Q1 2024 Royal Caribbean Group Earnings Call
Jason T. Liberty: Our business is propelled by our people, and they are the driving force behind our strategic vision for success. I am so grateful for their commitment and passion.
Our business is propelled by our people and they are the driving force behind our strategic vision for success.
Jason T. Liberty: So grateful for their commitment and passion.
Jason T. Liberty: Now moving onto our results as highlighted on slide four the first quarter was tremendous sending us well on our path to a year that is significantly better than we expected just a few months back wave season, combined with a record breaking introduction of the revolutionary icon of the seas.
Jason T. Liberty: Now moving on to our results. As highlighted on slide four, the first quarter was tremendous, sending us well on our path to a year that is significantly better than we expected just a few months ago. The wave season, combined with a record-breaking introduction of the revolutionary icon of the seas, resulted in consistently robust bookings at much higher prices than 2023. This strong booking and pricing environment across all key itineraries, coupled with continued strength in onboard spend, led to higher revenue in the first quarter and a further improvement in full-year yield expectations.
Jason T. Liberty: And consistently robust bookings at much higher prices than 2023.
Jason T. Liberty: This strong booking and pricing environment across all key itineraries, coupled with continued strength in onboard spend.
Jason T. Liberty: Two higher revenue in the first quarter and a further improvement in full year yield expectations.
Jason T. Liberty: In the first quarter, we delivered 2 million memorable vacations and achieved 107% load factor with exceptional guest satisfaction scores. Yields grew 19.3% compared to the first quarter of 2023, almost 400 basis points above our initial guide.
Jason T. Liberty: In the first quarter, we delivered 2 million memorable vacations and achieved 107% load factor at exceptional guest satisfaction scores.
Jason T. Liberty: <unk> grew 19, 3% compared to the first quarter of 2023.
Jason T. Liberty: Almost 400 basis points above our initial guidance.
Jason T. Liberty: Adjusted earnings per share in the first quarter was considerably higher than our guidance strong ticket and onboard revenue and favorable timing of expenses contributed to the better than expected earnings performance.
Jason T. Liberty: Adjusted earnings per share in the first quarter was considerably higher than our guidance. Strong ticket and onboard revenue and favorable timing of expenses contributed to the better-than-expected earnings performance. The acceleration of demand is also translating into higher revenue and earnings expectations for the balance of the year. As you can see on page 5, we are increasing full-year yield growth expectations by 50% compared to our initial guidance in early February, and we now expect adjusted earnings per share to grow 60% year-over-year.
Jason T. Liberty: The acceleration of demand is also translating into higher revenue and earnings expectations for the balance of the year.
Jason T. Liberty: As you can see on page five.
Jason T. Liberty: We are increasing full year yield growth expectations by 50% compared to our initial guidance in early February and we now expect adjusted earnings per share to grow 60% year over year.
Jason T. Liberty: The increased outlook for the year is expected to further accelerate our trajectory towards our trifecta goals, as we continue to expect to achieve all three goals in 2024, one year earlier than initially expected. Now, I'll provide some insight into the robust demand environment and our incredible wait. Bookings consistently outpaced last year throughout the entire first quarter and through April, even though we have significantly fewer staterooms left to sell, leading to higher pricing for all of our key products. We see strong demand across all products and markets. North America continues to be extremely robust, where approximately 80% of this year's guests are sourced.
Jason T. Liberty: The increased outlook for the year is expected to further accelerate our trajectory towards our trifecta goals as we continue to expect to achieve all three goals in 2020 for one year earlier than initially expected.
Jason T. Liberty: Now I'll provide some insight into the robust demand environment and our incredible wave season.
Jason T. Liberty: Bookings consistently outpaced last year throughout the entire first quarter.
Jason T. Liberty: And through April even though we have significantly fewer staterooms left to sell.
Jason T. Liberty: Leading to higher pricing for all of our key products.
Jason T. Liberty: Booking strength has been prevailing on both our existing hardware as well as on our industry, leading new chips.
Jason T. Liberty: We see strong demand across all products and markets North America continues to be extremely robust where approximately 80% of this year's guests are sourced.
Jason T. Liberty: This strength, combined with the incredible perfect day of CoCoK, has resulted in strong yield growth for our Caribbean sales. European bookings are outpacing last year's levels at higher prices, and Alaska has been performing particularly well with year over year yield growth. We are also pleased to return to the high-yielding China market this month with Spectrum of the Seas and to add Ovation of the Seas to Tianjin in 2025 as we rebuild our China business. With our return to China, we are now finally back in all of our key markets, which enables us to capture quality global demand and source from new consumer base.
Jason T. Liberty: This strength in combination with the incredible perfect day Coke. Okay has resulted in strong yield growth for our Caribbean sailings.
Jason T. Liberty: European bookings are outpacing last year's levels at higher prices and Alaska has been performing particularly well with year over year yield growth.
Jason T. Liberty: We're also pleased to return to the high yielding China market. This month with spectrum of disease and to add ovation of the seas Tianjin in 2025, as we rebuild our China business.
Jason T. Liberty: With our return to China, we are now finally back and all of our key markets, which enables us to capture quality global demand and source from new consumer basis.
Jason T. Liberty: Customer sentiment remains very positive, bolstered by resilient labor markets, wage growth, stabilizing inflation, and record high household net worth. Consumer preferences continue to shift towards spend on experiences, with particular priority for travel. This is evident as the year over year growth in spend on experiences is double that of spend on goods.
Jason T. Liberty: Customer sentiment remains very positive bolstered by resilient labor markets wage growth stabilizing inflation and record high household net worth.
Jason T. Liberty: Consumer preferences continue to shift towards spend on experiences, particularly priority for travel.
Jason T. Liberty: This is evident as the year over year growth in spend on experience is double that of spend on goods. Despite.
Jason T. Liberty: Despite our ability to narrow the gap to land-based vacations in the last 12 months, cruising still remains an exceptional value proposition. We continue to see excellent engagement from customers who are booking their dream vacations with us across all our products. Guests are buying 10% more onboard experiences per booking than in the first quarter of last year, and they continue to book these onboard activities earlier and at meaningfully higher APDs, translating it to higher on-board spend.
Jason T. Liberty: Despite our ability to narrow the gap to land based vacations in the last 12 months cruising still remains an exceptional value proposition.
Jason T. Liberty: We continue to see excellent engagement from customers, who are booking their dream vacations with us across all our products.
Jason T. Liberty: Yes, Sir buying 10% more onboard experiences per booking than in the first quarter of last year and they continue to book these onboard activities earlier and that meaningfully higher a P DS translating into higher onboard spend.
Jason T. Liberty: Looking to the rest of 2020 for the year is shaping up to be exceptional with strong yield and earnings growth.
Jason T. Liberty: Looking to the rest of 2024, the year is shaping up to be exceptional, with strong yield and earnings. We expect to achieve all trifecta targets in 2024, allowing us to focus on a new era of growth to drive long-term shareholder return. As I mentioned previously, trifecta creates the pathway back to what we internally describe as basic.
Jason T. Liberty: We expect to achieve all trifecta targets in 2024, allowing us to focus on a new era of growth to drive long term shareholder returns as.
Jason T. Liberty: As I mentioned previously trifecta creates a pathway back to what we internally described as base camp.
Jason T. Liberty: But our ambitions go well beyond that. As highlighted on slide seven, we now expect to deliver net yields that are nine to 10% higher than in 2023. Our yield outlook is driven by the performance of new and existing ships, combined with our leading private destinations, a strong pricing environment, continued growth from on-board revenue, and our accelerating commercial apparatus. In the second half of 2024, we expect to deliver mid-single-digit yield growth above our typical moderate yield growth expectation and on top of an approximately 17% yield increase in the back half of 2020.
Jason T. Liberty: But our ambitions go well beyond it as highlighted on slide seven we now expect to deliver net yields that are 9% to 10% higher than 2023.
Jason T. Liberty: Our yield outlook is driven by the performance of new and existing ships combined with our leading private destinations a strong pricing environment.
Jason T. Liberty: Continued growth from onboard revenue and are accelerating commercial apparatus.
Jason T. Liberty: In the second half of 2024, we expect to deliver mid single digit yield growth above our typical moderate yield growth expectations and on top of an approximately 17% yield increase in the back half of 2023.
Jason T. Liberty: We also continue to expect the business to deliver higher margins and earnings in 2024 with adjusted earnings per share expected to grow 60% year over year.
Jason T. Liberty: We also continue to expect the business to deliver higher margins and earnings in 2024, with adjusted earnings per share expected to grow 60% year over year. As we look ahead, we remain focused on executing our proven formula for success, moderate capacity growth, moderate yield growth, and strong cost controls that lead to enhanced margins, profitability, and superior financial performance. Our operating platform remains a key differentiator and is bigger and stronger than ever.
Jason T. Liberty: As we look ahead, we remain focused on executing our proven formula for success moderate capacity growth moderate yield growth and strong cost controls that lead to enhanced margins profitability and superior financial performance.
Jason T. Liberty: Our operating platform remains a key differentiator and is bigger and stronger than ever we remain intensely focused on attracting and keeping guests within our unique portfolio of brands and providing experiences for all of life's moments, while delivering long term value for our shareholders.
Jason T. Liberty: We remain intensely focused on attracting and keeping guests within our unique portfolio of brands and providing experiences for all of life's moments while delivering long-term value for our shareholders. Our addressable market is expanding, and NutaCruz continues to grow, increasing 16% year-over-year.
Jason T. Liberty: Our addressable market is expanding and new to cruise continues to grow increasing 16% year over year. These.
Jason T. Liberty: These guests are discovering our differentiated vacation experiences and are increasingly returning to us as we see repeat rates over 30% higher compared to 2019. Additionally, our brands also continue to attract new and younger customers. Millennials and younger generations have gained 11 percentage points of share compared to 2019. And today, almost one in two guests are millennials or young.
Jason T. Liberty: These guests are discovering our differentiated vacation experiences and our.
Jason T. Liberty: Kris singly returning to us as we see repeat rates over 30% higher compared to 2019.
