WEBVTT - Royal Caribbean Cruises President & CEO Jason Liberty Talks ERNINGS

0:00:02.520 --> 0:00:08.080
<v Speaker 1>Bloomberg Audio Studios, Podcasts, radio news. It's time now for

0:00:08.119 --> 0:00:10.440
<v Speaker 1>our Stock of the Hour, and we're watching Royal Caribbean.

0:00:10.480 --> 0:00:12.680
<v Speaker 1>The shares are higher following a strong earnings report, the

0:00:12.720 --> 0:00:15.560
<v Speaker 1>company raising it's full your forecast above some analyst estimates,

0:00:15.640 --> 0:00:19.400
<v Speaker 1>quelling fears of higher fuel prices weighing on the company.

0:00:19.800 --> 0:00:22.880
<v Speaker 1>Jason Liberty is Royal Caribbean Chairman and CEO, and he

0:00:22.960 --> 0:00:26.400
<v Speaker 1>joins us now from the Symphony of the Seas in Miami. Jason,

0:00:26.600 --> 0:00:28.520
<v Speaker 1>a pleasure to speak with you. Thank you so much.

0:00:29.040 --> 0:00:31.280
<v Speaker 1>I want to get from you just a snapshot of

0:00:31.320 --> 0:00:34.360
<v Speaker 1>what bookings look like, because my understanding from your earning

0:00:34.360 --> 0:00:38.120
<v Speaker 1>support is that the bookings moderated in March and early

0:00:38.159 --> 0:00:43.080
<v Speaker 1>April for some Mediterranean cruises, and I'm wondering what you're

0:00:43.120 --> 0:00:43.720
<v Speaker 1>seeing now.

0:00:46.240 --> 0:00:49.839
<v Speaker 2>Yeah. Well, first, Carlo, great to be here. It's a

0:00:49.840 --> 0:00:53.760
<v Speaker 2>great day for Royal Caribbean and all of our employees.

0:00:54.520 --> 0:00:57.279
<v Speaker 2>So I think first starting, I'll talking about the booking activity.

0:00:57.320 --> 0:01:01.440
<v Speaker 2>We're coming or coming off a record waves season, and

0:01:01.720 --> 0:01:05.679
<v Speaker 2>with inside that wave season, we had really high expectations

0:01:05.440 --> 0:01:10.040
<v Speaker 2>for the Mediterranean and those expectations we're a little bit

0:01:10.080 --> 0:01:13.160
<v Speaker 2>moderated based off of the geopolitical activities that were happening,

0:01:13.520 --> 0:01:16.440
<v Speaker 2>But outside of that, all of our core products are

0:01:16.440 --> 0:01:19.440
<v Speaker 2>booking exceptionally well, and we have about one hundred and

0:01:19.440 --> 0:01:23.560
<v Speaker 2>seventy thousand guests on our ship every day spending we're

0:01:23.600 --> 0:01:26.800
<v Speaker 2>taking tens of thousands of bookings every single day for

0:01:26.880 --> 0:01:29.080
<v Speaker 2>twenty twenty six and twenty twenty seven, a little bit

0:01:29.080 --> 0:01:31.520
<v Speaker 2>for twenty twenty eight, and we continue to see a

0:01:31.600 --> 0:01:36.520
<v Speaker 2>very strong consumer that has good jobs, good balance sheet,

0:01:35.840 --> 0:01:38.959
<v Speaker 2>and is always looking to have a great vacation experience

0:01:39.000 --> 0:01:40.800
<v Speaker 2>and they have great trust with us to do that.

0:01:41.200 --> 0:01:43.360
<v Speaker 1>And you mentioned the wave season of course, as January

0:01:43.360 --> 0:01:47.360
<v Speaker 1>through markets, the industry's peak sales period. People tend to

0:01:47.360 --> 0:01:50.440
<v Speaker 1>book their cruises months in advance, if not longer, so

0:01:50.480 --> 0:01:52.520
<v Speaker 1>they're committed to going. They're going to go on that

0:01:52.560 --> 0:01:56.520
<v Speaker 1>trip no matter what. I'm wondering how onboard spending trends

0:01:56.640 --> 0:01:59.480
<v Speaker 1>are evolving right now, what you're forecasting, what you've seen

0:01:59.520 --> 0:02:00.800
<v Speaker 1>so far in the last two months.

