Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: Now to another stock moving big time today.
Speaker 1: Yep, we are talking about Royal Caribbean Cruises shares a
Speaker 1: writing quite a wave higher, up about thirteen percent, more
Speaker 1: than thirteen percent at their high, almost fourteen percent, in fact,
Speaker 1: hitting a record intraday, up the most in more than
Speaker 1: two years. It is the top gainer in the S
Speaker 1: and P five hundred, and it's lifted the entire group
Speaker 1: because Norwegian and Carnival also top gainers in the S
Speaker 1: and P five hundred. This is coming after Royal Caribbean
Speaker 1: reported a full year profit forecast that blue past expectations
Speaker 1: as cruise demand continues to ramp up. They're also talking
Speaker 1: about getting into another area of the cruising world. For
Speaker 1: more on the outlook and what's driving metrics, we welcome
Speaker 1: the President CEO of Royal Caribbean Group. He is Jason Liberty.
Speaker 1: He joins us from Miami, Florida. Jason, it's great to
Speaker 1: have you here with us. How are you.
Speaker 3: I'm doing great, Carol, and thank you and Tim for
Speaker 3: having me today. Obviously it's a it's a great day
Speaker 3: on the share price, but it's a great representation of
Speaker 3: another incredible year here at the Royal Caribbean Group and
Speaker 3: a really strong outlook for twenty twenty five.
Speaker 1: Tell us what surprises you about the consistency in demand
Speaker 1: and the optimism that you are seeing, certainly in the
Speaker 1: cruising world and what comes to demand. What's surprising you
Speaker 1: in how the strength the strength that you are seeing.
Speaker 3: Yeah, well, I think I think there's a few things
Speaker 3: that I would point to. I mean, certainly, we have
Speaker 3: a lot of great demographics on our side in terms
Speaker 3: of more millennials coming into the space, multi generational travel,
Speaker 3: a lot of active wealth transfer, and we see that
Speaker 3: more and more, which has been a surprise to me.
Speaker 3: Just how much multigenerational travel where you have the patriarch
Speaker 3: and matriarch of the family paying for generations. I think
Speaker 3: that's been a little bit of a surprise. And there's
Speaker 3: also been just a continued flight to quality. We've invested
Speaker 3: so much in our ships and our brands and our
Speaker 3: destinations for so many decades. We're really now seeing these
Speaker 3: flowers bloom as we see consumers who are very healthy,
Speaker 3: you know, they have great balance sheets, they have great jobs,
Speaker 3: and they're high paying jobs. Having this flight to quality
Speaker 3: for our brands and for our destinations.
Speaker 2: When you talk about that flight to quality, break that
Speaker 2: down for us, where there's strength in the business and
Speaker 2: where you're seeing particular strength and if there are any
Speaker 2: areas where you're not seeing strength.
Speaker 3: Yeah, well we're really we are actually seeing strength in
Speaker 3: all markets that we source from. We're also seeing strength
Speaker 3: for all the different places that our ships go, whether
Speaker 3: that's in the Caribbean, Alaska, the Northeast, Europe, Australia, Southeast Asia, China.
Speaker 3: We're seeing strong demand kind of across the board, which
Speaker 3: is I think really great. We're also you know, seeing
Speaker 3: again elevated spend on our ships, and that's really across
Speaker 3: the board. A lot of it is in the gaming,
Speaker 3: the beverage area, on the culinary side, spa short excursions,
Speaker 3: so people are really looking to make sure that they
Speaker 3: grab the experiences that they want to have and there
Speaker 3: and there, and they're and they're willing to not only
Speaker 3: pay a little bit more money for that, but they're
Speaker 3: also willing to have more repetition of that, and that's
Speaker 3: how they're expanding the memories that they're building with their
Speaker 3: friends and family.
Speaker 1: How much is that wrapping up, Jason, that is something
Speaker 1: that I've seen throughout the cruise industry that it's not
Speaker 1: just about buying the ticket to get you on the ship,
Speaker 1: but it's about what you do once you're on the
Speaker 1: ship and possibly go off to other destinations. Those bookings, right,
Speaker 1: that add to the experience, but they also add to
Speaker 1: your revenue line, right, and your profit line.
