SeaWaves Cruise News
ISSN 1710-6958 February 7, 2005

Celebrity Maintains Lead in Survey

Miami January 21, 2005 - 'Three-peats' aren't just limited to the world of sports. For the third consecutive year, Celebrity Cruises has swept Condé Nast Traveler's readers' survey ranking "The Best Cruise Ships in the World."

Seven Celebrity ships - every ship in the fleet that falls into the large-ship category - ranked in the top 11 in the annual survey, results of which are published in the February 2005 edition. Infinity and Constellation ranked first and second, respectively, bettering their scores of 2004, which were then the highest in the history of the survey. Mercury, Summit and Galaxy ranked fourth, fifth and sixth, Millennium ranked ninth, and Century 11th. The balance of Celebrity's fleet - the 1,354-guest Horizon and Zenith - were among those honored in the medium-ship category.

The savvy subscribers of Condé Nast Traveler evaluated ships on five criteria: itineraries, crew/service, cabins/design, food/dining, and activities/excursions. Celebrity made a clean sweep of the survey's rankings in the category of food/dining - with Constellation, Infinity and Galaxy shutting out the competition. The same held true for Constellation, Infinity and Galaxy, honored as the best of the best in the area of crew/service.

"Very few surveys mean more than Condé Nast Traveler's, so this is a particularly meaningful validation of what we're doing at Celebrity," said the line's President & COO Jack Williams. "We've built increasing momentum and excitement behind the brand, and this recognition reinforces what we're doing, and encourages us to continue."

Royal Caribbean Reports 2004 Results

Miami February 1, 2005 - Royal Caribbean Cruises Ltd.  today reported net income for the year of $474.7 million, or $2.26 per share, compared to $280.7 million, or $1.42 per share, in 2003. Revenues for the year increased 20.4% to $4.6 billion from revenues of $3.8 billion in 2003. The increase in revenues was attributable to a 10.3% increase in capacity coupled with an increase in cruise ticket prices, occupancy and onboard revenues. Gross Yields for the year increased 9.1% from 2003. Net Yields increased a record 9.2% from 2003. Occupancy reached 105.7%, up from 103.2% in 2003.

"Despite hurricanes, sky-rocketing fuel costs and other challenges, 2004 was a very good year for the company," said Richard D. Fain, chairman and chief executive officer. "We are especially pleased with our yield performance and our income growth. These results reflect the strong demand for our product, successful implementation of our brand building initiatives, and the underlying strength of the industry fundamentals."

Revenues for the fourth quarter of 2004 were $964.6 million, up 9.9% from $878.0 million in 2003. Gross Yields and Net Yields increased 4.7% and 4.4%, respectively. Net Yields in the fourth quarter have now surpassed those achieved in the fourth quarter of 2000. The company reported a net loss of $25.8 million, or $0.13 per share, for the fourth quarter of 2004, which compares with a net loss of $20.0 million, or $0.10 per share, for the fourth quarter of 2003. As previously disclosed, included in the fourth quarter of 2004 is $8.1 million associated with the reversal of a tax accrual.

For the fourth quarter of 2004, Gross Cruise Costs and Net Cruise Costs per APCD, increased 6.3% and 6.5%, respectively. An unexpected spike in at-the-pump fuel costs during November and December was the primary driver of this increase. During the fourth quarter of 2004, fuel costs represented approximately 7.1% of total revenues.

Commenting on these figures, Mr. Fain said: "While the year as a whole has been very gratifying, we are disappointed that fuel and other costs hurt our fourth quarter results so much. In addition, onboard revenue, while up, did not reach the exceptional performance we had enjoyed during the first three quarters."

With three weeks of what has been characterized as the industry’s "wave period" completed, the company is able to report that bookings and pricing levels continue to be strong. Consumer demand is healthy across all products and for both brands. Many of the demand characteristics the company is now seeing are similar to those seen in the late 1990’s. As a result, the company currently forecasts Net Yields for the first quarter of 2005 will increase approximately 7% and Net Yields for the full year 2005 will increase in the range of 5% to 7%.

