1
00:00:02,279 --> 00:00:06,439
Speaker 1: In early as COVID triggered a global public health crisis,

2
00:00:06,720 --> 00:00:10,240
Speaker 1: the travel and tourism industry cutback service and slowed down.

3
00:00:10,800 --> 00:00:17,400
Speaker 1: The cruise industry went further. It completely shut down as

4
00:00:17,400 --> 00:00:21,280
Speaker 1: ships at idle. Operators scrambled to survive with no financial

5
00:00:21,320 --> 00:00:24,760
Speaker 1: precedent to guide them. All of a sudden, the revenue

6
00:00:24,880 --> 00:00:27,840
Speaker 1: just turns off. They did not teach this in business school,

7
00:00:27,840 --> 00:00:30,000
Speaker 1: by the way, so you know it turns off and

8
00:00:30,360 --> 00:00:33,160
Speaker 1: you you have to figure out how you're going to

9
00:00:33,280 --> 00:00:35,479
Speaker 1: ensure that the company has liquidity needs in order to

10
00:00:35,479 --> 00:00:36,879
Speaker 1: be able to get to the other side of it.

11
00:00:37,000 --> 00:00:40,879
Speaker 1: No revenue at all, but you have costs and expenses.

12
00:00:40,920 --> 00:00:43,320
Speaker 1: That's right. What you learned in the pandemic is that

13
00:00:43,440 --> 00:00:47,239
Speaker 1: leadership really matters. For Royal Caribbean Cruises, the lesson was

14
00:00:47,280 --> 00:00:50,920
Speaker 1: stark and clear. After generating almost two billion dollars in

15
00:00:51,000 --> 00:00:54,840
Speaker 1: annual profit before COVID, the company lost more than five

16
00:00:54,920 --> 00:01:01,440
Speaker 1: billion dollars in both At the end of one longtime CEO,

17
00:01:01,560 --> 00:01:05,040
Speaker 1: Richard Fain, stepped down after thirty three years, handing the

18
00:01:05,040 --> 00:01:08,720
Speaker 1: reins to CFO Jason Liberty. What was it like that

19
00:01:09,080 --> 00:01:12,400
Speaker 1: transition going from CFO to sea and we were still

20
00:01:12,480 --> 00:01:14,240
Speaker 1: kind of coming out of the pandemic. We were still

21
00:01:14,319 --> 00:01:17,680
Speaker 1: ramping up our fleet, ramping up our occupancy, and so

22
00:01:17,720 --> 00:01:19,399
Speaker 1: we had to keep our eye on the ball on

23
00:01:19,880 --> 00:01:23,039
Speaker 1: because historically we would bring about three ships up a

24
00:01:23,120 --> 00:01:26,039
Speaker 1: year um and here we brought up sixty four ships.

25
00:01:26,200 --> 00:01:29,920
Speaker 1: And it's a big change to herculean efforts helping the

26
00:01:29,920 --> 00:01:33,960
Speaker 1: new CEO meet those challenges. New CFO and if Tally Holt,

27
00:01:34,240 --> 00:01:37,160
Speaker 1: who moved up from VP of Finance, I had hired

28
00:01:37,240 --> 00:01:39,959
Speaker 1: him I think about six months before the pandemic. I

29
00:01:40,000 --> 00:01:41,800
Speaker 1: was looking for somebody with with a lot of really

30
00:01:41,840 --> 00:01:44,959
Speaker 1: strong work ethics, somebody who was strategic, um, you know,

31
00:01:45,000 --> 00:01:48,600
Speaker 1: somebody who who understood how to you to get things

32
00:01:48,640 --> 00:01:51,360
Speaker 1: done inside of an organization. And I saw those qualities

33
00:01:51,360 --> 00:01:53,640
Speaker 1: and off Tolly. And he has done an exceptional job

34
00:01:53,760 --> 00:01:57,120
Speaker 1: coming into the role. He hit the ground running. That

35
00:01:57,280 --> 00:02:00,280
Speaker 1: dynamic in the C suite is help Royal Caribbeans come back,

36
00:02:00,320 --> 00:02:05,320
Speaker 1: maintain momentum. What's it like becoming CFO working for the

37
00:02:05,360 --> 00:02:09,200
Speaker 1: individual who was CFO and is now CEO. I feel

38
00:02:09,320 --> 00:02:11,960
Speaker 1: very fortunate because I have someone who has been in

39
00:02:11,960 --> 00:02:14,639
Speaker 1: the job for many years is still with a company.

40
00:02:14,840 --> 00:02:18,880
Speaker 1: Obviously as much more responsibly. But he understands what what

41
00:02:18,919 --> 00:02:21,960
Speaker 1: I what, what what it means to be in my job.

42
00:02:22,200 --> 00:02:24,120
Speaker 1: So what was that like for you? Having been in

43
00:02:24,160 --> 00:02:26,440
Speaker 1: the CFO role for so long? What did you expect

44
00:02:26,440 --> 00:02:27,959
Speaker 1: of him? I rely on him very much to be

45
00:02:28,040 --> 00:02:30,799
Speaker 1: my eyes and ears, my strategic partner. And I'm also

46
00:02:30,919 --> 00:02:33,400
Speaker 1: very transparent with him in terms of what I'm thinking

47
00:02:33,440 --> 00:02:35,800
Speaker 1: about and doing um And sometimes he will sit there

48
00:02:35,800 --> 00:02:37,000
Speaker 1: and did we really need to spend money on that?

49
00:02:37,040 --> 00:02:38,680
Speaker 1: And also, yeah, we really need to spend money on that.