0:02:03.240 --> 0:02:06.400
<v Speaker 2>Yeah, well, we obviously watched the consumer very closely, and

0:02:06.440 --> 0:02:08.360
<v Speaker 2>as I mentioned, you know, we have a one hundred

0:02:08.400 --> 0:02:12.600
<v Speaker 2>and seventy thousand people any given day, very activated on

0:02:12.639 --> 0:02:16.040
<v Speaker 2>our ships, very engage on our ships and spending on

0:02:16.400 --> 0:02:18.480
<v Speaker 2>our ships, and we continue to see a very healthy

0:02:18.520 --> 0:02:21.160
<v Speaker 2>consumer and they're not really you know, when you look

0:02:21.200 --> 0:02:23.120
<v Speaker 2>at what they're spending money on, it's still the very

0:02:23.160 --> 0:02:25.840
<v Speaker 2>similar things, right. They're spending quite a bit on land

0:02:25.880 --> 0:02:28.920
<v Speaker 2>based experiences, spending a lot in our in our in

0:02:28.960 --> 0:02:32.720
<v Speaker 2>our bars and in our restaurants, spa, et cetera. So

0:02:32.760 --> 0:02:35.160
<v Speaker 2>they seem to be very healthy. And of course, you know,

0:02:35.200 --> 0:02:37.720
<v Speaker 2>we're somewhat insulated because we typically traded about a fifteen

0:02:37.720 --> 0:02:41.200
<v Speaker 2>percent discount to land based vacation and so that insulation

0:02:41.680 --> 0:02:43.560
<v Speaker 2>I think is giving them a little bit more spending

0:02:43.600 --> 0:02:44.480
<v Speaker 2>power in their wallet.

0:02:45.160 --> 0:02:48.079
<v Speaker 1>Has Royal Caribbean seen any changes in demand from new

0:02:48.120 --> 0:02:51.720
<v Speaker 1>to cruise passengers versus long time serial cruisers in the

0:02:51.760 --> 0:02:52.519
<v Speaker 1>last few months.

0:02:54.680 --> 0:02:57.720
<v Speaker 2>Yeah, well, what we have seen in the past few months,

0:02:57.800 --> 0:03:00.560
<v Speaker 2>those those stats haven't really changed. A few things, I

0:03:00.560 --> 0:03:03.839
<v Speaker 2>would say. First off, you know, a little under half

0:03:03.840 --> 0:03:07.119
<v Speaker 2>of our guests are millennial or younger, so we're really

0:03:07.160 --> 0:03:10.200
<v Speaker 2>attracting a lot of new to cruise into our environment.

0:03:10.600 --> 0:03:13.720
<v Speaker 2>But we do have an elevated amount of loyalists that

0:03:13.760 --> 0:03:17.639
<v Speaker 2>are cruising with us, and it's for several reasons, One

0:03:17.680 --> 0:03:19.480
<v Speaker 2>of which, and find most importantly is we have done

0:03:19.520 --> 0:03:23.560
<v Speaker 2>a lot to create an enterprise loyalty program across our brands.

0:03:23.800 --> 0:03:26.480
<v Speaker 2>We've invested a lot of money and data and AI

0:03:26.600 --> 0:03:29.040
<v Speaker 2>in order for us to better cureate and engage with

0:03:29.080 --> 0:03:31.760
<v Speaker 2>those guests. And those guests typically spend about twenty five

0:03:31.800 --> 0:03:34.760
<v Speaker 2>percent more with us than somebody that's new to cruise

0:03:35.000 --> 0:03:36.880
<v Speaker 2>or or first to brand.

0:03:37.200 --> 0:03:41.240
<v Speaker 1>Gotcha, So you're investing in this new passenger, this demographic.

0:03:41.560 --> 0:03:43.920
<v Speaker 1>I'm wondering in general, and you mentioned, of course the

0:03:43.960 --> 0:03:47.280
<v Speaker 1>Mediterranean cruises being somewhat affected by geopolitical events. How are

0:03:47.320 --> 0:03:50.680
<v Speaker 1>you responding to the volatility and the threat of changing

0:03:50.840 --> 0:03:53.600
<v Speaker 1>global macro and geopolitical trends overall.

0:03:56.240 --> 0:03:59.440
<v Speaker 2>Yeah, Well, first off, you know, we're a company that

0:03:59.800 --> 0:04:02.240
<v Speaker 2>we we operate global brands, and so we source from

0:04:02.240 --> 0:04:04.960
<v Speaker 2>every from any market in the world, and we have

0:04:05.040 --> 0:04:07.839
<v Speaker 2>sales and marketing presence some everywhere, and we have very

0:04:07.840 --> 0:04:10.400
<v Speaker 2>strong brand presence. So for us, when we when we

0:04:10.440 --> 0:04:13.440
<v Speaker 2>look at at demand, we're watching different demand patterns and

0:04:13.480 --> 0:04:16.159
<v Speaker 2>we're sourcing the highest yielding guests from anywhere in the world.

0:04:16.760 --> 0:04:19.440
<v Speaker 2>In reality, you know, while there's been a lot of

0:04:19.440 --> 0:04:23.160
<v Speaker 2>geopolitical activity that has not really stunted demand, it has

0:04:23.240 --> 0:04:26.400
<v Speaker 2>moderated it in certain products like the Mediterranean. Most of

0:04:26.440 --> 0:04:28.520
<v Speaker 2>that was actually driven more by just the increase in

0:04:28.560 --> 0:04:32.159
<v Speaker 2>air costs, you know, during during that period of time.