For 2005, the company has a relatively small capacity increase of 1.6%, which means fewer economies of scale to absorb inflationary and other cost pressures. In addition, uncertainty about fuel costs makes forecasting difficult. Assuming the yearly average at-the-pump price of fuel in 2005 is the same as the yearly average in 2004 and adjusting for fewer fuel hedges, the company currently expects that fuel costs will increase by approximately 8% per APCD. Based on this assumption, the company expects Net Cruise Costs to increase in the range of 2% to 3% per APCD. This increase in fuel costs accounts for 1% of the increase in Net Cruise Costs per APCD. Compared to the same periods in the prior year, management anticipates that Net Cruise Costs will increase in the first half of the year and be flat to slightly down in the second half of the year.

Depreciation and amortization is expected to be in the range of $410 to $420 million and net interest expense is expected to be in the range of $305 to $315 million. Additionally, 2005 will be the initial year the company accrues income taxes associated with the final regulations under Internal Revenue Code Section 883. The company expects the application of the final regulations will reduce 2005 earnings per share by approximately $0.04 to $0.05.

Based upon these assumptions, management expects full year 2005 earnings per share to be in the range of $2.70 to $2.90. On the same basis, first quarter 2005 earnings per share are expected to be in the range of $0.50 to $0.55.

On December 13, 2004, Royal Caribbean International's Sovereign of the Seas re-entered service after an extreme makeover that included bow-to-stern renovations and several new entertainment and dining options. Renovation highlights include the creation of the ship’s first balcony staterooms, the addition of Boleros Latin lounge, and the transformation of the Windjammer Café into the Windjammer Marketplace.

In response to steadily increasing demand for Celebrity Cruises’ vacation experience in Europe, Celebrity Cruises announced the deployment of Century to Europe. Century’s deployment gives Celebrity Cruises, the top-rated premium line, a total of four ships in Europe for the 2005 season. As the U.S. dollar continues to decline against the euro, a growing number of savvy travelers are honing in on cruising as the definitive way to experience Europe. The European deployment of Century will allow the company to capitalize on this strong demand.

The company has scheduled a conference call at 10 a.m. Eastern Standard Time today to discuss its earnings. This call can be listened to, either live or on a delayed basis, on the company’s investor relations web site at www.rclinvestor.com. A slide presentation will accompany the conference call, and is also available for viewing at www.rclinvestor.com.

Terminology

Available Passenger Cruise Days ("APCD")

APCDs represent double occupancy per cabin multiplied by the number of cruise days for the period and are our measurement of capacity.

Gross Yields

Gross Yields represent total revenues per APCD.

Net Yields

Net Yields represent Gross Yields less commissions, transportation and other expenses and onboard and other expenses per APCD. We utilize Net Yields to manage our business on a day-to-day basis and believe that it is the most relevant measure of our pricing performance. We have not provided a quantitative reconciliation of projected Gross Yields to projected Net Yields due to the significant uncertainty in projecting the costs deducted to arrive at this measure. Accordingly, we do not believe that reconciling information for such projected figures would be meaningful.

Gross Cruise Costs

Gross Cruise Costs represent the sum of total cruise operating expenses plus marketing, selling and administrative expenses.

Net Cruise Costs

Net Cruise Costs represent Gross Cruise Costs excluding commissions, transportation and other expenses and onboard and other expenses. In measuring our ability to control costs in a manner that positively impacts net income, we believe changes in Net Cruise Costs to be the most relevant indicator of our performance. We have not provided a quantitative reconciliation of projected Gross Cruise Costs to projected Net Cruise Costs due to the significant uncertainty in projecting the costs deducted to arrive at this measure. Accordingly, we do not believe that reconciling information for such projected figures would be meaningful.

