Expecting to post full year record adjusted earnings per share of $8.70 to $8.90, a 17 percent increase over last year, Royal Caribbean Cruises’ Chairman and CEO Richard Fain said on the company’s second quarter earnings call today that he is even more optimistic about 2019.
Fain said that revenues were continuing to grow while costs were under control. “Business is good and will continue to be good,” he added, “despite the head winds of foreign exchange and higher fuel prices.”
The company’s brands are already booked ahead for 2019 at both higher volume and pricing than was the case for 2018 at the same time last year, according to Jason Liberty, senior vice president and CFO.
Liberty also commented that Royal Caribbean continues to have a strong booked position in Asia Pacific, and that China is exceeding expectations, being “nicely” booked for the balance of 2018 and going into 2019.
“We have very strong assets in the market (China) and will be even stronger with the Spectrum of the Seas next year,” Liberty added. “We have been able to diversify our distribution and to sell additional products like shore excursions. We have also been focused on evolving the ports and the destinations in the area; we have gotten the Chinese to take longer cruises to marquee ports like Tokyo; and we have developed fly cruises.”
The Caribbean is also strong, according to Liberty, and booked in line with expectations. Fain added that last year’s hurricane season was the worst ever and not expecting that to reoccur. It did have an impact on consumer sentiment and last fall bookings dropped during the storm and in the aftermath. Although it did recover quickly, it has had a lingering effect with consumers being concerned about another storm season and the status of the destinations. Fain said the recovery has taking longer, but that the impact has now largely dissipated.
Commenting briefly on Royal Caribbean’s acquisition of a majority interest in Silversea, Fain said work has started on integrating the brand into the company. Silversea’s results will be reported with a three-month lag.
Among new products, Fain pointed out Excalibur, a digital platform being rolled out, which will be on all the ships by the end of next year, and the so-called Frictionless Arrival program.
He also commented on the fleet’s compliance with IMO’s 0.5 sulfur cap coming into effect in 2020, saying that 30 percent of the ships already run on low sulfur fuel and that other ships will be using scrubbers (excluding the LNG-fueled newbuilds).
Furthermore, the company has invested in a new waterpark in CoCoCay in addition to a new cruise terminal in Miami.
