Q3 2024 OneSpaWorld Holdings Ltd Earnings Call
Speaker Change: The The
Speaker Change: Good day and welcome to the one-style world third quarter, 2020 for earnings conference call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero.
Speaker Change: After today's presentation, there will be an opportunity to ask questions.
Speaker Change: To ask a question, you may press star then one on a text on phone. To withdraw your questions, please press star then two.
Speaker Change: Please note this event is being recorded. I would now like to turn the conference over to Allison Malkin of ICR. Please go ahead.
Allison Malkin: Thank you, good morning and welcome to One Spowworld 3rd Quarter, 2020 for earnings call and webcast.
Speaker Change: Before we begin, I'd like to remind you that certain statements and information made available on today's call and webcast may be deemed to constitute forward-looking statements.
Speaker Change: These forward-looking statements reflect our judgment and analysis only as of today and Actual results may differ materially from current expectations based on a number of factors affecting our business
Speaker Change: Accordingly, you should not place undue reliance on these forward-looking statements.
Speaker Change: for a more thorough discussion of the risks and uncertainties associated with the forward-looking statements to be made in this conference call and webcast.
Speaker Change: We refer you to the disclaimer regarding forward-looking statements that is included in our third quarter 2024 earnings release which was furnished to the FEC today on form 8k
Speaker Change: We do not undertake any obligation to update or alter any forward-looking statements, whether as a result of new information, future events, or otherwise.
Speaker Change: In addition, the company may refer to certain adjusted non-GAAP metrics on this call. An explanation of these metrics can be found in our earnings release issued earlier this morning.
Allison Malkin: Joining me today are Leonard Fluxman, Executive Chairman, Chief Executive Officer and President, and Stephen Lazarus, Chief Financial Officer and Chief Operating Officer. Leonard will begin with a review of our third quarter 2024 performance and provide an update on our key priorities.
Allison Malkin: Then, Stephen will provide more details on the financials and guidance. Following our prepared remarks, we will turn the call over to the operator to begin the question and answer portion of the call. I would now like to turn the call over to Leonard.
Leonard Fluxman: Thank you, Alison. Good morning and welcome to One Spa World's third quarter 2024 earnings conference call.
Leonard Fluxman: It's a pleasure to speak to you today and share another period of record performance.
Leonard Fluxman: Our team delivered exceptional third quarter results, achieving all-time records for total revenues, income from operations, and adjusted EBITDA that once again surpassed our expectations.
Leonard Fluxman: Our sustained strong performance continues to evidence the talent of our team to leverage our complex operating model and competitive strengths to deliver outstanding guest experiences for our cruise line and destination resort partners.
Leonard Fluxman: This positions us well to continue to achieve outstanding results for our company and our partners.
Leonard Fluxman: As outlined in our earnings release issued earlier this morning, based on our performance, our continued momentum and positive outlook across the business, we have increased our annual guidance for the third time this year.
Leonard Fluxman: Turning to the highlights of the quarter.
Leonard Fluxman: Total revenues increased 12% to a record $241.7 million, compared to $216.3 million in the third quarter of 2023.
Leonard Fluxman: Income from operations increased 48% to a record $25 million, compared to $17 million in the third quarter of 2023.
Leonard Fluxman: Adjusted EBITDA increased 33% to a record $33 million, compared to $24.9 million in the third quarter of 2023.
Leonard Fluxman: The unlevered off-the-tax-free cash flow conversion rate was 94% in the third quarter of 2024.
Leonard Fluxman: We continue to grow our ship count year over year. At quarter end we operated health and wellness centers on 196 ships with an average ship count of 195 for the quarter.
Leonard Fluxman: This compares with a total of 189 ships and an average ship count of 185 ships for the third quarter of 2023.
Leonard Fluxman: At quarter end, we had 4,204 cruise ship personnel on vessels compared with 3,927 cruise ship personnel on vessels at the end of the third quarter of 2023.
Speaker Change: The quarter included continued progress toward the key strategic priorities. Let me share some of those highlights with you. First, we captured highly visible new ship growth with current cruise line partners and added new cruise line partners to our fold.
Speaker Change: To this end, during the third quarter, we opened a health and wellness center on the new shipbuild Utopia of the Seas.
