Q4 2024 Royal Caribbean Group Earnings Call
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Regina: Good morning, My name is Regina and I will be your conference operator today at this time I would like to welcome everyone to the Royal Caribbean Group fourth quarter and full year 'twenty 'twenty four earnings conference call. All participants are in a listen only mode. After the speaker presentation. There will be a question and answer session to ask a question during this session.
Regina: You'll need to press star one on your telephone keypad I would now like to introduce like Daniel Vice President of Investor Relations Mr. Daniel the floor is yours.
Daniel: Good morning, everyone and thank you for joining us today for our fourth quarter 2024 earnings call.
Daniel: Joining me here in Miami are Jason Liberty, Our Chief Executive Officer, That's totally holds our Chief financial Officer, and Michael Bayley, President and CEO of the Royal Caribbean brand.
Daniel: Before we get started I would like to note that we will be making forward looking statements. During this call. These statements are based on management's current expectations and are subject to risks and uncertainties a number of factors could cause actual results to differ materially from our current expectations. Please refer to our earnings release issued this morning as well as our <unk>.
Daniel: Filings with the SEC for a description of these factors, we do not undertake to update any forward looking statements as circumstances change also we will be discussing certain non-GAAP financial measures, which are adjusted as defined and a reconciliation of all non-GAAP items can be found on our investor website and in our earnings release.
Daniel: <unk>.
Daniel: Unless we state otherwise all metrics are on a constant currency adjusted basis Jason.
Jason Liberty: Jason will begin the call by providing a strategic overview and update on the business.
Jason Liberty: We will follow with a recap of our fourth quarter, the current booking environment and our outlook for 2025. We will then open the call for your questions with that I'm pleased to turn the call over to Jason.
Jason Liberty: Thank you Blake and good morning, everyone I'm thrilled to discuss our exceptional fourth quarter and full year results our outlook for 2025, and there are many exciting things happening at the Royal Caribbean Group.
Jason Liberty: 2024, it was an incredible year for us in the fourth quarter was no exception, we delivered a record $8 6 million memorable vacation at very high customer satisfaction scores.
Jason Liberty: <unk> and <unk>.
Jason Liberty: Seven 6% net yield growth generated more than $5 billion of operating cash flow and return the balance sheet to investment grade metrics.
Jason Liberty: We achieved our trifecta of financial goals 18 months ahead of schedule and at the same time, we expanded capital allocation all while continuing to invest in the business to support our growth ambitions.
Jason Liberty: We also met our double digit carbon intensity reduction target a full year ahead of schedule.
Jason Liberty: These strong financial results set the foundation for a very bright future, which is truly just beginning for us with.
Jason Liberty: With our industry, leading global brands, the most innovative fleet and private destinations and the best people, we remain focused on winning a greater share of the two trillion dollar vacation market.
Jason Liberty: Our plan to capitalize on this opportunity continues to be grounded in our proven formula for success moderate capacity growth moderate yield growth and strong cost control.
Jason Liberty: I want to thank the entire world Caribbean group team for their passion dedication and commitment that enables us to deliver the best vacation experiences responsibly and to drive exceptional financial results.
Jason Liberty: Before getting into the details I'd like to take a moment to discuss an exciting new chapter in our mission to deliver the best vacation experiences.
Jason Liberty: Celebrity River cruises, which we announced this morning boardwalk exciting new opportunities for our guests our business and our shareholders.
Jason Liberty: Beginning in 2027 celebrity River cruises will provide yet another opportunity for guests to explore even more destinations with our leading brands.
Jason Liberty: We placed an initial order for 10 transformative ships, which will serve as the foundation for this new edge class inspired product.
Jason Liberty: Our ambition however go far beyond that.
Jason Liberty: We see river cruising as an exciting growth opportunity that aligns with our strategy of churning the vacation of a lifetime into a lifetime of vacations.
Jason Liberty: Expanding our ecosystem of vacation offerings and broadening our reach into adjacent lines of businesses.
Jason Liberty: River cruising as a sizable and attractive market.
Jason Liberty: <unk> double digit growth over the last decade.
Jason Liberty: By increasing demand from both seasoned cruisers as well as new customers.
Jason Liberty: It is a very fragmented market that presents an exciting opportunity for us to win substantial market share.
Jason Liberty: It delivers attractive a P. D's that we can capture while deepening customer loyalty within our family of brands.
Jason Liberty: River cruising as a complementary high margin high ROIC business that fits nicely within our portfolio.
Jason Liberty: The smaller scale of river shifts and shorter build timelines allow us for faster deployment and return profiles.
Jason Liberty: Celebrity River cruisers as a natural extension of celebrities premium motion offering and appeals to a similar demographic of discerning travellers who value immersive destination focused experiences.
Jason Liberty: River cruise has spent a disproportionate amount of their time and money on travel, including more spend on all types of cruises.
Jason Liberty: We have a remarkable opportunity.
Jason Liberty: Approximately half of our guests have either already experienced or intend to take our river cruise vacation and a majority of guests who would add additional vacation to take our river cruise.
Jason Liberty: Furthermore, celebrities existing reputation for exceptional hospitality and unparalleled experiences will attract new demand from travelers, who are curious about river cruising, but who haven't yet taken that leap.
Jason Liberty: Just as we've set the standard of excellence in Ocean cruising, we will continue to innovate and elevate in the river space.
Jason Liberty: <unk> and sophistication of our edge class Ocean ships will bring cutting edge design.
Jason Liberty: Stable technologies and re imagined on board and shore experiences that raises the bar for river cruising.
Jason Liberty: This is an exciting time for the celebrity brand as this new news follows our recent agreement to order a sixth edge class ship.
Jason Liberty: To be delivered to celebrity cruises in 2028.
Jason Liberty: <unk> also known as XL, two will be the sister ship to celebrity XL, which is gearing up for its inaugural selling later this year.
Jason Liberty: So now let's talk about 2024 results and 2025 outlook.
Jason Liberty: I'm proud of what we've accomplished in 2024.
Jason Liberty: We delivered double digit yield growth and generated half a billion dollars more in revenue than we originally expected.
Jason Liberty: Our strong performance was propelled by the flawless execution of our incredible team, which drove elevated demand across our brands.
Jason Liberty: We also continued our focus on driving durable margin expansion, resulting in 74% year over year adjusted EPS growth.
Jason Liberty: We continued to invest in our future while strengthening the balance sheet.
Jason Liberty: Our target of investment grade metrics, and reaching mid teens ROIC.
Jason Liberty: The year ended on a great note with revenue yields up seven 3% in the fourth quarter.
Jason Liberty: Earnings that were 20 cents better than our guidance and a strong book position for 2025 from both a pricing and volume standpoint.
