MMICC 2010 - CBS
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Cirque du Soleil proposes a three-pronged strategy of analyzing, negotiating, and expanding by partnering with Royal Caribbean cruise ships to perform resident shows. This would allow Cirque to enter the European market and leverage Royal Caribbean's large theater spaces on its cruise ships. The strategy involves negotiating a deal with Royal Caribbean to produce two new shows and have Cirque perform on two Royal Caribbean ships by 2014. This partnership would provide sustainable growth opportunities for both companies and increased revenues for Cirque du Soleil.
MMICC 2010 - CBS
- 1. Team 4 – Copenhagen Business School: A. Bruntse, L. Lawaetz, L. Pedersen, S. Troll
- 2. Cirque du Soleil needs to ANALYZE, NEGOTIATE, EXPAND
- 3. AGENDAIndustry AnalysisNew Sustainable PartnershipAnalyze
- 4. Negotiate
- 6. Cirque du Soleil differentiates through uniqueness and brandHighUniquenessHighLowBrand Awareness
- 7. Unexploited potential for residence shows in Europe 1 NY show1 Tokyo show1 FL show2 Macau show7 Vegas shows1 Dubai showResident showTouring show
- 8. Three pronged strategy: Analyze, Negotiate, Expand
- 9. Cruising industry has high revenue and sustainable partnership potentialBestWorstSlide 7Team McGill
- 10. Cruise industry is booming despite financial crisisSource: http://www.cruisemarketwatch.com
- 11. Cirque du Soleil @ Sea merges resident and touring TouringResidentCirque du Soleil @ Sea
- 12. Royal Caribbean is the best partner
- 13. Three pronged strategy: Analyze, Negotiate, Expand
- 14. Partnership fits both partnersCreative challenge
- 15. Sustainable in long run
- 17. Socially responsible partner
- 19. Revenue growth
- 20. Increased brand valueEuropean cruise ships have large theatres and visit large citiesAverage European cruise ships
- 21. Cirque Du Soleil customers can enter the theatre without getting access to the whole shipIn PortPhysical conditions on the ship Targeting the people in the city
- 22. The ship will be arena for night entertainmentAt sea Targeting cruise passengers
- 23. Package deals (Cruise + Show)Security checkSecurity checkSource: Royal Caribbean
- 24. Introduction of Cruises to the Mediterranean sea20112013
- 25. Three pronged strategy: Analyze, Negotiate, Expand
- 26. Promising platform for future expansionIndustry developmentFinancial criteria per ship addedTotal cruise industry growth (2009-2013): 17%Royal Caribbean fleet growth: Four ships launched by 2012 Capacity increase of 13,950 (approx. 3500 passengers/ship)Source: Royal Caribbean 10K
- 27. By 2014, Cirque du Soleil will have two ships operatingAnalyzeNegotiateExpandNegotiate RC dealExpand deal agreementAnalyze partner opportunitiesNegotiate target routes Develop more shows Get in touch with Royal Caribbean Develop content for 2h show20102011201220132014AnalyzeNegotiateExpand
- 28. Reduction of operating risks with new strategyRisksHow to meet the risksSet up new sustainable partnershipsExpand to new marketsLoose creative controlLas Vegas deal structureGood offer to Royal CaribbeanCannibalismGo to other markets than North AmericaOverall riskDillusion of brand valueHigh end partnerHigh class showKeeping price scheme
- 29. Win-win partnership for both partnersProposal to Royal CaribbeanNY-NYGrandMirageTotalBenefits 30$ per spend pr. customer
- 30. Promotion of the Royal Caribbean
- 31. High-end people coming to the ship
- 32. Royal Caribbean will get a competitive advantage
- 33. NPV positive projectSource: MGM in material
- 34. Revenue increases by 12% with new alliance New Cirque Du Solei platform
- 37. Higher presence in Europe
- 39. Production of 2 new shows
- 40. Marketing
- 41. Operational cost
- 43. 37% profit growth by 2015 with expansion into cruises Cost based on break even
- 44. WACC=12%
- 45. Cases derived from growth rate
- 46. Avg. ticket price of 120$
