Royal Caribbean is sailing off the boost from the relaxation of Covid protocols. Its executives says business has returned to normal. But that’s not exactly right, since it won’t ever be back to normal without one important market: China.
Royal Caribbean Group received a strong boost in its booking volume thanks to relaxed Covid protocols, the cruise company’s executives said on an earnings call Thursday.
Booking volumes in the third quarter was higher than in the same quarter last year. Booking volumes for 2023 in the third quarter have doubled compared to the second quarter. Executives did not specify an exact number.
A big contributor to the growth in bookings was the recent relaxation of Covid protocols on its ships and in other countries. “I think our calculation in the American market, the addressable market expanded by 35 million almost overnight and we saw that coming through our bookings,” Royal Caribbean International President and CEO Michael Bayley said.
Thanks to the relaxation of Covid protocols, Royal Caribbean executives said booking behavior has returned to 2019. “Psychologically and experience wise, it’s almost like we just stepped into the next quarter from 2019 and it’s business as usual,” Royal Caribbean Group President and CEO Jason Liberty said.
Passengers are splurging before they set foot on cruise ships. About 60 percent of all customers purchased onboard experiences their ships set sail, which has contributed to average passenger spending exceeding 2019 levels, according to Liberty.
Royal Caribbean sailed in the third quarter with a 96 percent occupancy level. Caribbean market ships even sailed with nearly 105 percent occupancy. The cruise company expects the occupancy level to be roughly the same in the third quarter and potentially reach 100 percent by the end of the year.
Total revenue for the third quarter amounted to $3 billion, compared to $460 million for the same period last year. Net income was $33 million, compared to a net loss of $1.4 billion in the same period last year.
Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) was $742.3 million, compared to a net loss of $704 million in the third quarter last year.
The executives also touted the results of the rollout of their Icon of the Seas class ship, which is reportedly the world’s largest cruise ship. “On the first day of booking, the past booking record for the brand and company overall,” Liberty said. “It wasn’t even close.” Icon will launch by the end of 2023 and it will be a “game changer,” according to Liberty.
In the fourth quarter, Royal Caribbean will also launch a flagship terminal in Galveston, Texas to better serve the Southeastern U.S. market. The terminal will be powered by solar panels and be the first “zero energy” terminal in the world, Liberty said.
Looking ahead to 2023, Royal Caribbean executives are optimistic about most markets except China, which they don’t expect business in for that year. They, however, expect to have business in China before 2025.