Jason Liberty: 'twenty 'twenty four it was another year of remarkable innovation as we ushered in a new era of vacations with the launch of icons of the seas Utopia of the seas, and silver Ray while announcing and advancing several key private destinations that will further differentiate our leading portfolio of brands, including perfect Day, Mexico Royal Beach Club.
Jason Liberty: And Paradise Island and cause of milk.
We received exceptionally high guest satisfaction scores and attracted a record number of both new and loyal guests.
Jason Liberty: We continued to invest in our commercial and vacation experiences flywheel.
Jason Liberty: 2024, we expanded our capabilities across distribution channels to create a digital experience that connects the dots across all aspects of the consumer journey.
Jason Liberty: Guests have been seamlessly planning and booking their dream vacations, reducing the amount of time to book a cruise by half.
Jason Liberty: We lost over 300, new digital capabilities across channels in 2024.
Jason Liberty: Proving the overall experience and reducing friction points, while increasing spend.
Jason Liberty: We also infused AI into the guest journey to provide a better more efficient experience and more personalized service.
Jason Liberty: For example, our new in App chat, sorry, 35% increase in guest adoption that led to a 20% reduction in our customer service line on board.
Jason Liberty: With nine out of 10 guests, indicating their intent to repeat our new loyalty status match program allows our guests to earn loyalty status across all three brands fostering long term relationships and rewarding loyal customers across our portfolio.
Jason Liberty: Turning to this year momentum continues in 2025 with bookings accelerating since the last earnings call.
Jason Liberty: Resulting in the best five booking weeks in the company's history.
Jason Liberty: Bookings have continued to outpace last year across all key products. Our book position is in line with prior years at higher a P DS, allowing us to further optimize pricing and yield growth as we continued to build the book of business for 2025.
Jason Liberty: As our bookings for 2025 have ramped up since the last earnings call. Our Apd premium to last year has widened underlining our continued focus on optimizing yield growth.
Jason Liberty: Our commercial apparatus is firing on all cylinders and all channels are delivering quality demand above 2024 levels, our direct to consumer channels are performing extremely well.
Jason Liberty: We added hundreds of new capabilities across our digital platforms last year as consumers' preference for digital engagement continues to grow our travel partners are also delivering meaningfully more bookings than last year at higher rates.
Jason Liberty: We continue to see particularly healthy demand from North America, we're about 80% of our guests will be sourced this year.
Jason Liberty: Our brands Global appeal, and nimble sourcing model allows us to attract the highest yielding guest by positioning our shifts in multiple markets around the world.
Jason Liberty: Our brands lead in their respective segments, and our very successful capturing quality demand across sectors and sourcing from new consumer bases.
Jason Liberty: As we think about consumer demand for 2025 and beyond we look to both macro trends and data points for millions of daily interactions with our customers we.
Jason Liberty: We continue to see very positive sentiment from our customers bolstered by strong labor market high wages surplus savings and elevated wealth levels.
Jason Liberty: At the same time, they continue to prioritize travel experiences.
Jason Liberty: American households are wealthier than ever with continued wage growth and low unemployment driving strong consumer spending we see positive sentiment from our customers in a macro environment that favors experiences over things as leisure and travel spend continue to grow.
Jason Liberty: Consumers plan to spend more on vacations and take more trips in the coming year.
Jason Liberty: And our guests over index in their intent to spend more on leisure travel.
Jason Liberty: Consumers place significant value on visiting multiple destinations and this is even more important to millennial and gen Z consumers something that cruising is uniquely positioned to deliver on.
Jason Liberty: Cruise consideration is high with the biggest gains among millennials and younger travelers cruise remains an attractive value proposition and also leads and guest satisfaction compared to other vacation alternatives.
Jason Liberty: We are very well positioned to benefit from these trends with our exceptional and leading portfolio of brands innovated and differentiated chips exciting exclusive destination experiences and leading commercial and AI driven capabilities.
Jason Liberty: 2025 is shaping up to be another great year, with 23% expected earnings growth and accelerated path towards robust cash flow generation.
Jason Liberty: In 2025, we expect to grow capacity by 5% through the introduction of star of the seas, and celebrity XL as well as the full year benefit of Utopia, the CS and silver rate.
Jason Liberty: New shifts not only elevate our vacation experience and draw new customers to our brand, but also provide yield tailwind and enhance overall profitability.
Jason Liberty: We expect yields to grow two and a half to four 5% driven by the performance of our entire fleet, new and existing ships combined with our leading private destinations and strengthening commercial apparatus strong rates and load factors together with continued focus on margins and strategic capital allocation.
To drive adjusted earnings per share of $14 35 to $14 65.
Jason Liberty: Which includes 65 cents of FX and fuel rate headwinds compared to our last earnings call.
Jason Liberty: Our proven formula for success is working moderate capacity growth moderate yield growth and strong cost control leads to enhanced margins profitability and superior financial performance.
For decades, the world Caribbean groups has been redefining what a vacation experience can be it.
Jason Liberty: It's clear that our success has been built on a foundation of differentiation.
Jason Liberty: Setting ourselves apart through innovation and excellence.
Jason Liberty: We have led the way in delivering best in class chips that redefined possible.
Jason Liberty: As we look ahead, we continue to redefine vacations through the ambitious expansion of our private destination portfolio, the exciting entry into new lines of businesses like celebrity River cruises and.
And the development of industry, leading digital and AI capabilities.
Jason Liberty: We relentlessly pursue an acute understanding of how today's families couples and individuals want to spend their valuable vacation time.
Jason Liberty: We can continue to develop and expanding ecosystem of vacation experiences that wildly exceed their expectations.
Jason Liberty: Our goal is to create seamless personalized journeys across our portfolio of experiences from ship to private island, two river cruises and beyond that inspire loyalty deepen relationships and position us as the preferred choice for every kind of vacation.
Jason Liberty: This is not just a strategy, it's a promise to redefine what travel means for our guests.
Jason Liberty: It's about meeting them, where they are dreaming alongside them and turning the vacation of a lifetime into a lifetime of vacations.
Jason Liberty: With this vision, we are poised to lead not just the cruise industry.
Jason Liberty: But the broader world of travel into an exciting new era.
Jason Liberty: Through it all we remain committed to our C. The future vision sustaining the planet energizing communities and accelerating innovation.
Jason Liberty: Yeah.
Jason Liberty: 2024 was an exceptional year for our company marked by many milestones that set the stage for an even brighter future.
Jason Liberty: We are continuously elevating what it means to deliver the best vacation experiences all inspiring ships and unparalleled private destination portfolio and globally trusted brands all propelled by the best people.
Jason Liberty: Royal Caribbean Group is redefining what people have come to expect from a vacation.
