Royal Caribbean Cruises Ltd. Bunker World Conference May 5, 2010

Transcription

1 Royal Caribbean Cruises Ltd. Bunker World Conference May 5, 2010

2 Agenda Cruise Industry Overview Success Factors Growth Opportunities Emissions Control Impact Current Issues

3 Challenging Macro Economic Factors US Annual Unemployment Rate *Source: U.S. Bureau of Labor Statistics Earthquakes in Japan, New Zealand, and Chile Geopolitical instability in the Middle East Recession, Economic Crisis, Credit Issues Volcanic Ash / European Airspace Record high Fuel Prices (Q1)

4 Continuous Growth Cruise Lines International Association (CLIA) Total CLIA Ships Passengers (in Millions) Average Passenger Growth Rate *Source: Cruise Lines International Association

5 Cruise Industry Fundamentals Focus on guest satisfaction leading to repeat business Providing better vacation value compared to land resorts Competing in a global market for cruise passengers Ability to move our assets to different part of the world to maximize revenue

6 Success Factors Value Accommodation, Transportation, Meals, Entertainment, Variation of Destinations Sightseeing Vacation Penetration 3.1% Americans, 2.6% UK, 1.8% Australia, 1.2% Continental Europe, and 1% Asia Innovation Destination Partners Port Partners Ships

7 US & International Growth 25 North America 52% PCDs (millions) 20 48% International Year Note: includes Royal Caribbean International, Celebrity Cruises, Azamara Cruises, Pullmantur & CDF

8 Royal Caribbean Cruises LTD RCL Advantages Premium Hardware as a % of Total Strong Brands 60% Superior Fleet Fuel Strategy % of Total Capacity 50% Oasis Class 40% Solstice Class 30% 20% Freedom & Voyager 10% 0%

9 Major Components of RCL Fuel Strategy 1 Long Long Range Range Demand Demand Planning Planning Procurement Procurement Secure guaranteed supply of fuel Negotiate for most competitive contract price Opportunistically use the spot in certain markets Determine optimal supply location Logistics Logistics Coordinate nomination and delivery of fuel Provide critical communication link between vessel and supplier Manage ships demand with local availability Risk Risk management management & & trading trading Contract for fixed price supply to protect from volatility Enter into financial hedges to protect from volatility Physical (barrels) and/or financial (paper) trading Demand Demand management management Establishing consumption budgets Monitoring actual consumption Driving conservation strategies Model Demand by Port 36 months out for hedging Firm up models 6-12 months out for procurement

10 Fuel Hedging Initiatives Percent of fuel consumption hedged 58% 55% 40% 10%

11 The Cost of ECA Compliance Shipping companies and consumers Business to Business model vs. Business to Consumer Port and destination partners Deployment strategy based on ECA variable Operational Issues Sourcing challenges Segregation and capacity of fuel tanks Proposed ECA s 2012 N America ECA 1%, Caribbean ECA 1% 2015 N America, Europe, & Carib ECA steps down to 0.1% 2020 global cap goes into effect limiting sulphur to 0.5%

12 Emissions Mitigation 1. Improve fuel efficiency More fuel efficient new build design Adjusting vessels speed and itinerary Optimizing maintenance (hull, prop, engines, HVAC, etc.) Deployment strategies 1. Alternative fuels & energy sources Solar Biodiesel Evaluated many others (shore power, fuel cell, wind, etc.) 1. Abatement Technologies In the process of testing promising technologies ( Scrubbers) Issues with both open & closed looped systems Water treatment is a major issue for cruise ships Equivalencies ( averaging, banking, & Trading)

13 Increasing Fuel Efficiency Fuel Consumption (Metric tons per 1000 pax per day) Focus on reducing fuel consumption Installed diesel generators on Millennium and Radiance classes for low power demand Various projects implemented across the fleet Window film to reduce heat Silicon hull paint Trim Optimization Slow steaming by adjusting hours in certain ports 2011 est

14 Current Issues Fuel Quality, Fuel Quantity, and On time Delivery Current Issues

15 The Buffet in Bunkers Service