Speaker Change: With this opening for the first nine months of the year, we have introduced health and wellness centers on five new shipbuilds.
Speaker Change: Looking ahead, we continue to expect to end fiscal 2024 operating on board 198 vessels.
Speaker Change: Second, as it relates to our higher value services and products.
Speaker Change: As you recall, we introduced new cryotherapy body services, which saw strong double-digit growth in revenue in Q3 as compared to Q2.
Speaker Change: Additionally, our new cryotherapy and LED light facial services that complement the new technology-driven Elemis Biotech 2.0 facial and LightStim therapy continues to be a very successful addition to our facial and acupuncture revenue.
Speaker Change: We will continue to ramp these new services to the entire fleet over the next few quarters.
Speaker Change: Third, we focused on enhancing health and wellness center productivity.
Speaker Change: We grew key maritime operating metrics with continued strong growth in revenue passenger per day, weekly revenue, and revenue per staff per day.
Speaker Change: This was driven by growth in total cruise guests utilizing the SPAR.
Speaker Change: and an increase in the number of treatments per guest, both of which benefit from the success of our technology, enhancements, our expertise in stop training, and the simplification of our service menu options and treatment lengths.
Speaker Change: Additionally, we continue to attract and retain staff, which has led to an increasing percentage of experienced staff members working on board.
Speaker Change: We continue to see more of our staff members sign on for additional contracts Reflecting the compelling workplace environment we provide and their affinity toward our company
Speaker Change: These more experienced staff members are also skilled at recommending product and service options, which, combined with the simplification of our service menu and treatment leads, led to growth in higher-priced products and services.
Speaker Change: We remain focused on initiatives that retain our best thought.
Speaker Change: Pre-booking revenue as a percentage of service revenue remains strong at 22%.
Speaker Change: Even as we phase in new partners that are just beginning to scale, we continue to see passengers that pre-book services spend 30% more than those who do not pre-book.
Speaker Change: And finally, we continue to expand productivity within our med spas.
Speaker Change: The quarter saw same SPAR revenue overall, up double-digit year-over-year. We continue to increase the number of doctors and nurses we have on board and add to the service offering.
Speaker Change: At quarter end, MediSpa services were available on 144 ships and up from 185 ships at the end of the third quarter of 2023.
Speaker Change: We now expect to have many spa services offerings to 144 ships this year.
Speaker Change: Fourth, as it relates to capital allocation, we further enhanced our capital structure and financial flexibility.
Speaker Change: During the quarter, we refinanced
Speaker Change: Our first lien term loan with a new $100 million five-year facility at a lower interest rate and entered into a five-year revolving credit facility up to $50 million, which was undrawn at quarter end.
Speaker Change: Our efficient capital structure, asset-light business model, and robust cash flow generation allows us to invest in support of our future growth while paying an ongoing quarterly dividend and evaluating opportunities to optimize our capital structure.
Speaker Change: With this in mind, the court has saw us deliver on each of these activities.
Speaker Change: We ended the quarter with $50 million in cash after paying down debt of $24.6 million and investing $11.3 million to repurchase our common shares in the quarter, as well as dispersing $4.2 million in quarterly dividends.
Speaker Change: We believe we will remain well positioned to continue to invest in support of our growth and return value to shareholders.
Speaker Change: Beth.
Beth: Earlier this month, we issued our inaugural Sustainability and Social Responsibility Report, which highlights our commitment to exemplary care for our employees, outstanding service to our partners and their guests, and responsible stewardship of the environment and communities of our community impact across the globe.
Beth: This commitment and our ongoing ability to leverage our industry-leading operating platform
Beth: Integrated Growth Initiatives and Asset Light Business Model
Beth: to generate consistently increasing off-the-tax cash flow.
Beth: positions, as well as to deliver continued strong near-term and long-term financial performance.
Beth: In summary, we are pleased with the ongoing strength of our business and excited about our business prospects.
Beth: With a clear path for growth, a highly talented team, and successful strategies in place, we continue to expect fiscal 2024 to represent another year of record growth and increased value to our shareholders.
Speaker Change: With that, I'll turn you over to Stephen, who will provide more details on our third quarter results and guidance.
Speaker Change: Stephen.
Stephen Lazarus: Thank you, Leonard. Good morning, everybody.