50
00:02:39,000 --> 00:02:41,960
Speaker 1: I'm a very direct person and I care and I

51
00:02:41,960 --> 00:02:44,160
Speaker 1: feel that that's that's important for me to make sure

52
00:02:44,160 --> 00:02:47,560
Speaker 1: that if I feel differently, you know, at least we

53
00:02:47,600 --> 00:02:50,720
Speaker 1: have a conversation. And you know, many times I would

54
00:02:50,880 --> 00:02:52,840
Speaker 1: I would I would think one way and then he

55
00:02:52,880 --> 00:02:56,760
Speaker 1: would point his point of view and it would make sense,

56
00:02:56,760 --> 00:02:58,440
Speaker 1: and I would say, you know what you're write and

57
00:02:58,639 --> 00:03:01,880
Speaker 1: you know and I get behind advancing the company's long

58
00:03:02,000 --> 00:03:05,799
Speaker 1: term mission through honest conversation. That's how enough Tally Holt

59
00:03:06,040 --> 00:03:10,160
Speaker 1: takes the CFO roll forward. And maybe many years ago

60
00:03:10,240 --> 00:03:12,480
Speaker 1: we was about making sure that the numbers are correct

61
00:03:12,560 --> 00:03:16,720
Speaker 1: and everything is on time and and we report correctly

62
00:03:16,760 --> 00:03:19,280
Speaker 1: and I think involved today too much more than that.

63
00:03:19,360 --> 00:03:22,400
Speaker 1: You know, what is the strategy that we're going to

64
00:03:22,480 --> 00:03:25,960
Speaker 1: embark on, what does that mean to the financial performance

65
00:03:26,000 --> 00:03:28,320
Speaker 1: of the company, and how does how do we invest

66
00:03:28,360 --> 00:03:31,240
Speaker 1: a view dot um. That's one aspect of it, and

67
00:03:31,280 --> 00:03:33,720
Speaker 1: the other is just making sure that we are always

68
00:03:33,720 --> 00:03:50,440
Speaker 1: on the polls with its full fleet returning to the season,

69
00:03:51,960 --> 00:03:56,720
Speaker 1: Royal Caribbean has enjoyed a financial rebound booking or robust

70
00:03:56,880 --> 00:04:00,280
Speaker 1: and they've been accelerating every quarter. In novemb Or, the

71
00:04:00,280 --> 00:04:04,080
Speaker 1: company announced the Trifecta Program, a three year initiative designed

72
00:04:04,080 --> 00:04:08,120
Speaker 1: to exceed performance in key financial metrics by the end

73
00:04:08,120 --> 00:04:12,240
Speaker 1: of Inside the industry, they're going to fit in because

74
00:04:12,280 --> 00:04:14,880
Speaker 1: there's bent up demand. People want to travel. We have

75
00:04:14,880 --> 00:04:17,680
Speaker 1: a hundred and thirty thousand people sailing with us right

76
00:04:17,680 --> 00:04:20,480
Speaker 1: now as we talked, and they are spending more than

77
00:04:20,520 --> 00:04:22,680
Speaker 1: they did a month ago. They're spending more than they

78
00:04:22,680 --> 00:04:24,440
Speaker 1: did a year ago. They're spending more than they did

79
00:04:24,480 --> 00:04:27,560
Speaker 1: pre COVID on travel experience. We know the ships that

80
00:04:27,600 --> 00:04:30,960
Speaker 1: are coming in. These ships are huge money makers, very

81
00:04:31,040 --> 00:04:33,640
Speaker 1: high yielding. Because of the inventory mix, there's more space

82
00:04:33,680 --> 00:04:36,960
Speaker 1: for onboard revenue venues they're very fuel efficient. Intent to

83
00:04:37,080 --> 00:04:40,880
Speaker 1: cruise is climbing. Whether or not that can be sustained,

84
00:04:41,080 --> 00:04:43,440
Speaker 1: I think is a question to be answered. And there

85
00:04:43,480 --> 00:04:47,880
Speaker 1: are a couple of different elements of that, the first being, UH,

86
00:04:48,040 --> 00:04:51,280
Speaker 1: the economy. Do you get a little nervous with all

87
00:04:51,279 --> 00:04:55,520
Speaker 1: the recession talk or another black swan who would have thought, right,

88
00:04:55,640 --> 00:04:58,039
Speaker 1: what happened the last couple of years. It's hard to

89
00:04:58,040 --> 00:05:00,640
Speaker 1: plan for it right. So what we are focused on

90
00:05:00,760 --> 00:05:05,080
Speaker 1: is to making sure that we have the best business

91
00:05:04,839 --> 00:05:09,000
Speaker 1: the right so the business is run well. We are

92
00:05:09,040 --> 00:05:11,880
Speaker 1: obviously are focused on liquidity and and our and our

93
00:05:12,000 --> 00:05:13,760
Speaker 1: on our financial metrics, and we want to fix the

94
00:05:13,800 --> 00:05:18,360
Speaker 1: balance sheet, um, you know, to to get to back

95
00:05:18,400 --> 00:05:21,240
Speaker 1: to where we were. Fixing the balance sheet, that's a

96
00:05:21,279 --> 00:05:25,320
Speaker 1: heavy lift. Royal Caribbean is carrying nearly twenty four billion

97
00:05:25,360 --> 00:05:28,320
Speaker 1: dollars in debt. Though it's paid down most of its

98
00:05:28,320 --> 00:05:31,720
Speaker 1: short term obligations, the debt still looms large. It's a

99
00:05:31,800 --> 00:05:35,599
Speaker 1: dark cloud over the entire cruise industry. The valuations for

100
00:05:36,120 --> 00:05:39,400
Speaker 1: the major cruise lines have gone down and UH and

101
00:05:39,520 --> 00:05:42,360
Speaker 1: the debt levels are very high, so they will have

102
00:05:42,440 --> 00:05:46,560
Speaker 1: difficulties to to receive more debt and it might be

103
00:05:46,680 --> 00:05:49,080
Speaker 1: very high interest rates. The debt that we took on.

104
00:05:49,200 --> 00:05:51,400
Speaker 1: Half of it was in order for us to deal

105
00:05:51,440 --> 00:05:54,480
Speaker 1: with UH not operating for those for those eighteen months

106
00:05:54,480 --> 00:05:58,000
Speaker 1: and ramping our business back up, staying a lot, that's right. UM.