Passenger Cruise Days

Passenger Cruise Days represent the number of passengers carried for the period multiplied by the number of days of their respective cruises.

Occupancy Percentage

Occupancy Percentage, in accordance with cruise industry practice, is calculated by dividing Passenger Cruise Days by APCDs. A percentage of 100% indicates that three or more passengers occupied some cabins.

Discovery Carries 4 Millionth Person to Grand Bahama and Begins Celebratory Campaign

Miami February 1, 2005 - Discovery Cruise Line, the largest tour operator to Grand Bahama Island, announced that on January 28, 2005 the cruise line recognized the four millionth person it has carried between Fort Lauderdale and the island destination.

The lucky person, actually a couple, was Mr. and Mrs. Roger Forget from Sunrise, Florida. To celebrate the event, Discovery refunded the winners' cruise and stay vacation cost, including the cruise and their accommodations at The Westin Beach & Golf Resort at Our Lucaya. In addition, the couple was awarded a certificate entitling them to cruise free on Discovery every year for the rest of their lives. The certificate also includes seven-course dining in Discovery's award-winning Grand Bahama Grill. Upon their arrival in Grand Bahama, the Forgets were introduced to the Minister of Tourism of The Bahamas, The Honourable Obediah H. Wilchombe, at the conclusion of the National Tourism Conference.

The recognition of the four-millionth passenger also triggered the start of a new advertising campaign by Discovery, which offers passengers traveling now through August 15, 2005, a discount of $40 per couple off the regular published rate for Cruise 'N Stay Vacation Packages for travel between August 16, 2005 and January 31, 2006. In addition, each passenger will receive a commemorative beaded necklace affixed with a tag that reads "4 Million Passengers and Counting." Select retailers on the island are offering people wearing the necklace a gift-with-purchase at their stores on island. The promotion is currently under way and expires August 15, 2005.

According to Hanns J. Hahn, the General Manager of Discovery, "Carrying over four million people between Ft. Lauderdale and Grand Bahama is a significant accomplishment and speaks volumes about our service, food and reliability, but it pales in comparison to the economic benefit these visitors have bestowed on the islands and its people." Using government statistics on the average spend per visitor, Mr. Hahn estimates "that this daily service to Grand Bahama has contributed over $2 billion to the Bahamian economy since Discovery started operations seventeen years ago. And," he said, "we plan to continue Discovery's business for many years to come, thereby increasing the economic benefit to the island every year, and indeed every month."

Discovery has not only been the most reliable means of transportation and hotel bookings to the islands over the years, but it has been a true partner and friend to the residents of Grand Bahama, bringing millions of dollars of water, food and supplies to its population in times of need, as evidenced by its immediate assistance to the island following the hurricanes that ravished the island in 2004.

Discovery sails daily from Ft. Lauderdale to Grand Bahama Island and offers Fun Day Cruises and Cruise 'N Stay Vacation Packages to most resorts on Grand Bahama, including Westin, Sheraton, Wyndham, Best Western and Pelican Bay at Lucaya.

Discovery passengers enjoy all the amenities of a traditional cruise in one fun-filled day, including lavish breakfast and lunch buffet meals on the cruise to the island. Discovery departs early morning and arrives in the afternoon so passengers can enjoy the rest of the day on Grand Bahama. On the day of the return they can enjoy a full morning and early afternoon on the island before boarding for the return cruise where they will be treated to a lavish buffet dinner, a Las Vegas-style casino, entertainment, shows, and more.

Repositioning Cruises Are a Great Deal If You Know Where to Find Them, According to FunCruise.com

Los Angeles February 1, 2005 - Have you ever wanted to take a five star cruise but did not want to pay five star prices? How about a seven-night cruise that normally costs thousands on an upscale cruise line, including food and entertainment, for less than $86 per day? That is only $602 for the entire seven-night cruise.