Jason Liberty: As we embark on 2025, we remain focused on winning.
Jason Liberty: Even greater share of the broader vacation market and we are just getting started.
Naftali: With that I will turn it over to Naftali.
Jason Liberty: <unk>.
Jason Liberty: Yeah.
Jason Liberty: Thank you, Jason and good morning, everyone.
Jason Liberty: I will start with reviewing fourth quarter results. Our teams delivered another exceptional quarter that exceeded our expectations, resulting in adjusted earnings per share of $1 63.
Jason Liberty: The outperformance compared to our guidance is driven by better revenue across our brands and products and strong cost performance. Despite a headwind from stock compensation due to the increase in our share price.
Jason Liberty: We finished the fourth quarter with net yield growth of seven 3% 200 basis points higher than the midpoint of our guidance that was driven by stronger than expected expected a P. DS from both new ships and like for like hardware.
Jason Liberty: We also saw both better pricing on ticket as well as better than expected onboard spend.
Jason Liberty: Net cruise costs, excluding fuel increased 13, 5% in constant currency.
Jason Liberty: The increase in costs compared to guidance is entirely driven by a 300 basis points impact from higher stock based compensation due to the ryzen to stock price adjusted EBITDA was $1 $1 billion, 10% year over year growth in operating cash flow was $1 $5 billion.
Jason Liberty: Now switching to our 2025 outlook I.
Jason Liberty: I will start by taking you through capacity and deployment for the year.
Jason Liberty: With the introduction of Star Excel in a full year of Utopia, and silver Ray capacity is expected to increase five 4% year over year.
Jason Liberty: We have fewer dry dock days this year compared to 2024 contributing about one percentage points to capacity growth.
Jason Liberty: This year, we also have some of our biggest ships planned for dry dock and we also have restarted our modernization program that has more days for each dry dock.
Jason Liberty: As a result, we have less dry dock days in 2024 more days than 2023.
Jason Liberty: In terms of quarterly cadence the first quarter is more dry docks than last year negatively impacting capacity growth by 300 basis points.
Jason Liberty: The second and third quarter are relatively flat to last year, while the fourth quarter, we will have fewer dry dock days compared to last year benefiting capacity growth by 500 basis points.
Jason Liberty: As a result, a P. C d's are expected to grow around 3% in the first and third quarters.
Jason Liberty: 6% in the second quarter and 10% in the fourth quarter.
New hardware in 2025 represents 4% of total capacity growth compared to 8% in 2024.
Jason Liberty: As Jason mentioned the year is off to a very strong start.
Speaker Change: Last quarter, we said the demand for 2025 is strong with book load factors in line with prior years and at higher rates, allowing for further pricing and yield growth is 2025 bookings continue to ramp up and that's exactly what is happening.
Speaker Change: Since the last earnings call. We've continued to build load factors, but also expanding our booked a P D versus the same time last year.
Speaker Change: The Caribbean represents 57% of our deployment this year.
Speaker Change: And capacity in the region is up 6% over last year.
Speaker Change: With the introduction of start of the seas.
Speaker Change: And celebrity XL in the second half of the year.
Speaker Change: We continue to differentiate in the Caribbean market with our incredible ships and private destinations driving very strong performance.
Speaker Change: Over 70% of guests on these itineraries sailing with the Royal Caribbean brand will visit our private destination this year and that percentage will increase to 90% in 2027 with the opening of the beach clubs at Paradise Island, Nossa and cause of Mel and perfect Day, Mexico.
Speaker Change: Caribbean bookings have been strong with icon in Utopia, continuing to perform well above expectations on top of strong performance of existing hardware.
Speaker Change: Europe will account for 15% of capacity and is up 5% versus last year Euro.
Speaker Change: European Sailings continue to perform very well on both rate and volume basis.
Speaker Change: Alaska is expected to account for 6% of total capacity, we have some of the best hardware in the region, including celebrity edge to quantum class ships and silver Nova among others Alaska.
Alaska demand has been very strong and continues to surpass our expectations.
Speaker Change: Now, let me talk about our guidance for 2025.
Speaker Change: Our proven formula for success modest capacity growth moderate yield growth and strong cost discipline is expected to drive 23% earnings growth and higher cash flow generation this year.
Speaker Change: We expect yield growth of 2.5% to 4.5%.
Speaker Change: <unk> between new and existing hardware.
Speaker Change: Our 2025 yield growth outlook is on top of 11, 6% growth in 'twenty 'twenty four that was boosted by fourth quarter outperformance and put 40 basis points headwind on this year's growth metric.
Speaker Change: Full year net cruise costs, excluding fuel are expected to be flat to up 1% as our focus remains to enhance margin as we continue to grow the business.
Speaker Change: The cadence of our cost growth there is throughout the year with second and third quarter costs expected to be higher than the first and fourth quarter driven by timing of dry docks ramp up of costs related to our acquisition of the close to my airport and other destinations.
Speaker Change: We anticipate fuel expense of $1.17 billion for the year, and we are 60% hedged at below market rates.
Speaker Change: Based on current fuel prices currency exchange rates and interest expense, we expect adjusted earnings per share between $14 35, and $14 65.
Speaker Change: I would also note that this range includes 65 cents headwind from foreign exchange and fuel rates since the last earnings call. When we shared our preliminary expectations for the year.
Speaker Change: We also expect 13% growth in adjusted EBITDA, and 150 basis points growth in gross EBITDA margin there.
Speaker Change: This positions us to accelerate our cash flow generation, which allows us to continue investing in game changing strategic initiatives, maintaining investment grade balance sheet metrics and expanding capital returned to shareholders.
Speaker Change: We expect to invest.
Speaker Change: $5 billion of capital into our key strategic growth initiatives as well as ensuring our assets are well maintained.
Speaker Change: We are set to deliver star of the seas in the third quarter and celebrity excel into fourth quarter with both ships, having committed financing in place.
Speaker Change: Non chip capital is expected to be $1 $6 billion with a significant portion related to our private destination portfolio, including the acquisition of the close to my a port that we announced last year, The Beach club and cause of Mel and the Beach club and Nossa that is expected to open in the fourth quarter of this year.
Speaker Change: Now I will discuss our first quarter guidance.
Speaker Change: In the first quarter capacity will be up 3% year over year more than 70% of our capacity will be in the Caribbean, 19% in Asia Pacific and the remaining capacity is spread across several other itineraries.
Speaker Change: Yields are expected to be up $4 75 per cent.
Speaker Change: Two 5.25% with growth coming from both new and existing hardware across all products.
Speaker Change: First quarter yield growth disproportionately benefits from both the timing of Drydocks and new hardware a full quarter of icon. In addition to Utopia and silver Ray.