Stephen Lazarus: We are pleased to report ongoing strength with the delivery of better than expected results across all key financial metrics in the third quarter.
Stephen Lazarus: We continue to drive shareholder value with a quarter generating record revenue, record net income, record adjusted EBITDA, and record unlevered after-tax free cash flow.
Stephen Lazarus: and we enhanced our already strong balance sheet ending the period with a strong cash position even as we utilize cash to reduce debt, repurchase our shares and pay a quarterly dividend.
Stephen Lazarus: Sharing more detail on the third quarter that we reported earlier today.
Stephen Lazarus: Total revenues were $241.7 million compared to $216.3 million in the third quarter of 2023.
Stephen Lazarus: The increase primarily was attributable to our average ship count increasing to 195 health and wellness centers onboard ships operating during the quarter.
Stephen Lazarus: compared with our average ship count of 185 health and wellness centers in the third quarter of 2023, together with continued productivity gains across our operations.
Stephen Lazarus: Cost of service were $159.6 million compared to $146.1 million.
Stephen Lazarus: And the increase was primarily attributable to costs associated with that increased service revenue of $194 million compared to service revenue of $175 million in the third quarter of prior year.
Stephen Lazarus: As to be expected, cost of products...
Stephen Lazarus: $40.1 million compared to Philly.
Stephen Lazarus: $4.5 million in the third quarter of 2023.
Stephen Lazarus: with the increase primarily attributable to costs associated with increased product revenue of $47.3 million in the quarter compared to product revenue of $40 million in the third quarter of 2023.
Stephen Lazarus: Net income was $21.6 million or net income per diluted share of 20 pennies.
Stephen Lazarus: as compared to net income of $23.4 million or net income per diluted share of 16 pennies in the third quarter of prior year.
Stephen Lazarus: The change in net income was primarily attributable to a $7.4 million decline in the fair value of the warrant liability as reflected in other expense in Q3 of 2023 and a $8.1 million increase in income from operations.
Speaker Change: Thank you. Thank you. Thank you.
Speaker Change: As you know, the change in fair value of warrants liabilities was the result of the re-measurement to fair value of the warrants exercise during the third quarter of 2023.
Speaker Change: reflecting changes in market prices of our common stock and other observable inputs deriving the value of these financial instruments.
Speaker Change: As a reminder, we have no outstanding warrants as of the 2024 quarter end.
Speaker Change: The $8.1 million change in income from operations primarily derived from an increase in the number of health and wellness centers onboard ships operating during the quarter and our productivity gains across our operations.
Speaker Change: Adjusted net income was $27.3 million, or adjusted net income per diluted share of 26 pennies, as compared to adjusted net income of $22 million, or adjusted net income per diluted share of 22 pennies in the third quarter of 2023.
Speaker Change: And adjusted EBITDA was $33 million compared to adjusted EBITDA of $24.9 million in the third quarter of the prior year.
Speaker Change: Turning to the balance sheet, we ended the quarter with a stronger balance sheet, including total cash of $50 million after repaying $24.6 million on our first lean term loan, repurchasing 745,000 common shares for $11.3 million.
Speaker Change: and paying the $4.2 million dividend during the quarter.
Speaker Change: At quarter end, we had $38.7 million therefore remaining on our current share repurchase authorization.
Speaker Change: Thank you for watching. God bless you. God bless America. God bless all of you. God bless the United States of America. God bless America. God bless America. God bless America.
Speaker Change: Since returning to service in fiscal 2022, we have repaid over $133 million of indebtedness.
Speaker Change: reducing our debt to $99 million and have also repurchased a total of 2.14 million shares in total for $28 million.
Speaker Change: In addition, we refinanced our first lean term loan with a new $100 million five-year facility, lengthening our maturity and reducing our ongoing interest expense to so-called plus 1.9%.
Speaker Change: Also in the third quarter, unlevered after-tax-free cash flow was a record $31 million compared to $24.2 million in the third quarter of 2023.
Speaker Change: Moving now on to guidance. With our strong third quarter performance and a continued positive outlook for the third time this year, we have increased our fiscal year 2024 guidance.
Speaker Change: We now expect revenue to increase 12% and adjusted EBITDA to increase 24% at the midpoint of the guidance ranges from fiscal 2023 actual results.