That's the price for a Celebrity repositioning cruise that starts in San Francisco and goes to Monterey, Los Angeles, Catalina Island, Ensenada, San Diego and back to San Francisco, according to Leslie Bauer, director of sales at FunCruise.com. "Twice a year cruise lines move their ships to other parts of the world on special sailings that are far below normal costs. The catch is that many of these specials are available to residents of certain states only," she continued. "In this case residents from about 17 states are eligible for this special price and the deadlines for reservations are tight."

Cruise lines limit such specials to certain state residents to increase market share in that state. Moving ships from the Caribbean to Alaska or other parts of the world means that ships have to be filled with special promotions since they are not a part of a regular schedule.

More information about these special repositioning Celebrity sailings can be obtained by calling 800-324-1000 or logging on to FunCruise.com.

Star-Studded Weekend Benefits Cystic Fibrosis Foundation and United Way

Miami February 2, 2005 - Last week’s second annual "Shine On Miami" fundraiser organized by Celebrity Cruises and Royal Caribbean International to raise funds for the Cystic Fibrosis Foundation (CFF) and United Way of Miami-Dade, shone brightly on its two beneficiaries, generating $1.9 million during the three-day event.

The funds generated by the January 21-23 weekend of fishing and golf tournaments – nearly twice the amount raised in its first year – capped by a posh gala evening held onboard Celebrity Cruises’ top-rated Summit, will be divided equally between the two charitable organizations.

Generating top bids at the live auction led by Royal Caribbean and Celebrity President & COO Jack Williams Saturday night included dinner for 10 created by celebrity chef Emeril Lagasse, who will be joined by Miami Heat’s Shaquille O’Neal ($40,000); famed romantic balladeer Michael Bolton will sing three songs in the winning bidder’s home ($21,000); a consignment piece by noted contemporary artist Romero Britto ($21,000); an original Marc Chagall painting ($20,000), and a private tennis lesson and lunch with acclaimed tennis star Andre Agassi ($20,000). Meanwhile, activity in Summit’s "Fortunes Casino" raised no small fortune ($39,500).

More than 15 entertainers and sports stars participated in the weekend’s activities, including football Hall of Famer Nick Buoniconti, actor John Byner, baseball Hall of Famer Gary Carter, entertainer Bobby Dee, actress Bo Derek, Miami Dolphins quarterback Jay Fiedler, hockey Hall of Famer Rod Gilbert, Marlins third baseman Mike Lowell, baseball Hall of Famer Jim Palmer, baseball Hall of Famer Mike Schmidt, PGA golfer Dave Stockton, Red Sox pitcher Tim Wakefield, and songwriter Paul Williams.

Shine On Miami was developed to celebrate the style and heart of the city and citizens while raising money for a worthy cause. Royal Caribbean and Celebrity Cruises’ President and COO Jack Williams, a long-time supporter and member of the CF Foundation Founders’ Council, conceptualized and orchestrated Shine On Miami, which raised more than $1.05 million for scientific research in its first year alone. Williams also has helped secure millions of dollars for the CF Foundation via other means, including securing donations for competing in the grueling "Escape from Alcatraz" triathlon in 2004 and raising $300,000 by crossing the finish line in his first New York City Marathon.

"We are enormously grateful to our title and presenting sponsors, Arnold Worldwide, Burdines-Macy’s, the Coca-Cola Company, Parkwest at Sea, St. Ives US Division, and Bob Wisse & Friends, as well as Shine On Miami’s many corporate and individual contributors, committee members and volunteers who invested so much of their time and dollars in supporting our efforts," said Williams. "It takes people like these to find a cure for CF, and to help the people who so desperately need the assistance United Way provides."

For Shine On Miami details and sponsorship information for the next annual event, visit www.shinemiami.com. For information about cystic fibrosis, visit the CF Foundation Web site at www.cff.org or call 1-800-FIGHT CF. For information about United Way of Miami-Dade, visit www.unitedwaymiami.org.