Jason T. Liberty: Our brands also continue to attract new and younger customers.
Jason T. Liberty: Millennials and younger generations have gained 11 percentage points share compared to 2019 and today almost one and two guests are millennials or younger.
Jason T. Liberty: New hardware has been a great differentiator for us.
Jason T. Liberty: New hardware has been a great differentiator for us. Since Icon of the Seas joined the fleet a few months ago, it is already exceeding our lofty expectations in both guest satisfaction and financial performance. We are also excited for the arrival later this year of Utopia of the Seas, a ship that is positioned to be another game changer for our short Caribbean product, and Silver Ray, which continues to reimagine the ultra-luxury and expedition segment. Demand and pricing for those new ships have been incredibly strong.
Jason T. Liberty: The iconic <unk> joined the fleet a few months ago. It is already exceeding our lofty expectations in both guest satisfaction and financial performance. We were also excited for the arrival later this year of Utopia sees a ship that is positioned to be another game changer for our short Caribbean product and silver array, which continues.
Jason T. Liberty: To re imagine the ultra luxury and expedition segment.
Jason T. Liberty: Demand and pricing for those new ships has been incredibly strong.
Jason T. Liberty: Also this quarter, we announced an order for a seventh ship in our hugely successful OASIS class that will join the fleet in 2028. Our brands continue to lead their segments and generate quality demand, and we see a very large opportunity to take a greater share of the rapidly growing $1.9 trillion vacation market as we continue to grow our fleet and vacation experience. We are leading the vacation industry and creating exciting new products and experiences, which include Private Destiny.
Jason T. Liberty: Also this quarter, we announced an order for a seventh ship and our hugely successful Oasis class that will join the fleet in 2028.
Jason T. Liberty: Our brands continue to lead their segments and generate quality demand and we see a very large opportunity to take greater share of the rapidly growing one nine trillion dollar vacation market as we continue to grow our fleet and vacation experiences.
Jason T. Liberty: We are leading the vacation industry, and creating exciting new product and experiences which include private destinations.
Jason T. Liberty: The newest addition to our growing portfolio, A Private Destination, is the Royal Beach Club and Cozumel, Maryland, that is set to welcome guests in 2020. With a combination of activities for every type of vacationer, Royal Beach Club Cozumel will further enhance our guests' experience, giving guests the ultimate beach day.
Jason T. Liberty: The newest addition to our growing portfolio of private destinations is the Royal Beach club and caused the mill in Mexico that is set to welcome guests in 2026 with.
Jason T. Liberty: With a combination of activities for every type of Vacationer Royal Beach club cause of Mel will further enhance our guest experience, giving guests the ultimate Beach day.
Jason T. Liberty: Earlier this week, we also celebrated another important milestone when we officially broke ground on Royal Beach Club Paradise Island and NASA, which is scheduled to open next year. Our journey to deepen the relationship with our customers continues this year. We are further enhancing our commerce platform through new technology and AI to continue improving the experience for our different distribution channels, build even more customer loyalty, and lower our costs to acquire customers. We are removing friction and unlocking travel planning by investing in a modern digital travel platform, making it easier than ever for guests to book their dream vacations while allowing us to expand wallet share.
Jason T. Liberty: Earlier. This week, we also celebrated another important milestone when we officially broke ground on Royal Beach Club Paradise Island, and Nassau, which is scheduled to open next year.
Jason T. Liberty: Our journey to deepen the relationship with the customers continues this year. We are further enhancing our commerce platform through new technology and AI to continue improving the experience for our different distribution channels build even more customer loyalty and lowering our cost to acquire the guest.
Jason T. Liberty: We are removing friction and unlocking travel planning by investing in a modern digital travel platform, making it easier than ever for guests to book their dream vacations, while allowing us to expand wallet share.
Jason T. Liberty: Our digital experiences delight guests. Our mobile app is consistently adopted by 94% of our guests on board, and we continue to enhance its capability. Among other features, we introduced Cruise Booking Capabilities in the app last year and recently added the ability to book flights.
Jason T. Liberty: Our digital experiences delight guests our mobile App is consistently adopted by 94% of our guests' onboard and we continued to enhance its capabilities.
Jason T. Liberty: Among other features we introduced.
Jason T. Liberty: Cruise booking capabilities in the App last year and recently added the ability to book flights.
Jason T. Liberty: We also created a loyalty hub so customers can quickly enroll and track their loyalty tiers and benefits. We will continue to enhance those capabilities in 2024. Our sustainability ambitions help support our mission to deliver the best vacation experiences responsibly. We recently released our 16th annual Seastanability Report, which outlines the progress we are making on See the Future, our vision to sustain the planet, energize communities, and accelerate innovation. We are actively making progress towards our journey to net zero emissions, including double-digit carbon intensity reduction, and we are now beyond the halfway mark.
Jason T. Liberty: We also created a loyalty hub so customers can quickly enroll and track their loyalty tiers and benefits, we will continue to enhance those capabilities in 2024 and beyond.
Jason T. Liberty: Our sustainability ambitions help support our mission to deliver the best vacation experiences responsibly.
Jason T. Liberty: We recently released our 16th annual CCA inability report, which outlines the progress we are making on see the future our vision to sustain the planet energized communities and accelerate innovation.
Jason T. Liberty: We are actively making progress towards our journey to net zero emissions, including double digit carbon intensity reductions and.
Jason T. Liberty: And we are now beyond the halfway mark.
Jason T. Liberty: Alongside the Sustainability Report, we published our first community impact report, which delves into how we energize the communities we visit. It highlights long-term projects that inspire future generations and our dedication to empowering local entrepreneurs through business development and micro-grant programs like the Royal Caribbean Kickstarter in the Bahamas. As we make progress, we also know achieving net zero can't be done alone and will need strong collaboration across the full marine ecosystem, including operators, suppliers, ports, and technology providers.
Jason T. Liberty: Alongside the sustainability report.
Jason T. Liberty: We published our first community impact report, which delves into how we energized the communities we visit at.
Jason T. Liberty: It highlights long term projects that inspire future generations, and our dedication to empowering local entrepreneurs through business development and micro grant programs like the Royal Caribbean Kickstarter in the Bahamas.
Jason T. Liberty: As we make progress we also know achieving net zero can't be done alone will need strong collaboration across the full marine ecosystem, including operators suppliers ports and technology providers. Our business continues to perform exceptionally well I'm incredibly thankful and proud of the teams at the world.
Jason T. Liberty: Our business continues to perform exceptionally well. I'm incredibly thankful and proud of the teams at the Royal Caribbean Group for showing up each and every day to dream and create the best vacation experiences for our guests, allowing us to perform while we travel. The future of the Royal Caribbean group is exceptionally bright, and I couldn't be more excited about what's ahead. And with that, I'm happy to turn the call over to Naftali. Naft? Thank you.
Naftali: <unk> group for showing up each and every day to dream and create the best vacation experiences for our guests, allowing us to perform while we transform.
Jason T. Liberty: The future of the World Cup and group is exceptionally bright and I couldnt be more excited about what's ahead and with that I'm happy to turn the call over to Naftali enough.
Naftali: Thank you, Jason and good morning, everyone I will start by reviewing first quarter results, which were significantly above our expectations.
Naftali Holtz: Thank you Jason and good morning everyone. I will start by reviewing the first quarter results, which were significantly above our expectations. Adjusted earnings per share were $1.77, 36% higher than the midpoint of our most recent guidance of $1.30. 45% of the outperformance, or $0.21, was driven by better pricing for our vacation experiences, with the remainder driven by the federal timing of operating expenses. We finished the quarter with a net yield increase of 19.3% compared to the first quarter of 2023, 385 basis points higher than the midpoint of our initial guidance in early February.
Naftali Holtz: Adjusted earnings per share were $1 70, 736% higher than the midpoint of our most recent guidance of $1 30.
Naftali Holtz: 45% of the outperformance or 'twenty one.
Naftali Holtz: It was driven by better pricing for our vacation experiences with the remainder driven by favorable timing of operating expenses.
Naftali Holtz: We finished the quarter with a net yield increase of 19, 3% compared to the first quarter of 2023 three.
Naftali Holtz: 385 basis points higher than the midpoint of our initial guidance in early February.
Naftali Holtz: While a load factor recovery was a contributor, most of our yield growth was driven by rates that were up by 14% versus 2023. 55% of their outperformance, compared to our initial guidance, was driven by ticket pricing, with the remainder driven by shipboard revenue strength. Net cruise costs, excluding fuel, increased 4.1% in constant currency, 315 basis points lower than our initial guidance; favorable timing was the driver that contributed to the better than expected result. Adjusted EBITDA margin was 31%, and operating cash flow was $1.3 billion.
Naftali Holtz: While our load factor recovery was a contributor most of our yield growth was driven by rates that were up by 14% versus 2023.
Naftali Holtz: 55% of the outperformance compared to our initial guidance was driven by ticket pricing with the remainder driven by shipboard revenue strength.
Naftali Holtz: Net cruise costs, excluding fuel increased four 1% in constant currency 315 basis points lower than our initial guidance.
Naftali Holtz: Favorable timing was a driver then contributed to the better than expected results. Adjusted EBITDA margin was 31% and operating cash flow was $1 3 billion on our last earnings call. We discussed the record breaking start to wave season, and widespread strength in booking pricing and onboard Rev.
Naftali Holtz: On our last earnings call, we discussed the record-breaking start to the wave season and widespread strength in booking, pricing, and onboard revenue. The consistent strength and demand for our brands has led to further amplification and prices well beyond the levels we were expecting. Bookings have been outpacing last year by a wide margin on a weekly basis despite having less inventory remaining for sale. As a result, we continue to be in a record book volume position, and our book per diems are now even further ahead of 2023 than they were as we entered the year. The Caribbean is our largest product group, representing just over 55% of our deployment this year.
Naftali Holtz: Yes.
Naftali Holtz: The consistent strength in demand for our brands has led to a further amplification and pricing well beyond the levels we were expecting.
Naftali Holtz: Bookings have been outpacing last year by a wide margin on a weekly basis, despite having less inventory remaining for sale.