Speaker Change: For the full year of fiscal 2024, we expect total revenues in the range of $888 million to $893 million versus our previous guidance of $870 to $890 million.
Speaker Change: An adjusted EBITDA is now expected in the range of $110 to $112 million versus our previous guidance of $102 to $108 million.
Speaker Change: We expect to end fiscal 2024 operating on 198 cruise ships and at 51 land-based results.
Speaker Change: Thank you for watching. Bye. Bye.
Speaker Change: For the fourth quarter, we expect total revenue in the range of $210 to $215 million and adjusted EBITDA in the range of $25 to $27 million.
Speaker Change: So, in summary, we enter the fourth quarter strongly positioned, we are confident in our outlook and our ability to continue to deliver increased value for our shareholders.
Speaker Change: as we execute our now proven strategy supported by our advantageous operating platform, robust growth initiatives, and asset-light business model.
Speaker Change: With that, Becky, could you please open the call for questions?
Speaker Change: We will now begin the question and answer session.
Speaker Change: To ask a question, you may press star, then 1 on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the keys.
Speaker Change: If at any time your question has been addressed and you would like to withdraw your question, please press star then 2.
Speaker Change: We ask that you please limit yourself to one question and one follow-up.
Speaker Change: If you have additional questions, please re-queue.
Speaker Change: At this time, we will pause momentarily to assemble our roster.
Speaker Change: The first question today comes from Steve Wysinski with Stiefel. Please go ahead.
Steve Wysinski: Hey guys, good morning.
Steve Wysinski: So Leonard or Stephen, I want to ask about the margin expansion in the quarter that was, you know, probably much, much better than what we were kind of expecting. I mean, if we look at the service margins, you know, those expanded by about 100 basis points. And then, you know, on top of that, on the operating expense side, your salary line was, you know, was actually down about 100 basis points. So, you know, you put that all together, you've got this massive 200 basis point.
Steve Wysinski: you know kind of plus move in EBITDA margins. So you know just wondering if there was anything we need to think about in terms of you know maybe one-time benefits.
Steve Wysinski: Or maybe a better question is just, you know, how were you able to push those margins so much and, you know, how should we think about margin expansion moving forward?
Speaker Change: Good morning. Let me start off with the second part of your question as it relates to salary and payroll taxes.
Speaker Change: being down versus
Speaker Change: the same quarter of our year.
Speaker Change: As it relates to the service margin, I would say two things, right? So number one, as you've heard from the cruise lines that have already reported to date.
Speaker Change: Onboard demand remains particularly strong, guest spend remains robust, that translates for us into
Speaker Change: minimal promotional activity that we need to do, which we're obviously delighted and encouraged about.
Speaker Change: And so, to the extent that those continue to play out, we continue to feel very, very good.
Speaker Change: I'd also just remind you that as we continually preach, right, we will focus on absolute dollars. So at a point in time if there is any softening, and we have not seen any,
Speaker Change: then we would do promotional activity in order to drive the absolute dollars. But where we stand right now, we feel really good about how things are playing out.
Speaker Change: Okay, gotcha. Thanks for that, Stephen. And then, you know, second question, I'm not sure if this is for Leonard or you, Stephen, but, you know, and maybe we're meeting, you know, we might be reading too much into this, but, you know, if we look at your land-based
Speaker Change: weekly production relative to your maritime weekly production. I mean, there's quite a big difference going on there between the two of them. Obviously, the cruise industry is doing.
Speaker Change: so well right now, and I think a lot of that's just due to the massive value proposition. But just wondering, or if you have any idea, why those land-based spas aren't seeing the same type of kind of revenue generation that you're seeing on the maritime side.
Steve Wysinski: A number of the details... Yes, Steve. Yes. Go ahead, Steve.
Leonard Fluxman: Okay, Leonard, go, go.
Leonard Fluxman: A number of the hotels, Steve, are actually undergoing renovation projects, and so that has negatively impacted some of the performance in the land-based resorts, particularly at some of the bigger locations.
Leonard Fluxman: Yeah, we had like three or four this year versus last year, Steve, so that has impacted.