107
00:05:58,080 --> 00:06:00,000
Speaker 1: The other half of it was actually because we were

108
00:06:00,000 --> 00:06:02,440
Speaker 1: growing and we were taking on new ships, and those

109
00:06:02,480 --> 00:06:05,440
Speaker 1: new ships we get incredible export credit financing for and

110
00:06:05,480 --> 00:06:07,880
Speaker 1: we've done a lot of refinancing and we do believe

111
00:06:08,040 --> 00:06:10,200
Speaker 1: over the coming years we're gonna be a much better

112
00:06:10,200 --> 00:06:13,160
Speaker 1: place to do two things, one is de leverage and

113
00:06:13,200 --> 00:06:16,440
Speaker 1: also improve our rating, and so that will also lower

114
00:06:16,480 --> 00:06:19,040
Speaker 1: our capital costs. Are you comfortable with that level of

115
00:06:19,080 --> 00:06:22,680
Speaker 1: debt and being able to service it, well, we were

116
00:06:22,720 --> 00:06:24,680
Speaker 1: not happy with it. We want to get Our goal

117
00:06:24,760 --> 00:06:26,880
Speaker 1: is to get back to the balance sheet we had

118
00:06:27,120 --> 00:06:30,920
Speaker 1: um which is an investment, great profile. We're back sailing

119
00:06:31,200 --> 00:06:37,400
Speaker 1: UM You occupancies were generating cash flow from operations, so

120
00:06:37,600 --> 00:06:39,960
Speaker 1: you know we Our goal is now to continue to

121
00:06:40,000 --> 00:06:43,080
Speaker 1: grow Ibada, continue to grow the cash flow so we

122
00:06:43,120 --> 00:06:45,920
Speaker 1: can pay down to debt and bring the balance sheet back.

123
00:06:46,200 --> 00:06:49,279
Speaker 1: This business is very resilient. We always said that we

124
00:06:49,320 --> 00:06:51,240
Speaker 1: wanted to have a balance sheet that could take a punch,

125
00:06:51,720 --> 00:06:53,520
Speaker 1: and we proved that we had a balance sheet that

126
00:06:53,520 --> 00:06:56,640
Speaker 1: could actually take a meteor um And so I think

127
00:06:56,720 --> 00:06:58,880
Speaker 1: that's why you know, NOF is very focused. I'm very

128
00:06:58,920 --> 00:07:02,479
Speaker 1: focused on getting back to a investment grade balance sheet.

129
00:07:02,720 --> 00:07:05,279
Speaker 1: I'm getting back to an unencumbered balance sheet. You know

130
00:07:05,320 --> 00:07:07,520
Speaker 1: that that sets us up for events as they as

131
00:07:07,600 --> 00:07:10,760
Speaker 1: they as they come forward, can Royal Caribbean perform its

132
00:07:10,760 --> 00:07:14,840
Speaker 1: way back to unencumbered financial stability. The cruise line generates

133
00:07:14,840 --> 00:07:18,240
Speaker 1: about six revenue from sales of tickets. Most of the

134
00:07:18,280 --> 00:07:22,040
Speaker 1: rest comes from on board spending. At the moment, higher

135
00:07:22,080 --> 00:07:26,000
Speaker 1: prices aren't holding down demand in either category. On the

136
00:07:26,040 --> 00:07:28,680
Speaker 1: ticket pricing side as well as on onboard spend, um

137
00:07:28,720 --> 00:07:31,480
Speaker 1: you are pricing is up versus nineteen. We use nineteen

138
00:07:31,480 --> 00:07:36,080
Speaker 1: as our reference point. Onboard experiences have really been become

139
00:07:36,120 --> 00:07:39,360
Speaker 1: a much more integral part of the experience. What we

140
00:07:39,400 --> 00:07:41,960
Speaker 1: have seen in the past couple of years is that

141
00:07:42,480 --> 00:07:46,040
Speaker 1: we we have a much more penetration of onboard board

142
00:07:46,080 --> 00:07:49,920
Speaker 1: experiences for a guest. So people just want to consume more,

143
00:07:50,000 --> 00:07:53,080
Speaker 1: They're willing to spend more, and that's obviously much um

144
00:07:53,160 --> 00:07:56,280
Speaker 1: that helps them. The yields and the revenues as well

145
00:07:56,320 --> 00:08:00,000
Speaker 1: as the margin pre pandemic. Unless we're impressed by Royal

146
00:08:00,080 --> 00:08:04,800
Speaker 1: Caribbeans margin expansion. Operating margins double during Jason Liberty's first

147
00:08:04,840 --> 00:08:08,640
Speaker 1: seven years as CFO. The barriage ahead may not be

148
00:08:08,760 --> 00:08:12,800
Speaker 1: a smooth especially if inflated costs eat into revenue gains.

149
00:08:13,320 --> 00:08:18,200
Speaker 1: We've seen huge inflation costs on the on the food. However,

150
00:08:18,320 --> 00:08:21,000
Speaker 1: you are supply chain teams have done really an exceptional job.

151
00:08:21,160 --> 00:08:23,720
Speaker 1: So we do believe as which is what the basis

152
00:08:23,760 --> 00:08:27,800
Speaker 1: of our Trifector program is moderate yields and good cost control.

153
00:08:27,840 --> 00:08:29,920
Speaker 1: And for us, good cost control is is low single

154
00:08:29,960 --> 00:08:32,960
Speaker 1: digit um change your ear. If you think about the

155
00:08:32,960 --> 00:08:36,480
Speaker 1: cruise industry, there's a course that vantage full labor because

156
00:08:36,520 --> 00:08:39,880
Speaker 1: they don't have debate the minimum weights is and there's

157
00:08:39,920 --> 00:08:43,440
Speaker 1: also ghost advantage in supplies like food and beverage supplies

158
00:08:43,440 --> 00:08:45,840
Speaker 1: because they buy it in quantity. Jason, what are the

159
00:08:45,840 --> 00:08:48,959
Speaker 1: conversations you have with enough Tolly about costs because it's

160
00:08:49,000 --> 00:08:51,840
Speaker 1: such a big component of of you know, when you

161
00:08:51,880 --> 00:08:54,439
Speaker 1: look at your financial statements, where I really focused no

162
00:08:54,480 --> 00:08:57,040
Speaker 1: off on is where can we become more efficient? Where

163
00:08:57,040 --> 00:09:00,000
Speaker 1: can we use technology for us to become more efficient?

