Royal Caribbean is the second largest cruise line company in the world and it is in position to take advantage of a recovering industry that is once again attracting high numbers of people looking to spend money. Royal Caribbean has strong brand awareness in North America where a majority of cruises originate, but it also has a strong international reputation through the other brands it operates as well as its own increasing presence in the European and Asian market. Royal Caribbean was hit hard by the downturn in the global economy and it continues to be in a weakened financial condition due to large investments in new ships and rising operating costs. However, the total revenue for the company is back on the rise and the company remained profitable even during down years. Forecasts for the industry are trending upward and Royal Caribbean is in place to take advantage. An internal and external environment analysis indicate that Royal Caribbean looks to remain profitable for the future but certainly has areas to improve up and become more in line with the industry leader Carnival.
This report will review the cruise line industry and give an understanding of where this business has its roots. From there it will give a company overview of Royal Caribbean Cruise Ltd, the second largest cruise company in the world behind Carnival Cruises. This overview will give the reader a basic understanding of Royal Caribbean and lead into the in depth analysis of the company. An external environment analysis will be done to cover the trends of technologic, demographic, economic issues along with a Porter’s Five Forces Analysis. An internal environment analysis will look at Royal Caribbean’s recent financial history and a SWOT analysis will lead into the key results area. All of these factors will be useful in developing conclusions and strategic recommendations for future development of Royal Caribbean.
The cruise industry that we are familiar with today did not begin to take shape until the 1960’s. Prior to that the, cruise ship transportation focused on transatlantic trips where passengers were using the ships as a means of travel rather than vacation. The period of 1900 through the early 1940s is the time when luxury and extravagance embedded itself in the cruise line industry. As so called “superliners” were built during this time each one tried to outdo the next by adding another amenity not seen before on ships. Ships began adding things like elevators and full scale restaurants to make passage more enjoyable for the passengers. “In 1911, the White Star Line surpassed even Cunard for luxury when it launched the Olympic. In addition to the amenities that had become standard, the Olympic was outfitted with a swimming pool, Turkish baths, and a tennis court” (Gale, 2011). These glory days continued until post Word War II when planes, that only took hours complete a transatlantic trip, became the preferred choice of travel for those that could afford it. “By the 1960s, most passenger ships had become drab and dingy” (Gale, 2011). It wasn’t until the early 1970’s that Carnival Cruises reinvented the cruise line industry. Carnival Cruises was founded in 1972 in Miami took a fundamentally different concept to cruising. Instead of transatlantic routes it decided to concentrate on warm weather destinations and market trips as vacations rather than travel. To fill time between ports of call Carnival had different kinds of live entertainment such as comedians and singers come on board to occupy the guests. It is during this time that Carnival got its reputation for having the “fun ship” as it moved away from the formality of cruise voyages, which was the conventional way of thinking about cruises at the time, by encouraging a more relaxed, causal and festive atmosphere. Carnival was at the forefront of the rebirth of the cruise line industry. Cruising popularity...