only about ship design - many people are involved in that and it is not all done by the cruise lines themselves.(which is why not all innovations can be attributed to the line which is featuring them for the first time - this is true for Carnival as well as for RCI)

quote:

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Originally posted by eroller:

I can't really think of anything else, how about you?

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As said above, talking about ship design the new Aida ships would come to my mind. However, as said above, it is not only about the hardware - and the 'core business' of a cruise line is actually to operate cruise ships and not to build them. Carnival is offering many, many different and sometimes also rather innovative itineraries, Carnival is present in and is pioneering many markets - and this IS also a way to be innovative - it's not only about putting new gimmicks aboard ships.

quote:

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Originally posted by eroller:

Yes, I agree there is plenty of variety within Carnival Corp., but that is only because Carnival purchased the majority market share of the cruise industry.

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Which is just another strategy to expand.

quote:

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Originally posted by eroller:

They are superb at buying established brands and expanding them, but not very adapt at starting anything from scratch.

Many of the concepts that exist within Carnival Corp. cannot be credited to Carnival. Aida for instance started well before Carnival purchased the line.

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And like Cunard, they took it to another level. Aida with all it's creativity IS now part of Carnival - like all the other brands. Finally, what is in this context (who is more creative?) the difference between hiring innovative/creative personnel and buying companies with innovative/creative personnel?

quote:

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Originally posted by eroller:
Carnival can hardly be credited for the innovative concept of Aida although they were smart enough to buy the line and expand it.

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It actually requires quite some talent and creativity to do that.

quote:

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Originally posted by eroller:

Royal Caribbean on the other hand can be attributed with many innovations onboard their ships. These are innovations that are customer facing (not technical) and not offered on any other brand.

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Wait a moment - I actually pointed out in my posting above that it is NOT only about the hardware. (I was not even talking about technical details like podded propulsion)

quote:

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Originally posted by eroller:

The list goes on and on. You may not consider them innovations, but I do. Royal Caribbean has a finesse with incorporating these innovations into the ship design in a seamless way. That in itself I consider very innovative.

Ernie

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I never said that RCI is not innovative nor do I say that Carnival is 'more innovative' or 'more creative'. It's just totally inadequate to say that Carnival is 'lazy and unimaginative', uncreative or not innovative at all.

P.S.: ad Vista class ships: As much as I hate to say it: Using the same class of ships for different brands is actually an innovation. As far as I know, this has not been done before and it seems to work out for Carnival.

[ 11-05-2008: Message edited by: Ernst ]

That the Carnival share price is less volatile than RCCL probably reflects the following:

- Carnival is less highly geared and therefore not as exposed to tight credit markets

- Carnival's business model is more able to sustain profits through upcoming turbulent economic times. This would tend to be supported as Carnival is more globally diversified so it is not as dependant on US economy, it is not currently engaged in a massive increase in berth numbers and it has been better able to control the increase in its operating costs in the past couple of years.

The stock market isn't judging which is the better cruiseline, it is judging which it sees as the better business!

quote:

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Originally posted by Ernst:

It's just totally inadequate to say that Carnival is 'lazy and unimaginative', uncreative or not innovative at all.

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I never said that.

quote:

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Originally posted by Ernst:

As said above, talking about ship design the new Aida ships would come to my mind.

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Yes, they are innovative but again the Aida concept was already well in place when Carnival purchased Aida. The new Aida ships are just expanding an existing concept. How about an innovation that was actually started and created by Carnival inself? Can you provide some of those examples?

quote:

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Originally posted by Ernst:

Aida with all it's creativity IS now part of Carnival - like all the other brands.

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Yes, true ... but again the creativity and concepts for Aida existed well before Carnival took over. I hardly give Carnival credit for Aida's concept just because they purchased a cruise line where immense creativity already existed. Maybe we should give NCL credit, they owned Aida at one time as well. Carnival made a smart business decision based on what their accountants advised them. I don't consider that innovative, just smart thinking on the part of Carnival accountants.

quote:

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Originally posted by Ernst:

Carnival is offering many, many different and sometimes also rather innovative itineraries

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Lot's of cruise companies offer itineraries equal to or better than Carnival Corp. I certainly don't find anything innovative about the majority of itineraries Carnival offers. The core of Carnival itineraries are 7-day Caribbean, 7-day Mexico, 7-day Alaska, and European sailings. Sure Seabourn may offer some off the beaten track itineraries, but so do Regent, Crystal, Silversea, etc. etc. I don't see any of Carnival's itineraries being so unique and different that they stand out from the crowd.

quote:

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Originally posted by Ernst:

It actually requires quite some talent and creativity to do that.

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I don't agree. I mentioned that it doesn't take much creativity to purchase a cruise line and you replied with the above. Perhaps some talent in the accounting department, I'll give you that but otherwise I don't think a corporate buy- out takes much creativity.

quote:

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Originally posted by Ernst:

Vista class ships: As much as I hate to say it: Using the same class of ships for different brands is actually an innovation. As far as I know, this has not been done before and it seems to work out for Carnival.

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What I find much more innovative than using the same class of ship for multiple brands, is using the same hull design and capturing those synergies, but truly adapting the rest of the hardware for a specific brand. Great examples of this are the Millennium and Radiance Class of Royal Caribbean and Celebrity. Many synergies regarding hull design, propulsion, and layout were used on these two classes of ships. RCCL took advantage of a similar design and used many parts of it for two different brands, but made the ships different enough that anyone looking at them would never guess they are related. That is what I consider innovative.