Naftali Holtz: As a result, we continue to be in a record book volume position and our booked per Dms are now even further ahead of 2023 than they were as we entered the year.
Naftali Holtz: The Caribbean is our largest product group, representing just over 55% of our deployment this year.
Naftali Holtz: Overall, the Caribbean products remain in an extremely strong book position with new hardware and much higher pricing on existing ships, contributing to strong yield growth for the product. Europe accounts for around 15% of our capacity for the full year and close to 25% during the summer. Despite the fact that we had to modify some of our Eastern Mediterranean sailings that were previously expected to call in Israel or sail through the Red Sea, our European itineraries have been performing very well.
Naftali Holtz: Overall, the Caribbean products remain in an extremely strong book position with new hardware and much higher pricing on existing ships contributing to strong yield growth for the product.
Naftali Holtz: Europe accounts for around 15% of our capacity for the full year and close to 25% during the summer.
Naftali Holtz: Despite the fact that we had to modify some of our eastern Mediterranean sailings that were previously expected to call in Israel or sell through the Red Sea, our European itineraries have been performing very well.
Naftali Holtz: And we are currently booked nicely ahead of last year in both rate and volume. Regarding the situation in the Red Sea, we have rerouted a handful of spring repositioning cruises, and we also have contingency plans for a few other sailings that may be impacted in the fall. All these are included in our revised guidance this morning, including the reduction in APCDs. We are all close to the start of our summer Alaska season.
Naftali Holtz: And we are currently booked nicely ahead of last year in both rate and volume.
Naftali Holtz: Regarding the situation in the Red Sea, we have rerouted a handful of spring repositioning cruises and we also have contingency plans for a few other sailings that may be impacted in default.
Naftali Holtz: These are included in our revised guidance this morning, including the reduction in <unk>.
Naftali Holtz: We are all close to the start of our summer Alaska season. This product represents 6% of full year capacity and 15% in the summer season.
Naftali Holtz: This product represents 6% of full-year capacity and 15% in the summer season. We have upgraded our Alaska capacity this year for two of our brands. For the first time, Celebrity will offer incredible Alaska vacations on an Edge-class ship. Celebrity Edge, and Silver Sea's new ship, Silver Nova, will also sail in Alaska.
Naftali Holtz: We have upgraded our Alaska capacity this year for two of our brands for the first time celebrity will offer incredible Alaska vacations on the edge class ship.
Naftali Holtz: But he edge and Silversea is new ship silver Nova will also sell in Alaska.
Naftali Holtz: Alaska has been one of our strongest performing itineraries this year and remains in a record booked position. Asia Pacific itineraries will account for 10% of our capacity this year. Overall, our Asia and Australia itineraries continue to perform well, and we're in a strong book position for the upcoming winter. Now, let's turn to slide 7 to talk about our increased guidance expectations for 2024. Our results remain ahead of expectations, and we now expect to meet all our trifecta goals in 2024.
Naftali Holtz: Alaska has been one of our strongest performing itineraries this year and remains in a record booked position.
Naftali Holtz: Asia Pacific Itineraries will account for 10% of our capacity this year.
Naftali Holtz: Overall, our Asia, and Australia itineraries continues to perform well and we are in a strong book position for the upcoming winter season.
Naftali Holtz: Now, let's turn to slide seven to talk about our increased guidance expectations for 2024.
Naftali Holtz: Our results remain ahead of expectations and we now expect to meet all of our to effect that goes in 2024.
Naftali Holtz: Net yields are expected to be up nine to 10% for the full year, a 225 basis point increase from the midpoint of our prior guidance in mid-February. 40 basis points of the increase is due to exceptional first quarter results. The remainder is due to a significantly better business outlook for the rest of the year due to robust demand driving higher pricing and continued strength in onboard revenue. Now moving to cost.
Naftali Holtz: Net yields are expected to be up 9% to 10% for the full year 225 basis point increase from the midpoint of our prior guidance in mid February.
Naftali Holtz: <unk> 40 basis points of the increase is due to exceptional first quarter results the.
Naftali Holtz: The remainder is due to a significantly better business outlook for the rest of the year due to robust demand driving higher pricing and continued strength in onboard revenue.
Naftali Holtz: Now moving to costs.
Naftali Holtz: Full year net cruise costs, excluding fuel, are expected to be up approximately five and a half percent, and that includes three hundred and ten basis points of impact from the increased dry dock days and the operations of hideaway beach. Our cost metric is up 150 basis points compared to our prior guidance, with a quarter of the increase predominantly due to lower APCDs on cancelled Red Sea sailings that skew the metric. The remainder is driven by higher non-cash stock-based compensation.
Naftali Holtz: Full year net cruise costs, excluding fuel are expected to be up approximately five 5% and that includes 310 basis points impact from the increased drydock days and the operations of Hideaway Beach.
Naftali Holtz: Our cost metric is up 150 basis points compared to our prior guidance with a quarter of the increased predominantly due to lower abcd's on canceled sailings execute the metric the remainder is driven by higher noncash stock based compensation.
Naftali Holtz: Consolidating those items, our costs are in line with our initial expectation and guidance. We anticipate a fuel expense of $1.18 billion for the year, and we are 61% hedged at below market rates. So, based on current fuel prices, currency exchange rates, and interest expense.
Naftali Holtz: Excluding those items our costs are in line, where initial expectation and guidance.
Naftali Holtz: We anticipate fuel expense of a 1.18 billion for the year and we are 61% hedged at below market rates.
Naftali Holtz: So based on current fuel prices currency exchange rates and interest expense, we expect adjusted earnings per share between $10 70, and $10 90.
Naftali Holtz: We expect adjusted earnings per share between $10.70 and $10.90. I want to provide a little more color on the progress of our earnings guidance. As you can see on page 5, we are increasing our earnings guidance by $0.80 for the year. That includes $0.10 headwind from fuel prices and currency exchange rates as well as $0.17 benefit from the refinancing we completed in the first quarter. After accounting for those changes, approximately one-third of the increase in earnings is attributable to first quarter business outperformance.
Naftali Holtz: I want to provide a little more color on the progress of our earnings guidance.
Naftali Holtz: You can see on page five we are increasing our earnings guidance by <unk> 80 for the year.
Naftali Holtz: That includes 10 cent headwind from fuel prices and currency exchange rates as well as 17 Ben.
Naftali Holtz: Benefit from the refinancing we completed in the first quarter.
Naftali Holtz: After accounting for those changes approximately one third of the increase in earnings is attributable to first quarter business outperformance that excludes 26 cents benefits from favorable timing with the remainder of two thirds driven by better business outlook for the rest of the year.
Naftali Holtz: That excludes $0.26 benefits from favorable timing, with the remainder two-thirds driven by a better business outlook for the rest of the year. Now turning to slide 8, I will discuss our second quarter guidance. We plan to operate 12.2 million APCDs during the second quarter. Net yields are expected to be up 10.2 to 10.7% compared to 2023. Two-thirds of the yield increase is driven by new hardware and load factor catch up, with the remainder one-third related to like for like prices.
Naftali Holtz: Now turning to slide eight I will discuss our second quarter guidance.
Naftali Holtz: We plan to operate $12 $2 million <unk> during the second quarter.
Naftali Holtz: Net yields are expected to be up 10, two to 10, 7% compared to 2023.
Naftali Holtz: Two thirds of the yield increase are driven by new hardware and load factor catch up with the remainder one third related to like for like pricing.
Naftali Holtz: Net cruise costs, excluding fuel, are expected to be up 7.4% to 7.9% and include costs related to increased dry dock days and the operations of Hideaway Beach, as well as timing of costs shifted from the first quarter.
Naftali Holtz: Net cruise costs, excluding fuel to be up seven four to seven 9% and includes costs related to increased dry dock days and the operations of Hideaway Beach as well as timing of costs shifted from the first quarter.
Operator: During the second quarter, we will have eight and a half times more dry dock days compared to the second quarter of last year, which is weighing on our cost metrics this quarter. Taking all this into account, we expect adjusted earnings per share for the quarter to be between $2.65 and $2.75. Turning to our balance sheet, we ended the quarter with $3.7 billion in liquidity. We continue to make significant progress in strengthening the balance sheet and reaching our trifecta goals of investment grade metrics.
Naftali Holtz: During the second quarter, we will have eight five times more dry dock days compared to the second quarter of last year, which is weighing on our cost metrics this quarter.
Operator: Taking all this into account, we expect adjusted earnings per share for the quarter to be $2 65 to $2 75.
Operator: Turning to our balance sheet, we ended the quarter with $3 7 billion in liquidity, we continue to make significant progress in strengthening the balance sheet and reaching our trifecta goals of investment grade metrics.
Operator: During the first quarter, we refinanced $1.25 billion of our most expensive bonds with a new unsecured note at six and a quarter that allowed us to save over 500 basis points, or $56 million of annual interest expense, while also realizing some savings in 2024. We will continue to proactively pay down debt and pursue opportunistic refinancing, and we expect to further reduce leverage to just below the mid-three times by the end of 2024.
Operator: During the first quarter, we refinanced $1 billion to $5 billion of our most expensive bonds with a new unsecured note at six in a quarter that allowed us to save over 500 basis points or $56 million of annual interest expense. While also realizing some savings in 2024.
Operator: We will continue to proactively pay down debt and pursue opportunistic refinancing.
Operator: And expect to further reduce leverage to just below three times by the end of 2024.
Operator: Also in the first quarter, S&P upgraded our credit rating to double B plus with a stable outlook, and Moody's upgraded the company's credit rating to BA2 with a positive outlook. We are very pleased with the rating agencies' acknowledgement of the strong trajectory of the business and our commitment to strengthening the balance sheet. Our priorities to address debt remain unchanged, managing debt maturities, reducing interest expense, and removing remaining restrictions on capital allocation toward a fully unsecured balance sheet.
Operator: Also in the first quarter S&P upgraded our credit rating to double B, plus with a stable outlook and Moody's upgraded the company's credit rating to be <unk> with a positive outlook. We are very pleased with the rating agencies acknowledgment of the strong trajectory of the business and our commitment.
