Speaker 1: Bloomberg Audio Studios, Podcasts, radio news. This is Bloomberg Markets.
Speaker 1: I'm Scarlett Foo. It's time now for our stock of
Speaker 1: the hour, and we're looking at Royal Caribbean, following as
Speaker 1: much as eight point eight percent at one point today,
Speaker 1: although it has since cut that decline in half, and
Speaker 1: of course, this after its profit outlook for this quarter
Speaker 1: trailed analyssessments due to cost related to its newest ship.
Speaker 1: Keep in mind, this is a stock that's holding your
Speaker 1: record highs climbing sixty three percent through yesterday's clothes. CEO
Speaker 1: Jason Liberty says demand for Royal Caribbean's experiences and brands
Speaker 1: continues to accelerate, and I'm pleased to say Jason joins
Speaker 1: us now from Miami. Jason, great to speak with you.
Speaker 1: I want to start with that stock reaction. It's a
Speaker 1: fairly steep decline, even though you beat second quarter earningsessments
Speaker 1: and you raised your full year adjusted EPs guidance. So
Speaker 1: this weaker than expected outlook for this quarter due to
Speaker 1: the delayed launch of Star of the Season. That's a
Speaker 1: one time thing.
Speaker 2: Sure well, first, Scarlett, it's really great to be here.
Speaker 2: I think in terms of when we think about off
Speaker 2: of expectations. I think that's off of consensus, it's not
Speaker 2: necessarily off of our expectations. We actually the year is
Speaker 2: playing out exactly how we thought it was going to
Speaker 2: play out from our last call, except that we've seen
Speaker 2: elevated close in demand, which resulted in an outperformance in
Speaker 2: the second quarter. Also, you know, if we continue to
Speaker 2: see that out performance that we saw in the second quarter,
Speaker 2: that leads to additional upside for the balance of the year.
Speaker 1: I look at Royal Care being shares and how they've
Speaker 1: done so far this year, pretty incredible run, and a
Speaker 1: lot of people say that that raises a bar obviously
Speaker 1: for your earnings print and your guidance. One analyst even
Speaker 1: said investors were basically expecting perfection. Is that frustrating?
Speaker 2: No, I mean, we manage this business for the long term, right,
Speaker 2: We're making investments that are that are that are really yielding,
Speaker 2: I mean significant benefits for our shareholders. You know, we're
Speaker 2: going to generate almost seven billion dollars of EBITDA this year,
Speaker 2: and our earnings performance is up over thirty percent year
Speaker 2: of a year for our expectations for twenty twenty five.
Speaker 2: So I think that it's you know, I can't manage
Speaker 2: what people's expectations are from one quarter to the next.
Speaker 2: What we focus on is delivering the best vacations in
Speaker 2: the world, doing that responsibly, and that's resulting in our
Speaker 2: guests paying us more money because they trust the vacation
Speaker 2: experience that we're going to deliver for them.
Speaker 1: Let me just come back to this idea of stabilization
Speaker 1: and visibility in your business right now, can you give
Speaker 1: us any sense of what stabilization or improvement you might
Speaker 1: have seen following what some observers have observed as a
Speaker 1: bit of a slowdown in April, right around the time
Speaker 1: that the Liberation Day tariffs were announced.
Speaker 2: Sure, thanks, Carling. So I think, first off, when the
Speaker 2: Liberation Day occurred, you know, there was a little bit
Speaker 2: of noise, but we really didn't see a change in
Speaker 2: consumer behavior. You know, we're fortunate that we get to
Speaker 2: have about a million, you know, millions of different interactions
Speaker 2: with our guests each and every day, whether that's them
Speaker 2: planning and booking a vacation for the future, or whether
Speaker 2: they're spending on board, and so we've actually seen an
Speaker 2: acceleration from the consumer and their onboard activities in terms
Speaker 2: of what they're spending on as well as they're planning.
Speaker 2: What we did see a shift in is I think
Speaker 2: people will probably being a little bit patient to understand
Speaker 2: what it all meant. So we saw a rise and
Speaker 2: close in demand, which also allowed us to raise prices
Speaker 2: in the quarter and that resulted in the outperformance.
Speaker 1: Got it. Got it? And could you give us a
Speaker 1: comment on how your strategy to enter the luxury river
Speaker 1: cruise segment is faring right now with your first vessel
Speaker 1: planning to debut in twenty twenty seven.
Speaker 2: Yeah, well, we're really excited about it. I mean, ultimately,
Speaker 2: what we're trying to do is keep our customer inside
Speaker 2: of our ecosystem. We're doing that through our integrated loyalty programs.
Speaker 2: We're doing that by better curating what our guests are
Speaker 2: looking for, obviously establishing great trust with our guests by
Speaker 2: delivering the vacation experience that we market and we promise
Speaker 2: that that they're going to get, but we also realize
Speaker 2: there's other vacation experiences that they look to do. And
Speaker 2: one of those vacation experiences, which is not a substitute
Speaker 2: for cruise, but it's an addition vacation they take is
Speaker 2: on River, So we've added or we're adding River to
Speaker 2: our portfolio through our celebrity brand. And ultimately the goal
Speaker 2: is is how do we keep adding experiences, are having
Speaker 2: experiences that meet our guests where they want to be
Speaker 2: so they stay inside of our ecosystem.
Speaker 1: All right, Jason, quick question here at the very end,
Speaker 1: as we wrap up our conversation with you, talk a
Speaker 1: little bit more about what you see among your customer
Speaker 1: base that gives you confidence that they'll be building on
Speaker 1: their spending in twenty twenty six and twenty twenty seven.
Speaker 1: So many of the CEOs we talk to say that
Speaker 1: they want to get past twenty twenty five because of
Speaker 1: all the headline risk and the uncertainty, and what they're
Speaker 1: really looking forward to is twenty twenty six. You're in
Speaker 1: a unique position because you have so much visitibility months
Speaker 1: and sometimes even years down the line.
Speaker 2: Well, I like twenty twenty five. You know this is
Speaker 2: going to be another year where we're going to have
Speaker 2: thirty plus percent earnings per share growth, and of course,
Speaker 2: at the same time, you know we're taking bookings for
Speaker 2: next year. Right. One of the comments we made earlier
Speaker 2: today is that when we look at our book position
Speaker 2: for twenty five twenty six, we're in line with the
Speaker 2: previous periods, but at higher rates. So what we see
Speaker 2: is our guests are planning their vacation experiences into twenty
Speaker 2: twenty six. They're willing to pay more money and they're
Speaker 2: willing to act faster in order to ensure that they
Speaker 2: have the vacation experience that they're looking for. So I
Speaker 2: think we see a very healthy consumer as great jobs,
Speaker 2: they've got good savings, and they're spending to ensure that
Speaker 2: they're getting the vacation experience that they want. And that
Speaker 2: has been the big shift over the past several years.
Speaker 2: People want less stuff, they want more experiences, and fortunately
Speaker 2: we're in the experience business.
Speaker 1: Yeah, and you're in the perfect place to provide it.
Speaker 1: Thank you so much, Jason, really appreciate your taking the
Speaker 1: time to speak with us. The CEO of Royal Caribbean,
Speaker 1: Jason Liberty, joining us from Miami