Speaker 1: Bloomberg Audio Studios, Podcasts, radio news. It's time now for
Speaker 1: our Stock of the Hour, and we're watching Royal Caribbean.
Speaker 1: The shares are higher following a strong earnings report, the
Speaker 1: company raising it's full your forecast above some analyst estimates,
Speaker 1: quelling fears of higher fuel prices weighing on the company.
Speaker 1: Jason Liberty is Royal Caribbean Chairman and CEO, and he
Speaker 1: joins us now from the Symphony of the Seas in Miami. Jason,
Speaker 1: a pleasure to speak with you. Thank you so much.
Speaker 1: I want to get from you just a snapshot of
Speaker 1: what bookings look like, because my understanding from your earning
Speaker 1: support is that the bookings moderated in March and early
Speaker 1: April for some Mediterranean cruises, and I'm wondering what you're
Speaker 1: seeing now.
Speaker 2: Yeah. Well, first, Carlo, great to be here. It's a
Speaker 2: great day for Royal Caribbean and all of our employees.
Speaker 2: So I think first starting, I'll talking about the booking activity.
Speaker 2: We're coming or coming off a record waves season, and
Speaker 2: with inside that wave season, we had really high expectations
Speaker 2: for the Mediterranean and those expectations we're a little bit
Speaker 2: moderated based off of the geopolitical activities that were happening,
Speaker 2: But outside of that, all of our core products are
Speaker 2: booking exceptionally well, and we have about one hundred and
Speaker 2: seventy thousand guests on our ship every day spending we're
Speaker 2: taking tens of thousands of bookings every single day for
Speaker 2: twenty twenty six and twenty twenty seven, a little bit
Speaker 2: for twenty twenty eight, and we continue to see a
Speaker 2: very strong consumer that has good jobs, good balance sheet,
Speaker 2: and is always looking to have a great vacation experience
Speaker 2: and they have great trust with us to do that.
Speaker 1: And you mentioned the wave season of course, as January
Speaker 1: through markets, the industry's peak sales period. People tend to
Speaker 1: book their cruises months in advance, if not longer, so
Speaker 1: they're committed to going. They're going to go on that
Speaker 1: trip no matter what. I'm wondering how onboard spending trends
Speaker 1: are evolving right now, what you're forecasting, what you've seen
Speaker 1: so far in the last two months.
Speaker 2: Yeah, well, we obviously watched the consumer very closely, and
Speaker 2: as I mentioned, you know, we have a one hundred
Speaker 2: and seventy thousand people any given day, very activated on
Speaker 2: our ships, very engage on our ships and spending on
Speaker 2: our ships, and we continue to see a very healthy
Speaker 2: consumer and they're not really you know, when you look
Speaker 2: at what they're spending money on, it's still the very
Speaker 2: similar things, right. They're spending quite a bit on land
Speaker 2: based experiences, spending a lot in our in our in
Speaker 2: our bars and in our restaurants, spa, et cetera. So
Speaker 2: they seem to be very healthy. And of course, you know,
Speaker 2: we're somewhat insulated because we typically traded about a fifteen
Speaker 2: percent discount to land based vacation and so that insulation
Speaker 2: I think is giving them a little bit more spending
Speaker 2: power in their wallet.
Speaker 1: Has Royal Caribbean seen any changes in demand from new
Speaker 1: to cruise passengers versus long time serial cruisers in the
Speaker 1: last few months.
Speaker 2: Yeah, well, what we have seen in the past few months,
Speaker 2: those those stats haven't really changed. A few things, I
Speaker 2: would say. First off, you know, a little under half
Speaker 2: of our guests are millennial or younger, so we're really
Speaker 2: attracting a lot of new to cruise into our environment.
Speaker 2: But we do have an elevated amount of loyalists that
Speaker 2: are cruising with us, and it's for several reasons, One
Speaker 2: of which, and find most importantly is we have done
Speaker 2: a lot to create an enterprise loyalty program across our brands.