Speaker 3: Yeah, that's exactly right. One. I think that we we've
Speaker 3: gotten a lot better, whether it's you through AI or
Speaker 3: other other disruptive tech to really take friction out of
Speaker 3: the experience of shopping with us, whether that's on the
Speaker 3: ticket side, whether that's also on the on board side.
Speaker 3: And what we're doing is we're able to enhance the
Speaker 3: experience so they can do all the different things that
Speaker 3: they want to do. And then in reality, while it's
Speaker 3: still very frustrating to me, while there we're increasing share
Speaker 3: of wallet, we're still a very significant discount to land
Speaker 3: based vacation. And so for us, like we we focus
Speaker 3: a little bit less on what's happening with our cruise competitors.
Speaker 3: We're trying to take a larger share of the two
Speaker 3: trillion dollar marketplace and travel leisure, and for us, having
Speaker 3: the experiences that our guests want to do, and also
Speaker 3: being able to make it easier for them to shop
Speaker 3: with us is winning for us.
Speaker 2: The pace of bookings this year relative to last year.
Speaker 2: What does that tell you about demand where we're you know,
Speaker 2: when we're a little over a month past what is
Speaker 2: referred to in the industry as wave season.
Speaker 3: Yeah, so you know, the past couple of years, you know,
Speaker 3: wave has been elevated, not just for us, but also
Speaker 3: for the entire industry, and we're seeing we're continue to
Speaker 3: see those waters rise here on on on the on
Speaker 3: the wave season. So we're seeing record booking weeks, we're
Speaker 3: seeing elevated pricing, and we're seeing a consumer that is
Speaker 3: not only willing to pay a little bit more money
Speaker 3: for their vacation experience, but they're also looking to book
Speaker 3: further out. So the booking window is continuing to extend,
Speaker 3: and they're also doing more and more pre cruise booking
Speaker 3: activities for the activities that happen on the ship and
Speaker 3: off the ship to make sure they get the vacation
Speaker 3: experience that them and their family and friends want to have.
Speaker 1: Are you surprised by it? You've been doing this a while, Like,
Speaker 1: are you surprised by the pace of demand.
Speaker 3: Well, I have been doing this. I mean I've been
Speaker 3: in the sea for a little over three years, and
Speaker 3: of course I was the CFO before that, so I've
Speaker 3: been in the industry a while. Certainly you're seeing an
Speaker 3: elevated demand for experiences. So clearly, coming out of COVID,
Speaker 3: you've seen a few different changes in behavior, one of
Speaker 3: which is very comfortable booking and interacting through technology, so
Speaker 3: we're able to take friction out of that experience. But
Speaker 3: you're also seeing just a trade by a lot less stuff.
Speaker 3: We want to buy experiences. We really appreciate the time
Speaker 3: with our friends and family, and we want to make
Speaker 3: sure that that time that we have is one that
Speaker 3: is not only exceptional, but it's also with somebody who
Speaker 3: we trust will deliver that for us. And I think
Speaker 3: we have that trust. We value that trust with our
Speaker 3: customers each and every day.
Speaker 1: All Right, we want to talk a bit more about
Speaker 1: the business. But you know, Jason, we've been asking everybody
Speaker 1: who comes on a CEO or anybody who runs an institution,
Speaker 1: a company, an organization, Uh, the dynamics and the backdrop
Speaker 1: anything that could be impacted by policies out of the
Speaker 1: Trump administration, anything coming out of government, and I think
Speaker 1: about you know, we've talked about various policies that could
Speaker 1: lead to inflation, tariffs, you know, on possible goods that
Speaker 1: could increase costs, immigration, the impact on the labor force.
Speaker 1: So I'm just curious. You guys are floating cities, your
Speaker 1: massive ships, so you you know, the dynamics of kind
Speaker 1: of the economy of the US economy certainly impact you.
Speaker 1: So I'm just curious anything in particular that could come
Speaker 1: out of DC that you're watching very closely.
Speaker 3: Well, look, I think we're we as we always have.