As I said earlier, we obviously have some fundamental differences of what we consider innovative. That is fine. You are certainly not going to change my mind and I doubt I will change yours, so we can agree to disagree and move on.

RCI are obviously very good at marketing and on board innovations. The do build some nice ships - that said there are some pretty well ordinary ships in their fleet to - personally I have never gone wild about the Vision class. Other than being slightly bigger than the Sovereigns there was nothing really special about them. There are some real downsides to RCI IMHO, I am not convinced that they really are able to think ahead, they seem to build ships as the market goes down (not just recently either), they seem to make investments that just don't pay off more often than other players. So yes great ships - but the vision required to be #1 is not there.

Carnival. Well yes you have to look harder for real innovation and it is of a different sort. Absolutely using cokkie box cutter or clone ships across multiple brands in the way they have is not only innvoation but a revolution. The Fantasy class, when they announced they were going to build 8 of them the whole industry sat up in disbelief, and the way they are now going back to these ships and extending the life of them is innovative. The creativity and imagination needed to sit there and not only build CCL but to look beyond and build other brands is hugely innovative, not only to buy them but to improve them. A company that takes Cunard then builds QM2 is hardly short of ideas, imagination and innovation.

So one final question.

quote:

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Originally posted by eroller:

quote: originally posted by Ernst:

It's just totally inadequate to say that Carnival is 'lazy and unimaginative', uncreative or not innovative at all.

I never said that.

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No, you never said that but Patsy did. That's how this discussion started. (!!) As said - and it seems as if this is not getting across - I am NOT saying that Carnival is more innovative etc. - all I said is that it is inadequate to call them 'lazy and unimaginative' and that Carnival is indeed also innovative.

quote:

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Originally posted by eroller:

Lot's of cruise companies offer itineraries equal to or better than Carnival Corp. I certainly don't find anything innovative about the majority of itineraries Carnival offers. The core of Carnival itineraries are 7-day Caribbean, 7-day Mexico, 7-day Alaska, and European sailings. Sure Seabourn may offer some off the beaten track itineraries, but so do Regent, Crystal, Silversea, etc. etc. I don't see any of Carnival's itineraries being so unique and different that they stand out from the crowd.

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Again, all I said is that the variety of itineraries of all Carnival brands is more diverse than the itineraries of the RCI brands. I know that there are lines that offer MUCH better itineraries. Crystal BTW would not come to my mind - their usually boring and unimaginative itineraries are one of their weak links.

[ 11-06-2008: Message edited by: Ernst ]

quote:

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Originally posted by mike sa:

If I gave you $100,000 and said you must buy cruise line stock and keep it for 2 years - whose stock would you buy ?

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I don't think anyone is posing an argument as to which company is more successful. That is common knowledge. Personally I choose not to invest in any cruise line. I don't think they are the wisest investment, and better returns can be had in a variety of other industries.

quote:

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Originally posted by Ernst:

Again, all I said is that the variety of itineraries of all Carnival brands is more diverse than the itineraries of the RCI brands. I know that there are lines that offer MUCH better itineraries. Crystal BTW would not come to my mind - their usually boring and unimaginative itineraries are one of their weak links.

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That is possible for one reason, because Carnival is larger and has more brands. This being said, considering how large Carnival is and how many ships they have, I think they could be substantially more innovative with their itineraries. For the most part they play it safe, hitting the tried and true destinations. Again, very smart for business but not necessarily innovative IMO.

As for Crystal, they have had many itineraries over the years I have found quite interesting. I have wanted to sail on the line for years so I look at where they go. My reason for not sailing on Crystal has nothing to do with the itineraries, but is because I feel they are overpriced. I also realize there are limitations to where they can go based on the size of their ships, and the fact they only have two. They have to pick and choose very carefully, always trying to offer something new for repeat clientele but appealing to a new audience at the same time.

(You can substitute British, or German, or whatever you like for "American," this is not a dig at US citizens).

That is exactly why Carnival's share price is performing better than Royal Caribbean's.

quote:

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Originally posted by mike sa:
If I gave you $100,000 and said you must buy cruise line stock and keep it for 2 years - whose stock would you buy ?

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RCL brands are all the same. Celebrity has been dumbed down, Azamara is poorly marketed and mostly unknown to the traveling public. RCCL was much better when they were a single line.

quote:

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Originally posted by sunviking82:

CCL is raising the bar, while RCL is building gimics.

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To each his own. I feel Carnival Corp. has lowered the bar on many levels while RCCL has raised it.

We are all entitled to our opinions and we should be thankful we still have so many choices. If you don't like a particular brand, there are plenty of others to choose from.

quote:

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Originally posted by mike sa:
From Cruise Community

So here is the Q.

OK so we understand why but why is it that it seems to me that RCI always drops faster than CCL and gains less than CCL - and if so why don't RCI change their business model ?

I mean if it ain't broke don't fix it but if it is not performing.........................?

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Easy answer - Both companies carry an almost identical debt load but:

1) RCCL's debt to equity ratio is DOUBLE that of CC's.

2) RCCL's debt is roughly the same as CC's while their revenues are less than HALF of CC's.

3) RCCL's earnings are roughly 25% of CC's.

4) RCCL's margins are historically @10-12% while CC's are typically in the 20% range.