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Company Profile of Royal Caribbean International

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Company Profile of Royal Caribbean International
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Pratik Kukreja
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Company Profile of Royal Caribbean International - May 13th, 2011

Royal Caribbean International is a Norwegian / American cruise line brand based in Miami, Florida and owned by Royal Caribbean Cruises Ltd.. With 42 ships in service under 5 different brands and one more under construction, it controls a 25.6% share of the world cruise market. All ships since 1991 have names ending in "of the Seas."

Royal Caribbean Cruises Ltd. is the world's second largest cruise company (behind top-ranking Carnival Corp.) with 17 cruise ships and a total of 29,100 passenger berths as of September 1997. Founded in 1969, the company has been instrumental in changing the cruise industry from a trans-ocean carrier service into a vacation option in and of itself. Royal Caribbean offers over 80 different itineraries and its ships call at more than 140 destinations in the Caribbean, Bahamas, Mexico, Alaska, Europe, Bermuda, Panama Canal, Hawaii, New England, China, and Southeast Asia. The company, a Liberian corporation, operates under two separate brands, Royal Caribbean International (12 ships) and Celebrity Cruises (five ships). While the company operates globally in terms of its itineraries and destinations, the majority of its passengers are from North America. Selling its cruises almost exclusively through some 30,000 independent travel agencies worldwide, the company targets the upper end of the volume market and the lower end of the premium market. The company also operates two private destinations, one in Haiti and one in the Bahamas, and two on-shore Crown and Anchor Clubs. Members of the Wilhelmsen family of Norway and of the Pritzker and Ober families in the U.S. control a majority of the stock.
Royal Caribbean Cruises Ltd. (Royal Caribbean), incorporated on July 23, 1985, is a cruise company. As of December 31, 2010, it operated 40 ships in the cruise vacation industry with approximately 92,300 berths. The Company’s brands include Royal Caribbean International, Celebrity Cruises, and Azamara Club Cruises along with its Pullmantur brand, which serves the cruise markets in Spain, Portugal and Latin America and its CDF Croisieres de France brand, which serves the French market. In addition, the Company has a 50% investment in a joint venture, which operates the brand TUI Cruises, which specifically serves German market. The Company’s ships operate worldwide in approximately 420 destinations.
Royal Caribbean International
As of December 31, 2010, the Company operated 22 ships with approximately 62,000 berths under its Royal Caribbean International brand, offering cruise itineraries that range from 2 to 18 nights. Royal Caribbean International offers a variety of itineraries to destinations worldwide, including Alaska, Asia, Australia, Bahamas, Bermuda, Canada, the Caribbean, Europe, Hawaii, the Middle East, the Panama Canal, South America and New Zealand. In October 2010, Royal Caribbean International took delivery of the sister ship, Allure of the Seas. In addition, during the year ended December 31, 2010, Royal Caribbean International introduced DreamWorks Animations themed activities onboard certain ships and the first Starbucks Coffee at sea onboard Allure of the Seas.
Celebrity Cruises
As of December 31, 2010, the Company operated 10 ships with approximately 20,500 berths under its Celebrity Cruises brand, offered cruise itineraries that ranged from 2 to 17 nights. Celebrity Cruises offers a variety of cruise lengths and itineraries to premium destinations throughout the world, including Alaska, Australia, Bermuda, the Caribbean, Europe, New Zealand, the Panama Canal and South America. Celebrity Cruises also operates a ship in the Galapagos Islands, Celebrity Xpedition. Celebrity Xpedition has 96 berths and provides experience on 7 day cruises with pre-cruise tours in Ecuador.
Azamara Club Cruises
As of December 31, 2010, the Company operated two ships with a total of approximately 1,400 berths under its Azamara Club Cruises brand, offered cruise itineraries that range from 4 to 17 nights. Azamara Club Cruises is designed to serve the up-market segment of the North American, United Kingdom, German and Australian markets. Azamara Club Cruises sails in Asia, Western & Northern Europe, the Mediterranean, South America, the Panama Canal and the less-traveled islands of the Caribbean, with more overnight and late-night stays in every region.
Azamara Club Cruises offers a range of onboard services, amenities and activities, including gaming facilities, fine dining, spa and wellness, butler service for suites, as well as interactive entertainment venues. Starting in April 2010, Azamara Club Cruises also includes, as part of the base price, certain onboard services, amenities and activities, such as wine with lunch and dinner, bottled water, soda, premium coffees and teas, gratuities for housekeeping and dining/bar staff, self-service laundry and shuttle buses for certain ports.
As of December 31, 2010, the Company operated five ships with approximately 7,650 berths under its Pullmantur brand, offering seven-night cruise itineraries. Pullmantur serves the contemporary segment of the Spanish cruise market and continues to expand into the Portuguese and Latin American cruise markets. Pullmantur has land-based tour operations and owns a 49% interest in an air business that operates 4 Boeing 747 aircrafts in support of its cruise and tour operations. Pullmantur offers a range of cruise itineraries to the Baltic, Brazil, the Caribbean, the Mediterranean, Mexico and Portugal. Pullmantur offers a range of onboard activities and services to guests, including exercise facilities, swimming pools, beauty salons, gaming facilities, shopping, dining, certain complimentary beverages, and entertainment venues. Pullmantur’s tour operations sell land-based travel packages to Spanish guests, including hotels and flights primarily to Caribbean resorts, and land-based tour packages to Europe aimed at Latin American guests.
CDF Croisieres de France
As of December 31, 2010, the Company operated one ship, Bleu de France, with approximately 750 berths under its CDF Croisieres de France brand, offering 4 to 10 night cruise itineraries. CDF Croisieres de France is designed to serve the contemporary segment of the French cruise market. In November 2010, Bleu de France was sold to an unrelated party. As part of the sale agreement, the Company chartered Bleu de France from the buyer for a period of one year from the sale date in order to fulfill existing guest commitments. At the end of the charter period, Pullmantur will redeploy Horizon to CDF Croisieres de France and prior to its redeployment the ship will undergo renovations to incorporate signature brand elements. CDF Croisieres de France offers seasonal itineraries to the Mediterranean. CDF Croisieres de France offers a range of onboard services, amenities and activities, including entertainment venues, exercise and spa facilities, fine dining and gaming facilities.
TUI Cruises
In 2008, the Company formed a joint venture with TUI AG, a European tourism and shipping company which owned 51% of TUI Travel. The joint venture operates TUI Cruises, designed to serve the contemporary and premium segments of the German cruise market by offering a custom-tailored product for German guests. All onboard activities, services, shore excursions and menu offerings are designed to suit the preferences of this target market. TUI Cruises operates one ship, Mein Schiff, with a total of approximately 1,850 berths. As of December 31, 2010, the Company would be selling Celebrity Mercury to TUI Cruises to serve as its second ship.