Leonard Fluxman: certainly revenue per week on average at the resorts. We've also had some softness in Asia where they have not had the same occupancy. I mean, room occupancy is down overall across Asia, and the Caribbean.
Leonard Fluxman: Just not getting as many people as they had last year and you know the business
Leonard Fluxman: Here's a little challenge because some of the biggest bars, as Stephen mentioned, have not been open because of the construction.
Speaker Change: So as those renovations kind of come to a close, and you know as we think about 25, we should start to think you know about that land-based spa side of the business starting to you know to grow again. Is that kind of fair?
Speaker Change: I think it's fair to assume like we you know we've got to we've got to work harder on you know penetrating and capture rate in the results.
Speaker Change: We have to make sure that all of our marketing tools are in play and so we're doing a number of different things right now to put some more energy and life into producing those results and I think 2025 should be a little better
Speaker Change: Okay, gotcha. Thanks guys, appreciate it and congrats on the solid quarter.
Speaker Change: Thank you.
Speaker Change: The next question comes from Max Rukalenko with TD Cowan. Please go ahead.
Max Rukalenko: Hey, great. Thanks a lot guys and congrats on a really nice quarter So first, how are you thinking about pricing on the service on the service side both for fourth quarter and 2025?
Max Rukalenko: Are you seeing consumer acceptance to higher price points and just how are you thinking about how much room you may have to push that a little bit further?
Speaker Change: So, Max, I think, you know, based upon the comments both Stephen and I have made, I mean, demand, the cruise lines have also spoken about demand for an incremental onboard span still.
Speaker Change: continuing to be robust. We've taken, we obviously took pricing last year, we took very little pricing this year, except in some cases in some of the MedSpot treatments.
Speaker Change: But as we deploy or innovate or add to the lineup new services, those will be incrementally higher. We also continue to look within the
Speaker Change: transformation process that we've done, which is simplification of menu, etc., moving people from shorter services to longer services at higher price points. To the extent that we think the demand
Speaker Change: And we firmly believe that right now will continue.
Speaker Change: We will look across the board at some of the services and see if more pricing is needed.
Speaker Change: can be taken. Look, we don't want to get ahead of ourselves. We never have.
Speaker Change: But I think there's some opportunities in some of the services to still have some smaller increases in 25 and 26.
Speaker Change: Got it, that's helpful. And then just switching over to margins, obviously, as we just touched on, really nice outperformance versus the initial guide provided earlier this year. Do you view 2024 as the correct jumping off point with potential?
Speaker Change: into the video.
Speaker Change: More incremental improvements over time, as you know, with such a high variable cost nature business, it is difficult to drive those margins. Obviously, we saw them flow through very, very nicely in the third quarter with
Speaker Change: significant outsized revenue that then helps as it relates to scale and covering some of your fixed costs so
Speaker Change: I think I would put it to you this way, right? We're obviously, as you know, in the process now of looking at 2025. There is nothing at this point that gives us pause with regards to 2025. We don't talk specifically around those numbers just yet. But as we go through our budget process and, you know, then early next year, we would come out more formally with our expectations.
Speaker Change: for 2025, but as of right now, we remain optimistic about where we're at as of today and how we see the outlook playing out.
Speaker Change: Okay, great. Thanks a lot, guys. Best regards.
Speaker Change: Thank you.
Speaker Change: The next question comes from Sharon Zaxia with William Blair. Please go ahead.
Sharon Zaxia: Hi, good morning. I was hoping, just given the election that's coming up next week, could you go over any tariff risk that you guys might have either in the maritime or land-based resort business as it relates to your acquisition of product or anything along those lines?
Speaker Change: There's an election next week? Sharon, good morning. Sorry to remind you.
Sharon Zaxia: Yeah. We...
Speaker Change: The majority of our product technically does not come into the United States although physically it enters it's into a bonded warehouse and then goes straight back out onto the ships and into international waters.
Speaker Change: And so, for the vast majority of our activities, we are not anticipating any impact from any terrorists.
Speaker Change: Great, and thank you.
Speaker Change: Sorry, I'm getting all choked up as I talked about the election.
Speaker Change: I also wanted to ask, I know your long-term algorithm, I think, is for high single-digit revenue growth, and you've obviously been doing better than that for this entire kind of post-pandemic.