Speaker Change: Net cruise costs, excluding fuel are expected to be up in the range of one 6% to 2.1% and include 130 basis points impact from increased dry docks compared to the first quarter of 2024.
Speaker Change: Taking all this into account, we expect adjusted earnings per share for the quarter to be $2 43 to $2.53.
Speaker Change: Turning to our balance sheet.
Speaker Change: We ended the quarter with $4 $1 billion in liquidity.
Speaker Change: Our balance sheet is in a very strong position to support our growth ambitions, while expanding capital allocation.
Speaker Change: At year end 2024, our balance sheet was unsecured and leverage was at low three times consistent with our goal of investment grade credit metrics.
Speaker Change: With a strong expected cash flow generation and increasing EBITDA, we expect to finish 'twenty twenty-five would leverage at mid to high two turns we will continue to manage maturities and find opportunities to reduce cost of capital.
Speaker Change: In closing, we remain committed and focused on our mission to deliver the best vacation experience as responsibly as we work to deliver another year of solid results.
Speaker Change: With that I will ask our operator to open the call for a question and answer session.
Speaker Change: At this time I would like to ask a question press star followed by the number one on your telephone keypad.
Speaker Change: Ask that you limit yourself to one question and one follow up then reenter the queue for any additional questions you might have well take our first question from the line of Brent Mine tour with Barclays. Please go ahead.
Speaker Change: Good morning, everybody. Thanks for taking my question and congratulations on the.
Brent Minetor: <unk> strong 2024 results. The first question is about yields and your guidance just looking at the.
Brent Minetor: Three 5% midpoint of the yield guide and I guess, you kind of want us to think about 40 basis points of tough comps from the fourth quarter upside, but just sort of level setting that versus the high single digit for Dms that you reported in 24 kind of help us think about we're trying to bridge that gap and just maybe if you could help us think.
Brent Minetor: The puts and takes this year versus last year.
Brent Minetor: Last year, the tailwind on the new hardware side, what you have this year and how it sort of compares.
Speaker Change: Okay, Brian. Thank you thanks for the question.
Brent Minetor: Hope all is well.
Brent Minetor: I think to the.
Speaker Change: First point.
Speaker Change: The strong demand we saw in the fourth quarter.
Speaker Change: Did kind of elevate the best comparable for us and so we would be guiding.
Speaker Change: Or before or maybe slightly north.
Speaker Change:
Speaker Change: We.
Speaker Change: That rise happened in that close in demand, which is which is really great and we're also coming off of some very incredible comps right. So 2023, we had a 13, 5% yield improvement.
Speaker Change: Last year, we had 11, 6% improvement. So it is a it is a little bit more of a difficult comp and of course, we also recovered our load factor was a long time ago.
Speaker Change: That potential lift up from a load factors.
Speaker Change:
Speaker Change: That's something that's in that zone.
Speaker Change: An opportunity for us.
Speaker Change: But it is early and wave and we've seen obviously incredible booking activity during wave last week was our highest booking week ever for wave and so we are we are very encouraged in.
Speaker Change: And what we're seeing.
Speaker Change: And I think the other thing that we're very encouraged on is that we're not only seeing improvement on on on new hardware, but also on like for like.
Speaker Change: And of course, we have some very incredible comps on icon when we launched her as well as Utopia.
Speaker Change: As well. So you know there are our guide of the two and a half to four and a half is based off of where we're booked today.
Speaker Change: The trends that we're seeing.
Speaker Change: As always.
Speaker Change: And I think we feel.
Speaker Change: You're confident in the yield guide and we were also very encouraged to be able to give a midpoint on our guidance of $14.50 considering all the headwind from FX and fuel that.
Speaker Change: Hum.
Speaker Change: Since the last call.
Speaker Change: Yeah.
Brent Minetor: Great. Thanks for that Jason and I should also say congratulations on the exciting announcement on entering the river market. My My second question is about the river market. Obviously, you guys have done a lot of research.
Speaker Change: The existing market.
Speaker Change: And where do you think your place can be in that market and so we all know there's a prominent competitor out there.
Speaker Change: <unk>.
Speaker Change: Qualifies as themselves as luxury that per Dms that they charge our luxury rates your celebrity brand in ocean charges are rates significantly below that commensurate with the broader premium ocean market. So I guess the question is.
Speaker Change: Do you foresee the celebrity brand sort of slotting in the river market below that luxury per DM general area, because it sounds like again you used the word elevate used the word cutting edge. It doesn't sound like you expect the product to sort of be second rate. So maybe you could provide a little more color around that.
Speaker Change: Sure well first obviously, there's there's there's great competitors and I remember space like like like the ones you don't want to say, but I will say by king I'd be toward toward does an exceptional job in that space. It's also very fragmented.
Speaker Change: Market as well.
Speaker Change: And also I think it's important when youre comparing with celebrity guests today versus what you might see what Viking yesterday as an example, disappoint to note that.
Speaker Change: Uh huh.
Speaker Change: On the celebrity side, it's not it's not an all inclusive product. So as you start adding in some of the inclusivity that comes with river.
Speaker Change: We expect there was a P. DS two also elevate.
Speaker Change: The other thing when I when I talk about elevating the brand at least in our point of view is there's a real incredibly was an incredible opportunity.
Speaker Change: Hum.
Speaker Change: These beautiful small ships.
Speaker Change: Through design, improving in culinary and entertainment.
Speaker Change: Date rooms, etcetera, and really bring it up to the level of what you see on edge, which to US is far superior to anything else that's in and in that space that we're going to draw a really high quality demand at the end of the day for us.
Speaker Change: Have you know.
Speaker Change: All over 8 million guests a year.
Speaker Change: Have a database of 35 million.
Speaker Change: People, who are continuing vacationing with us.
Speaker Change: And so it was it's great opportunity for us to use that flywheel.
Speaker Change: To generate high quality demand.
Speaker Change: And of course, with our loyalty program being able to make sure that people are being incentivized.
Speaker Change: To stay within our ecosystem and that's really what this is the balance we're trying to.
Speaker Change: Meet our customers, where they want to be on an experience standpoint, there is high trust.
Speaker Change: Our brands.
Speaker Change: We're going to deliver the vacation experience.
Speaker Change: The lives up to the marketing. That's you know that's you know that's out there and I think that's why we think this is a great space for us to go into.
Speaker Change: And as I've said before in the past.
Speaker Change: We really focus on ourselves as being an experienced company.
Speaker Change: You have to deliver those experiences.
Speaker Change: And we think the cruising platform is obviously, where we where we really excel and we think that there is great opportunity for us to do this as well on the member side.
Speaker Change: Excellent congrats again on the quarter.
Brent Minetor: Thanks Brent.
Speaker Change: Our next question comes from the line of James Hardiman with Citi. Please go ahead.
