By Tom Stieghorst
U.S. travel agents will get an additional
Royal Caribbean International ship to market in 2016, though not one with a lot of
novel new “wow” features and premium-priced staterooms.
The ship is the 25-year-old Empress,
which is now sailing for the Spanish brand
Pullmantur. It will be rebranded as the Empress of the Seas and returned to the Royal
Moving the 2,020-passenger ship to
“right size” the Pullmantur fleet reflects
the prolonged troubles that have afflicted
the Spanish brand since the 2008 economic
Royal’s parent, Royal Caribbean Cruises
Ltd. (RCCL), said it would take a $400 million impairment charge to reflect the decline in Pullmantur’s value. The brand will
be refocused on Spain after several years of
primarily being marketed in Latin America.
The Latin America strategy has been
doomed by an economic downturn in
South America, including a 22% decline in
the Brazilian real against the dollar in the
“This type of precipitous decline dashed
our hopes and plans for Pullmantur in Latin America,” RCCL chairman Richard Fain
told Wall Street analysts in an earnings call.
So RCCL is pulling the brand back to
its Spanish roots. Asked why the company
doesn’t just shut down the line entirely,
Fain said a Pullmantur with just two ships
has a chance to match supply with demand
“We do think that there is opportunity
with those assets and with the positioning
of the brand to do well,” he said.
Empress will rejoin Royal in the spring
on an as yet unnamed itinerary following
what the company described as an “exten-
When the ship debuted in 1990 as the
Nordic Empress, it was the first new vessel
to sail the short cruises from Miami to the
Bahamas that are now offered on the Maj-
esty of the Seas.
Royal has announced that following its
own upgrades, the Majesty will sail to the
Bahamas next summer from Port Canaveral.
Despite Pullmantur’s problems, analysts
were mostly impressed with RCCL’s third
quarter, which produced a net income
of $228.8 million after the impairment
charge, compared with $490.2 million a
Revenue was $2.52 billion, up from
Patrick Scholes, an analyst at Sun Trust
Robinson Humphrey, raised his predic-
tion of RCCL’s earnings to $1.05 billion in
2015 and to $1.4 billion in 2016. He cited
strength in the Caribbean and China, as
well as Royal’s 7-month-old program of
not discounting close-in cruises, which
“improves customer and travel agent satis-
faction,” Scholes said.
In the current quarter, a season when
Caribbean sailings account for 47% of capacity, inventory is nearly sold out and
business is much more favorable than at
this time last year, with expected yield improvements in the Caribbean in the mid to
high single digits, Royal said.
Fain said the booking curve has grown
by 30 days over the past two years, so that
2016 load factors are currently the highest
in the company’s history, and prices are
also ahead of the same time last year.
Caribbean sailings of all lengths are
“nicely ahead,” with the new Harmony of
the Seas showing particular strength, Fain
He added that the net effect of the price
integrity program will be to decrease revenue in 2016 as some cabins sail unoccupied.
But CFO Jason Liberty said the program
is changing the conversation with guests
who have booked, and it is expanding the
booking window to position Royal for
stronger pricing down the road.
Royal to welcome back Pullmantur ship as Empress of the Seas
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Pullmantur’s Empress will
begin sailing for Royal
Caribbean in the spring.