Royal Caribbean International’s Icon of the Seas and the Wonder of the Seas met in the Bahamas earlier this week.
Currently serving as the world’s largest cruise ships, the vessels docked simultaneously at the company’s private island destination Perfect Day at CocoCay.
After assuming the title in 2023, the Icon of the Seas is currently the largest cruise ship in the world at over 250,000 tons.
Starting on Jan. 27, the 365-meter-long ship is scheduled to offer a series of week-long sailings to the Caribbean departing from PortMiami.
In addition to weekly visits to Perfect Day at CocoCay, Icon’s schedule includes many popular ports in the region, including St. Maarten, St. Thomas, and St. Kitts.
At 250,800 tons, the Icon of the Seas was built by the Meyer Turku in Finland, and can accommodate over 5,610 guests at double occupancy, in addition to 2,350 crew members.
Previously serving as the largest cruise ship of the world until 2023, the Wonder of the Seas is offering week-long cruises departing from Port Canaveral.
Slightly bigger than its sister ships, the 227,627-ton vessel is part of the Oasis Class and entered service in early 2022.
Sailing from its Florida homeport every Sunday, the 5,448-guest vessel offers different itineraries to the Western and the Eastern Caribbean.
The recent arrival in CocoCay was part of a seven-night cruise to the Western Caribbean that also features visits to Cozumel and Costa Maya, in Mexico, as well as Isla de Roatán, in Honduras.
During its year-round program in the region, the Wonder of the Seas also sails to Puerto Rico, St. Maarten, Labadee, and more.
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.”
“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.”
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