164
00:09:00,160 --> 00:09:03,040
Speaker 1: The food side, what we we want to make sure

165
00:09:03,160 --> 00:09:05,720
Speaker 1: is that the experience that we offer to the guests

166
00:09:06,520 --> 00:09:10,400
Speaker 1: is great, because that's our mission. Maybe we can source

167
00:09:10,440 --> 00:09:13,200
Speaker 1: more locally, maybe we need some of it to source

168
00:09:13,240 --> 00:09:16,040
Speaker 1: more globally. Just reimagine of how do we deliver on

169
00:09:16,080 --> 00:09:19,400
Speaker 1: the service and on the fuel side. UM, we have

170
00:09:19,480 --> 00:09:22,720
Speaker 1: an active hedging program and you know, we're very focused,

171
00:09:22,800 --> 00:09:25,199
Speaker 1: which is good for also for our environment, is to

172
00:09:25,840 --> 00:09:30,760
Speaker 1: minimize the reduced the consumption of fuel UM and that

173
00:09:30,920 --> 00:09:33,000
Speaker 1: is UM. You know, obviously one of the things that

174
00:09:33,040 --> 00:09:37,240
Speaker 1: we can control the most. What Royal Caribbean can't control

175
00:09:37,640 --> 00:09:41,400
Speaker 1: head winds caused by world events that threatened growth. COVID

176
00:09:41,520 --> 00:09:44,520
Speaker 1: zero has meant zero cruising in China since the start

177
00:09:44,559 --> 00:09:49,000
Speaker 1: of war in Ukraine and recession signals are concerns in Europe.

178
00:09:49,520 --> 00:09:52,280
Speaker 1: All this put strain on the supply chain that provides

179
00:09:52,400 --> 00:09:57,360
Speaker 1: Royal Caribbean's most important commodity passengers are sourcing for Our

180
00:09:57,400 --> 00:10:00,720
Speaker 1: guests come from a hundred different locations around the world,

181
00:10:00,880 --> 00:10:02,880
Speaker 1: and we created a platform for it to be very nimble,

182
00:10:02,920 --> 00:10:05,400
Speaker 1: and so we're always sourcing the highest shielding guests from

183
00:10:05,400 --> 00:10:10,160
Speaker 1: anywhere in the world. But our assets, our business moves.

184
00:10:10,440 --> 00:10:13,400
Speaker 1: It's fluid, so when events do happen around the world,

185
00:10:13,480 --> 00:10:15,480
Speaker 1: we have we have the ability really on a dime,

186
00:10:15,600 --> 00:10:18,240
Speaker 1: to move our deployment around or move our sourcing around

187
00:10:18,640 --> 00:10:20,880
Speaker 1: to help mitigate that. So yeah, we're, you know, like

188
00:10:20,920 --> 00:10:23,280
Speaker 1: we always are. We're nimble, and we've you know, are sourcing,

189
00:10:23,320 --> 00:10:27,199
Speaker 1: and our deployment is going to be different. Um and

190
00:10:27,200 --> 00:10:30,600
Speaker 1: then we'll see what brings. Uncertainty about the future of

191
00:10:30,640 --> 00:10:33,400
Speaker 1: travel has weighed on crew stocks over the last two years.

192
00:10:33,800 --> 00:10:37,679
Speaker 1: Despite suns of a rebound, investors remain cautious. What was

193
00:10:37,679 --> 00:10:39,320
Speaker 1: it going to take for Wall Street to be like,

194
00:10:39,520 --> 00:10:41,800
Speaker 1: we're comfortable with this. Well, I think they're getting more

195
00:10:41,840 --> 00:10:44,360
Speaker 1: comfortable with it and and and I think once they

196
00:10:44,360 --> 00:10:48,199
Speaker 1: start seeing guidance and they see the level of profitability,

197
00:10:48,200 --> 00:10:50,079
Speaker 1: the level of cash flow, I think at that point,

198
00:10:50,120 --> 00:10:53,000
Speaker 1: you know what, we'll we'll start to see the the

199
00:10:53,000 --> 00:10:57,400
Speaker 1: the overall crystallization of where we are um and then

200
00:10:57,559 --> 00:10:59,280
Speaker 1: and then begin to think about where we're gonna be going.

201
00:10:59,720 --> 00:11:02,680
Speaker 1: It's Ason Liberty took over as Chief executive of Royal

202
00:11:02,720 --> 00:11:07,560
Speaker 1: Caribbean Cruises in January two, replacing Richard Fayne, who had

203
00:11:07,600 --> 00:11:12,160
Speaker 1: been CEO since and remains chairman of the company's board.

204
00:11:12,559 --> 00:11:16,280
Speaker 1: Liberty's promotion fits with a trend. According to Christ Colder's

205
00:11:16,280 --> 00:11:19,720
Speaker 1: annual survey, more new CEOs are coming to the job

206
00:11:19,800 --> 00:11:23,520
Speaker 1: directly from a CFO chair than ever before. The role

207
00:11:23,520 --> 00:11:25,800
Speaker 1: of the CFO. I think has changed over time, right.

208
00:11:25,800 --> 00:11:28,560
Speaker 1: They become much more strategic, um, you know, and of

209
00:11:28,559 --> 00:11:30,960
Speaker 1: course this world has become more data driven UM, and

210
00:11:31,000 --> 00:11:32,840
Speaker 1: so being able to you know, to to think in

211
00:11:32,920 --> 00:11:34,920
Speaker 1: that way, and and of course being brought up that

212
00:11:34,960 --> 00:11:37,959
Speaker 1: way and putting people in the CFO position that think

213
00:11:38,040 --> 00:11:42,640
Speaker 1: that way versus maybe just doing accounting or treasury related activities.

