Good Signs in China for Royal Caribbean

A bullish outlook on the domestic Chinese market and outbound sourcing potential were among the positive topics on Royal Caribbean Cruises’ year-end and fourth quarter earnings call on Wednesday.

“China continues to be an important market for us, and we saw significant yield growth for the product throughout 2018,” said Jason Liberty, CFO. “2019 China sailings are booked ahead of same time last year. Over half a million Chinese guests sail with us each year, mostly on sailings from China.

“However, we are seeing a significant growth in outbound travel with 75% more Chinese guests on a non-China itinerary in 2019 when compared to just 3 years ago. Cruises in Europe and Alaska have seen the number of Chinese guests more than double.”

Of note, the former China-based Ovation of the Seas will debut in Alaska this summer.

In the domestic Chinese market, the new Spectrum of the Seas will join the Quantum of the Seas this summer.

Ticket pricing should be strong with two modern ships in China, plus a significant decline in supply, according to the 2019 Cruise Industry News Annual Report.

The company has also added longer cruises to its China portfolio as the Chinese cruise market continues to mature.

Added Michael Bayley, president and CEO of Royal Caribbean International: “We’ve been in the market for 10 years, and we continue development. And as Jason (Liberty) mentioned, ’18 performance was significantly improved from ’17 and ’19 is in a really good book position, and we are feeling quite good about the dynamics there at the moment.

“It is the world’s largest outbound travel market, and things are changing with regard to visa restrictions and group travel and what have you,” Bayley continued. “We are starting to see an improvement in terms of the number of Chinese guests who are going through our products in Alaska and the Mediterranean and Europe, and we think that’s an opportunity, particularly as the brand becomes more and more well known in the China market and as we establish wider, broader, deeper distribution, then it becomes a really good opportunity for us in terms of that outbound growth.”

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