Royal Caribbean Cruises Ltd. RCL

The business

Royal Caribbean operates cruise ships under three brands and increasingly owns the destinations they visit. Perfect Day at CocoCay and the new Royal Beach Club network are private islands where the company captures the shore spending that used to go to local operators.

The economics are two numbers: net yield, which is revenue per available passenger cruise day, and net cruise cost excluding fuel per the same unit. The gap between them is the profit, and both are disclosed quarterly, which makes this one of the easier large businesses to follow. A ship is a fixed cost that sails whether it is full or not, so every incremental passenger and every dollar of onboard spending falls almost entirely to the bottom line.