Royal Caribbean Admits Failures
Layoffs For 300 Top List
July 21, 2008
It was kind of like George Bush saying on national television that the economy was strong. Then, only two weeks later things begin to crash, and crash hard. For two years, we have been buzzing here about the economic decline, food prices rising 25% then 50%, then 50% with a reduction in package size of 25% or more. Nobody seemed to notice, that we were falling as a nation, and the poor were getting poorer in record numbers, like none I had seen in half a century.
They didn't blame home loses on rising fuel and food prices. Oh no, that might have triggered panic. So, instead the subprime mortgage industry took the entire fall for the failing American economy.
The writing was on the wall. But, with the stock market climbing ever higher, the easily fooled were lulled into a false sense of security. The pumpers of the world, who make money on the losses of others, argued that America was the strongest, most prosperous nation on the face of the earth.
I would have bought that gravy train of rhetoric back in 1999. Perhaps would have even bought a few tracks into the lush forests back in 2002. But in 2007, it was obvious the gravy train had dumped it's load on Southern biscuits, and was parked for a very, very long time.
As I watched the cruise lines, the writing was on the wall. I wouldn't have bought a share of stock in any, since September 2006, when I first really came to the conclusion, we were all headed for some very hard times.
You could go to nearly any pro-cruise industry website, right up to a week ago, and hear how strong the cruise industry was, and how things were only getting better. There were lots of big ships on order, that were more modern, more unique and more interesting than ever in the history of cruising. The industry was growing, and that had to be sign they were prospering, right?
As I read these thoughts of industry pumpers, I wondered at what point these people would actually admit, the industry was in for a crash, also like never seen before. The industry knew it, they had discussed it at length in meetings. They also discussed how they were going to survive. To that end, they decided to target minorities, and that was when I really knew they were grasping at straws, teetering on the edge of disaster.
Much of their newly targeted market was involved with those subprime mortgages, especially in Florida, that were skyrocketing in monthly payments, and soon to crash. In spite of what the cruise industry thought, people, generally do not go on a cruise, when they are fighting to keep their home.
The final hint that the industry was about to take a crash, was the closing of 600 Starbucks stores. When people can not afford a $4.00 cup of yummy coffee, the cruise industry didn't stand a chance.
Today, when I received a note telling me that Royal Caribbean Cruise Lines, was going to can about 400 land-based employees, I really wasn't shocked. They are between a rock and hard spot.
They can't raise fuel surcharges any more. Already customers are bawking at that and deciding there are better places to be puking their guts out, at a much lower price. The current fuel surcharge is $10 per day per passenger up to $140 per cabin of two passengers. But, an additional surcharge had surfaced to include up to another $70 for those extra passengers in the cabin, such as children.
On a Bahamas, five day cruise, offered for only $399.00 for a coffin-size inside cabin, for a family of four, the net price of $1596 quickly picks up a $150, 10% fuel surcharge.
Since the fuel surcharge is the equivalent of a shipping charge on the 'product', 10% is simply too high. I am shopping online like crazy, getting FREE shipping on everything, like I have never seen before. With everything on sale or clearance, and free shipping, with often no sales tax, I can't afford to shop at hometown stores with these online deals.
So, applied to travel, the same thing is true. Many destinations are offering free gas, free meals, free golf, free spa treatments and much more if you will take a vacation to their destination. If you shop around, not only will the destination give you free gas, but so will the travel agent.
I've seen $75 worth of gas cards for a two-night stay. Take a trip that is only a couple hundred miles from home, and your gas is free at that rate. Travel weekdays and save even more, even in the summer. With free meals being thrown in, gas and spa treatments you can easily save 75% on a land-based holiday over what the holiday might have cost you two years ago.
Land-based destinations are not increasing prices, they are reducing prices. So, why would you cruise, and pay MORE, when SO many HUGE bargains are available for land-based vacations?
Doesn't make any sense to me, as a bargain hunter. This is what I call a "travelers" market. It is like the current "buyer's market" in the housing industry. Smart people are taking advantage of industries that are hurting and willing to do what they have to do in order to keep from laying off employees.
The cruise industry can't raise the price of the cruise any more. It is only because cruising had been so cheap, that many were trying cruising for the first time.
On top of that, we have environmentalists joining forces with governments to make the industry responsible, something that is going to cost the industry a bundle.
With Royal Caribbean stock falling a record 47% so far this year, it was a given that the publicly traded line would not be able to conceal their woes.
The slash and burn mentality of cutting costs by slashing operating expenses by $125 million of course was going to produce layoffs. Royal Caribbean has about 3,361 employees in South Florida and about 861 in Eugene, Oregon and Wichita, Kansas for a total of 4,222.
The 400 layoffs expected amount to about 10% of their land-based employees, a huge percentage in the big picture. RCCL says they had 100 vacant jobs, a fact that is now coming out, and is more telling in how long the problem has been quietly going on.
As people left, they were not hiring. That kept their bottom line looking good, on the surface, something that was not common knowledge, until now. They now say only 300 jobs will actually be cut, since they are not filling the 100 vacant positions.
Since RCCL is #2 in the U.S. it is only a matter of time before #1, Carnival Cruise lines follows suit. The airlines have been doing it for months, it was a given the cruise industry would have to eventually admit growth defeat, inspite of what the pro-industry websites say.