Speaker Change: timeframe and I think the the fourth quarter implied revenue is kind of in that 10 percentage range. Do you think that you can sustain kind of something a bit above that long-term algorithm just given the momentum both in the crew space and what's happening with pre-booking specifically for your business?
Speaker Change: Please see the complete disclaimer at https://sites.google.com or at https://sites.google.com
Speaker Change: I don't think we'd be comfortable just yet in taking that up above what we've typically talked to. We certainly feel very comfortable with all of the initiatives in place with the 10 new goals coming into service next year that high single-digit revenue growth is certainly achievable. Obviously to the extent that we can do better than that, we will be delighted and we will continually strive to do that. But at this point in time I don't think we want to go out and change the long-term algorithm metrics as we've previously communicated.
Speaker Change: And Stephen, do you want to keep any debt on the balance sheet? I mean, it seems like you could be debt-free at this time next year if you want to.
Stephen Lazarus: Yeah, so, you know, it's interesting. So we did restructure the debt, not only in the quantum of the debt, but also in where it was divided, and we put a large portion of the debt now actually in the U.S. where you will get some interest shield.
Leonard Fluxman: So, if you ask me and Leonard personally, do we want to keep any debt due to our conservative nature, the response would be no. Why? Why would we pay interest to somebody else when we can rather just return all of that money and do something better with it?
Leonard Fluxman: I will tell you that with the refinancing, with the increasing of the maturity, with the hedge that we've entered into that gives us an incremental slight benefit, at least for now, on the interest rate, the focus on paying down debt
Leonard Fluxman: will perhaps not be as high as it has been in the past and I think we will continue to employ a balanced...
Leonard Fluxman: Capital Allocation Strategy.
Leonard Fluxman: where we've talked about doing all three things.
Leonard Fluxman: which is pay down debt, buy back shares, and pay a dividend. And that balance allocation strategy is something that we remain very, very focused on. It's likely, though, that over the shorter term, the next year or so...
Leonard Fluxman: There is less of a focus on debt and more of a focus elsewhere, but we will pay down some debt and again And the stock we purchase as we've said all along is opportunistic. So when there's weakness, we'll go ahead with it. It's not programmed It's not a certain amount per quarter or anything like that
Speaker Change: Okay, thank you.
Speaker Change: The next question comes from Gregory Miller with Truist Securities. Please go ahead. Thanks. Good morning, gentlemen. I have a couple questions related to the cruise line private islands.
Gregory Miller: First off, do you anticipate that your revenue generation would be better or worse as these islands increasingly become part of the Caribbean itineraries, say, relative to a Central American or Western Caribbean port of call?
Speaker Change: Thank you for watching.
Speaker Change: You know, the islands, you know, when we first started to see a lot more of them being developed
Speaker Change: Some are different to others. Some offer sort of massage treatments, some don't, some will. We continue to work with the cruise lines on exploring the opportunities to develop
Speaker Change: more real estate on the island to do more services. I think that would be a good addition. I certainly think that they're listening and hopefully as we move forward with some of the new developments that are happening with to the cruise lines we'll be able to
Speaker Change: improve the offering on board there. But I think people are smart. So they know they're gonna go to one of the islands for X number of hours a day, and depending who's with them.
Speaker Change: they will either pre-book in the morning to do something or they'll do it when they come back from the island. So in and of itself, it's not a net negative, but I think as time goes by and we see more of our services being offered in addition to the water park stuff, I think it will be accretive to us.
Speaker Change: Can you just repeat that? What makes them what?
Speaker Change: If you have an existing private island that's already in operation, what would make a cruise line make that determination to add OSW services?
Speaker Change: sources.
Speaker Change: Thank you very much.
Speaker Change: at a later time.
Speaker Change: I appreciate it. Thank you.
Speaker Change: Yes, no problem.
Speaker Change: The next question comes from Asia Georgieva with NVIDIA Research. Please go ahead.
Asia Georgieva: Good morning, guys. Congratulations on this record quarter and hopefully continue.
Asia Georgieva: smooth sailings into 2025. Gregory basically asked pretty much my first half of the question. So are the economics on those private islands similar to what you would get on board during a sea day or would you be competing sort of with your port pricing on board the ship if you're offering the same type of services?