Brent Minetor: Yeah.
James Hardiman: Oh, Hey, good morning, Thanks for taking my questions.
Brent Minetor: We want to stay.
Brent Minetor: On that same page with the with the river cruise announcements.
Brent Minetor: Just trying to get a feel for the offering and how it's going to be similar versus different too.
Brent Minetor: Devising offering, but I guess first let's just start so 10 ships.
Speaker Change: Youre going to start in 2027, I'm, assuming all 10 ships wont be up and running by 2027, what's the shape of that ramp.
Brent Minetor: And then as I, just think about sort of.
Brent Minetor: What the offering is going to look like our kids are going to be allowed on the ships.
Brent Minetor: Is it primarily U S customers going to Europe.
Brent Minetor: I'm, assuming that there's going to be a big nightlife component given that sort of celebrities brand just trying to put some meat on these bumps.
Brent Minetor: Okay. Okay. Well also there's you know there's there's also going to be a lot to come which I think is going to be great on.
Brent Minetor: On the on the Riverside.
Brent Minetor: Our plan is to deliver a couple of ships in 2027, and then it's about for a year I'd also point out because we are a very intentional in our words the word put in front of it was initial.
Brent Minetor: Warner was 10 ships.
Brent Minetor: And so this is not a hobby for us so we are going into this.
Brent Minetor: Into this space.
Brent Minetor: So I just wanted to point that out and of course, you know 2027. When these ships come in is going to be an incredibly exciting year anyway for the company because we're gonna have icon for how we're going to have a couple of river ships were going to have perfect day in Mexico launching in 2027, we're gonna have the the beach club and cause of Mel will have a full year because that's when the launch in <unk>.
Brent Minetor: Thousand 26.
Brent Minetor: So theres a lot of a lot of great things that we're looking forward to in 2027.
Brent Minetor: One of the things that I would I would say I think it's going to differentiate us is that we.
Brent Minetor: For decades, we have built out.
Brent Minetor: A set of brands globally sourced.
Brent Minetor: And we source those guests from all over the world and our yield management tools, which gets more and more sophisticated each and every day allow us to source the highest yielding guest hum in the world and so that you know so our sourcing can range from obviously.
Brent Minetor: They were about 80% coming from <unk>.
Brent Minetor: Yes, but we have times, when we're 60% coming from the U S and so we we ebb and flow based off of those markets.
Brent Minetor: And so we would expect our sourcing would generally be similar to what we're seeing on the ocean side of things.
Brent Minetor: And so but I think it's important to remember these.
Brent Minetor: These ships are not.
Brent Minetor: Icon the seaside hold about 180 passengers.
Brent Minetor: And so our ability to to sell and market and hum attract them high quality demand from a royal brand, our celebrity brand as well as our Silversea brand is going to be an incredible title wave them for.
Brent Minetor: For us to be able to to manage or demand for this product on the experienced sizable it'll be similar to what you see on celebrity.
Brent Minetor: And so you know there are from time to time, there are kids that that can be on on celebrity, but we think that there's a real opportunity to.
Brent Minetor: As I said, you elevate the aesthetics and the detailed design of the ship.
Brent Minetor: Have more activities, whether that is on the culinary side or whether that is on on the on the beverage side of things whether that is with entertainment, whether that's what the state rooms.
Brent Minetor: And how you can connect further from the ship to shore.
Brent Minetor: So you were able to kind of get an end to end.
Brent Minetor: Intense experience with land as well as working with what can happen on the ship.
Brent Minetor: So we're really excited about it we'll be talking to more and more about it.
Brent Minetor: About the about the design like we always do we like to tease and then build up on what it's going to be in.
Brent Minetor: I can tell you in the end.
Brent Minetor: And the four hours since we've announced this I'm just watching the number of the.
Brent Minetor: The amount of interest from our travel partners from our guests to.
Brent Minetor: To get on one of our river boats as soon as possible is exceptional and that comes down to I think which is what's most important is trust.
Brent Minetor: Our guests do trust us that we're going to deliver on this.
Speaker Change: That's great color and loved the Ts.
Brent Minetor: Secondly, just.
Speaker Change: Just on the Capex front, I think you've guided 2000 $25 billion to $5 billion pretty big step up I'm, assuming we'll need to wait.
Speaker Change: On the free cash flow front until the analyst day to get a more sort of unified outlook, but maybe is there any way to think about sort of capex requirement moving forward I think we're looking at $3 4 billion Newbuild 1.6 non newbuild.
Speaker Change: Should we model those going forward I'm, assuming that the Newbuild piece goes up with capacity, but then.
Speaker Change: Non newbuild theres a lot of <unk>.
Speaker Change: Non new build opportunities for you guys for sure. So how do we think about that $5 billion number and how it moves into 'twenty six 'twenty seven.
Speaker Change: Hi, it's enough. So I think if you kind of think about what do we have this year and kind of what we laid out in terms of our priorities.
Speaker Change: So you think about the ships that we have to deliver this year both started the season a celebrity excel.
Speaker Change: Compared to what we had last year and remember icon last year did not actually delivering 24, you actually delivered in 2023, so that capital was counting in 'twenty three.
Speaker Change: You know, we you have to ship a lay out in terms of our deliberate and spoke we expecting and you should expect that to follow that and I remind you that we do have a committed financing for those when you order the ships and so two 5 billion that I noted in its into released obviously is on a gross basis and we have to commit to financing related.
Speaker Change: The deliveries as well as installment payment.
Speaker Change: In terms of the non ship AR capital.
Speaker Change: We have maintenance capital and kind of the things that we do that to not change.
Speaker Change: Change materially year over year, but we did lay out our priorities in terms of fiber destinations and as we ramp up our private destination effort and you see what we've announced those.
Speaker Change: Those are following kind of a dark cadence and this year, we have particularly Kosta my where we announced last year the acquisition of the port that acquisition actually will close.
Speaker Change: You know between end of first quarter to second quarter, and then we obviously.
Speaker Change: Acquiring land and then we will start the construction at some point.
Speaker Change: And then this year. We also it's also expected to deliver the Beach club Nasaw at the end of the year. So obviously he development capital there as well so majority of that capital is going to be there. We also restarting our modernization program. So we have one ship this year and then we'll share more details going going forward.
Speaker Change: Around our program, but we do see an opportunity around that all of that said if you think about the size of the company and where we are we delivered $6 billion of EBITDA last year, you kind of look at our guidance. This year, we're going to deliver 13% more of of EBITDA and were made a significant progress.
Speaker Change: Around our balance sheet, reducing our interest expense you see below $1 billion.
Speaker Change: Out into account you see they were generating significant amount of cash flow and our focus is to continue to expand margin as we grow the business it will accelerate cash flow and allow us to invest in key priorities.
