Royal Caribbean: ‘Exceptionally Strong’ Demand, Lifts Forecast by a Third

Royal Caribbean International posted strong results Thursday and lifted its earnings expectations for this year by a third.

The Miami-based cruise operator said it now expected earnings per share of $6 to $6.20, up from its prior forecast of $4.40 to $4.80.

“Demand for cruising and our brands is exceptionally strong and we have seen another step change in booking volumes and pricing, leading us to now expect double-digit net yield growth for the full year,” said CEO Jason Liberty.

Consumer spending onboard, as well as pre-cruise purchases, is continuing to significantly exceed 2019 levels.

Royal Caribbean called out three market trends:

• Accelerated booking volumes for European consumers booking European cruises was a positive surprise.
• Demand from the North American consumer has remained strong and was expected.
• Sales for the newly relaunched China voyages, to set sail in April 2024, are going well: “Both volume and rate of bookings are incredibly encouraging,” an executive said on the conference call.

Total revenue for the quarter was $3.5 billion and net income was $459 million, versus a loss for the same period last year. It reduced debt by $1.6 billion.

“Better than expected financial results and cash flow have allowed us to accelerate reduction in both leverage and debt levels. We expect to continue improving the balance sheet and moving us closer to achieving our Trifecta goal of returning to investment grade metrics,” said CFO Naftali Holtz. “Strengthening the balance sheet continues to be a top priority.”

Three new ships will join the fleet in 2023, with the star of the show being the Icon of the Seas, slated for delivery in October. The ship will be the largest cruise vessel to ever set sail.