0:04:32.520 --> 0:04:35.040
<v Speaker 2>But for the most part, you know, our guests are

0:04:35.560 --> 0:04:38.240
<v Speaker 2>are you know, are appreciating the vacation experience. And you know,

0:04:38.240 --> 0:04:40.520
<v Speaker 2>of course some some I'm sure there's somewhat affected to

0:04:40.560 --> 0:04:42.880
<v Speaker 2>some degree by the geopolitical activity, but we're not really

0:04:42.920 --> 0:04:45.440
<v Speaker 2>seeing that in their day to day spending behavior, and

0:04:45.480 --> 0:04:48.000
<v Speaker 2>we're not seeing that in their day to day planning

0:04:48.080 --> 0:04:50.320
<v Speaker 2>for today and into the future.

0:04:50.600 --> 0:04:53.599
<v Speaker 1>Right like everyone else, you're dealing with higher fuel costs

0:04:53.600 --> 0:04:57.320
<v Speaker 1>and that's certainly a headwind. How effective have hedges been

0:04:57.440 --> 0:05:00.039
<v Speaker 1>in managing the cost effect of rising funker fuel.

0:04:59.839 --> 0:05:05.640
<v Speaker 2>Pri Yeah, well, you know, we're we're we're for twenty

0:05:05.640 --> 0:05:08.080
<v Speaker 2>twenty six, we're a little over sixty percent hedged and

0:05:08.120 --> 0:05:11.000
<v Speaker 2>next year we're a little under half hedged with with

0:05:11.120 --> 0:05:15.400
<v Speaker 2>pre crisis hedge costs. So yeah, we have a pretty

0:05:15.440 --> 0:05:19.000
<v Speaker 2>active hedging program. But still, you know, despite that, you know,

0:05:19.000 --> 0:05:20.680
<v Speaker 2>fuel costs are going to impact us a little over

0:05:20.760 --> 0:05:23.520
<v Speaker 2>sixty cents this year based off of where current spout

0:05:23.560 --> 0:05:26.000
<v Speaker 2>rates are and that you know, that's you know, that's

0:05:26.040 --> 0:05:28.000
<v Speaker 2>a that's a reality that we're having to deal with

0:05:28.000 --> 0:05:30.200
<v Speaker 2>in our P and L and fortunately we were able

0:05:30.200 --> 0:05:34.880
<v Speaker 2>to recover some of that through different business activities and

0:05:34.640 --> 0:05:36.560
<v Speaker 2>and things that are you know, that are happening with

0:05:36.640 --> 0:05:37.640
<v Speaker 2>our joint ventures.

0:05:38.360 --> 0:05:40.680
<v Speaker 1>Do you have any contingency plans in place, Chase and

0:05:40.720 --> 0:05:43.760
<v Speaker 1>if disruption of the strait of hormones and higher crude

0:05:43.760 --> 0:05:48.040
<v Speaker 1>prices become more protracted become kind of our normal.

0:05:50.400 --> 0:05:52.560
<v Speaker 2>Well, I would say on contingency plans, I mean, I mean,

0:05:52.880 --> 0:05:56.279
<v Speaker 2>for one thing about our business or our industry is

0:05:56.320 --> 0:05:58.880
<v Speaker 2>our assets move, So you know, our ability to move

0:05:58.920 --> 0:06:01.240
<v Speaker 2>our assets out of places is that you know that

0:06:01.400 --> 0:06:03.480
<v Speaker 2>might be more challenged is something that we that we

0:06:03.680 --> 0:06:06.760
<v Speaker 2>that we can do uh pretty quickly. And that's typically

0:06:06.760 --> 0:06:09.039
<v Speaker 2>how we try to manage risk in different parts of

0:06:09.040 --> 0:06:11.599
<v Speaker 2>the world as it relates to things that can impact it,

0:06:11.800 --> 0:06:13.839
<v Speaker 2>especially with the straight up from moves like fuel prices.

0:06:14.279 --> 0:06:16.120
<v Speaker 2>You know, that's something we try to manage through our

0:06:16.240 --> 0:06:20.000
<v Speaker 2>our our our hedging program and and and being thoughtful

0:06:20.000 --> 0:06:22.360
<v Speaker 2>about the amount of consumption of fuel that that we

0:06:22.600 --> 0:06:23.720
<v Speaker 2>that we take all.

0:06:23.720 --> 0:06:26.520
<v Speaker 1>Right, Jason We really appreciate your joining us. Jason Liberty

0:06:26.720 --> 0:06:29.599
<v Speaker 1>is the chairman and CEO of Royal Kruby and talking

0:06:29.680 --> 0:06:30.680
<v Speaker 1>to us from Miami.