214
00:11:43,200 --> 00:11:45,679
Speaker 1: I think that's why you're starting to see more CFOs

215
00:11:45,840 --> 00:11:49,079
Speaker 1: rise into the CEO spot, which because there's a lot

216
00:11:49,080 --> 00:11:51,560
Speaker 1: of that kind of commonality that comes in the day

217
00:11:51,600 --> 00:11:54,360
Speaker 1: to day of the CEO job. Royal Caribbean CFO and

218
00:11:54,360 --> 00:11:57,400
Speaker 1: of Tally Holtz brings a strategic and data driven background

219
00:11:57,440 --> 00:12:00,920
Speaker 1: to the CFO role, and he's mission driven as well.

220
00:12:01,559 --> 00:12:04,240
Speaker 1: I was born and raised in Israel UM and like

221
00:12:04,320 --> 00:12:07,960
Speaker 1: everybody else, I enlisted into Israeli Air Force. I had

222
00:12:08,000 --> 00:12:12,040
Speaker 1: a four very meaningful years serving my country and giving back,

223
00:12:12,200 --> 00:12:14,320
Speaker 1: and then I always wanted to be to move to

224
00:12:14,320 --> 00:12:16,560
Speaker 1: the United States. I had some family here, but I

225
00:12:16,600 --> 00:12:20,160
Speaker 1: was just aspiring to the country the opportunity, and I

226
00:12:20,200 --> 00:12:22,480
Speaker 1: thought that the best way for me to do it

227
00:12:22,559 --> 00:12:25,080
Speaker 1: is through going through business school. And I was fortunate

228
00:12:25,120 --> 00:12:27,959
Speaker 1: to get into Chicago Booth and learned from the best

229
00:12:28,160 --> 00:12:33,120
Speaker 1: and get some of those finance skills and knowledge UM.

230
00:12:33,320 --> 00:12:35,400
Speaker 1: And then I started on Wall Street and it was

231
00:12:35,440 --> 00:12:38,880
Speaker 1: just the natural I was, you know, transition. I really

232
00:12:38,920 --> 00:12:43,440
Speaker 1: felt compelled and and interested about UM investments and the

233
00:12:43,559 --> 00:12:48,240
Speaker 1: markets and companies and their stories. And I really learned

234
00:12:48,240 --> 00:12:51,960
Speaker 1: a lot UM and you know, through transactions interacting with

235
00:12:52,040 --> 00:12:54,560
Speaker 1: CEOs and CFOs. So how do you think having a

236
00:12:54,600 --> 00:12:59,760
Speaker 1: career on Wall Street finance background maybe makes you a

237
00:12:59,800 --> 00:13:03,239
Speaker 1: better CFO. Obviously, all the skills that I had UM,

238
00:13:03,320 --> 00:13:05,840
Speaker 1: you know, in my career on Wall Street, understanding how

239
00:13:05,880 --> 00:13:09,360
Speaker 1: to raise capital, what investors are looking for, helped us

240
00:13:09,559 --> 00:13:12,200
Speaker 1: in the beginning of the pandemic when we had to

241
00:13:12,280 --> 00:13:15,600
Speaker 1: raise capital UM to make sure we get to the

242
00:13:15,600 --> 00:13:19,720
Speaker 1: other side. So, you know, just understanding the different instruments

243
00:13:19,880 --> 00:13:22,520
Speaker 1: in the different ways to raise the capital, understanding the

244
00:13:22,600 --> 00:13:26,559
Speaker 1: capital a location, how we will prioritize investments, how we

245
00:13:26,600 --> 00:13:30,000
Speaker 1: were prioritizing the cash flow that this business generates a

246
00:13:30,000 --> 00:13:33,240
Speaker 1: lot of cash low um is something that I'm focused on,

247
00:13:33,280 --> 00:13:35,839
Speaker 1: and obviously I've seen a lot of those in my

248
00:13:36,000 --> 00:13:39,200
Speaker 1: career on Wall Street. A cruise ship is much more

249
00:13:39,240 --> 00:13:42,360
Speaker 1: than a flotilla of financials and numbers. If Tally Holt

250
00:13:42,360 --> 00:13:45,920
Speaker 1: shown me around the celebrity beyond Royal Caribbeans newest ship

251
00:13:46,440 --> 00:13:50,360
Speaker 1: rolling out, not the red carpet, instead the magic carpet,

252
00:13:50,760 --> 00:13:55,240
Speaker 1: an example of investment that's yielding returns in several different ways. Originally,

253
00:13:55,240 --> 00:13:58,440
Speaker 1: actually we designed it because we wanted to have a

254
00:13:58,440 --> 00:14:01,000
Speaker 1: really nice platform for tender in because sometimes we can't

255
00:14:01,000 --> 00:14:05,320
Speaker 1: homeport exactly value functional. And then we looked at it

256
00:14:05,360 --> 00:14:07,560
Speaker 1: and said, why don't we just make it a really

257
00:14:07,600 --> 00:14:11,200
Speaker 1: cool feature spot where people can enjoy it beyond the

258
00:14:11,240 --> 00:14:13,480
Speaker 1: functional space, and we may create that this bar it

259
00:14:13,559 --> 00:14:16,160
Speaker 1: went up and down. It take about the Instagram conues

260
00:14:16,400 --> 00:14:19,120
Speaker 1: become bad at about that I can instagram a moment

261
00:14:19,360 --> 00:14:22,240
Speaker 1: with the sunset, having a drink with your friends or family.