Speaker Change: 10 about an investment grade balance sheet metric and also do capital returns and so the size of the company on the generation of the cash flow really we feel is allowing us to achieve all of those things.
Speaker Change: It makes a lot of sense. Thanks, Scott Thanks, guys.
Speaker Change: Okay.
Speaker Change: Our next question comes from the room and stabilize and ski with Stifel. Please go ahead.
Speaker Change: Hey, guys. Good morning, so so going back to the guidance.
Speaker Change: The guidance for this year I'm not going to sit here and harp on the the fact that.
Speaker Change: The yield guidance does look a little bit conservative to us but.
Speaker Change: If we think about the EPS guide, let's let's go over there.
Speaker Change: That's actually much better than I think we were expecting given the.
Speaker Change: The FX and fuel headwinds. So just wondering if you guys embedded anything in there in terms of buybacks or debt refis.
Speaker Change: Sure.
Speaker Change: Excludes those potential accretion and I guess thing that another way as well, Jason you talked about 14 handle comment and probably to us that that could have easily been a 15.
Speaker Change: 15 handle.
Speaker Change: Without these headwinds right now is that.
Speaker Change: A a fair statement.
Speaker Change: Yes, yes, yes, obviously, if you add the 65 or $14 50 that would get you north of $15.
Speaker Change: I mean, I think what may have been a surprise was.
Speaker Change: And where our cost guide came out for the year. Our teams have worked exceptionally hard are continuing to leverage scale within our business.
Speaker Change: And similar to the past, we do not contemplate.
Speaker Change: Capital returns.
Speaker Change: And.
Speaker Change: In that guide so if we were to repurchase shares in which we.
Speaker Change: Our strategy has been to do that Opportunistically that'll out that would that would obviously be a tailwind on the earnings per share side.
Speaker Change: Okay, Gotcha, and then yes.
Speaker Change: Yes, that's right.
Speaker Change: We've we always say that right. Our formula is moderate capacity growth moderate yield growth strong cost control and you can see that does deliver significant performance and so whatever is in a in a in a.
Speaker Change: Normal debt Paydowns, that's already in our capital investments are already in and then any the dividends of course, we've announced that's already in but any other things or are not included.
Speaker Change: Okay Gotcha.
Speaker Change: And is it Jason going back to the river real quickly I mean, obviously rivers up much different animal versus <unk>.
Speaker Change: Versus ocean and you know.
Speaker Change: One of those key differences is the fact that the operators and river need Berthing rights.
Speaker Change: To get access to certain ports so just.
Speaker Change: Wondering if celebrity.
Speaker Change: It has already secured those berthing rights or is in the process of getting some of those Berthing rights and then maybe is there an opportunity down the road to enter river.
Speaker Change: As well with.
Speaker Change: Silversea to kind of capture.
Speaker Change: A little bit more of that higher end customer.
Speaker Change: Sure well I think I mean, I think firstly just to use your <unk>.
Speaker Change: Your metaphor of an animal it is a different animal, but it's still an animal and and so we I think we're where we've grown to get comfort with the space understanding how it works.
Speaker Change: Different people to partner with in this space.
Speaker Change: We we didn't just make this announcement without having the orders in place we did not make this announcement without having the berthing and place.
Speaker Change: And I also think that you know, sometimes we always think about it.
Speaker Change: Certain rivers inside of Europe, but they're also members around the world and we're trying to make sure that we are being able to provide the experiences that are that our guests are looking for it.
Speaker Change: As we build up this.
Speaker Change: This kind of engine for river under celebrity It will certainly provide opportunity for our ultra luxury guests.
Speaker Change: Two to consider a a river experience under Silversea.
Speaker Change: We're gonna start off with celebrity we're going to see that's where we think that there is great scale opportunity and then of course, you know real well.
Speaker Change: We'll be looking to see if there's other ways to expanded for our other brands as it is it is it.
Speaker Change: It sees fit.
Speaker Change: But we have gone into this very prepared very buttoned up.
Speaker Change: And again as I said, a few minutes ago.
Speaker Change: This is not a hobby for us so we do plan.
Speaker Change: To.
Speaker Change: We are taking this extremely seriously.
Speaker Change: And it's you know, but we want to make sure we can live up to delivering the best vacation experiences in the world.
Speaker Change: And making sure we're doing that in a responsible way and that's all heavily in the consideration of what we're doing.
Speaker Change: Okay got you thanks, guys appreciate it.
Speaker Change: Our next question comes from the Brian If Matthew boss with Jpmorgan. Please go ahead.
Brian: Thanks, and congrats on another great quarter.
Speaker Change: So Keith maybe two part question on the strong start to 'twenty five any specific areas that you're seeing notable acceleration globally and how are you optimizing the pricing relative to capacity and then maybe just higher level I guess what inning overall would you say we're in today on your market share opportunity in the <unk>.
Brian: Trailing in global vacation market.
Speaker Change: Okay sure.
Speaker Change: Well, thanks, Matt I think on on on on the 2025 side again, one of the I think the interesting trends, we've now seen going into kind of three year or third year here.
Speaker Change:
Speaker Change: Of of coming out of our out of the incident is that we see really strong demand across all of our products.
Speaker Change: And obviously, having incredible assets like perfect day, and ships like Utopia and icon in the Caribbean are just drawing a drawing a different level of quality demand.
Speaker Change: From from all different generations, and all different mixes of first time cruisers are first a brand as well as our loyalists.
Speaker Change: Strong demand in the Caribbean.
Speaker Change: Continue elevation in Alaska.
Speaker Change: And it really across all European products.
Speaker Change: As well as in Southeast Asia, and Australia, New Zealand and even in China. So, we're seeing an elevation or high demand across all those different products.
Speaker Change: And then in terms of markets.
Speaker Change: Sure.
Speaker Change: Everyone's fighting over the highest but where could the highest yielding guest come from my by finding I mean, our our our guests are fighting for based on our ships. Yeah. We're seeing really good demand trends from Europe as well as obviously the U S is exceptionally strong in North America is exceptionally strong. So there's not there's no area of kind of weakness.
Speaker Change: Theres always.
Speaker Change: Hey deployment here or there that we would maybe switch up but.
Speaker Change: That's a heavy heavy on the margin overall, we're seeing really strong.
Speaker Change: I'm really strong demand across that and then of course, you know all the all the different technology that we're now utilizing is just getting stronger and stronger on what I would describe as disruptive tech whether that is using AI or gen AI and other things to enhance the guest experience or to just get a better read on what we can be.
Speaker Change: Lending to our guests, whether it's on pricing or whether it's on the guest experience that's into really kind of early innings of of all of this.