Asia Georgieva: at a private island.
Speaker Change: Generally speaking, they're going to be similar, Asya. To the extent we can't complete the same length of service, obviously it's priced accordingly. But other than that, it's very similar.
Asia Georgieva: Okay, in the second somewhat unrelated question...
Speaker Change: You mentioned the 22% pre-booked rate, and I think from what we've heard so far from the cruise companies, they're looking at much higher pre-booked onboard, and I understand that the mix is certainly different where they're looking at the Wi-Fi beverage packages.
Speaker Change: And given the fact that you have new cruise partners, what would you say is the max penetration rate that you have at this point with the more established partners? And do you still see an opportunity for them, let's say it's 30%, do you still see an opportunity for that to grow?
Speaker Change: Yeah, I think as I mentioned in my call, we have one particular larger banner that's not yet at scale. We've continued to work with their Shoreside Revenue and Marketing folks to try and improve that.
Speaker Change: It's really a function of allocating some some allocate more resources some understand it Some actually have folks in marketing that own it. I think
Speaker Change: better and they tend to have more or more the frequency of services is higher. So we go to our quarterly meetings, we demonstrate some of the metrics to them, we show them where there's room for improvement, and it's really up to them then to allocate
Speaker Change: more resources because, look, it's more money for everybody. So I think there's a strong understanding and they're receptive to it. It just comes down to, do they have the resources at the time to allocate, but there is room for improvement overall.
Speaker Change: And do you think, and again I understand that it will probably
Speaker Change: depend on each marketing team and each management team and whether they're more focused on the services that they provide directly. Do you think that it's possible to move that needle by five percentage points, meaning from 22 to 27 over the course of 12 months or so?
Speaker Change: Look, we'd certainly love to see it move above 25. Our target internally is definitely above 25, but we're really, it's not, the dependency is not on what we're capable of doing because we manage
Speaker Change: very efficiently the back end of that pre-booking function and the yield management. I think if we can get more of our cruise lines to give more attention to it, particularly because the spend is so much higher, then I think the potential to go above 25 is certainly there for the future.
Speaker Change: Perfect. It makes a lot of sense. Thank you, Leonard.
Leonard Fluxman: Yeah, you're welcome.
Speaker Change: The next question comes from Laura Champine with Loop Capital. Please go ahead.
Speaker Change: Thank you for watching.
Laura Champine: Hi, thanks for taking my question. Sorry if this has already come up, but any progress on getting the cruise lines to share more data so that you can offer more personalized discounts to passengers?
Laura Champine: No.
Laura Champine: The End
Speaker Change: Laura, no, they don't like it. They don't like, they don't, they never have and I don't think they ever will. They're very protective about the data. I mean we try different ways to get more granularity on the data we need, but honestly it's unlikely they're going to share more than they have to.
Speaker Change: Understood. So what are the things that move the needle on pre-bookings for you guys?
Speaker Change: use to drive that number even higher.
Speaker Change: So to the extent that firstly all the visual, all the navigation
Speaker Change: the offering, the way in which the website looks when you land on it from the front end of the cruise line.
Speaker Change: You know, we're working with a lot of different banners to improve that, to improve the imagery, adding videos, showing people things that they just didn't know we offered.
Speaker Change: All of that capability is certainly things where they can improve the way in which people view our services and get to book them.
Speaker Change: I think if there are inefficiencies on the booking side of the navigation, we can certainly point those out. But more importantly, it's how they market what can be pre-booked. So if they're marketing meals, if they're marketing show excursions, we would love to see more of a focus around the SPAR.
Speaker Change: as part of what they're pre-booking and just having them point out, you know, there are certain days where if you don't pre-book, you're not going to get that service. So, I think it's really collaborating with their marketing folks in a much more meaningful way that will drive, you know, a better result out of the pre-booking for us.
Speaker Change: Got it. Thank you.
Speaker Change: Bye.
Speaker Change: This concludes our question and answer session. I would like to turn the conference back over to Leonard Fluxman for any closing remarks.
Leonard Fluxman: Right. Thanks, everybody, and thank you for joining us today. We look forward to speaking with many of you at the upcoming investor conferences that we'll be attending and when we report our fiscal year results in February. Thanks for joining today. Take care.
Speaker Change: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.