Speaker 3: We're going to work very closely with the administration. But
Speaker 3: I think I think what we're looking for is a
Speaker 3: healthy and happy consumer. And I think as long as
Speaker 3: the consumer has confidence and their spending and and and
Speaker 3: of course they seek great vacation experiences, which we think
Speaker 3: they're going to do, I think we feel very bullish
Speaker 3: about the future spending behavior of our customers. The other
Speaker 3: point that I would just add, which I think also
Speaker 3: brings us great comfort on whether if costs do rise
Speaker 3: in some form or fashion or there is inflation, is
Speaker 3: that point I made earlier that there is a significant
Speaker 3: gap to land based vacation. There's a lot of value
Speaker 3: for the consumer and in our different vacation products, and
Speaker 3: that's a good hedge for us if there is any
Speaker 3: any any type of change in the winds.
Speaker 2: How are you guys doing it controlling costs right now?
Speaker 2: Specifically when it comes to labor, are you are you
Speaker 2: getting all the employees you need and where are you
Speaker 2: getting them from?
Speaker 3: Yeah? Well, most of our our employee base our international crew,
Speaker 3: So we're not really that impacted by rises on the
Speaker 3: wage side, you know, short side. Certainly like every other company,
Speaker 3: you know, there's there's inflationary pressures that can impact your wages.
Speaker 3: For our shore side and our corporate offices and so forth,
Speaker 3: we actually are you know, our cost guide for this
Speaker 3: year was for us to be flat to up one percent,
Speaker 3: and we've been able to do that by really managing
Speaker 3: our supply chain, leveraging the scale as our business grows,
Speaker 3: and having a team that wakes up every day and
Speaker 3: says how do we do it better? And and doing
Speaker 3: all that and making sure we're enhancing the guest experience
Speaker 3: and we're not cutting the guest experience because we feel
Speaker 3: that it's it's you know, it's important for us to
Speaker 3: live up to our marketing and our reputation each and
Speaker 3: every day.
Speaker 1: Jason, Could any of that supply chain be impacted by tariffs?
Speaker 3: I don't think so, you know, because we source a
Speaker 3: lot of the things that we source are are are
Speaker 3: really from here here in the US. We're not really
Speaker 3: expecting any any any tariff impact. But you know, we're
Speaker 3: watching it, just like we're watching other things on more
Speaker 3: and more in terms of how it would impact our
Speaker 3: customer less so how it's going to impact our cost space.
Speaker 2: What about when it does come to that international labor pool,
Speaker 2: Are there concerns about a crackdown on immigration affecting the
Speaker 2: way that employees on your ships are able to be
Speaker 2: on your ships when they're docked in the US. How
Speaker 2: do you handle that?
Speaker 3: Yeah, well, it's obviously something that we're always looking into,
Speaker 3: but I don't think that's a very high risk. We're
Speaker 3: an international maritime organization. Our crew or international maritime they're
Speaker 3: really focused on being on the ships. So you know,
Speaker 3: obviously we watch it and we try to manage it,
Speaker 3: but we don't see that as a high risk in
Speaker 3: terms of any policies that can come forward. There.
Speaker 1: Hey, listen, we want to talk about you guys getting
Speaker 1: into the river cruise market before we do. So you
Speaker 1: talked though a lot about destinations and experiences for those
Speaker 1: who get on ships. You guys have had great success
Speaker 1: with Cococae, private island destination that's in the Bahamas specifically,
Speaker 1: how could Perfect Day Mexico, which is another such destination,
Speaker 1: kind of drive some of that onboard spending that you
Speaker 1: were talking about a little bit earlier and ticket prices
Speaker 1: when it opens in twenty twenty seven.
Speaker 3: Yeah, So I would say a few things about the
Speaker 3: destination experience. So you take as you gave an example
Speaker 3: of Perfect Day of Cocoka, which by the way, is
Speaker 3: the highest rated, has the highest net promoter score of
Speaker 3: any other destination we go to in the world. Because
Speaker 3: we do an exceptional job of delivering thrill and delivering chill,
Speaker 3: but we're not able to deliver that experience to all guests,
Speaker 3: all all guests in the Caribbean, and so Perfect Day
Speaker 3: in Mexico will allow us to not only ensure that
Speaker 3: every especially on our Royal brand, has at least one
Speaker 3: Perfect Day when they're in the Caribbean, but it's also
Speaker 3: going to expand the catchment area of areas like Texas
Speaker 3: and west of the Mississippi, which will have an easier
Speaker 3: way to get to places like Galveston where they can
Speaker 3: go in and have a Perfect Day. We're also adding
Speaker 3: royal beach clubs which will also expand the experience in
Speaker 3: places like Nasa, Bahamas and also and case them melt.