Speaker Change: And I think that's why I think we.
Speaker Change: We continue to see just kind of outperformance in these any different trends.
Speaker Change: It's tough to tell what are what inning, we're in but I would say that we are generally in the early innings of.
Speaker Change: The opportunity that's in front of us.
Speaker Change: It's great to hear congrats again.
Speaker Change: Thanks, Mike.
Speaker Change: Our next question comes from the line of Robin Farley with UBS. Please go ahead.
Robin Farley: Thank you very much.
Speaker Change: Circle back to your river cruise lines.
Speaker Change: Can we get a sense if you.
Speaker Change: Mentioned, obviously your ambitions are much more than these initial 10 river ships in terms of how quickly you could order more is it fair to say given the length of time and lead time is not as long as you would need for relationship you can actually wait till you launch in 2027 to see what's working what's not working before you order ships for sort of 2013.
Speaker Change: How does that kind of what we should think about it the timeframe for additional orders and then second part of the question.
Speaker Change: Can you give us just a rough sense of how the build per berth cost compares to maybe some of the relationships you've had delivered in the last year or is it is it pretty comparable or less or more than that and then I can squeeze it like a part of it is just purely on the yield you mentioned, obviously, it's going to be more inclusive product, but if we think about your yield which of course includes.
Speaker Change: Onboard them.
Speaker Change: And I assume a premium to your existing yield given that the majority of your have.
Speaker Change: Of your fleet right now is the Royal brand and this will be celebrity and maybe even celebrity plus pricing and all of that.
Speaker Change: Kind of a sense of what premium to your existing yield. Thank you.
Speaker Change: Sure.
Robin Farley: Well good morning, Robyn I'm, sorry, I'm on the on the timeframe aside what I would say is no you're not going to wait till 2027.
Robin Farley: To order more you know this is our initial order these.
Speaker Change: Each yard probably can.
Robin Farley: About four of these a year.
Robin Farley: We're not going to get into when it cost per per ship, obviously the cost per berth is going to be elevated.
Robin Farley:
However.
Robin Farley: These are I mean relative to a cruise ship they are.
Speaker Change: Our Oh.
Speaker Change: A very small amount of money and so our ability to scale into this.
Speaker Change: Probably be the second largest operator and it would be.
Speaker Change: Significantly less money than the.
Speaker Change: Excel to ship that we just bought so it's it's it's a it's not something that has a high barrier of entry on Opana costs, but there is a high barrier in terms of the execution.
Speaker Change: Making sure we can do this in a in a flawless way.
Speaker Change: Hum as it relates to on the yield side, we would expect that this would be a yield tailwind to.
Speaker Change: So our business Hum it we do expect that it's going to have at scale, a similar if not better margin profile.
Speaker Change: Better Rois C profile.
Speaker Change: And then lastly, I would say is the only thing that will be a little bit different.
Speaker Change: As you know.
Speaker Change: Usually the riverboats do not operate year round.
Speaker Change: There'll be it'll be parts of the year, where the ships are.
Speaker Change: Our laid up.
Speaker Change: That's under the kind of the current models. We'll you know we'll see just as we found a way to lift the shoulder seasons back in the day, we will be will obviously be studying that to see how we.
Speaker Change: Oh, how we can make them as productive as we can during the off season when it's cold.
Speaker Change: Thank you very much.
Rob: Thanks, Rob.
Speaker Change: Our next question comes from the line of Conor Cunningham with Melius Research. Please go ahead.
Speaker Change: Hi, everyone. Thank you.
Conor Cunningham: I'm just trying to understand the cost guide a little bit better.
Conor Cunningham: You know, obviously a lot better for the full year, but can you just give a little a bit of a shape of how the year progresses as it just follow.
Conor Cunningham: And then what what is not and you had a big headwind from from from.
Conor Cunningham: From stock based comp like I assume that's not in it this year just any thoughts around that thank you.
Conor Cunningham: Yeah, My counter so yes, you're right the cadence of the year really follows mainly the the dry dock.
Conor Cunningham: Cadence right and I had spent some time in my prepared remarks walking through the capacity growth quarter over quarter because that does.
Conor Cunningham: Impact.
Conor Cunningham: The cost cadence as well and then remember we also are buying close to my age is going to be an operating poured this year, that's going to close.
Conor Cunningham: As I said towards the end of the first quarter second quarter, and so you don't have that cost because we do need to operate it doesn't have the a b C. D. And then as we ramp up some of our private destinations mainly the Paradise Island and also obviously there are some costs kind of towards the end of the year and so those are mainly the real.
Conor Cunningham: Impact of our of the Clos get into the year and obviously, we'll give our guidance it's going to end the year progresses for them for the next quarter.
Conor Cunningham: But as I said, you know the facts.
Conor Cunningham: And third quarter are going to be higher in the fourth quarter is going to be benefiting from significant capacity growth.
Conor Cunningham: Okay.
Conor Cunningham: Helpful and then sorry to talk about river again.
Conor Cunningham: Maybe it's just a.
Speaker Change: Higher level question, you know I think that Viking Viking Viking obviously it goes after the the older demographic I think celebrity is younger. So if you could just talk about the demographic that you are looking at because it just seems like when you talk about fragment and it seems like there's an opportunity with it with a younger cohort rather than an older. One just.
Speaker Change: Sorry to belabor the point, but just any thoughts there. Thank you.
Speaker Change: Yeah, I'm not sure if I would have expected so many questions on something that is.
Speaker Change: It is just beginning.
Speaker Change: And it will always be a small part of our of our broader business, but it's a big part of expand making sure that we.
Speaker Change: We match, our customers, where they want on a vacation experience standpoint, you know the you know the average age of our celebrity guest as you know and they're in their early to mid fifties.
Speaker Change: But obviously they have older clientele they have younger clientele.
Speaker Change: I think I think the I think first off I mean, keeping us going back to the two trillion dollar market space.
Speaker Change: Whether it's crews or whether it's crews and the river I mean, we're you know we're a we're a fraction of a fraction of that overall market, which to me is just incredible opportunity for us all to grab grab more and more share of all of this.
And I think the other part is is that I think we feel very confident that this isn't about chase.
Speaker Change: Tracing Viking customers or another or another customer this is about.
Speaker Change: Leveraging this incredible sort of this business that we have this incredible flywheel that's incredible.
Speaker Change: Leading.
Speaker Change: Leading brands in each one of their segments.
Speaker Change: And making sure that we keep them inside of our ecosystem and so we don't think there's like a demand challenge here and I'm sure there'll be some demographic changes, but I think the real the real big difference here is more of where they are being sourced from and they are being sourced from a highly productive accelerating flywheel.