262
00:14:22,440 --> 00:14:24,440
Speaker 1: I mean, that's that's that's amazing. So what does it

263
00:14:24,520 --> 00:14:26,600
Speaker 1: take to do something like this? And I'm thinking cost

264
00:14:26,680 --> 00:14:30,720
Speaker 1: engineering time, Yeah, a lot of effort, from a lot

265
00:14:30,760 --> 00:14:33,440
Speaker 1: of people. So starts from just the design and the

266
00:14:33,480 --> 00:14:36,480
Speaker 1: conceptual aspect of it. Then we need to figure out

267
00:14:36,880 --> 00:14:40,000
Speaker 1: a lot of technical factors, the wait, the wind, and

268
00:14:40,200 --> 00:14:43,600
Speaker 1: so lots of lots of hours of really hard work.

269
00:14:44,120 --> 00:14:46,440
Speaker 1: And every time we up the game, we see that

270
00:14:46,560 --> 00:14:49,440
Speaker 1: customer willing to spend more. Is there like a bunch

271
00:14:49,480 --> 00:14:52,000
Speaker 1: of other innovative ideas that you guys are working on.

272
00:14:52,120 --> 00:14:53,840
Speaker 1: Is there other things that maybe are in the hopper

273
00:14:53,960 --> 00:14:55,800
Speaker 1: that might be like this that we might see in

274
00:14:55,840 --> 00:14:59,240
Speaker 1: future ships. Yes, you know, obviously the ships are core

275
00:14:59,320 --> 00:15:03,560
Speaker 1: to to We delivered the bestifications in the world, um

276
00:15:03,600 --> 00:15:05,840
Speaker 1: and a couple of years ago we saw an opportunity

277
00:15:06,080 --> 00:15:08,320
Speaker 1: to extend that even to land, so we built some

278
00:15:08,360 --> 00:15:12,960
Speaker 1: private islands and exclusive destinations. Cook is one example of it.

279
00:15:13,200 --> 00:15:16,600
Speaker 1: And we have a lot of great ideas and projects

280
00:15:16,640 --> 00:15:18,800
Speaker 1: in the hopper. And you know, we're very focused on

281
00:15:18,880 --> 00:15:22,520
Speaker 1: being discipline. You know, we we deploy billions of dollars

282
00:15:22,520 --> 00:15:25,520
Speaker 1: on behalf of our shareholders, so we we have for

283
00:15:25,560 --> 00:15:28,920
Speaker 1: ourselves and for them, you know, a return expectations. So

284
00:15:28,960 --> 00:15:31,360
Speaker 1: we just to make sure that as we as we

285
00:15:31,480 --> 00:15:34,080
Speaker 1: invest the money, it's it's it's it's getting the returns

286
00:15:34,120 --> 00:15:38,480
Speaker 1: we want in every corner of celebrity beyond, there's evidence

287
00:15:38,480 --> 00:15:42,320
Speaker 1: of careful investment designed to give customers every opportunity to

288
00:15:42,360 --> 00:15:45,320
Speaker 1: spend money. And for passengers who want to spend a

289
00:15:45,360 --> 00:15:49,320
Speaker 1: little more money, there's ample opportunity to upgrade. So this

290
00:15:49,360 --> 00:15:54,280
Speaker 1: is our exclusive retreat area and guests can upgrade right

291
00:15:54,360 --> 00:15:58,320
Speaker 1: and and buy a room a stateroom here and enjoy

292
00:15:58,400 --> 00:16:01,360
Speaker 1: the exclusive access to those facilities. And you can see

293
00:16:01,360 --> 00:16:04,840
Speaker 1: there's a pool, there's cabanas obviously, lots of opportunities for

294
00:16:04,960 --> 00:16:09,479
Speaker 1: food and beverage. The segmentation of giving you know, passengers

295
00:16:09,520 --> 00:16:11,760
Speaker 1: and opportunity to have a different experience, maybe pay up

296
00:16:11,760 --> 00:16:14,000
Speaker 1: for a more premium experience. Is this kind of where

297
00:16:14,000 --> 00:16:16,160
Speaker 1: it's all going. Yeah, And I think it's really about

298
00:16:16,320 --> 00:16:20,000
Speaker 1: every Everyone has maybe a little bit different um you know,

299
00:16:20,360 --> 00:16:23,840
Speaker 1: um desire of what their ultimate vacation is. Some people

300
00:16:23,880 --> 00:16:26,120
Speaker 1: want to go and meet people. Some people just want

301
00:16:26,200 --> 00:16:29,080
Speaker 1: to because it came in with their their where their family,

302
00:16:29,360 --> 00:16:31,960
Speaker 1: just to go and spend their time alone. So it's

303
00:16:32,000 --> 00:16:35,240
Speaker 1: really designed to do to be like the ultimate vacation,

304
00:16:35,280 --> 00:16:38,120
Speaker 1: depending on what do you want. Royal Caribbean is one

305
00:16:38,160 --> 00:16:41,080
Speaker 1: of three companies that together control about three quarters of

306
00:16:41,160 --> 00:16:46,080
Speaker 1: the global cruising market. Its capacity share was second only

307
00:16:46,080 --> 00:16:48,960
Speaker 1: to Carnival and more than twice that a third place

308
00:16:49,120 --> 00:16:53,240
Speaker 1: Norwegian cruise line. Royal Caribbean operates it ships under three

309
00:16:53,240 --> 00:16:57,200
Speaker 1: brands with three distinct profiles. And the Royal Caribbean brand,

310
00:16:57,240 --> 00:17:01,120
Speaker 1: you know, they're more family focused, multigenerational. Our Celebrity brand

311
00:17:01,200 --> 00:17:03,480
Speaker 1: is more of a premium luxury and then we have

312
00:17:03,520 --> 00:17:08,480
Speaker 1: Silver Sea which is ultra luxury and expedition. So it's

313
00:17:08,520 --> 00:17:11,520
Speaker 1: not a one size fits all business. And as passengers

314
00:17:11,520 --> 00:17:15,200
Speaker 1: demand more choices, one way to fulfill them is bigger ships.

315
00:17:15,520 --> 00:17:18,440
Speaker 1: In October, Royal Caribbean unveiled plans to launch what will

316
00:17:18,440 --> 00:17:21,400
Speaker 1: be the largest ship in the world, Icon of Disease.

