Royal Caribbean Cruises Chairman and CEO Richard Fain outlined the new company’s new 20 by 25 program on today’s 2019 year-end and Q4 earnings call, targeting $20 earnings per share by 2025. 2019 was the company’s 11th consecutive year of yield growth, which was attributed partially to new hardware, onboard revenue and cost control.
Fain said the company will get there by focusing on what he called the three Ps, that is, people, profit and (the) planet. The goal is also to reduce its carbon footprint by another 25 percent on top of what it has already achieved and exceed the 2030 target set by the IMO.
According to CFO and Senior Vice President Jason Liberty, the model is based on moderate yield growth, cost control and continuing to invest in the business.
While posting record revenues and income for 2019, Royal Caribbean had to overcome the impact of the sudden ban on cruises to Cuba, the incident in Grand Bahama that affected the Oasis of the Seas and has put some drydock capacity out of business for 2020, Hurricane Dorian, tension in the Middle East and brush fires in Australia.
Starting 2020, while forecasting another record year, the Royal Caribbean brand has so far cancelled eight cruises of the Spectrum of the Seas sailing out of China because of the coronavirus situation and is awaiting the how the situation plays out.
However, there are plans for alternate deployment, said Michael Bayley, president of Royal Caribbean, who would not say for competitive reasons what those plans may be. The financial impact is so far estimated at $0.25 per share for Q1.
China represents 6 percent of the company’s capacity in 2020, according to Fain, Australia 7 percent, and the Asia-Pacific region as a whole 17 percent.
Royal Caribbean is looking forward to introducing four new ships this year: the Celebrity Apex, the Silver Moon and the Silver Origin and the Odyssey of the Seas.
With 60 percent of its cruise capacity in North America, Fain said the market continues to be as strong as ever, and the Caribbean is shaping up have its best season ever with half of the brands’ overall deployment. Alaska, with 5 percent of the cruise capacity, is also said to be shaping up nicely. However, sourcing in Europe has been reduced to allow for more global sourcing of passengers.
Last year saw the introduction of the Spectrum of the Seas (in China), the Celebrity Flora and Mein Schiff 5, as well as the introduction of Perfect Day at CocoCay, the modernization of six ships, the launching of a new cruise terminal in Miami, and the consolidation of Silversea within the Royal Caribbean organization.
Referring the 20 by 25 program, Fain said that setting long-term goals motivates employees and will increase their engagement, driving the company towards those goals.
“In 2019, we achieved record net promoter scores and record employee engagement,” he added.
