Despite the highest net revenue yields in the company’s history, Royal Caribbean Cruises Ltd. (RCCL) said fuel costs have forced them to eliminate 400 shoreside positions, 100 of which were already vacant, with a goal to cut operating expenses by $125 million annually. RCCL projects spending $772 million on fuel in 2008 if the current rates hold.
Many of the employees laid off were reportedly high-level executives, although Vicki Freed, senior vice president, sales, said, “We have not decreased our Business Development Manager (BDM) support for our travel partners and actually will call on more travel partners in 2009 by expanding the reach and territories that our BDMs currently call on.”
Freed also said agent co-op funds for next year will be greater than this year’s, as Royal backs the distribution channel.
Richard Fain, RCCL chairman and CEO, said the company was “deeply disappointed” to eliminate the positions. He added that the criteria were to cut positions without jeopardizing the quality of the product or the support of agent partners.
Load factors and pricing for 2009 are ahead of the same time last year, fares are up and executives are seeing close-in strengthening of demand in the Caribbean. New ships coming in are commanding higher revenues and have greater fuel efficiency.
Adam Goldstein, president and CEO of Royal Caribbean International, reported that the company is intensely reviewing itineraries, hewing a line between fuel savings and consumer satisfaction.
Dan Hanrahan, president of Celebrity Cruises and Azamara Cruises, said he is seeing a good late season building in Alaska and that Caribbean and Panama Canal itineraries are exceeding projections. He said the 18 percent additional retail space on Solstice ships is expected to boost the onboard spend.
RCCL’s net income for the second quarter was $84.7 million compared to $128.7 million in the second quarter of 2007. Net yields rose 1 percent, lower than the 2 percent forecast because of the economic climate in Spain
impacting the Pullmantur brand. Overall net income for the first six months was $160.3 million compared to net income of $137.6 million for the same period last year.