317
00:17:21,960 --> 00:17:25,760
Speaker 1: It will carry over seven thousand passengers. Its first cruise,

318
00:17:25,880 --> 00:17:30,000
Speaker 1: set for January, sold out within hours. If you're going

319
00:17:30,040 --> 00:17:31,920
Speaker 1: on a on a seven day void, you're going to

320
00:17:31,960 --> 00:17:33,960
Speaker 1: be able to do anything and everything that you could

321
00:17:34,000 --> 00:17:36,600
Speaker 1: possibly dream of and and you know, it might be

322
00:17:36,640 --> 00:17:38,320
Speaker 1: what you want to do, it might be what your

323
00:17:38,400 --> 00:17:40,040
Speaker 1: daughter wants to do, it might be what your parents

324
00:17:40,080 --> 00:17:43,080
Speaker 1: want to do, and everybody can have different experiences on

325
00:17:43,119 --> 00:17:45,240
Speaker 1: a We describe it as the thrill and the child.

326
00:17:45,359 --> 00:17:48,400
Speaker 1: We offer much a lot more on the ship. They

327
00:17:48,440 --> 00:17:51,920
Speaker 1: become much more profitable because there's so much more to do.

328
00:17:52,119 --> 00:17:55,920
Speaker 1: There's economies of scale um and their efficiencies and operations,

329
00:17:55,920 --> 00:17:58,959
Speaker 1: so it ship that we deliver is actually much more profitable.

330
00:18:00,119 --> 00:18:03,480
Speaker 1: Caribbean is also investing in technology to drive profits to

331
00:18:03,560 --> 00:18:05,760
Speaker 1: say that cruising industry is actually one of the leaders

332
00:18:05,840 --> 00:18:08,439
Speaker 1: when it comes to digital transformation, and I see that

333
00:18:08,640 --> 00:18:10,800
Speaker 1: accelerating in the future. We want to make sure that

334
00:18:10,880 --> 00:18:15,240
Speaker 1: we create a frictional ness experience. Right. The expectations today

335
00:18:15,440 --> 00:18:18,920
Speaker 1: from the consumer is that the experience is friction less.

336
00:18:19,000 --> 00:18:22,840
Speaker 1: Especially through the pandemic, people got very comfortable for on

337
00:18:22,920 --> 00:18:25,520
Speaker 1: demand services. They wanted groceries, they went to instacart and

338
00:18:25,760 --> 00:18:28,520
Speaker 1: so for here all through your phone. That's exactly right.

339
00:18:28,640 --> 00:18:31,560
Speaker 1: People want to organize themselves well in advance of getting

340
00:18:31,560 --> 00:18:33,159
Speaker 1: on our ships. So they want to be able to

341
00:18:33,200 --> 00:18:34,720
Speaker 1: book their spa appointments, they want to be able to

342
00:18:34,760 --> 00:18:37,400
Speaker 1: book their short excursions well in advance of them ever

343
00:18:37,440 --> 00:18:39,520
Speaker 1: getting onto the ship. And of course when they do that,

344
00:18:39,560 --> 00:18:41,480
Speaker 1: they actually tend to spend more money, which is also

345
00:18:41,560 --> 00:18:44,840
Speaker 1: a a good thing. So we have to take friction

346
00:18:44,880 --> 00:18:46,960
Speaker 1: and we have been taking friction out of that experience.

347
00:18:47,080 --> 00:18:50,280
Speaker 1: Is there some application where there's the app and there's

348
00:18:50,359 --> 00:18:51,920
Speaker 1: kind of a metaverse where I can kind of walk

349
00:18:51,960 --> 00:18:53,879
Speaker 1: through the ship before I even get on and decide

350
00:18:53,920 --> 00:18:55,520
Speaker 1: what I want to do or where I want to go. Yeah,

351
00:18:55,600 --> 00:18:57,280
Speaker 1: I think it's even I think it's even greater than that.

352
00:18:57,320 --> 00:18:59,080
Speaker 1: I actually think in the metaverse, where we're gonna be

353
00:18:59,119 --> 00:19:01,640
Speaker 1: able to do is to help people begin to dream

354
00:19:01,760 --> 00:19:03,520
Speaker 1: what their vacation is going to be and to be

355
00:19:03,560 --> 00:19:06,919
Speaker 1: able to put on either oculus is or using their phones,

356
00:19:07,440 --> 00:19:10,200
Speaker 1: um to really understand what they're going to expect location

357
00:19:10,280 --> 00:19:14,720
Speaker 1: by location. We are working on this already and it's

358
00:19:14,800 --> 00:19:16,639
Speaker 1: and I think it's going to change. Um, it's going

359
00:19:16,680 --> 00:19:19,719
Speaker 1: to change how people book cruises. And then that that

360
00:19:19,760 --> 00:19:21,920
Speaker 1: content helps us understand how we need to modify and

361
00:19:22,000 --> 00:19:26,520
Speaker 1: change our product not a beautiful thing, that's awesome. Royal

362
00:19:26,560 --> 00:19:30,400
Speaker 1: Caribbean already understands the need to make its operations greener.

363
00:19:30,760 --> 00:19:32,879
Speaker 1: The company just opened a state of the art zero

364
00:19:33,000 --> 00:19:36,240
Speaker 1: energy cruise terminal in Galveston, Texas at a cost of

365
00:19:36,280 --> 00:19:40,720
Speaker 1: one million dollars. Even the behemoth Icon of the seas

366
00:19:40,960 --> 00:19:44,560
Speaker 1: is being built with sustainability in mind, that ship will

367
00:19:44,600 --> 00:19:47,320
Speaker 1: have l en g um as as the base fuel

368
00:19:47,359 --> 00:19:50,040
Speaker 1: for that ship. Now LG is not perfect um to

369
00:19:50,160 --> 00:19:54,720
Speaker 1: transitional fuel UM, it will produce less carbon. We're putting

370
00:19:54,760 --> 00:19:57,840
Speaker 1: a mega watch fuel cell onto the ship and we're

371
00:19:57,840 --> 00:20:01,359
Speaker 1: looking at trifuel engines, so that will be prepared for

372
00:20:01,400 --> 00:20:04,000
Speaker 1: things when whether it's methanol or hydrogen or other comes

373
00:20:04,000 --> 00:20:09,480
Speaker 1: into place. Sustainability is UH is table stakes going forward.