Operator: The strengthening the balance sheet.
Operator: Our priority is to adjust that remain unchanged managing debt maturities, reducing interest expense and removing remaining restrictions on capital allocation and towards a fully unsecured balance sheet.
Operator: In closing, we remain committed and focused on executing our strategy and delivering our mission while achieving our trifecta goals. Our strong book position and an accelerating demand environment position us for another strong year of yield growth and a step change in earnings growth. With that, I will ask our operator to open the call for a question and answer session.
Operator: In closing, we remain committed and focused on executing our strategy and delivering our mission, while achieving our trifecta goals.
Operator: Our strong book position and an accelerating demand environment positioning us for another strong year of yield growth and a step change in earnings growth.
Operator: With that I will ask our operator to open the call for a question and answer session.
Operator: At this time, if you would like to ask a question, press star followed by the number one on your telephone keypad. We ask that you limit yourself to one question and one follow-up, then re-enter the queue for any additional questions you may have. Our first question will come from the line of Steven Wieczynski with Stiefel. Please go ahead.
Speaker Change: At this time, if you would like to ask a question press star followed by the number one on your telephone keypad, we ask that you limit yourself to one question and one follow up then reenter the queue for any additional questions. You may have our first question will come from the line of Steven with Henske with Stifel. Please go ahead.
Jason T. Liberty: Hey guys, good morning. Congratulations on the solid results and outlook. So Jason and Naf, 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 pretty shortly. So you're just wondering what kind of color you can give us for 2025 at this point and wondering if the booking and pricing strength that you're seeing today is being transferred so far into 2025.
Steven Moyer Wieczynski: Hey, guys good morning.
Jason T. Liberty: Congratulations on the solid results and outlook.
Jason T. Liberty: So so so Jason enough.
Jason T. Liberty: You, obviously gave a lot of color around how bookings are shaping up for the rest of this.
Jason T. Liberty: This year, but you know look if we think about bookings for next year I'm sure, that's where a lot of investor.
Jason T. Liberty: Interest levels are going to go to pretty shortly so just you're just wondering what kind of color you can give us for 2025 at this point I'm wondering if the ease of booking and pricing strength that youre seeing today.
Jason T. Liberty: It was being transferred so far into into 2025.
Jason: Well good morning, Steve Thanks for the question.
Jason T. Liberty: Morning, Steve. Thanks for the question. So one, I mean, all of our commentary around our bookings, the strength that we're seeing, but 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 2025 than we are for 2024. And so when we look into booking behavior, one, the booking window continues to extend, so guests are making their decisions much further out.
Jason T. Liberty: So one I mean, all of our commentary around our bookings the strength that we're seeing but not only relates to 2024, but also into 2025 and where we're getting close to the point, where well it's too soon to be taking more bookings for 25, and we are for 2024.
Jason T. Liberty: And so when we look into the <unk>.
Jason T. Liberty: The booking behavior more on the booking window continues to extend.
Jason T. Liberty: So guests are making their decisions much further out.
Jason T. Liberty: 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. We're also seeing very strong booking behavior pre-cruise and again, making sure that our guests have the ability to get their first day of their vacation back by planning their onboard activities and shore excursion activities well in advance.
Jason T. Liberty: We look at the repeat rates that are going on and and the dreaming that our guests are doing to make sure that they're getting the vacation experience that they want.
Jason T. Liberty: 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.
Jason T. Liberty: We're also seeing.
Jason T. Liberty: Strong booking behavior pre cruise and again, making sure that our guests are have the ability to get there. The first day of their vacation back bye bye planning, they're onboard activities and shore excursion activities well in advance and that's also not only helping our ability to yield manage.
Jason T. Liberty: And that's not only helping our ability to yield manage on the onboard experience, but it's also improving our customer deposits, which are 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 just in the booking behavior but also all of our survey data around one's propensity to cruise but also their propensity to cruise with us.
Jason T. Liberty: On the onboard experience, but it is also improving.
Jason T. Liberty: Our customer deposits, which is also rising due to that so all in all.
Jason T. Liberty: Yes.
Jason T. Liberty: Can you just continue to accelerate.
Jason T. Liberty: And the thirst for 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.
Jason T. Liberty: Around.
Jason T. Liberty: One propensity to crews, but also a propensity to cruise with us.
Steven Moyer Wieczynski: Okay, gotcha. Thanks for that, Jason.
Speaker Change: Okay got you thanks for that Jason and then second question, probably probably a bigger picture question, but.
Jason T. Liberty: And then second question, probably a bigger picture question. But, you know, look, if I remember correctly, before the pandemic, you guys were always targeting, I think it was $20 a share in earnings by 2025. And look, you know, obviously, you aren't prepared to give another long-term set of financial targets today. But, you know, I mean, look, if we start to think about your capacity yield cost algorithm, are we crazy to think that getting back to $20, you know, even with the dilution and the higher interest costs 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?
Jason T. Liberty: 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 aren't prepared to give another long term set of financial targets today, but.
Jason T. Liberty: I mean look if we start to think about your your capacity yield cost algorithm.
Jason T. Liberty: Are we crazy to think that getting back to $20, even with the dilution and the higher interest costs that you guys took on during Covid I mean, it seems like that's probably back on the horizon again or are we kind of crazy to think that way.
Jason T. Liberty: Well, I won't get into how crazy you are, Steve. Unknown Speaker Because I could take the balance of the call.
Speaker Change: Well I won't get into how crazy yours, Steve because that could take the balance of the call.
Speaker Change: But I I I think as you pointed out which I think is an important.
Jason T. Liberty: But I think, as you pointed out, which I think is an important component, is that 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 didn't see that last year; we've seen elevated yield growth. Moderate yield growth, good cost control, moderately grow your business, bring in new destinations, and drives really tremendous earnings power.
Jason T. Liberty: Component as you know we have a business that has really strong operating leverage.
Jason T. Liberty: And what we have what we have talked about is.
Jason T. Liberty: Our formula for success, which is moderate yield growth, which clearly we havent seen this year, we didn'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.
Jason T. Liberty: Really very tremendous.
Jason T. Liberty: Tremendous earnings power do you think about a 1% change in our yields it was $120 million this year.
Jason T. Liberty: 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 a great inventory mix. You bring in new destinations like we did this year with Hideaway, bringing in the Beach Club in Nassau, bringing in the Beach Club in Mexico, etc.
Jason T. Liberty: A.
Jason T. Liberty: A 1% change in our cost is about half of that so grocery yields faster than your your cost bring in.
Jason T. Liberty: Really strong high yielding capacity that has great inventory mix you bring in new destinations like.
Jason T. Liberty: We did this year with hideaway, bringing it into the Beach club and Nassau, bringing the Beach club and Mexico et cetera. So these are all things that are driving very high.
Jason T. Liberty: These are all things that are driving very high margins for us and are improving our return profile as well as our earning profile. And of course, none of that takes into account. I mean, Naft and his team have done an exceptional job already on the balance sheet. There'll be more opportunity to continue to lower the negative carry. And, of course, none of this contemplates capital returns, which is one thing that we were doing pre-COVID.
Jason T. Liberty: Margins for us.
Jason T. Liberty: And is improving our return profile as well as our earning profile and of course, none of that takes into account.
Jason T. Liberty: <unk> and team have done an exceptional job already on the balance sheet there'll be more opportunity to continue to lower the negative carry.
Jason T. Liberty: And of course, we haven't.
Jason T. Liberty: None of this contemplates capital returns, which is one thing that we were doing pre COVID-19.
Jason T. Liberty: So it's something that we think as we look at how we continue to improve shareholder return; those are things that could also improve our earnings outlook by considering the dilution that occurred and returning capital to shareholders. All of these are things that we will begin to address once we get to our trifecta goals.
Jason T. Liberty: So it's something that we think as we look at how do we continue to improve shareholder return.
Jason T. Liberty: These are things that can also improve our earnings outlook is by considering the dilution that occurred in 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.
Jason T. Liberty: That's a great color. Thank you guys. I appreciate it.
Jason T. Liberty: That's great color. Thank you guys appreciate it.
Operator: Your next question comes from the line Ben Chaiken with Mizuho. Please go ahead.
Jason T. Liberty: Your next question comes from the line of Ben Chaiken with Mizuho. Please go ahead.
Benjamin Nicolas Chaiken: Hey, good morning. Sounds like demand is accelerating. Would be great to hear any color on demand for Paradise Island and, related to that, can you talk to us how you're differentiating the destinations from a marketing perspective of Coco Cay and Paradise Island and Cozumel, or maybe my ship class, just any nuances you would call out? Like, is this a Coco Cay returning customer or a different person? That'd be great.
Benjamin Nicolas Chaiken: Hey, good morning.
Benjamin Nicolas Chaiken: Sounds like demand accelerating would be great to hear any color on demand for Paradise Island, and then I guess related can you talk about how you're how you're differentiating the destination from marketing perspective, yes, coke, Okay in Paradise Island, and causing Mel or maybe by ship class just any nuances you would call out.
Benjamin Nicolas Chaiken: Is this a cocoa K, returning customer or a different person.
Speaker Change: Great. Thanks.
Michael W. Bayley: Hi Ben, it's Michael. 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 our demographics and, really, in terms of what our guests are seeking and looking for when they go on a Caribbean cruise, they really knock it out of the park in terms of satisfying that demand and that need. So, a very similar type of product, but different vibe.
Michael: Hi, Ben its Michael.
Michael W. Bayley: I mean, when we think of the Beach club portfolio that were planning on developing along with perfect day.
Michael W. Bayley: They're incredibly complementary destination experiences and they fit.
Michael W. Bayley: Early in the sweet spot of the demographics and really in terms of what our guests are seeking and looking for when they go on a Caribbean cruise really knock it out of the park in terms of satisfying that demand that need.
Michael W. Bayley: So.
Michael W. Bayley: Very similar type of product different vibe.
Michael W. Bayley: Perfect Day is the full day for, you know, thrills and chills, and the Beach Club is, as you imagine, just an incredible day at the beach, which is what most guests are 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.