Royal Caribbean's offerings in the Caribbean also included stops at two private company-operated destinations: CocoCay, an island in the Bahamas owned by the company, and Labadee, a peninsula on the north coast of Haiti leased by the company. Passengers could shop at artisan markets, eat picnics along the beach, and windsurf, snorkel, and sail. In 1995 the company added to these the industry's first on-shore club, the Crown & Anchor, at St. Thomas in the U.S. Virgin Islands.
In December 1995, a series of class-action suits were filed alleging that the company misrepresented to its passengers the amount of its port charge expenses. These were followed in 1996 with class-action suits alleging that seven cruise lines, including Royal Caribbean, should have paid commissions to travel agents on port charges included in the price of cruise fares. In February 1997, Royal Caribbean and other companies agreed that all components of the cruise ticket price, other than governmental taxes and fees, would be included in the advertised price.
During 1996, some 973,000 passengers went on Royal Caribbean cruises, over 100,000 more than sailed in 1995. That year saw the sale of another of the company's original ships, the Song of Norway, for $40 million (a gain of $10.3 million), and the establishment of the $1 million Royal Caribbean Ocean Fund.
In July, Royal Caribbean bought Celebrity Cruise Line Inc. for $515 million. Celebrity became a wholly-owned subsidiary and continued to operate under its own brand name. Celebrity served the premium cruise vacation market, owned five ships with approximately 8,200 berths, and offered 40 different itineraries ranging from six to 18 nights, and stopping in over 50 ports in Alaska, Bermuda, the Caribbean, and through the Panama Canal. The addition of Celebrity Cruises greatly enhanced the company's presence in the premium, destination market of one- and two-week cruises, and its acquisition increased Royal Caribbean's total market share in 1996 to approximately 27 percent of the 4.7 million North Americans who went on cruises that year.
Royal Caribbean continued its capital expansion program by contracting for two Eagle-class ships to be delivered in the fall of 1999 and 2000. These were to be the largest passenger cruise ships built to date, each weighing 130,000 tons and accommodating 3,100 passengers, and were being designed to attract families and those seeking active sports and entertainment activities. Among the planned amenities: rock climbing facilities, conference centers, and a wedding chapel.
During January 1997 a new television advertising campaign debuted, introducing a new brand identity--Royal Caribbean International--and presenting Royal Caribbean as a global vacation brand with a focus on worldwide cruise vacations. That same month, the company and two of Hyatt Hotels' Puerto Rican properties began jointly marketing what was a first in the Caribbean, a week-long vacation package that included both a cruise and a stay at a hotel. To attract new passengers, Royal Caribbean also marketed its vessels as conference sites for groups ranging from romance writers to dental anesthesiologists, and combined cruising and golf with Golf Ahoy!, a shore excursion program for people who would rather play golf than shop, sunbathe, or sightsee. And to help passengers finance their cruise, the company announced "CruiseLoans," allowing people to charge all the expenses, including upgrades, excursions, and on-board spending. The program was administered by Citicorp's Citibank NA.
In the fall of 1997, the company sold $9 million of stock to repay some of its debt and announced it would sell the Sun Viking, its smallest ship and the last of its original three vessels, to Star Cruises for $30 million. At the same time, Celebrity Cruises took delivery of the 1,850 berth Mercury, the last of a five-ship expansion program begun in 1990, bringing its total fleet capacity to some 8,200 berths.
With its two brands, Royal Caribbean Cruises, Ltd. had strong name recognition in both the popular, warm-weather vacation market and the seasonal cruise market. Its new ships received press attention because of their size and facilities. Between 1996 and 2000, the company expected to increase its berth capacity by 102 percent, to 38,000. And other cruise lines were doing the same, as industry capacity was expected to grow 12.4 percent in 1998 and 11.7 percent in 1999, according to the Cruise Line Industry Association. With the number of passengers growing only at an average 7.6 percent a year since 1981, Royal Caribbean Cruises would need to use all its creativity and traditional service quality to attract new passengers to cruising in order to fill their ships.
Principal Subsidiaries: Celebrity Cruise Line Inc.

