Q4 2019 Earnings Call
Thank you.
Good morning, everyone and thank you for joining us for live Lads 2019 fourth-quarter and full-year earnings call with me on the call. Today is Finland by our founder and chief executive officer page will begin with some opening comments. And then I will follow with some details in our fourth-quarter and full-year results before we open the call for Q&A. You can find our latest earnings release in the investor relations section of our website before we get started. Let me remind everyone at the company's comments today may include forward-looking statements those expectations are subject to risks and uncertainties that may cause actual results and performance would be materially different from these expectations. The company can see the accuracy of any forecast or estimates and we undertake no obligation to update any such forward-looking statements. If you would like more information on the risks involved in forward-looking statements, please see the company's SEC filings in addition. Our comments May reference non-gaap Financial measures. I reconciliation of the most directly comparable gaap Financial measures wage.
and other Associated disclosures
Are contained in the company's earnings release and with that out of the way, let me turn the call over to thank you Craig and thanks everyone for joining us this morning. I just a pleasure to be here today to discuss strong financial performance this past year and to highlight some of the Strategic steps. We have taken and continue to take to build upon this momentum in the years ahead as to demand for travel an expedition cruising specifically continues to rise with a proven track record of delivering authentic and high-quality experience in some of the world's most remarkable geographies. No company is better positioned to capitalize on this trend and then let Expeditions. This is certainly evident in our 2019 Financial results. Craig will discuss the specifics just a moment but lindblad strong growth this past year, once again demonstrates our ability to maintain high heels combined with high occupancy as we add significant capacity since we strategic
We began investing in our new bill.
Graham back in 2015 in bed has increased are available guest Nights by over 20% while expanding net yields by 8% and maintaining occupancy levels at over 90% as more and more guests are experiencing the intimate and immersive Expeditions. We deliver the latest addition to our Fleet the hundred passenger National Geographic Adventure just completed his first full year of operations and guests have been extremely pleased with her Comfort level her array of exploration tools the quality of our service and amenities and her ability to explore where many other ships home simply cannot go with the addition of events of this past year and our sister ship the National Geographic question 2017. We have increased the size of our us Coastal Fleet by over two thousand and fifty percent the primary reason we undertook this level of expansion was the excess demand. We believed existed in certain key geographies most notably Alaska, which certainly has proven to be wage.
Case this past summer even without it.
We nearly sold-out our Alaska inventory for the entire 2019 season while increasing our yields across the expanded u.s. Fleet in all of our long-term plans with regards to building the the focus Coastal ships. We took a conservative approach with regards to what the shoulder Seasons would generate. The high Returns on investment anticipated for these vessels was highly recommended on our ability to do the to deliver strong returns during the summer months and it's certainly been the case. However, we believe there's shoulder seasons do represent a real opportunity. We continue to develop a number of ideas that will take greater advantage of these periods. This is where the bulk of a wild Escape shorter four and five night programs are being developed. These programs will take some time to build and gain significant traction. The occupancy is out of the gate are not expected to be at the same level as some of our traditional itineraries, but they will create opportunities for us to generate additional Returns on the birth.
during the winter months while also developing a
Broader pipeline for attracting new guests many of whom do not have the resources to embark on longer Expeditions at this particular stages of their lives a great example of night program. We are offering in Mexico's Magdalena Bay a geography that we have been operating in since 1981. It's a location that traditionally generated plenty of bandwidth only to us ships. But with an expanded Coastal Fleet, we are looking for unique ways to expose broader audiences to this remarkable region. This newly-developed Expedition is an action-packed itinerary during the height of the gray whale season with amazing opportunities to have intimate contact from sea level on our Zodiacs. It's a geography we are deeply familiar with and this more compact itinerary birth stunning experiences to a place that is easy to get to with a possibility of taking extra time, and it's a perfect Escape.
We are currently offering offering 11 different wild Escape programs across seven different geographies. And we're very excited about further development of these unique experiences for our guests off the big growth engine in the year ahead will certainly be the launch of our first new-build Polar Ice class ship the National Geographic endurance. I just returned from my last visit to see her and was going away. I wish everyone on this call could see an experiencer. This is Expedition Excellence meets Elegance in Spades robust would be an understatement. This ship can literally go where no ship built for life has ever gone. She has technically Innovative and expansive with magnificent public spaces including the First floating Art Exhibit in history curated by the incomparable area form and fifty plus artists have created an exhibit showcasing the Wonder and the importance of ice throughout the ship. There's literally no know where you can go where you are not connected to the outside wage.
Even the sun is have an ocean view and given that this ship will rarely see Darkness the connection out will be huge.
Significance of excited to be joining her on her inaugural Voyage in early April in the Norwegian Arctic a place of stunning Beauty at a time most other ships would never contemplate and this is just the first of many truly remarkable voyage voyage is here scheduled for the upcoming year including an expedition across the Northeast passage and a 35-day epic wage in Antarctica demands to this new state-of-the-art Expedition ship has been off the charts and she is already over 95% sold for the entire year.
Based on the very strong response for the endurance early last year. We took the next step in our ongoing new-build strategy by committing to her sister ship the National Geographic resolution waited for delivery in the fourth quarter of 2021. One of the important lessons. I've learned through the years is to be careful not to undertake and if you build it, they will come strategy before committing to this further Hardware expansion. We look closely at the demand curves for expanding Fleet as well as factors such as market dynamics the competitive landscape the quality of the yard. We were working with an external acquisition of opportunities. The resolution is just gone on sale for the 21 22 Antarctic season and while still very early initial demand has been strong we're excited about the opportunity to further expand a slate.