Michael W. Bayley: Perfect Day is the full day for thrill and Chill and the Beach club as you imagine it's just an incredible day at the beach, which is what most guests are seeking in the Caribbean.
Michael W. Bayley: It's curated by Royal Caribbean is studying experience and of course, it's very authentically connected to the culture for example in the Bahamas for Mexico.
Michael W. Bayley: And it really is a huge demand driver when we look at the demand that we've seen for perfect day, and the shoe will 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 sell on the ships that go to perfect day and the launch of sale on the ships that go to the Beach club.
Michael W. Bayley: Last year it was 2.6 million, and it really is a demand driver. People want to sail on the ships that go to Perfect Day, and they want to sail on the ships that 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 Utopia, which is a brand new Oasis-class ship that was going straight into the short product market out of Port Canaveral, the demand we've seen for, for example, Utopia sailing to Perfect Day has been extraordinary. So we think we've got the formula figured out, and our plan is to continue to evolve and develop that formula over the coming years.
Michael W. Bayley: 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.
Michael W. Bayley: Success beyond our wildest streams success.
Michael W. Bayley: 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 seen for for example, Utopia sailing to perfect day has been extraordinary. So we think we've got the formula figured out.
Michael W. Bayley: One is to continue to evolve and develop that formula over the coming years.
Jason T. Liberty: Yeah, and Ben, I just want to add, and I mentioned it in my remarks, I think one of the incredible things that we're seeing out of destinations like Perfect Day, and we'll see this at the World Beach Club in Nassau, is how it's drawing in new-to-cruise and millennials. So my comment that one in two of our guests, one out of two of our guests are... a millennial or younger. To me, it's a very powerful statement.
Michael W. Bayley: Yes.
Jason T. Liberty: I just wanted to add and I had it in my remarks, I think one of the incredible things that we're seeing out of destinations like perfect day, and we will see this.
Jason T. Liberty: The Royal Beach club in Nassau is how it's drawing in new to cruise.
Jason T. Liberty: And millennials so my comment on one and two of our guests one out of two of our guests are.
Jason T. Liberty: Millennials or younger.
Jason T. Liberty: To me, it's a very powerful statement.
Jason T. Liberty: We have an 11-point increase in new-to-crews. And so, and what we know is when they sail with us, they're five times more likely to sail with us again. And the repeat rates that we're seeing are exceptional. And it's a lot because not only are we bringing that full, incredible experience that our crew delivers on our ships, but we're enhancing the experience in the destinations. And I think that combination, where Michael and his team have really been dreaming and innovating in delivery on the perfect day and how, you know, there are 25,000 guests.
Jason T. Liberty: The increase where we have an 11 point increase in new to cruise.
Jason T. Liberty: And so and what we know is when they sell with US. They are five times more likely to stay on with us again.
Jason T. Liberty: And the repeat rates that we're seeing are exceptional and it's a lot because not only we bringing that full incredible experience that our crew delivers on our ships.
Jason T. Liberty: But we are enhancing the experience and the destinations.
Jason T. Liberty: And I think that combination.
Jason T. Liberty: Michael and his team have really the dreaming and innovating and delivery on perfect day, and how there's 25000 guests a day that come into Nassau and we're going to.
Jason T. Liberty: A day to come into NASA, and we're gonna, you know, take some of those guests, and we're going to bring them over to the beach club, which is great economically for us as well as it is for the Bahamas, and deliver, you know, an incredible experience that's going to drive probably 90 plus NPS scores. And that's what, you know, people are seeking. They want those experiences that they can walk away from. And it's attracting, you know, a high level of demand.
Jason T. Liberty: It takes some of those guests and we're going to bring them over to the Beach club, which is great.
Jason T. Liberty: Economically for us as well as it is for the Bahamas.
Jason T. Liberty: And deliver an incredible experience that's going to drive probably 90, plus NPS scores and that's what people are seeking they want those experiences.
Jason T. Liberty: But they can walk away from.
Jason T. Liberty: And it's and it's attracting.
Michael W. Bayley: Ben, not to continue on this but to add to Jason's comments, you know, Utopia is not by accident, Utopia is selling out of Port Canaveral, it'll be going to Perfect Day, it really is another product that's squarely in this competitive space of land-based vacations and we're seeing huge demand coming for this product and you think about the combination of a three, four day product like Utopia going to Perfect Day and then in 25 it'll go to Perfect Day and the Beach Club, that's really a phenomenal game-changer and it really is drawing in a huge amount of new-to-crews and it's beautifully positioned in Canaveral right fundamentally in
Jason T. Liberty: High level of demand.
Speaker Change: And then not too.
Michael W. Bayley: Continue on this.
Speaker Change: To add to Jason's comments.
Michael W. Bayley: Utopia is not by accident Utopia setting out of port Canaveral, it'll be going to perfect day. It really is another product that squarely in this competitive space of land based vacations and we're seeing huge demand coming for this product and you think about the combination of a three four day product like Youtube.
Michael W. Bayley: We are going to perfect day, and then in 'twenty five it'll go to perfect day, and the Beach club, that's really a phenomenal game changer and it really is drawing in a huge amount of new to cruise who is beautifully positioned.
Michael W. Bayley: <unk>.
Michael W. Bayley: Fundamentally.
Benjamin Nicolas Chaiken: Gotcha. Just a very quick follow up on Paradise.
Michael W. Bayley: Linda.
Speaker Change: Gotcha, and just a very quick follow up on Paradise. Thank Jay.
Jason T. Liberty: I think, Jason, you mentioned 25,000 guests to NASA. Am I interpreting that correctly, that this could be a kind of a revenue generator for not just your cruise guests but also other people who are going to NASA, or is that the wrong reason? No, no, no, it's primarily for the Royal Caribbean brand. Our other brands will have access to it, but the broader cruise market would not have access to the Beach Club.
Benjamin Nicolas Chaiken: And you mentioned 25000 guests to NASA.
Jason T. Liberty: <unk>.
Jason T. Liberty: Am I interpreting that correct that this could be a kind of revenue generated for not just your cruise guests, but also other people who are going to NASA or no.
Jason T. Liberty: No, it's primarily for the Royal Caribbean brand or other brands will have access to it but the broader.
Jason T. Liberty: Our cruise market, but not have access to the beach club, but the beautiful thing is is that.
Jason T. Liberty: But the beautiful thing is that, um... The Royal Beach Club in Paradise Island is positioned pretty much at the entrance to Nassau. I think the point is that on a given day, there are 25,000 to 30,000 cruise guests coming in on multiple different cruise brands. And, of course, when they sail into Nassau, the only thing they're going to see is the Royal Caribbean Royal Beach Club, which is going to be absolutely stunning. And they will be unbelievably jealous knowing that they can't go there.
Jason T. Liberty: The royalty.
Jason T. Liberty: Royal Beach Club in Paradise Island is positioned pretty much at the entrance to Nassau and I think the point is is that on a given day. This 25 to 30000 cruise guests coming in on multiple different cruise brands and of course, we may sale international the only thing they are going to see is the Royal Caribbean Royal Beach club, which is going to be.
Jason T. Liberty: Absolutely stunning and they will be unbelievably jealous knowing that they can't go there.
Jason T. Liberty: Yes.
Operator: Unknown Speaker
Speaker Change: It's a great point thanks, Greg.
Operator: Your next question comes from the line of Matthew Boss with J.P. Morgan. Please go ahead.
Speaker Change: Great. Thanks.
Operator: Your next question comes from the line of Matthew Boss with JP Morgan. Please go ahead.
Matthew Robert Boss: Great, thanks, and congrats on another nice quarter. Thank you.
Matthew Robert Boss: Great Thanks, and congrats on another nice quarter. Thank.
Jason T. Liberty: So, Jason, coming off the strongest wave season in history, could you elaborate on the continued near-term strength you've cited in April, both from demand and pricing, maybe if anything by region? And to your comments earlier, how best to think about your market share opportunity in this $1.9 trillion growing global vacation market? And then just for Naftali, just as we think about the underlying guidance rate, where are you more confident today, as we think about the back half, maybe relative to three months ago?
Matthew Robert Boss: Thank you.
Matthew Robert Boss: So Jason coming off a strongest wave season in history could you elaborate on the continued near term strengthening in April both from demand and pricing, maybe if anything by region and to your comments earlier, how best to think about your market share opportunity and that's one nine trillion growing global vacation Mark.
Jason T. Liberty: And then just a fairer naftali just as we think about the underlying guidance rate.
Jason T. Liberty: Where are you more confident today as we think about the back half maybe relative to three months ago.
Jason T. Liberty: Well, thanks for the question, Matt. First off, I think just the timing wave was absolutely exceptional. It was, it's kind of mid-teens better than what we saw in the previous year. Interesting enough, though, April was almost double that in terms of the level of demand that we were seeing. So that's why when I talk about demand accelerating, it's not just what we saw when we last spoke to everybody in early February. It's not just when we updated at the end of February. But that acceleration has picked up speed.
Jason: Sure well thanks for the question, Matt first of all I think just the timing wave.
Jason T. Liberty: What is absolutely exceptional.
Jason T. Liberty: It's kind of mid teens or better than what we saw in the previous year Interestingly enough, though April was almost double that in terms of the level of demand that we're seeing so that's why when I talk about demand is accelerating.
Jason T. Liberty: It's not just what we saw when we last spoke to everybody.
Jason T. Liberty: In early February it's not just when we updated at the end of February but that acceleration has.
Jason T. Liberty: And of course, at this point, we only have about 12% of load factors left to build for the year. And so that will provide opportunity for us to a degree this year. But what that, I think, means in terms of the opportunity into 2025 and beyond is very appealing. I think when you frame that the $1.9 trillion travel space, and of course, that's a growing number, cruises account for $65 billion of that $1.9 trillion. So we're a very, very small fraction.
Jason T. Liberty: Has picked up speed.
Jason T. Liberty: And of course at this point, we only have about 12% load factor is left to build for the year.
Jason T. Liberty: And so that that will provide opportunity for us to a degree this year, but what that I think means in terms of the opportunity into 2025 and beyond is very appealing.
