Royal Caribbean Cruises is a cruise company. Co. owns Royal Caribbean International, Celebrity Cruises, Pullmantur, Azamara Club Cruises, and CDF Croisieres de France and a 50.0% joint venture interest in TUI Cruises. Co.'s ships operate on a selection of worldwide itineraries that call on approximately 490 destinations. As of Dec 31 2013, Co. operated 41 ships with approximately 98,750 berths. Co.'s cruise brands provide onboard services, amenities and activities including gaming, the sale of alcoholic and other beverages, gift shop items, shore excursions, photography, spa/salon and fitness services, art auctions, catalogue gifts for guests and a range of restaurants and dining options.
RCL’s moat is based on its oligopolistic position. Royal Caribbean, Carnival, and Norwegian, which combined control nearly 90% of the North American cruise market. RCL’s brand and unique assets (their ships) give them a competitive advantage. The capital-intensive nature of the business also discourages potential competitors without deep pockets or the ability to obtain significant amounts of financing from attempting to take share in the segment.
Royal Caribbean reduced its 2015 earnings projection. The company's reduced outlook is mostly due to the strengthening U.S. dollar. A stronger domestic currency makes revenues earned abroad less valuable in dollar terms, which is particularly harmful in the cruise line industry owing to its global nature. The company expects to make billions of dollars in capital expenditures in the coming years, in addition to elevated levels of capital spending. The rise in capacity should be especially accretive to profits, as new ships yield significantly more revenue per berth (occupancy unit) while costing less to run. These shares have solid long-term appreciation potential.
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Major brands addressing diverse customer segments
Strong market presence in major cruise markets
Significant level of indebtedness may impact the company’s financial flexibility
Stringent environmental legislation and regulations
Intense competition could affect the company's growth
Partnership with Ctrip.com may help RCL in its expansion efforts in the Chinese cruise market
Favorable trends in global cruise industry
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