Royal Caribbean Reports Q3 Results, Increases Guidance

Royal Caribbean Reports Q3 Results, Increases Guidance

Royal Caribbean departing from Southampton, Photo credit Spacejunkie2 (Flickr account)

Royal Caribbean Group today reported third quarter Earnings per Share of $3.65 and Adjusted EPS of $3.85 for the third quarter of 2023.

These results were better than the company’s guidance due to stronger close-in demand and further strength in onboard revenue, the company said in a press release.

The company is also increasing its full year 2023 Adjusted EPS guidance to $6.58 – $6.63, driven by strong demand and continued strength in onboard revenue.

“The strength of our brands and the acceleration of consumer spending on experiences have propelled us towards another outstanding quarter and a robust 2023,” said Jason Liberty, president and CEO, Royal Caribbean Group. “Looking ahead, we see accelerating demand as we build the business for 2024. Our booked load factors are higher than all prior years and at higher rates, further supporting our trajectory towards the Trifecta goals,”  added Liberty.  “The combination of our leading brands, the best people, and the most innovative fleet and destinations, positions us exceptionally well to deliver on a lifetime of vacation experiences while creating long-term shareholder value.”

Third Quarter 2023 Results:

• Gross Margin Yields increased 19.1% As-Reported, and Net Yields increased 16.7% in Constant-Currency (16.9% As-Reported), both compared to the third quarter of 2019.
• Gross Cruise Costs per Available Passenger Cruise Day (“APCD”) increased 14.4% As-Reported, and Net Cruise Costs (“NCC”), excluding Fuel, per APCD increased 10.3% in Constant-Currency (10.1% As-Reported), both compared to the third quarter of 2019.
• Total revenues were $4.2 billion, Net Income was $1.0 billion or $3.65 per share, Adjusted Net Income was $1.1 billion or $3.85 per share, Adjusted EBITDA was $1.7 billion.

Full Year 2023 Outlook:

• Net Yields are expected to increase 12.9% to 13.4% in Constant-Currency (12.4% to 12.9% As-Reported), compared to 2019.
• NCC, excluding Fuel, per APCD is expected to be up 7.0% to 7.5% in Constant-Currency (6.5% to 7.0% As-Reported), compared to 2019, and includes approximately 30 basis points impact due primarily to reduced APCDs on cancelled Israel and related sailings.
• Fuel pricing and foreign exchange rates are negatively impacting EPS by $0.18, compared to prior guidance. In addition, impacted sailings related to Israel deployment is expected to impact the year by approximately $0.03.
• Adjusted EPS is expected to be in the range of $6.58 to $6.63 per share.

Third Quarter 2023

The company reported Net Income for the third quarter of $1.0 billion or $3.65 per share compared to Net Income of $33.0 million or $0.13 per share for the same period in the prior year. The company also reported Adjusted Net Income of $1.1 billion or $3.85 per share for the third quarter compared to Adjusted Net Income of $65.8 million or $0.26 per share for the same period in the prior year.

Gross Margin Yields increased 19.1% As-Reported, and Net Yields increased 16.7% in Constant-Currency (16.9% As-Reported) when compared to the third quarter of 2019. Third quarter revenue across North America and Europe itineraries exceeded expectations due to better close-in demand that translated into higher load factors and pricing, as well as continued strength in onboard revenue. Load factor for the third quarter was 110%.

Gross Cruise Costs per APCD increased 14.4% As-Reported, compared to 2019. NCC, excluding Fuel, per APCD increased 10.1% As-Reported and 10.3% in Constant-Currency, compared to 2019.   Lower operating expenses, as well as favorable timing, contributed to better-than-expected costs.

Revenue Environment and 2024 Outlook

Bookings remained strong throughout the third quarter, significantly exceeding 2019 levels.  Closer-in demand for 2023 sailings exceeded expectations, contributing to higher load factors at higher prices and higher onboard revenue for the third quarter.  Consumer spending onboard, as well as pre-cruise purchases, continue to significantly exceed 2019 levels driven by greater participation at higher prices. As of September 30, 2023, the Group’s customer deposit balance was at $5.0 billion.