Jason T. Liberty: I think when you frame that the one nine trillion dollars.
Jason T. Liberty: Yeah.
Jason T. Liberty: Well travel space.
Jason T. Liberty: And of course, that's a growing number crudes of 65 billion of that of that one.
Jason T. Liberty: One nine trillion. So we're a very very small fraction and I think something we've talked about before.
Jason T. Liberty: And I think something we've talked about before is a 1% shift is worth 11 Oasis-class ships. And so for us, when you look at things like Perfect Day, when you look at things like the Royal Beach Club, when you look at things like Utopia, you look at things like what we were doing on Edge and Nova, it's very purposeful, less about what's happening with other cruise operators. It's more, how do we take a further share?
Jason T. Liberty: Before is a 1% shift.
Jason T. Liberty: It is worth 11 Oasis class ships to us.
Jason T. Liberty: So for US when you look at things like perfect day, when you look at things like the Royal Beach Club when you look at things like Utopia.
Jason T. Liberty: Look at things like what we.
Jason T. Liberty: We're doing on edge and Nova it's very purposeful less about what's happening with other cruise operators. It's more how do we take further share how do we compete with Orlando, how do we compete with Las Vegas, how do we compete with other other land based alternatives to grab that share where as we know today currently trades at least.
Jason T. Liberty: How do we compete with Orlando? How do we compete with Las Vegas? How do we compete with other land-based alternatives to grab that share, which currently trades at least at a 25 or 30 percent premium to what we're getting? So that value, we want to close that gap with land-based vacations, and we want to take share. And we believe waking up and being just obsessed with delivering the best vacation experiences in the world puts us in a position to win.
Jason T. Liberty: At a 25% to 30%.
Jason T. Liberty: Premium to what we're getting so that value, we want to close that gap to land based vacation and we want to take share and we believe by waking up and being.
Jason T. Liberty: Just obsessed on delivering the best vacation experiences in the world and puts us in a position to.
Naftali Holtz: Hey Matt, it's Naf. Just to add one more thing to Jason also, if you kind of look at 19 versus where we are today, we have been taking a share. Again, you don't have to believe much, and as Jason said, 1% is 11 Oasis-class ships. That's a pretty significant rise, but we've continued to focus on it and make progress there. I think just in terms of the strength, as you kind of heard in our prepared remarks, the strength is across all our key itineraries, and of course, the Caribbean continues to be performing very well, but as much as others, Alaska, Europe, and obviously, we're coming back to China, so we feel pretty good about where we are standing today with our book position, and where the pricing is for the rest of the year.
Jason T. Liberty: To win.
Naftali Holtz: Yes.
Naftali Holtz: Hey, Matt it's enough just to just add one other thing too. Jason also now if you kind of look at 19 versus where today, we have been taking share again, you don't have to believe much and as Jason said, one percentage 11 Oasis class ships.
Naftali Holtz: Pretty significant rise, but we've continued to focus on it in and make progress there.
Naftali Holtz: Just in terms of the strength that you've kind of heard in our prepared remarks.
Naftali Holtz: This is across all our key itineraries.
Naftali Holtz: And.
Naftali Holtz: Of course, the Caribbean continues to be performing very well, but.
Naftali Holtz: Much as others, Alaska, Europe, and obviously, we're coming back to China. So we feel pretty good of where we are standing today.
Naftali Holtz: Book position.
Naftali Holtz: Where the pricing is for the rest of the year.
Matthew Robert Boss: Great, congrats, and best of luck.
Speaker Change: Great Congrats best of luck.
Speaker Change: Thank you.
Operator: Your next question comes from the line of Sharon Zakvia with William Blair. Please go ahead.
Matthew Robert Boss: Your next question comes from the line of Sharon Zackfia with William Blair. Please go ahead.
Sharon Zackfia: I think on the last call you talked about 80% of passengers being North American this year. I'm just wondering if there's any update on that, if there's any change. And then, as we think about next year, kind of where would you expect North America to go? It's kind of been unusually large the last few years. And if we see some kind of China or Europe ramping up in the passenger base, how do we think about that impact on onboard revenue?
Sharon Zackfia: Hi, good morning.
Sharon Zackfia: I think on the last call you talked about 80% of passengers being North American this year I'm. Just wondering if there is any update on that if there is any change and then as we think about next year kind of where would you expect.
Sharon Zackfia: North America, I think Eric kind of an unusually large the last few years and as we see it.
Sharon Zackfia: China or.
Sharon Zackfia: Europe, a ramp up in the passenger base, how do we think about that impact on onboard revenue.
Jason T. Liberty: Well, thanks for the question, Sharon. I hope you're doing well.
Sharon Zackfia: Yes.
Speaker Change: Thanks for the question, Sharon I hope Youre doing well.
Jason T. Liberty: So I think just starting off, you know, we need to just frame that we have global brands, not nationalistic brands. And these global brands are supported by a very significant commercial apparatus, you know, with leading yield management tools and teams around the world. And so the sourcing is really a reflection of the demand patterns that we see to optimize our ultimate revenue. More China next year, as we add that second ship into China, could move this number a little bit to be less North American-centric, but we're going to follow the demand patterns, and that is how we have done it for a very, very long period of time.
Speaker Change: So I think just starting off.
Jason T. Liberty: Need to just a frame that we have global brands non nationalistic brands in these global brands are supported by a very significant.
Jason T. Liberty: Commercial apparatus with leading yield management tools and teams around the world.
Jason T. Liberty: And so the sourcing is really a reflection of the demand patterns that we see to optimize our ultimate revenue.
Jason T. Liberty: More China next year as we add that second ship into China will.
Jason T. Liberty: It can move this number a little bit to be less north American centric, but we're going to follow the demand patterns.
Jason T. Liberty: And that is how we have we've done for a very very long period of time.
Jason T. Liberty: And of course that could potentially shift.
Jason T. Liberty: And of course, that could potentially shift the mix of onboard and ticket revenue. But I don't think it's going to materially shift it, because I do think that we'll probably be relatively close to the sourcing that we saw this year. Maybe it moves a little bit, but it's not going to move a lot. But we're focused on optimizing our revenue, and so if we're getting more in ticket from a customer and a little bit less on onboard, we're perfectly okay with that, as long as the answer is a higher yield profile and higher margin profile for us.
Jason T. Liberty: The mix of onboard and ticket I don't think its going to materially shifted because I do think that will probably be relatively close to.
Jason T. Liberty: The sourcing that we saw this year.
Jason T. Liberty: Maybe moves a little bit, but it's not going to move a lot.
Jason T. Liberty: But where we're focused on optimizing our revenue and so if we're getting more than ticket from a customer and a little bit less on onboard we're perfectly okay with that as long as the answer is.
Jason T. Liberty: Higher yield profile and higher higher margin profile.
Jason T. Liberty: And that's how we've run the business for a very long time, and I think we're very fortunate to have thought a long time ago to make sure that our brands are positioned to be globally desirable by sourcing from many different markets.
Jason T. Liberty: For us and that's how we that's how we run the business for a very long time and I think we're very fortunate to have thought long time ago to make sure that our brands are positioned to be globally.
Jason T. Liberty: Our desirable and sourcing from many different markets.
Sharon Zackfia: Jason, can I ask a follow-up question? You know, the one or two passengers being millennials at this point, do you find that that customer is more inclined to pre-book on board versus kind of their elders, like me? Or, you know, are you seeing pre-booking success kind of across the demographic? Yeah, I mean, it skews a little bit younger, but...
Speaker Change: And can I ask a follow up.
Sharon Zackfia: Yeah.
Sharon Zackfia: Injuries being millennials.
Sharon Zackfia: Do you find that that customer is more inclined to pre book onboard versus kind of their elders.
Sharon Zackfia: To me.
Sharon Zackfia: Or is.
Sharon Zackfia: Are you seeing played lucky in success kind of across the demographic gamut.
Speaker Change: I mean, it skews a little bit younger, but I think Sharon.
Jason T. Liberty: Yeah, I mean, it skews a little bit younger, but I think, Sharon, one positive thing out of COVID was that the consumer, young or middle-aged, etc., got very used to booking or buying things online. We also really improved our ability to take friction out of the booking experience for ticket price, as well as the booking experience for onboard by curating, taking a lot of steps out of the process, etc., and that's really what is driving that better behavior.
Jason T. Liberty: One if we can if we can pick any positiveness out of Covid.
Jason T. Liberty: That was that the consumer a younger middle aged et cetera.
Jason T. Liberty: We used to booking.
Jason T. Liberty: Buying things online.
Jason T. Liberty: We also really.
Jason T. Liberty: Proved our ability to take friction.
Jason T. Liberty: Out of the the booking experience for a ticket price as well as <unk>.
Jason T. Liberty: The booking experience for onboard.
Jason T. Liberty: By Curating, taking a lot of.
Jason T. Liberty: Steps out of the process et cetera, and Thats really what is driving that better behavior. The installation of a proper commerce system that we can yield manage that we can cure rate, which we're still very in the early innings on is really what's benefiting that.
Jason T. Liberty: The installation of a proper commerce system that we can yield manage, that we can curate, which we're still very early in the innings on, is really what's benefiting that. And you just think about just shopping behavior. In the first quarter, we had 100 million visits to our websites. That's twice what we had pre-COVID. And so, you know, we have really upped our game, not just on a marketing basis, but also to make sure that our websites help our customers dream about what they want to do and help them get to the experience that they're looking for, and then make sure that they have all the onboard experiences that they want to have and are able to resolve all that well in advance of them getting on the ship.
Jason T. Liberty: And you just think about just shopping behavior in the first quarter, we had 100 million visits to our websites $100 million. That's twice, what we had pre COVID-19.
Jason T. Liberty: And so we have really upped our game not just on a marketing basis, but also.
Jason T. Liberty: To make to make that are our websites.
Jason T. Liberty: Helped our customers dream.
Jason T. Liberty: About what they wanted to do and help them get to the experience that they're looking for and then making sure that they have all the onboard experiences that they want to have and being able to resolve all that well in advance of them getting on the ship.
Operator: Your next question comes from the line of Brandt Montour with Barclays. Please go ahead.