Speaker 3: So what we're trying to do is gain continue to
Speaker 3: enhance the experience offering. We see ourselves as as an
Speaker 3: experience organization with really a vision of you know, what
Speaker 3: we've always been done great is delivering delivering the best
Speaker 3: vacations in the world, and we want to be able
Speaker 3: to deliver a lifetime of those vacations over somebody's life.
Speaker 1: And I just want to make sure I heard correctly.
Speaker 1: But in terms of Perfect Day Mexico specifically driving on
Speaker 1: board spending and ticket ticket prices when it opened, can
Speaker 1: you give us any kind of color on that or specificity.
Speaker 3: Absolutely, you know. I think one of the surprises when
Speaker 3: we when we open Perfect Day at Coco Ka is
Speaker 3: not only do we get high demand to go to
Speaker 3: the island and people were willing to pay for things
Speaker 3: like water parks and overwater cabanas. But we also saw
Speaker 3: ships that touch Perfect Day in Mexico got elevated pricing,
Speaker 3: and so we expect that's going to be the same
Speaker 3: thing here is when you deliver the destination and the
Speaker 3: experience mark, guests are willing to pay for that, and
Speaker 3: that's what we expect to occur in Mexico. It's also
Speaker 3: what we expect to occur with our Royal beach clubs
Speaker 3: as well as well. You know, we'll deliver an experience
Speaker 3: that far superior to what is currently being offered in
Speaker 3: those in those different destinations.
Speaker 1: I'm just gonna say I'd like some thrill and chill
Speaker 1: right now, because I'm tired of cold New York. I'm
Speaker 1: just going to put that.
Speaker 2: Out there, all right, sign up, Carol. Speaking of.
Speaker 3: Available, available, no no, I woud say it's available and
Speaker 3: I'm happy. I'm happy to help you book a cruise.
Speaker 2: Well, let's let's talk about what's going on in the
Speaker 2: river cruise market. I mean, my in laws are back
Speaker 2: from a river cruise this fall. My sister's back from
Speaker 2: river cruise, both of those with different companies in Europe. Now,
Speaker 2: you guys are getting in through the celebrity business. Why now.
Speaker 3: Yeah, well why now is you know, we've been seeing
Speaker 3: for some time, you know, a growing trend with our
Speaker 3: guests that they're looking for additional vacations, not a substitute
Speaker 3: for going on a cruise, but additional vacations. And when
Speaker 3: we look at what are those additional vacations that they're
Speaker 3: going on, one of the things that we've seen arise
Speaker 3: in is on the river side. And so as we
Speaker 3: again seek to deliver a lifetime of vacations and we
Speaker 3: want to leverage you know, all the having a single
Speaker 3: loyalty program, great reciprocity across our different brands, we're enhancing
Speaker 3: the flywheel and we're investing in that flywheel so that
Speaker 3: we can get more reps out of our guests. And
Speaker 3: so we had to listen to what our guests are
Speaker 3: looking to do, and we have to be focused on
Speaker 3: how do we keep our customer in our ecosystem. And
Speaker 3: one of the ways of doing that is is expanding
Speaker 3: the offering. And we think River is you know, it's
Speaker 3: it's similar, it's it's sotly not exactly the same as
Speaker 3: as an ocean cruise, and we think we can elevate
Speaker 3: that vacation experience significantly, not just on the ship in itself,
Speaker 3: but also on land.
Speaker 1: So where are you going to go with those cruises?
Speaker 3: Well, it's gonna start off. You know, we've ordered you know,
Speaker 3: ten ships so far and it is an initial order
Speaker 3: and those ships will be in Europe, but our expectations
Speaker 3: will continue. We'll grow it in Europe and we're also
Speaker 3: going to grow it around the world. We have a
Speaker 3: massive global footprinm We go to a thousand different destinations.
Speaker 3: We source from all over the world, and there's a
Speaker 3: great opportunity to match those guests also on the river side.
Speaker 1: All right, kenn Of lead with there. Listen, Jason, thank
Speaker 1: you so much, covered so much ground and really appreciate
Speaker 1: it joining us to talk about the business and the outlook.
Speaker 1: Jason Liberty folks there, he's President, chief executive officer of
Speaker 1: Royal Caribbean Group, joining us from Miami, Florida.