Carnival Corporation is seeing revenue from its fleet again, and it’s not just because ships are finally able to accommodate paying guests again.
It turns out that once on board, passengers make up for lost time (and cruises) by opening their wallets and spending on discretionary items not included in the price of their cruise fare.
What do cruisers spend money on
On a recent earnings conference call, Carnival Corporation President and CEO Arnold Donald was pleased to say that companies “onboard revenue per guest are off the charts.” And it is in part because of this increase in spending that the executive predicted that “we expect the cash flow from operations for the whole company to turn positive at some point in the start of the year. ‘next year”.
READ: Mardi Gras Trip Report, Day 1
CFO David Bernstein became more specific about onboard revenue, saying the increases came mainly from “the bar, casino, shops, spa and the internet.” And indeed, our own experiences and those of Cruise Radio readers would indicate that to be true.
Cruise Radio reader Brian Lawson told us, âWhen I was on board Horizon CarnivalIt was not possible to find a spa or a steakhouse reservation. We both pre-booked for our Thanksgiving browsing on Sunrise. “
Earlier this summer, we encountered the same reservation issue while sailing aboard Carnival Cruise Line’s brand new ship, Mardi Gras. And it is important to note that both Horizon and Mardi Gras are currently sailing at reduced capacity, which means fewer people are vying for those reservations.
(Note: While it’s also true that in many cases restaurants have fewer reservations available to meet social distancing requirements.)
Customers have a “fresh wallet”
During the earnings call, Bernstein said vessels in service in the last quarter were, in fact, positive cash flow, generating nearly $ 90 million in vessel-level cash contributions. âWhen people come on board,â he explained, âthey really have a new wallet. All in all, this encourages more spending on board. “
What exactly is a ânew portfolioâ?
Essentially, it refers to the fact that by the time the passengers board the ship, they have already paid for the cruise itself. Essentially, they feel more free to spend on discretionary items like specialty restaurants than they could if they were billed for the full cost of shipping at the end of the trip.
READ: Carnival posts $ 2 billion loss, now cash flow positive
Looking ahead, Bernstein pointed out that other facts will increase the line’s cash flow, especially when comparing new ships such as Mardi Gras or the next one Carnival celebration older ships, including some that have been decommissioned.
On the one hand, newer ships have a higher number of balconies, which sell for a higher price than interior or ocean-view cabins.
In addition, he stressed that newer ships have “more income opportunities on board because there is more public space in larger ships”. In other words, they can easily add paid places such as Mardi Gras‘Seagrill by Rudi.
To date, the company has carried over half a million passengers since the restart, with 50,000 guests aboard one of their brands every day.
And that number – along with the corresponding cash flow from onboard expenses – will only increase as more ships return to service, with Carnival hoping to see its entire fleet sail by spring 2022.