Speaker Change: Thank you.
Brandt Antoine Montour: Thanks Sharon.
Brandt Antoine Montour: Your next question comes from the line of Brent <unk> with Barclays. Please go ahead.
Brandt Antoine Montour: Hey everybody, thanks for taking my question. So maybe for Michael, China restarted this month. I'm wondering if you could give us maybe even qualitatively a sense of sort of, you know, initial load factors, initial pricing, or initial expected onboard spend. Obviously, you can't give us that specifically, but just sort of better or worse than you were forecasting, and clearly, the follow-up is, you know, you decided to take Ovation there next year. That's obviously a good sign, but why Ovation? I think that comes out of Alaska and Australia. Why that ship and why not a ship necessarily out of the Caribbean or somewhere else? Thank you.
Speaker Change: Hey, everybody. Thanks for taking my question, so maybe for Michael.
Brandt Antoine Montour: China, We started this month.
Brandt Antoine Montour: Wondering if you could give us.
Brandt Antoine Montour: Maybe you can qualitatively a sense sort of initial load factors initial pricing.
Brandt Antoine Montour: Initial expected onboard spend.
Brandt Antoine Montour: So you can't give us that specifically, but just sort of better or worse than you were forecasting then clearly that follow up.
Brandt Antoine Montour: You decided to take ovation there next year, that's obviously, a good sign but why ovation I think that comes out of Alaska, and Australia, why that ship and why not a ship necessarily out of the Caribbean or somewhere else. Thank you.
Michael W. Bayley: Yeah, good question. I think, you know, the fact that we've already deployed a second ship into the Chinese market gives you an indication of how well the first ship is doing in the Chinese market. So we're pleased with the Spectrum bookings. You know, our comparison, of course, is back to 2019, which we've used a lot over the last couple of years. Overall volume and rate for the China product in 24 is significantly higher in both volume and rate from 19, which, you know, is a great indicator of the kind of demand that we're seeing for the product. And we feel good about 24 going into 25. That's why we've got the second ship, both quantum class.
Speaker Change: Yeah. Good question I think.
Michael W. Bayley: That we've already deployed the second ship into the China market gives you an indication of how well the first ship is doing in the China market. So we're pleased with.
Michael W. Bayley: With the spectrum bookings a comparison of course is back in 2019, which we've used a lot over the last couple of years.
Michael W. Bayley: Overall volume and rate for the China product in 'twenty four is significantly higher in both both volume and rate from 19, which is a great indicator of the kind of demand that we're seeing for the product and we feel good about 'twenty forward going into 25, that's why we've got the second ship both quantum class.
Michael W. Bayley: Both have done very well in the Chinese market. They seem to be really well suited to that market. And, of course, Ovation, both in Alaska and Australia, is perfectly suited to the Chinese market in terms of its geographical positioning.
Michael W. Bayley: Both have done very well in the China market, they seem to be really well suited for that market and of course ovation. Both in Alaska and Australia is perfectly suited for the for the China market in terms of its geographical positioning.
Michael W. Bayley: One will be in Tianjin, which we've operated out of for many years before the pandemic. And, of course, Shanghai, both great markets for us. The onboard spend, obviously, it's only a couple of days into the season, but it's looking really positive.
Michael W. Bayley: One will be in Tianjin, which we've operated out of many years.
Michael W. Bayley: And before the pandemic and of course, Shanghai, both great markets for us.
Michael W. Bayley: The onboard spend obviously, it's only a couple of days into the into the into the season, but it's looking really positive.
Naftali Holtz: We have high expectations, and I think they're going to be realized. The other thing that's changed quite a lot in terms of the market dynamics in China is the change in our direct business versus the traditional trade business. There was quite a transformation during the pandemic in terms of a lot of the retailers that dropped out of business. Fortunately, pre-pandemic, we started to invest significantly in resources, technology, and people to develop that direct business.
Naftali Holtz: <unk> high expectations, and I think they are going to be realized.
Naftali Holtz: The other thing that has changed quite a lot in terms of the market dynamics in China as the change in our direct business versus the traditional trade business. There was quite a transformation during the pandemic in terms of a lot of the retailers.
Naftali Holtz: Opt out of the business Fortunately pre pandemic, we started to invest significantly in resources technology people to develop that direct business and we continue through the pandemic and we accelerated and when we came out of the pandemic and it's proving to be very productive for us. So overall our distributions.
Naftali Holtz: And we continued through the pandemic, and we accelerated when we came out of the pandemic. And it's proving to be very productive for us. So overall, our distribution strategy is proving to be successful, and demand seems very, very strong. Of course, Korea opened up, which is great. So that gives us a better itinerary product to offer to our guests. And we're feeling good about how this will play out. Of course, we've been in China for a decade before that. So we've all been through the ups and downs, but currently, it's looking pretty positive.
Naftali Holtz: Strategy is proving to be successful demand seems very very strong of course Korea opened up which is great. So that gives us a better itinerary product to offer to our guests.
Naftali Holtz: And we're feeling good about how this will play out of course, we've been in China for a decade before so we.
Naftali Holtz: We've all been through the ups and downs, but currently its looking pretty positive.
Naftali Holtz: Okay, that's really helpful. And then maybe one for Naft, the higher guidance for the year, you know, helps bring credit metrics, at least in our model, perhaps a little closer to IG, perhaps a little earlier than we had before. And so I guess, you know, maybe it's worth refreshing us on what you think the board needs to see to reestablish capital returns and if today's report maybe helped that picture at all. And that's it for me.
Naftali Holtz: Okay. That's really helpful and then maybe one for <unk>.
Naftali Holtz: The higher guidance for the year helps bring credit metrics at least in our model.
Naftali Holtz: Perhaps a little closer to IAG, perhaps a little earlier than we had before and so I guess.
Naftali Holtz: Maybe it's worth you refreshing us on what you think the board needs to see to reestablish capital returns and if today's report maybe help that picture at all and ethically.
Naftali Holtz: Yeah, so just on the balance sheet. So you're right, obviously, with the acceleration of performance, we're focused on basically three things, right?
Naft: Yes, so just on the balance sheet.
Naft: So you're right obviously with the acceleration of performance we're focused on basically three things right. We're focused on reducing leverage and I said in my prepared remarks, we will we expect to get to below the three five time leverage baidu.
Naftali Holtz: We're focused on reducing leverage. And I said in my prepared remarks that we expect to get below the three and a half times leverage by the end of the year. So that's very positive. Obviously, we continue to pay down debt, and EBITDA, you know, increases are helping with that leverage. So we're feeling pretty good about that.
Naftali Holtz: By the end of the year.
Naftali Holtz: So thats very positive obviously, we continue to pay down debt EBITDA.
Naftali Holtz: Increases are helping with that leverage though.
Naftali Holtz: Feeling pretty good about that.
Naftali Holtz: And then reducing the cost of capital, you saw us take action this quarter reducing more than 500 basis points, or almost $60 million, of annual interest expense. And we'll continue to find those opportunities to lower the cost of capital and use both cash and opportunistic refinancing. I think there's much more to do there.
Naftali Holtz: And then reducing cost of capital you saw us take an action this quarter reducing.
Naftali Holtz: On one bond more than 500 basis points or almost $60 million of annual interest expense.
Naftali Holtz: And we will continue to find those opportunities to deliver the cost of capital.
Naftali Holtz: And use both cash and opportunistic refinancings, I think theres much more to do there.
Naftali Holtz: And lastly, it's just an unsecured balance sheet; we want to get back that capacity on the balance sheet, like we had before COVID. And we basically have three bonds left that if we pay them back, or we refinance them, the whole structure collapses, and we're back to an unsecured balance sheet. So that's our focus. We'll continue to execute on that. You know, our focus is on metrics, not ratings. We were very pleased with the upgrades that we got from the rating agencies, but our focus is on getting to the balance sheet.
Naftali Holtz: And lastly, it's just.
Naftali Holtz: And I think your balance sheet, and we want to get back that capacity.
Naftali Holtz: On the balance sheet, we had pre COVID-19 and we basically have three bonds left if we paid them back or do we refinance them.
Naftali Holtz: The whole structural collapses and we're back to unsecured balance sheet. So that's our focus when we continue to execute on that.
Naftali Holtz: Our focus is on metrics not ratings, we were very pleased with the upgrades that we got from the rating agencies, but our focus in our <unk>.
Naftali Holtz: Turning to the balance sheet.
Naftali Holtz: Thank you, everyone.
Speaker Change: Thank you everyone congrats on the quarter.
Jason T. Liberty: I was just going to say, obviously, you're getting to base camp and getting to those metrics is an important line for us, and as well as for our board in terms of consideration of capital returns. But I would just point out that, pre-COVID, we certainly had a competitive dividend and also buying back shares opportunistically.
Speaker Change: Thanks, Jason.
Jason T. Liberty: I was just going to say.
Jason T. Liberty: Obviously, youre getting two to base camp in getting to those metrics is an important line for us.
Jason T. Liberty: And as well as for our board in terms of consideration of capital returns, but I would just point to the pre COVID-19.
Jason T. Liberty: We certainly that was very much part of our formula.
Jason T. Liberty: As having a competitive dividend and also buying back shares opportunistically.
Operator: Your next question will come from the line of Robin Farley with UBS. Please go ahead.
Robin Margaret Farley: Thanks, everyone.
Operator: Your next question will come from the line of Robin Farley with UBS. Please go ahead.
Robin Margaret Farley: Great, thanks. One clarification on your really excellent guidance. It sounded like you were suggesting that there were some fall Red Sea cruises that are still on your schedule, but did I understand your comment to mean that if they were to change, that's already factored into your guidance? So if we see that, or see any changes in those, it wouldn't change your guidance? I just want to make sure I understood that part of your commentary, right?
Robin Margaret Farley: Great. Thanks, one clarification on your really excellent guidance.
Robin Margaret Farley: Sounded like you were suggesting that there were some fall red decreases that are still on your schedule, but did I understand you.
Robin Margaret Farley: Your comment to mean that if they were to change that's already factored into your guidance. So if we see that.