Another area where we are.
Expanding. Our offerings is across our Charter vessels as a reminder. There are four key reasons why we Charter One to provide our past guess with greater diversity to to get more familiar with a region where we might wish to expand trade to check out ships. We met one day acquire several of our own shift started off as Chargers and for the economics of favorable because we can easily adjust the inventory month demand relationship. We continue to fine-tune our Charter offerings and are close to announcing some new itineraries for 2021 as we strategically expand. The geographies. We've is the size of our Fleet. We're also continue to invest in our infrastructure and communication reach to ensure they are capable as we need them to effectively handle the anticipated growth in 2018. We started a broad digital transformation Journey which involved Reinventing nearly every point of digital interaction. We have with our guests and travel agent Partners across four major wage.
a new CRM platform
A new marketing Cloud a new website and it new reservation system powering It All We Are live with the first phase of our new CRM platform having connected it to our existing reservations platform with a remaining three components of the Journey coming to fruition later this year. Our new CRM platform is already allowing us to capture and Market to leads that are prior sister was unable to capture and is allowing us to provide a more seamless guest experience by creating a more rigorous and complete history of guests interactions as we roll out the remaining elements of our digital transformation program. It will only enhance our CRM capabilities by providing a full 360-degree view of the guests enabling sales and marketing actions that can be triggered in real time. I guess in travel advisory activity.
The rollout of our new website and reservations platform will provide an enhanced digital guest experience including full online booking capabilities into live inventory and dynamic pricing. We also continue to see returns for my increased marketing and sales efforts this past year. Our Focus has been twofold investing more deeply and lower funnel media targeting consumers who have made some indications. They are interested in our type of travel and invested in investing more in media to create brand awareness to audiences that have a higher propensity to purchase our travel Services, even if they have an explicit indicated that they're currently in the market for an expedition so far. We are seeing success in both areas as an example visitation expeditions.com one way of gauging the effectiveness of weirdness driven media was up 67% year-over-year driven by primarily by traffic associated with our media campaigns.
in terms of our efforts
To increase conversation new households joining our database increased nearly 20% of 2019 and growth from direct bookings from first-time guests outpaced all other channels and 2019 largely driven by our media efforts. We continue to learn and optimize our marketing approach and so far in 2020. We are seeing further increases in performance vs 19
the bulk of the benefit from our technology and marketing investments will bear fruit over the long term. But they also helping to drive the strong reservation Trends we continue to see today. We already have generated 55 million more in bookings for 2020 then we had at the same point a year ago for 2019 and we just had the strongest January in our history. Let's take a moment to discuss the coronavirus as I'm sure it's top of mind for most people on this call for first of all, we only operate one small Charter ship in Asia and the majority of the 2020 itineraries on this vessel have already taken place second less than 1% of our guests are sourced from China and we have put in strict protocols around any guess that have traveled through this region including Hong Kong and Macau. So we fully expect the direct impact on our business to be relatively small.
extremely small
However, we do understand that this is an issue of both reality and perception. So there will be some indirect impact this situation is not unique frankly and we have faced many situations like this before SARS terrorism War financial crisis crisis in each instance is a similar pattern relatively few cancellations allow in future bookings many times plus or minus a month followed by a robust return to normal. We don't say see why this should be any different and February February is on track to be as productive slightly increased over last February. So we're not seeing any any decline in business to date. We also have the advantage of traveling to places where Contracting any diseases reduced wage because of limited outside human connection. Our whole primary mission is to avoid crowds focusing instead primarily on nature. Obviously, there are exceptions, but there are a few plus we have very educated Samsung.
clientele they are going to
Perception. In fact far better than most and will conclude the traveling with us does not present undue risk this to like any other such illness will hopefully lessons will have been learned in life goes off. One thing I do know is that managing anything that represents this kind of risk is far simpler when dealing with smaller units as the outlook for our marine-based operations remains strong. So does the momentum on our land-based operator natural habitat 2019 was in another year of strong growth as more and more guest experienced the diverse products. We offer from safaris in Africa by two polar bears in Churchill. We continue to fine-tune our itineraries to focus on those that have the most upside. Well also looking for ways to capitalize and cross-marketing opportunities between lindblad and natural habitat. We know that our guests have a diverse portfolio of travel interest and tend to be omnivorous. So they're travelling so the traveler trying to talk to you one year may be compelled to take an African safari the next and vice versa.
the crossover I
Activity of lindblad and natural habitat constituent constituents is continuing to grow exponentially each year and we have an excellent excellent template for further Acquisitions as to how to best maximize the long-term value. And finally while in about is always been at the Forefront of environmental Consciousness. We have really stepped it up in the past years, which we believe is both the right thing to do and the same thing to do from a business perspective. So we are as of 2019 a carbon-neutral company. We have eliminated all single-use Plastics. We are pressuring Supply chains to eliminate waste off sustainable food procurement is increasing annually new engine technology is incorporated new bills and the list goes on and on and smaller yet meaningful ways. This is not green flashing. This is multi-pronged attack.