In January 1998, the Company also signed letters of agreement to build three new ships with options to build three more. Two ships have been designated as Millennium-class vessels for Celebrity Cruises and are scheduled for delivery in June 2000 and January 2001. One ship has been designated as a Voyager-class vessel for Royal Caribbean and is scheduled for delivery in February 2001. The Millennium-class vessels are a progression from Celebrity Cruises' Century-class vessels and will have approximately 1,900 berths. The Voyager-class vessel is a progression from Royal Caribbean's Vision-class vessels and will have approximately 2,000 berths. The Company also has options to purchase three additional vessels with delivery dates between September 2001 and June 2002. Between 1997 and 2002, the Company's year-end berth capacity is expected to increase 55% from 29,900 to 46,400, or 75% to 52,300, assuming the three options are exercised.
In October 1997, the Company sold Sun Viking, which was built in 1972 and was the last of the original three ships in the Royal Caribbean fleet. The Company continued to operate the ship under a charter agreement until January 1998. The sale price was $30.0 million and the Company recognized a gain of $4.0 million on the sale. In September 1997, the Company sold Meridian, which operated in the Celebrity Cruises fleet. The sale price was $62.1 million and there was no gain or loss recognized on the transaction.
Results of Operations
The following table presents operating data as a percentage of revenues:
REVENUES
Revenues increased 42.9% in 1997 to $1.94 billion compared to $1.36 billion in 1996 as a result of a 40.7% increase in capacity as well as an increase in Yield. The acquisition of Celebrity contributed 22.1% of the capacity increase. The capacity increase in the Royal Caribbean fleet of 18.6% was a result of the introduction of Rhapsody of the Seas and Enchantment of the Seas in 1997 as well as the full-year impact of Splendour of the Seas and Grandeur of the Seas which were introduced in 1996. These increases were partially offset by the departure of Song of Norway from the fleet in the first quarter of 1997. Yield for the year increased 1.5% over 1996 as a result of an increase in occupancy. Occupancy levels increased to 104.2% in 1997 as compared to 101.3% in 1996. The Company's philosophy is to use a variety of revenue management techniques to maximize occupancy and revenue.
Revenues increased 14.6% in 1996 to $1.36 billion compared to $1.18 billion in 1995 as a result of a 15.0% increase in capacity. Capacity increased in 1996 primarily due to the full-year impact of Legend of the Seas, which began service in the second quarter of 1995 and the delivery of Splendour of the Seas in the second quarter of 1996. Yield in 1996 remained approximately the same as in 1995; however, there was a shift in the mix of revenues as shipboard and other revenues represented a higher percentage of total revenues. Occupancy levels were 101.3% in 1996 as compared to 100.5% in 1995.
EXPENSES
Operating expenses increased 42.7% to $1.2 billion in 1997 as compared to $854.5 million in 1996. This increase in operating expenses was primarily due to the 40.7% increase in capacity and higher variable costs associated with the increased occupancy.
Operating expenses increased 15.1% in 1996 to $854.5 million compared to $742.5 million in 1995. This increase was primarily due to the 15.0% increase in capacity and higher variable costs associated with the increased occupancy. Operating expenses increased as a percentage of revenues primarily as a result of higher expenses due to changes in itineraries and an increase in shipboard and other expenses resulting from higher shipboard and other revenue per diems. This increase was partially offset by savings in air cost associated with a small reduction in the percentage of passengers using the Company's air program.
Marketing, selling and administrative expenses increased 39.9% in 1997 to $272.4 million versus $194.6 million in 1996. The increase was primarily due to the acquisition of Celebrity, an increase in staffing and additional advertising costs. Marketing, selling and administrative expenses increased 9.7% in 1996 to $194.6 million versus $177.5 million in 1995. The majority of the increase was due to higher staffing, advertising and telecommunications costs. In both 1997 and 1996, these expenses decreased as a percentage of revenues as a result of the economies of scale achieved with the increase in capacity.