Robin Margaret Farley: See any changes in those it wouldnt change your guidance I, just want to make sure I understood that that part of your commentary right yes.
Naftali Holtz: Yes, Robin, that's correct.
Speaker Change: Yes, Robyn let me correct.
Robin Margaret Farley: Okay, great. Thank you.
Speaker Change: Okay, great. Thank you and then just.
Robin Margaret Farley: And then my other question is on capacity and capacity growth. And you mentioned that, you know, moderate capacity growth has been your goal. Others out there, some have been more aggressive lately with ordering ships out into the future, and I wonder if you could just... Give us your thoughts on whether that changes anything with the availability of slotted shipyards or if that changes in any way what you have been thinking about capacity or what you would think about needing to do in the future. Thanks.
Robin Margaret Farley: My other question is on capacity.
Robin Margaret Farley: And capacity growth and you mentioned that you know moderate capacity growth has been your goal.
Robin Margaret Farley: Others out there.
Robin Margaret Farley: Some have been more aggressive lately with ordering ships into the future and I Wonder if you could just.
Robin Margaret Farley: Give us your thoughts on whether you feel that that changes anything with availability.
Robin Margaret Farley: The largest shipyard or is that changes in any way what you have been thinking about capacity.
Robin Margaret Farley: We think about needing to do in the future. Thanks sure.
Jason T. Liberty: Hi Robin. So first, I think it's important that, you know, when we talk about our order book, these are ships that are actually on order. We're not talking about options. We're not talking about slot reservations. We're talking about things on order. And of course, we don't have any orders going out to, I think, you know, 2035 or 2036.
Speaker Change: Hi, Robin So first I think it's important that.
Jason T. Liberty: When we talk about our order book. These are ships that are actually on order.
Jason T. Liberty: We're not talking about options when I'm talking about slot reservations and we're talking about things on order.
Jason T. Liberty: And of course, we don't have any orders going out to I think $2035 2036.
Jason T. Liberty: At this point in time, what we do subscribe to is that, you know, we believe that we are in the right. We are in segments that have a lot of growth potential for them. We believe we have the right brands in those segments. And we believe that we should be moderately growing our brands over time. And so that's kind of what we're committed to. And I think we feel very good, not only about our current order book and about the potential of that order book to grow moderately, but also about our access to, you know, to build those ships over an extended period of time.
Jason T. Liberty: At this point in time, while we do subscribe to is that we are.
Jason T. Liberty: We believe that we are in the right. We're in segments that have a lot of growth potential to them. We believe we have the right brands in those segments and we believe that we should be moderately growing our brands.
Jason T. Liberty: <unk>.
Jason T. Liberty: Overtime, and so thats kind of what we're committed to and and I think we feel very good not only about our current order book and about the potential of that order book to grow moderately.
Jason T. Liberty: But also our access to.
Jason T. Liberty: Two to build those ships.
Jason T. Liberty: Over over.
Jason T. Liberty: So it's, it's, I think we feel very good about it all around. And I think we're showing that the investments we're making in our brands, one of the investments we're making in the destinations, are yielding very high returns for our shareholders.
Jason T. Liberty: For an extended period of time, so and so.
Jason T. Liberty: I think we feel very good about it.
Jason T. Liberty: All around and I think we're showing that the investments we're making in our brands.
Jason T. Liberty: Investments, we're making and the destinations are yielding very high returns for our shareholders and continuing to expand our margins.
Robin Margaret Farley: I guess maybe to clarify, do you feel that you would need to order ships more than five years in advance in the current environment? Or is that sort of five, five to six years out? Unknown Speaker No, I don't.
Speaker Change: I guess, maybe to clarify do you feel that you would need to order ships more than five years in advance.
Speaker Change: In the current environment or is that sort of.
Jason T. Liberty: Yeah, I think I think it depends on the circumstances. We've ordered, you know, ICON was, was, was being designed and dreamt of obviously, COVID delayed some of those orders, but somewhere typically in that kind of five to six years, five to six year range is where you make those orders. But keep in mind, and that's what my comment is, that doesn't mean you don't have options and you don't have slot reservations and so forth that you could also, you know, which is why we typically order in that kind of five to six year range. We don't we don't announce things unless they are fully contracted and we know the price, and we have the financing in place. Great, thank you.
Speaker Change: Five six years out.
Jason T. Liberty: No.
Speaker Change: Hi, Joe.
Jason T. Liberty: Yes, I think I think it depends on the circumstances we've ordered.
Jason T. Liberty: <unk> was.
Jason T. Liberty: It was being designed in terms of obviously.
Jason T. Liberty: We have delayed some of those orders, but somewhere in typically in that kind of five to six years.
Jason T. Liberty: Five to six year range is is where you will you make those orders, but we keep in.
Jason T. Liberty: Mine and that's why my comment is is that doesn't mean, you don't have options and you don't have slot reservation and so forth that you could also.
Jason T. Liberty: Which is why we typically order and that kind of five to six year type of range and we don't we don't announce things unless they are.
Jason T. Liberty: Fully contracted and we know the price and we have the financing in place.
Speaker Change: Okay, great. Thank you.
Jason T. Liberty: Pleasure.
Operator: We have time for one more question. Our final question will come from the line of Vince Ciepiel with Cleveland Research. Please go ahead. Great, thanks. Early in the call, there was some commentary on loyalty, and I just wanted to get your sense for, you know,
Speaker Change: We have time for one more question.
Vince Charles Ciepiel: Our final question will come from the line of CPO with Cleveland Research. Please go ahead.
Vince Charles Ciepiel: Great. Thanks earlier in.
Vince Charles Ciepiel: The call there was some commentary on loyalty and I just wanted to get your sense for what youre seeing within that across your brands and bearing products.
Vince Charles Ciepiel: What you see in terms of overlap of customers and then maybe finally within that.
Vince Charles Ciepiel: Our final question will come from the line of Vince Ciepiel with Cleveland Research. Please go ahead. Great, thanks.
Vince Charles Ciepiel: <unk> thought about getting into river cruising thoughts on that segment of the market and is there much overlap with your current customer base.
Jason T. Liberty: Yeah, well, first, just to kind of build off of what I had said earlier, we have been very thoughtful about having the right brands and the right segments. And we have done such an incredible job of delivering a vacation of a lifetime, and we're focused on making sure we're set up to deliver a lifetime of vacations. And our guests, there is overlap between Royal and Celebrity and Royal and Silver Sea and vice versa, because you know, you could have a set of grandparents on Silver Sea that next month are going on a cruise with their kids and grandkids on the Royal Caribbean brand. That happens all the time.
Jason T. Liberty: Yes.
Jason T. Liberty: Yes.
Jason T. Liberty: First just to kind of build off of what I had said earlier is we.
Jason T. Liberty: We have been very thoughtful about having the right brands in the right segments and.
Jason T. Liberty: We have done such an incredible job at delivering a vacation or a lifetime.
Jason T. Liberty: We're focused on making sure we're set up to deliver a lifetime of vacations and our guests there is overlap between royal and celebrity and Royal and Silversea.
Jason T. Liberty: And vice versa, because you can have a set of grandparents on silversea that.
Jason T. Liberty: Next month are going on a cruise with their kids and grandkids on the Royal Caribbean brand.
Jason T. Liberty: That happens all the time and our ultimate one of our ultimate goals here is to make sure that we keep our customer and our ecosystem.
Jason T. Liberty: And our ultimate, one of our ultimate goals here is to make sure that we keep our customers and our ecosystem safe. And so we do that, whether that's through awareness of our brands, whether that's through loyalty of programs, whether that's through cross-selling, et cetera, and those are things that we have an opportunity to get better and better at, especially as our travel platform, technology-wise, is more flexible. The comment on the river or other experiences, you know; we're always, you know, evaluating opportunities.
Jason T. Liberty: And so we do that whether that's through awareness.
Jason T. Liberty: Our brands, whether thats through loyalty.
Jason T. Liberty: Grams, whether thats through cross selling et cetera, and those are things that we have an opportunity to get better and better at especially as our travel platform technology wise.
Jason T. Liberty: Is is more flexible.
Jason T. Liberty: The comment on river or other experiences we're always evaluating opportunities.
Jason T. Liberty: You know, the river is an area where we do see some overlap, not a lot of overlap, but we do see some overlap occurring. And you know, that could be something that we would consider at some point in the future. But at this point in time, we're very focused on excelling in our core, growing, and further building out our destination platform. All of that, as we're clearly seeing, is working to deliver a very high ROIC profile and producing strong shareholder returns.
Jason T. Liberty: <unk>.
Jason T. Liberty: River is an area, where we do see some overlap not a lot of overlap, but we do see some overlap occurs.
Jason T. Liberty: Occurring.
Jason T. Liberty: <unk>.
Jason T. Liberty: And that could be something that we would consider at some point in the future but at this at this point in time, we're very focused on selling.
Jason T. Liberty: Selling and our core growing our core and also.
Jason T. Liberty: Yes.
Jason T. Liberty: Further building out our destination platform all of that is we're clearly seeing is working to deliver a very high return ROIC profile and producing strong shareholder returns.
Naftali Holtz: I will now turn the conference back over to Naftali Holtz, CFO, for a closing remarks.
Naftali Holtz: Great. Thank you.
Naftali Holtz: I will now turn the conference back over to now telehealth CFO for closing remarks.
Naftali Holtz: Thank you all for your participation and interest. Michael will be available for any follow-up. We wish you all a great day.
Naftali Holtz: Well. Thank you all for your participation and interest Michael will be available for any follow up we wish you all a great day.
Operator: Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.
Naftali Holtz: Ladies and gentlemen, this concludes today's conference call. Thank you for your participation you may now disconnect.
Unknown Speaker: Get ready for the best family vacation in the world on Icon of the Seas. It's the first of a whole new class of ships where everyone in your crew will have the time of their life multiple times a day. You'll never forget the feeling of plunging down six record-breaking slides at Thrill Island or finding the courage to conquer the Crown's Edge, a test of bravery like nothing you've ever dared, dangling high above the ocean.
Operator: Ready for the birth family vacation in the World.
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