While onboard Crystal Serenity’s preview voyage, Cristina Levis, CEO of A&K Travel Group, announced that the brand is working with its advisors, lenders and export credit agents in order to sign a memorandum of agreement with two European shipbuilders for four new ships.
This will include two classic ships and two expedition vessels, the company said.
During the presentation, Levis stated:” We have ambitious growth plans for Crystal and are proud of what we have accomplished with the relaunch of Crystal Serenity and Crystal Symphony in just under a year following the purchase of the brand. We are now thrilled to formally announce that we will be growing our fleet and continue to offer the most exceptional cruising experiences in the industry.”
In just a few short days on July 31, Crystal Serenity will set sail for its inaugural voyage departing from Marseille following an extensive refurbishment. The Crystal Serenity’s sister ship, the Crystal Symphony will depart from Athens on Sept. 1, for its inaugural sailing.
“In the second quarter, the per cent of guests were either new to the brand or new to cruise surpassed 2019 levels by a wide margin, and we have seen post-cruise repeat booking rates nearly double 2019 levels,” said Jason Liberty, CEO of Royal Caribbean Group, speaking on the company’s second-quarter earnings call.
“While we have made positive strides in narrowing the gap to land-based vacations over the last several months, cruising remains an exceptional value proposition, allowing us to outperform broader leisure travel as we seek to further close the gap to land-based vacations, drive better revenue and welcome even more happy customers,” he said.
Liberty said that the company had double the web traffic now compared to 2019.
“In addition, our travel partners are now fully back up and running and delivering more bookings than they did in 2019,” he continued. “Our improved commercial capabilities have allowed us to capture this quality demand and expand our share of the guest wallet.”
Part of the new brand strategy has been the company’s investment in the short cruise market, with refurbished ships and Perfect Day at CocoCay. That strategy takes the next step in 2024 with the new Utopia of the Seas, which will be positioned year-round in the short cruise market.
“Utopia will be the first Oasis-class ship that will be entirely focused on short cruises in the Caribbean, supporting our strategy of competing with land-based vacation alternatives and driving new-to-cruise customers into our vacation ecosystem as we seek to close the value gap,” Liberty said.
“Demand and pricing for Utopia have far exceeded our expectations.”
Royal Caribbean Group today reported second-quarter Earnings per Share of $1.70 and Adjusted Earnings per Share of $1.82.
These results were significantly better than the company’s guidance due to more robust pricing on closer-in demand and further strength in onboard revenue, the company said in a statement.
As a result of the accelerating demand environment for its vacation experiences, the company is increasing its 2023 Adjusted Earnings per Share guidance by 33% to $6.00 – $6.20.
“Our brands continue to fire on all cylinders, resulting in record yields and second-quarter earnings significantly exceeding our expectations,” said Jason Liberty, president and CEO, of Royal Caribbean Group. “Demand for cruising and our brands is exceptionally strong and we have seen another step change in booking volumes and pricing, leading us to now expect double-digit net yield growth for the full year. We also expect to achieve record Adjusted EBITDA per APCD and Return on Invested Capital this year and are well on our way toward achieving our Trifecta goals.”
Key Highlights
Strong ticket pricing from both North America and Europe itineraries, combined with strength in onboard revenue, led to better-than-expected revenues in the second quarter and a significant increase in the company’s full-year outlook for revenue and earnings.
Second Quarter 2023:
Gross Margin Yields increased 13.1% As-Reported, and Net Yields increased 12.9% in Constant-Currency (12.6% As-Reported), both compared to the second quarter of 2019.
Gross Cruise Costs per Available Passenger Cruise Day (“APCD”) increased by 10.9% As-Reported, and Net Cruise Costs (“NCC”), excluding Fuel, per APCD increased by 9.0% in Constant-Currency (8.6% As-Reported), both compared to the second quarter of 2019. The favourable timing of operating expenses was offset by the increase in stock compensation expense due to the rise in share price and expected financial performance.
Total revenues were a record $3.5 billion, Net Income was $458.8 million or $1.70 per share, Adjusted Net Income was $491.7 million or $1.82 per share, Adjusted EBITDA was a record $1.2 billion and Operating Cash Flow was $1.4 billion.
Full Year 2023 Outlook:
Net Yields are expected to increase 11.5% to 12.0% in Constant-Currency and As-Reported, compared to 2019.
NCC, excluding Fuel, per APCD is expected to be up approximately 7.0% in Constant-Currency (6.7% As-Reported), compared to 2019. The increase in costs, relative to previous guidance, is driven by an increase in stock compensation expense due to the rise in share price and expected financial performance.
Adjusted Earnings per Share for the entire year are expected to be in the range of $6.00 to $6.20 per share.
Third Quarter 2023 Outlook:
Net Yields are expected to increase 13.5% to 14.0% in Constant-Currency (14.0% to 14.5% As-Reported), compared to the third quarter of 2019.
NCC, excluding Fuel, per APCD is expected to increase by approximately 11.2% in Constant-Currency and As-Reported, compared to the third quarter of 2019. Approximately half of the cost increase compared to 2019 is related to structural costs, a timing shift of operating expenses from the second quarter, and an increase in stock compensation expense.
Adjusted Earnings per Share for the third quarter are expected to be in the range of $3.38 to $3.48 per share.
Second Quarter 2023
The company reported Net Income for the second quarter of $458.8 million or $1.70 per share compared to Net Loss of $(0.5) billion or $(2.05) per share for the same period in the prior year. The company also reported an Adjusted Net Income of $491.7 million or $1.82 per share for the second quarter compared to an Adjusted Net Loss of $(0.5) billion or $(2.08) per share for the same period in the prior year.
Second-quarter revenue significantly exceeded the company’s guidance due to higher pricing and higher shipboard revenue across the company’s key itineraries, including the Caribbean and Europe. The load factor for the second quarter was 105%.
Gross Cruise Costs per APCD increased by 10.9% As-Reported, compared to 2019. NCC, excluding Fuel, per APCD increased by 8.6% As-Reported and 9.0% in constant currency, compared to 2019. Favourable timing of operating expenses drove NCC lower, however, it was offset entirely by an increase in stock compensation expense-related costs due to the significant rise in share price and expected financial performance.
Update on Bookings
Booking volumes in the second quarter remained significantly higher than in the corresponding period in 2019 and at record pricing levels. Demand for 2023 sailings has significantly exceeded expectations and bookings for 2024 sailings are up significantly versus all prior years at record prices. Demand from the North American consumer has remained incredibly strong throughout the year, and booking volumes from European consumers who are booking European cruises this summer have accelerated.
The further increase in yield expectations for the year is the result of higher pricing and onboard revenue expectations for key itineraries, particularly in North America and Europe. Consumer spending onboard, as well as pre-cruise purchases, continue to significantly exceed 2019 levels driven by greater participation at higher prices.
As of June 30, 2023, the Group’s customer deposit balance was at a record-high $5.7 billion.
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