Beta: 2.91
Market Cap (Mil.): $8,899.45
Shares Outstanding (Mil.): 430.68
Annual Dividend: --
Yield (%): --
RCL Industry Sector
P/E (TTM): 16.21 53.00 21.07
EPS (TTM): 91.32 -- --
ROI: 3.51 0.73 1.78
ROE: 7.01 1.12 2.74

Public Company
Founded: 1969
Employees: 12,500
Sales: $1.4 billion (1996)
Stock Exchanges: New York
SICs: 4481 Deep Sea Passenger Transportation, Except By Ferries

Name Age Since Current Position
Richard Fain 63 1988 Chairman of the Board, Chief Executive Officer
Brian Rice 52 2006 Chief Financial Officer, Executive Vice President
Adam Goldstein 51 2007 President and Chief Executive Officer - Royal Caribbean International
Daniel Hanrahan 53 2009 President and Chief Executive Officer - Celebrity Cruises
Gonzalo Chico Barbier 50 2008 President and Chief Executive Officer - Pullmantur
Lawrence Pimentel 59 2009 President and Chief Executive Officer - Azamara Club Cruises
Harri Kulovaara 58 2005 Executive Vice President - Maritime
Michael Bayley 52 2010 Executive Vice President - International
William Reilly 71 1998 Director
Bernard Aronson 64 1993 Independent Director
Laura Laviada 60 1997 Independent Director
Eyal Ofer 60 1995 Independent Director
Thomas Pritzker 60 1999 Independent Director
Gert Munthe 54 2002 Independent Director
William Kimsey 68 2003 Independent Director
Arne Wilhelmsen 45 2003 Independent Director
Bernt Reitan 63 2004 Independent Director
Morten Arntzen 56 2008 Independent Director

1050 Caribbean Way
Miami, Florida 33132

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