374
00:20:09,680 --> 00:20:12,720
Speaker 1: Six and ten. Consumers in the US are concerned about

375
00:20:12,720 --> 00:20:16,520
Speaker 1: the travel industry's impact on climate change. And when we

376
00:20:16,600 --> 00:20:21,200
Speaker 1: ask consumers who is responsible for fixing it, a plurality

377
00:20:21,240 --> 00:20:23,840
Speaker 1: say it's the responsibility of companies in the industry. The

378
00:20:23,920 --> 00:20:26,840
Speaker 1: cruise line has to go green. There is no a

379
00:20:26,880 --> 00:20:30,359
Speaker 1: lot of options because millennials are the biggest group of

380
00:20:30,400 --> 00:20:34,000
Speaker 1: consumers today already and in the future even more, and

381
00:20:34,040 --> 00:20:38,120
Speaker 1: they are choosing those cruise lines that are sustainable and

382
00:20:38,119 --> 00:20:41,080
Speaker 1: and there's no room for creen washing in the area.

383
00:20:41,119 --> 00:20:43,840
Speaker 1: It's one of our goals right to reduce our carbon

384
00:20:43,920 --> 00:20:50,679
Speaker 1: intensity by double digits and innovation around the environment is

385
00:20:50,680 --> 00:20:53,480
Speaker 1: something that the company has done for many, many years.

386
00:20:53,520 --> 00:20:56,800
Speaker 1: I'll give you a quick example. Um in Um the

387
00:20:56,920 --> 00:21:00,200
Speaker 1: last couple of years we've we wanted to reduce used

388
00:21:00,200 --> 00:21:02,800
Speaker 1: the waste of food on the ship. It's good for business,

389
00:21:02,800 --> 00:21:05,639
Speaker 1: it's also good for the environment. We've used technology for that.

390
00:21:05,760 --> 00:21:08,399
Speaker 1: Really understand how much is it that we have the

391
00:21:08,480 --> 00:21:11,440
Speaker 1: waste of the food and we've implemented technology to help

392
00:21:11,520 --> 00:21:15,720
Speaker 1: us UM reduce that that waste. We are working really

393
00:21:15,800 --> 00:21:19,560
Speaker 1: closely with ports around the world because when the ship

394
00:21:19,600 --> 00:21:22,760
Speaker 1: is on port, we can maybe plug into their green

395
00:21:22,800 --> 00:21:25,960
Speaker 1: grid and or have or powered the ship with the

396
00:21:25,960 --> 00:21:27,919
Speaker 1: fuel cell and then part of it is really the

397
00:21:27,920 --> 00:21:31,160
Speaker 1: fuel of the future, which UM. You know, we continue

398
00:21:31,200 --> 00:21:35,440
Speaker 1: to have a lot of partnerships in R and d UM,

399
00:21:35,480 --> 00:21:37,959
Speaker 1: you know as as we as we continue that journey,

400
00:21:38,000 --> 00:21:41,359
Speaker 1: so we're we're focused on it. There is so much

401
00:21:41,440 --> 00:21:44,320
Speaker 1: to focus on. As a CFO engaged in the company's

402
00:21:44,359 --> 00:21:47,560
Speaker 1: restart following a complete shutdown, I asked n if Tally

403
00:21:47,640 --> 00:21:50,439
Speaker 1: holds what he sees when he looks ahead. What's the

404
00:21:50,440 --> 00:21:53,040
Speaker 1: opportunity for Royal Caribbean and the next ten years that

405
00:21:53,160 --> 00:21:56,440
Speaker 1: most excites you. Continue to grow our market share in

406
00:21:56,480 --> 00:22:00,120
Speaker 1: the leisure in the leisure space just even beyond cruising.

407
00:22:00,200 --> 00:22:01,960
Speaker 1: So what's the challenge for the company in the next

408
00:22:01,960 --> 00:22:03,760
Speaker 1: ten years. That keeps you up at night, Well, I

409
00:22:03,840 --> 00:22:06,800
Speaker 1: sleep quite okay at night. But I think we just

410
00:22:07,160 --> 00:22:09,560
Speaker 1: continue to you know, I think what we want to

411
00:22:09,600 --> 00:22:12,320
Speaker 1: really focus on, to me is to continue to innovate,

412
00:22:12,560 --> 00:22:16,919
Speaker 1: continue to be retaining the best talent and the culture

413
00:22:16,960 --> 00:22:19,359
Speaker 1: of innovation and DNA and kind of making sure that

414
00:22:19,400 --> 00:22:23,479
Speaker 1: we continue to evolve and and and with with the

415
00:22:23,520 --> 00:22:26,000
Speaker 1: with the with the world and the consumer. What's the

416
00:22:26,040 --> 00:22:28,359
Speaker 1: best advice for the future that you would give to

417
00:22:28,560 --> 00:22:34,280
Speaker 1: someone who was promoted to CFO today, Listen a lot um,

418
00:22:34,320 --> 00:22:38,800
Speaker 1: really get into the business and what is it that's

419
00:22:38,920 --> 00:22:44,199
Speaker 1: really driving it to be really impactful and influential. With

420
00:22:44,440 --> 00:22:48,040
Speaker 1: two thoughtful and experienced financial leaders at the helm, Royal

421
00:22:48,119 --> 00:22:51,520
Speaker 1: Caribbean is setting a course for its next chapter. Jason

422
00:22:51,560 --> 00:22:55,600
Speaker 1: Liberty enough Tally Holtz feel prepared for whatever the future brings.

423
00:22:56,119 --> 00:23:03,119
Speaker 1: I'm Carol Masser. This is Bloomberg. Do