It was a light week for Royal Caribbean International news.

The line signed a 10 year agreement with Port Everglades in Ft. Lauderdale.  It codifies a previously announced agreement to stage both Oasis of the Seas and her future sister ship Alure of the Seas out of the port.  Port Everglades is in the process of a massive upgrade to the piers to be used, effectively create new, custom facilities for Royal Caribbean.  There is long-term talk of an area people-mover system, consisting of bus and light rail systems.  The system would connect the port, airport, and other major areas.   The increase in traffic to Port Everglades means it will overtake Miami as the busiest passenger port in north America.

The other news came from the quarterly earnings report.  Each report comes with a conference call, which is where the company officers make statements, put the report in context, and field questions.  Royal Caribbean made it through the quarter in good shape.  For the chaos that we have seen in the economy, the line actually improved on what it had expected.  It was noted there has been a sharp decline in bookings during recent weeks.  This isn’t shocking, given the crash of stocks, fears about the global economy, and debate over the U.S. government bailout efforts.

There was no panic from Royal Caribbean, nor has any been seen in the wider industry.  Carnival is ending its dividend on stocks, shifting some ships around.  However Royal Caribbean seems to not have any such issues.  Steve Kent, an analyst at Goldman Sachs posed a pair of poorly structured questions which seemed to do much to illustrate an equally poor grasp of the industry.  First, he couldn’t grasp why the foreign exchange rate was suddenly a big factor at the close of quarter 3, when it hadn’t been for months prior.  This seems to miss the point that the U.S. dollar only started its rise against other currency during recent weeks, so naturally it wouldn’t have shown in previous results.  Then he seemed more frustrated the world wasn’t listening to him by commenting “Just one other thing, Richard, and given what’s going on, why not just commit right now to not building any more ships. We have seen the benefit in the Caribbean of low supply, you have seen it on the pricing, even before this, I guess I still struggle with both companies and even the private companies, why not just slow down the CapEx finally. It’s obviously a benefit, there is not capital out there. The demand is not there. I am completely frustrated. I don’t get it anymore why neither company will commit to this.”

Evidently he seems to think that ships are built by a clap of the hands, or can be canceled weeks before delivery, like George Soros did when he tried to get Richard Fain to cancel Sovereign of the Seas a month before it was completed.  Fain made the common sense point that you can’t know the future and this industry can’t revolve around the panic of the moment.  You don’t build ships based on what is happening right now, you do it based on the future.  Plus, the industries well known numbers, which any capable and intelligent analyst might have read, clearly point to an industry no even close to its inevitable growth limits.

To be fair, he was also pointing out that demand typically drives prices.  If you have limited demand in the Caribbean, logically prices rise, which is theoretically what you want to happen as an investor.  An astute observer will note that if demand and price rise too high, and people can not find berths or afford them, you kill the market.  Kent’s line of questioning seems to hint at a lack of in-depth understanding of the industry, beyond the bottom line.
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Royal Caribbean International revealed the last “neighborhood” aboard the forthcoming Oasis of the Seas.  The Youth Zone, already a staple on RCI’s fleet of ships, grows even larger on the Oasis.  At over 28,700 square feet, The Youth Zone will feature a first with the Royal Caribbean fleet.  An infant nursery, able to accommodate children as young as 6 months will be featured.  It is an area not emphasized by the line in the past, and indeed, children under age three were the full-time responsibility of their parents.  Now however, parents can enjoy time to themselves without having to bring family with them.  I know that has prevented Liz and I from cruising as a couple over the past few years.  There is no word on if this feature will find its way into older ships within the fleet, but it would not be surpising to see it spread during the years to come.

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Ask me not where, ask me not when, but word is emerging this morning, that the final neigaborhood reveal for Oasis of the Seas will be tonight.  It is said to be another “virtual reveal” in conjunction with American Express, the last of which involved a series of online forums which broadcast the details.  Royal Caribbean International staffed smaller break-out rooms for more focused chat.

In all, it was a fun time.  However, as of this writing, no word is out yet as to when, or through which website this will occur.

www.RoyalCaribbeanFan.com  -  www.OasisoftheSeas.com - www.CruiseAficionados.com

Dubai.  They have money in Dubai.  A lot of money.  Now they will have Royal Caribbean International’s Brilliance of the Seas from January 2010, through April of that year.  This is the first time Royal Caribbean has ventured into this specific area of the Middle-east.  No word in the press release as to where the ship will sail as yet.

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Royal Caribbean’s role in one of its lesser known ventures, Island Cruises, is being ended. Island Cruises was run jointly with a British travel firm, and presently involves two ships. The Island Star, formally the Celebrity Horizon and owned by Royal Caribbean, is being sent to the Pullmantur fleet and the Spanish market. Island Escape, the former Viking Serenade, is owned by Royal Caribbean’s partner, TUI UK & Ireland, and will be sent to Thomson Cruises next year.

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