Release Date: April 25, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q & A Highlights
Q: Congratulations on the solid results and outlook. So Jason, you obviously gave a lot of color around how bookings are shaping up for the rest of this year. But look, if we think about bookings for next year, I'm sure that's where a lot of investor interest levels are going to go to pretty surely. So you're just wondering what kind of color you can give us for 2025 at this point. I'm wondering if the booking and pricing strength that you're seeing today is being transferred so far into 2025?
A: (Jason T. Liberty - Royal Caribbean Cruises Ltd. - President, CEO & Director) Steve, thanks for the question. So one, I mean, all of our commentary around our bookings, the strength that we're seeing that not only relates to 2024, but also to 2025. And we're getting close to the point where we'll soon be taking more bookings for '25 than we are for 2024. And so when we look into the booking behavior, one, the booking window continues to extend. So guests are making their decisions much further out. When we look at the repeat rates that are going on and the dreaming that our guests are doing to make sure that they're getting the vacation experience that they want, is really all leading to very, very strong demand trends for 2024 as well as 2025. And by the way, we're also taking bookings into 2026. And we're also seeing very strong booking behavior pre-cruise, and again, making sure that our guests are -- have the ability to get their first day of their vacation back by planning their onboard activities or shore excursion activities well in advance. And that's also not only helping our ability to yield manage on the onboard experience, but it's also improving the -- our customer deposits, which is also rising due to that. So all in all, things just continue to accelerate and the thirst or hunger for our brands and their experiences just continues to grow. And you see that not in just the booking behavior, but also all of our survey data around, what propensity to cruise, but also propensity to cruise with us.
Q: Okay. Got you. And then second question, probably a bigger picture question. But look, if I remember correctly, before the pandemic, you guys are always targeting, I think it was $20 a share in earnings by 2025. And look, obviously, you weren't prepared to give another long-term set of financial targets today. But I mean, look, if we start to think about your capacity yield cost algorithm, are we crazy to think that getting back to $20 even with the dilution and the higher interest cost that you guys took on during COVID, I mean, it seems like that's probably back on the horizon again. Are we kind of crazy to think that way?
A: (Jason T. Liberty - Royal Caribbean Cruises Ltd. - President, CEO & Director) Well, I won't get into how crazy you are, Steve, because that could take the balance of the call. But I think as you pointed out, which I think is an important component is we have a business that has really strong operating leverage. And what we have talked about is our formula for success, which is moderate yield growth, which clearly we haven't seen this year. We don't see that last year. We've seen elevated yield growth. Moderate yield growth good cost control, moderately grow your business, bring on new destinations, drive -- really very -- I mean, tremendous earnings power. You think about a 1% change in our yields is $120 million this year. A 1% change in our cost is about half of that. So grow your yields faster than your costs, bring in really strong, high-yielding capacity that has great inventory mix. You bring in new destinations like we did this year with Hideaway, bringing it into the Beach Club in Nassau, bringing in the Beach Club in Mexico, et cetera. These are all things that are driving very high margins for us and is improving our return profile as well as our earning profile. And of course, none of that takes into account, I mean, Naf and team have done an exceptional job already on the balance sheet. There will be more opportunity to continue to lower the negative carry, and of course, we haven't -- none of this contemplates capital returns, which is one thing that we were doing pre-COVID. So it's something that we think as we look at, how do we continue to improve shareholder return, those are things that could also improve our earnings outlook is by considering the dilution that occurred and returning capital to shareholders. All of this are things in which we will begin to address once we get to our Trifecta goals, which, as you know, we describe as base camp.
Q: It sounds like demand is accelerating. It would be great to hear any color on demand for Paradise Island. And then I guess related, can you talk to about how you're differentiating the destinations from a marketing perspective of CocoCay, and then Paradise Island, Cozumel or maybe by ship class. Just any nuances you would call out? Like is this a CocoCay returning customer or a different person?
A: (Michael W. Bayley - Royal Caribbean Cruises Ltd. - President & CEO of Royal Caribbean International) Ben, it's Michael. I mean, when we think of the Beach Club portfolio that we're planning on developing along with Perfect Day, they're incredibly complementary destination experiences, and they fit really in the sweet spot of the -- of our demographics and really in terms of what our guests are seeking looking for when they go on a Caribbean cruise, they really knock it out of the park in terms of satisfying that demand, that need. So a very similar type of product, different vibe, Perfect Day is a full day for thrill and chill, and the Beach Club is, as you imagine, it's just an incredible day at the beach, which is what most gas is seeking in the Caribbean, and it's curated by Royal Caribbean. It's a stunning experience. And of course, it's very authentically connected to the culture. For example, in the Bahamas or Mexico, and it really is a huge demand driver. When we look at the demand that we've seen for Perfect Day, this year, we'll take 3.2 million guests to Perfect Day. Last year, it was 2.6 million. And it really is a demand driver. People want to sail on the ships, they go to Perfect Day and they want to sail on the ships, they go to the Beach Club. And I think it's proven to be incredibly successful. When you wrap that up with the kind of hardware we've introduced, for example, Icon, which has been an unbelievable success, I mean, beyond our wildest dreams success, and you add on Utopia, which is a brand-new Oasis-class ship, which was going straight into the short product market out of Port Canaveral, the demand we've
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