Demand for 2024 has continued to accelerate, with bookings significantly and consistently outpacing 2019 levels. Booked load factors and rates are higher than all prior years while the booking window has continued to extend.  The market response to the company’s new ships, existing hardware, and the expansion of Perfect Day at CocoCay, and Hideaway Beach, has been excellent and further positions the company for strong yield and earnings growth in 2024.

Fourth Quarter 2023

Net Yields are expected to be up 16.2% to 16.7% in Constant-Currency and 15.0% to 15.5% As-Reported, both compared to the fourth quarter of 2019.  Continued strong demand for the company’s vacation experiences and strength in onboard revenue contributes to increased yield expectations for the fourth quarter.

NCC, excluding Fuel, per APCD for the quarter are expected to increase 3.9% to 4.4% in Constant-Currency and 3.3% to 3.8% As-Reported, both compared to the fourth quarter of 2019.

Fuel pricing and foreign exchange rates are negatively impacting EPS by $0.15, versus previous expectations.  Impacted sailings related to Israel deployment are negatively impacting the quarter by approximately $0.03.

Based on current fuel pricing, interest and currency exchange rates and the factors detailed above, the company expects fourth quarter Adjusted EPS to be $1.05 to $1.10 per share.

“The performance of our business continues to accelerate, driven by strong demand and excellent operational execution,” said Naftali Holtz, chief financial officer at Royal Caribbean Group. “Our formula of moderate yield growth, strong cost discipline, and moderate growth of our fleet delivers a strong financial profile and enhanced margins.”

Resco Launches New Itinerary Planner Module

Resco Launches New Itinerary Planner Module

Resco has launched a new itinerary planner tool, which the company said is a new revolutionary tool that enables the planning department to plan cruise itineraries well in advance based on various factors related to the ship, ports, sea routes and fuel.

“It allows you to manage itineraries of a ship for an entire season from a single dashboard,” according to a company statement.

The new software module allows cruise lines to select the most appropriate routes between ports, considering fuel consumption and cost, distance, ETA, canals and straits, special zones and fuel types.

It also allows the user to manipulate segments to decide on the most optimal itinerary, by altering ETD/ETA, adding or reducing sea days or port stay duration, inserting, removing or replacing ports, choosing an alternative route or using a radius port search.

It can also effectively manage port status and agent collaboration, by raising and tracking berth reservation and port cost-info requests with port agencies.

 

Uk's High Price of PCR Tests UnCovered.

The average cost of PCR Covid-19 tests in the UK is more than double the price charged in other European countries at £128 per person, according to research.

PCR tests are set to play a key role in the planned restart of international travel from 17 May, as laid out on Friday (9 April) by the government’s Global Travel Taskforce, with travellers required to take these tests after returning from even the lowest risk “green” countries under the planned new traffic light system.

But research by Abta and the Airport Operators Association found that PCR costs in the UK cost an average of £128 per person compared with an average of just £62pp across eight key European destinations.

 

The high costs of PCR tests are seen as a potential deterrent to holidaymakers booking international trips this summer, particularly for families and short-haul travel.

 

Mark Tanzer, Abta’s chief executive, said: “Travel to the lower risk, green categorised countries should be as unrestricted as possible. The requirement for a PCR test when you arrive back from a green list country could prove a cost-barrier for many people – we welcome the fact that the government commits to engaging with industry on this issue.

 

“Small changes, like requiring a PCR test only if the individual gets a positive result from a lateral flow test, would make international travel more accessible and affordable whilst still providing effective mitigation against re-importation of the virus.

 

“The government should also consider whether those who have been vaccinated can be exempt from testing requirements, should scientific evidence suggest reduced transmissibility.”

The UK government has now pledged to work to bring down the cost of Covid testing for leisure travellers ahead of the resumption of international travel this summer.

 

Karen Dee, chief executive of the Airport Operators Association, added: “The cost of testing could act as a significant barrier to the meaningful restart to aviation and should not be underestimated.

 

“With UK pre-departure and post-arrival tests costing around double the average in countries like Spain, Italy, Portugal and Greece, UK travellers are penalised for wanting to travel from the UK.

 

“Without a cost-effective solution like this, a summer holiday will be out of reach for many and damage an already badly hit aviation and travel industry even further.”