Tag Archives: revenue

Royal Caribbean: Better Than Expected Q2 2023 Results

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Royal Caribbeans Serenade of the Seas leaving the port of Vancouver, photo credit Spacejunkie2 Flickr

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.

‘EXCEPTIONAL’ Q1 BOOKINGS HELP RCG UPGRADE 2023 PROFIT PROJECTIONS

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Independence of the Seas in the port of Southampton, photo credit Spacejunkie2 (Flickr).

Royal Caribbean Group (RCG) saw booking volumes in the first quarter of 2023 perform “considerably” better than expected, enabling the company to “significantly” improve its revenue expectations for all three remaining quarters of 2023.

In a recent trading update covering the three months to 31 March, the group, which owns Royal Caribbean, Silversea and Celebrity Cruises, saw an earlier start to an extended wave period generate a record level of bookings.

The strong trends resulted in an acceleration of the group’s booked position in relation to prior years, with the company generating “significantly” more bookings at “meaningfully” higher prices.

This year’s wave resulted in strong close-in demand at higher prices for the first quarter and enabled a significant improvement in revenue expectations for all three remaining quarters.

The increase in yield expectations for the year is predominantly related to higher load factors in the first quarter and higher prices for all four quarters, especially for Caribbean sailings.

Consumer spending onboard, as well as pre-cruise purchases, continue to exceed 2019 levels driven by greater participation at higher prices. The company expects load factors to reach “historical” levels by late spring.

“We knew that demand for our business was strong and strengthening, but we have been pleasantly surprised with how swiftly demand further accelerated well above historical trends and at higher rates,” said Jason Liberty, president and chief executive of RCG.

“Leisure travel continues to strengthen as consumer spending further shifts towards experiences. Demand for our brands is outpacing broader travel due to a strong rebound and an attractive value proposition.”

The company reported a net loss for the first quarter of $47.9 million compared to a net loss of $1.2 billion for the same period in the prior year. 

The group also experienced particularly strong close-in demand for Caribbean itineraries, which accounted for close to 80% of first-quarter capacity. Load factors in the first quarter were 102%.

Adjusted earnings per share for the full year are expected to be in the range of $4.40 to $4.80 per share.

Norwegian Cruise Line Raises Onboard Prices and Posts Strong Onboard Revenue Numbers

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Onboard revenue is seen as a real-time now indicator of how guests are feeling about their financial situation right now and while onboard company ships, according to Frank Del Rio, president and CEO of Norwegian Cruise Line Holdings.

“Onboard revenue generation has continued to be impressive, even as we continue to ramp up occupancy carrying more guests across all ships and cabin classes. In the second quarter, onboard revenue per passenger cruise day was approximately 30 per cent higher than during the comparable 2019 period,” he said, on the company’s second-quarter earnings call.

Mark Kempa, CFO, added that the company had raised prices for “all of our offerings” onboard the ships.

“We’ve gotten smarter in the pre-marketing of our products, creating that sense of urgency before the consumer steps onboard,” he said. “Those consumers who have a stronger propensity for presales, they also spend more, about 30% or 40% more once they’re on board. So, it’s a combination of all those. But the numbers are strong. We’re seeing a strong consumer today, spending today’s dollars. And we feel that bodes well for ourselves and the industry.”

Del Rio said that pre-cruise revenue was up 50 per cent compared to 2019 levels.

“We continue to focus on enhancing our market-leading bundled offerings and increasing quality touch points with our guests starting from the time of booking to capture even more revenue pre-cruise, allowing guests to arrive on board with an ever fresher wallet, which ultimately results in higher overall spend. In fact, our pre-cruise revenue on a per passenger day basis for the second quarter of ’22 is up over 50% versus 2019 levels. At a high level, guests who make pre-cruise purchases tend to spend approximately double that of guests who do not pre-book onboard activities,” he said.