- 47. 9.3 Shows a week
- 48. 48 running weeks a year
- 49. Show runs for 10 years
- 50. Increased merchandise sales
- 51. Yearly profit growth by 9%
- 52. 37% growth by 2015AssumptionsBenefits
- 53. Attractive offer to Royal CaribbeanBenefits Cost of Refurbish theater: 24.6 million $
- 54. Avg. Spending 30$ per customer
- 55. 25% EBIT margin on additional salesAssumptions
- 56. Cirque du Soleil needs to ANALYZE, NEGOTIATE, EXPAND
- 57. Q&A
- 58. Growth ratesSource: MGM Initial occupancy rate of 63%
- 59. Growth rate of 12% a year
- 60. Growth ends at occupancy rate of 88%
- 61. Initial occupancy rate of 60%
- 62. Growth rate of 8% a year
- 63. Growth ends at occupancy rate of 82%
- 64. Initial occupancy rate of 63%
- 65. Hereafter an occupancy rate of 90%Most likelyWorst caseBest case
- 66. Weighted NPV, derived from the three scenarios
- 67. European destinations are attractive due to high GDP and touristsBarcelonaRomeMonaco (including Nice)Source: Royal Caribbean and International Monetary Fund
- 68. 7 day cruise8 shows in port2 shows at sea10 shows in total
- 69. 9 day cruise8 shows in port4 shows at sea12 shows in total
- 70. 12 day cruise4 shows at sea12 shows at Port16 Shows in total
- 71. Wrap up on estimates on ShowsWhy 9.3 Shows per weekWhy 48 shows a yearBenchmark: Indecency of the seaIn the 2011 schedule it has 48 weeks in Europe
- 72. Alliance with theme parksTivoli One park only
- 73. 3rd largest in Europe
- 74. Located in city center of CopenhagenFinancial criteriaFinancial criteriaSeveral parks around the world
- 75. Main presence in North America
- 76. Current partnerSource: Tivoli, Disney World
- 78. Possible partnersSource: Carnival, Royal Caribbean, Star Cruises
Editor's Notes
- #8: Initial costs: equally high for all residential shows (touring Cirque excluded on previous slide!)Easiest to ecpand on current partnerships, Cruises is an area not fully exploited by similar arrangements!Cruising industry has been growing strongly despite financial crisis (casinos have been affected strongly)Scope of Partnership: Disney is already implemented, only very few parks left. Same true for Casinos, plus: industry distress. Tivoli: only one place. Cruises provide good potential.Revenue: Limited for Disney and Tivoli due to limited scope. Casino is limited due to crisis and the best locations already exploited. Cruises: revenue not full since locations can only host about 1200 visitors (opposed to Vegas).
- #11: http://mgm409.wikispaces.com/file/view/17393.pdf Datamonitor SWOT
- #14: Check out our new shows on the following ships:Explorer of the Seas - "Invitation to Dance" (Choreographed by Louis van Amstel from ABC's Dancing with the Stars) and New Ice ShowAdventure of the Seas - "Jackpot" - A Tribute to Las VegasMonarch of the Seas - "Signed Sealed Delivered" and "You Can't Stop the Beat"Liberty of the Seas - "In the Air" (our first flying show)Navigator of the Seas - New Ice ShowIndependence of the Seas - 4 new shows produced for ship's inaugural seasonOasis and Allure of the Seas - dazzling new shows in the first-ever AquaTheater
- #15: Remember to say:
- #16: Mediterranean has great potential:Northern part of Africa, Turkey, israel etc. something they can look into in the future
- #21: (Cirque du Solei at Carnival)
- #24: EBIT from Scandlines
- #29: Nice is the france capital at the French RivieraCanada has GDP pr. Capita at 39,217 (ranked 18)Denmark is ranked 5th with 56,000
- #30: Barcelona 1 portMontecarlo 2 portLivorno 1 portRome 2 portNaples 1 portMessina 1 portFun day 2 seaBarcelona 0
- #31: Venice 1 portFun 2 seaDubrovnik 1 portFun 2 seaMessina 1 portNaples 1 portRome 2 portLivorno 1 portMontecarlo 1 portBarcelona0
- #32: Barcelona 0 port (ONE DAY OFF DUE TO ONLY possible of 4 shows not 6)Montecarlo 2 portLivorno 1 portRome 2 portNaples 1 portFun 2 seaDubrovnik 2 portVenice 2 portVenice 1 portFun day 2 seaMessina 1 portFun day 2 sea