Speaker Change: We built and of course, we're adding more and more things like enterprise loyalty on the reciprocity and so forth. So it really incentivizes, our guests and recognizes our guests to stay inside of our our ecosystem in that and that would be in the day is what we're really trying to achieve and that resulted in.
Speaker Change: You know.
Speaker Change: Better lifetime value of the customer we get more reps out of it and and we get guests that are were happy and and supportive because they trust us.
Speaker Change: I appreciate it thank you.
Okay.
Speaker Change: Our next question comes from the line of been shaken with Mizuho. Please go ahead.
Speaker Change: Hey, good morning on the private destination Nassau is opening in December how do you think about pricing access to that opportunity I asked because the beach club comes with a lot of benefits Beach food drink that are all inclusive if I'm not mistaken which is different than.
Speaker Change: Perfect Day, and then kind of related to that is there any way to think about the or quantify the volume of passengers annually that touch Nassau today, and then I have one quick follow up thanks.
Speaker Change: Yeah.
Michael Bayley: Hi, Ben Thank you for asking that question I was kind of feeling lonely on this cool so it's Michael.
Michael Bayley: Yeah, we have a pricing strategy laid out will be launching the product into the market opening for sale in April so it will be able to talk about our pricing and about that.
Michael Bayley: Two months time.
Michael Bayley: It's an all inclusive package, we have quite a lot of volume going into Nashville in total just for the Royal brand its way exceeds the capacity of the Beach club.
Michael Bayley: Our expectation is in the first full year of the operation of the Beach club will have approximately 1 million guests going into the beach club for the experience.
Michael Bayley: And I will talk about the pricing you know later on but I can't really comment on it with any detail during this call.
Speaker Change: Understood and then and then obviously recognizing it opens late in the year do the 20th that isn't enough kind of alluded to this but to the 25 net cruise costs include any thing for Nassau, that's worth highlighting and then.
Speaker Change: Also on a net cruise cost basis, how is it similar or maybe just talk anecdotally how is it similar or different from coke. Okay. I'm on the surface. Obviously, it's smaller so presumably less head count, but just any reason this would be more or less efficient than cocoa on the cost side. Thanks.
Speaker Change: I mean, the the big difference really will be volume I think this year on if twenty-five coke, okay, we'll be hosting three and a half million guests. So we get all of those scale economies that come with the operation.
Speaker Change: NASA or the volume will be around a million and a million and a half when it's fully operational. So obviously, there's less scale opportunities, but it's still a very efficient operation. So its margins will be pretty attractive.
Speaker Change: It's going to be a very profitable business. It's also I mean, one of the major elements of the Beach club of course is its proximity to two of ships and it's a product offering that we think is really needed in Nashville. So it's gonna be a great guest experience. It's also incredibly complementary with coke, okay. Because we will have a lot of show up.
Speaker Change: Product that goes to perfect day on one day and the next day it'll be in the Beach club. So it's like the greatest weekend in the history of cruising.
Speaker Change: Thank you Ed Yeah, just to add that.
Speaker Change: In terms of operation you know, it's still a very accretive investment shouldn't expect us to be a material different and then as we go through the cost towards the end of the year. Obviously is that the brand is is.
Speaker Change: Is it ready to open up the private destination, there's some opening and kind of ramp up costs, there, they're gonna touch towards the end of the year and obviously it will be fully in the base in 2025 and 2026 sorry.
Speaker Change: Our final question will come from Nomura.
Speaker Change: P O with Cleveland Research. Please go ahead.
Speaker Change: Thanks, So much I wanted to circle back on loyalty.
Speaker Change: A comment on relating to share of wallet repeat booking behavior crossover between brands I know that I think it was maybe in the second quarter of this year there was some.
Speaker Change: Just with the program to be more inclusive across brands, just kind of curious if theres anything quantifiable and the response you've seen in the last.
Speaker Change: Roughly a year now.
Speaker Change: Yeah, well I think we Wanna be generally muted in terms of how successful it is but I will tell you. It has been grocery successful.
Speaker Change: In terms of the reciprocity program one for our guests to recognize and do you believe it or not there are not as many as you would think they recognize that.
Speaker Change: Celebrity and Silversea, we're in the same house.
Speaker Change: Hum and so I think just building that broader awareness and a.
Speaker Change: Of course, we have guessed that.
Speaker Change: When they're on Royal are traveling with their kids and grandkids and when theyre not they might be looking to travel on celebrity or silversea or maybe it's.
Speaker Change: For kids and their adult.
Speaker Change: Maybe older children are on celebrity and Theyre not.
Speaker Change: But when they're not with your children. They want to go on silversea or whatever it might be so bringing that awareness is one thing now that theres reciprocity.
Speaker Change: Then it makes it a lot stickier for them to stay inside of our ecosystem because of all the benefits that they get.
Speaker Change: With that I would I mean, I think we have been incredibly surprised at how quickly.
Speaker Change: Hum our guests have have taken to that that program and I think it's one of many reasons why our.
Speaker Change: Our flywheel continues to get faster and faster and we're getting significantly more repeat guests.
Speaker Change: Yes than we had planned for it.
Speaker Change: Thanks, and then thinking about kind of your expansion to perfect day in Mexico.
Speaker Change: I think western Caribbean is maybe 30% 35% of the story in the Caribbean. Today can you just comment on where you think that could go over time is perfect Mexico ramps and then thought it was really helpful. Commenting on I think it was three and a half million guests cocoa, one and a half eventually.
Speaker Change: Beach club in Nassau.
Speaker Change: Number of passengers you think perfect day, Mexico could eventually support.
Speaker Change: Hi, It's Michael again, I mean, obviously.
Speaker Change: We're thinking big and you.
Speaker Change: You know we've got some big ships coming we've got icon class coming online pretty much whenever you're in now.
Speaker Change: We've got Galveston, and Texas, and the opportunity regionally from Texas, We think that the ultimately the volume that we will take to perfect day, Mexico will far exceed what we're taking into our coke okay.
Speaker Change: Yeah.
Speaker Change: Thanks.
Speaker Change: And now I'll turn the conference back over to Dr. Polly hold CFO for any closing remarks.
Speaker Change: We thank you all for your participation and interest in the company like will be available for any follow ups. We wish you all a great day.
Speaker Change: Ladies and gentlemen, this concludes today's conference call. Thank you all for joining you may now disconnect.
Speaker Change: Experienced a box family they place them in the world icon.
Speaker Change: It's the same kind of a whole new class of ship.
Speaker Change: Everyone. In your crew will have the power was there like multiple times a day, you'll never forget the feeling of plunging one record breaking five gorilla island for finding the parents to Congress.
Speaker Change: I'll pass the bravery like nothing we've ever dared Dang.
Speaker Change: High above the airframe.