Speaker 2: We've invested a lot of money and data and AI
Speaker 2: in order for us to better cureate and engage with
Speaker 2: those guests. And those guests typically spend about twenty five
Speaker 2: percent more with us than somebody that's new to cruise
Speaker 2: or or first to brand.
Speaker 1: Gotcha, So you're investing in this new passenger, this demographic.
Speaker 1: I'm wondering in general, and you mentioned, of course the
Speaker 1: Mediterranean cruises being somewhat affected by geopolitical events. How are
Speaker 1: you responding to the volatility and the threat of changing
Speaker 1: global macro and geopolitical trends overall.
Speaker 2: Yeah, Well, first off, you know, we're a company that
Speaker 2: we we operate global brands, and so we source from
Speaker 2: every from any market in the world, and we have
Speaker 2: sales and marketing presence some everywhere, and we have very
Speaker 2: strong brand presence. So for us, when we when we
Speaker 2: look at at demand, we're watching different demand patterns and
Speaker 2: we're sourcing the highest yielding guests from anywhere in the world.
Speaker 2: In reality, you know, while there's been a lot of
Speaker 2: geopolitical activity that has not really stunted demand, it has
Speaker 2: moderated it in certain products like the Mediterranean. Most of
Speaker 2: that was actually driven more by just the increase in
Speaker 2: air costs, you know, during during that period of time.
Speaker 2: But for the most part, you know, our guests are
Speaker 2: are you know, are appreciating the vacation experience. And you know,
Speaker 2: of course some some I'm sure there's somewhat affected to
Speaker 2: some degree by the geopolitical activity, but we're not really
Speaker 2: seeing that in their day to day spending behavior, and
Speaker 2: we're not seeing that in their day to day planning
Speaker 2: for today and into the future.
Speaker 1: Right like everyone else, you're dealing with higher fuel costs
Speaker 1: and that's certainly a headwind. How effective have hedges been
Speaker 1: in managing the cost effect of rising funker fuel.
Speaker 2: Pri Yeah, well, you know, we're we're we're for twenty
Speaker 2: twenty six, we're a little over sixty percent hedged and
Speaker 2: next year we're a little under half hedged with with
Speaker 2: pre crisis hedge costs. So yeah, we have a pretty
Speaker 2: active hedging program. But still, you know, despite that, you know,
Speaker 2: fuel costs are going to impact us a little over
Speaker 2: sixty cents this year based off of where current spout
Speaker 2: rates are and that you know, that's you know, that's
Speaker 2: a that's a reality that we're having to deal with
Speaker 2: in our P and L and fortunately we were able
Speaker 2: to recover some of that through different business activities and
Speaker 2: and things that are you know, that are happening with
Speaker 2: our joint ventures.
Speaker 1: Do you have any contingency plans in place, Chase and
Speaker 1: if disruption of the strait of hormones and higher crude
Speaker 1: prices become more protracted become kind of our normal.
Speaker 2: Well, I would say on contingency plans, I mean, I mean,
Speaker 2: for one thing about our business or our industry is
Speaker 2: our assets move, So you know, our ability to move
Speaker 2: our assets out of places is that you know that
Speaker 2: might be more challenged is something that we that we
Speaker 2: that we can do uh pretty quickly. And that's typically
Speaker 2: how we try to manage risk in different parts of
Speaker 2: the world as it relates to things that can impact it,
Speaker 2: especially with the straight up from moves like fuel prices.
Speaker 2: You know, that's something we try to manage through our
Speaker 2: our our our hedging program and and and being thoughtful
Speaker 2: about the amount of consumption of fuel that that we
Speaker 2: that we take all.
Speaker 1: Right, Jason We really appreciate your joining us. Jason Liberty
Speaker 1: is the chairman and CEO of Royal Kruby and talking
Speaker 1: to us from Miami.