A wave season running longer than usual, guests booking cruises much closer to sailing dates than usual, bookings at much higher pricing than in 2019, and an occupancy rate of over 100%. All factors that have ensured that Royal Caribbean Group beat its earnings guidance.
It does not mean Royal Caribbean Group is out of the red yet. The company posted a $47.9 million loss in its first-quarter earnings report, but expects to be profitable once again by the second quarter.
Royal Caribbean Bookings Looking Strong
Royal Caribbean Group’s Wave season has been very successful in the last four months. The period between January and March is traditionally when cruise lines’ pricing is at its best for consumers, making for much higher booking volumes than usual.
However, it’s not just Wave season that has made a difference for the world’s second-largest cruise company. The positive first-quarter earnings report the company released today, May 4, shows that demand for cruises has been strong across the board.
It has lead to significantly higher occupancy levels compared to 2022 and more onboard spending.
An ever-growing market appears to have been tapped into by the Royal Caribbean cruise line, as thousands more holidaymakers than usual have made bookings for one of the 64 ships in its fleet.
With the addition of Icon of the Seas, Wonder of the Seas, and Celebrity Beyond, in the last year, Royal Caribbean Group’s bookings have gone, quite literally, through the roof.
“We knew that demand for our business was strong and strengthening, but we have been pleasantly surprised with how swiftly demand further accelerated well above historical trends and at higher rates,” said Jason T. Liberty, president and chief executive officer of Royal Caribbean Group.
With the company operating above historical levels achieved in 2019, Royal Caribbean Group CEO Jason Liberty even increased the company’s full-year guidance. Liberty said he expects the Royal Caribbean Group to show a strong performance throughout 2023.
“Leisure travel continues to strengthen as consumer spend further shifts towards experiences. Demand for our brands is outpacing broader travel due to a strong rebound and an attractive value proposition. We are increasing full-year guidance, given the significant momentum in our business, and we are well on our way to achieve our Trifecta goals.”
Royal Caribbean is also seeing a lot of bookings at higher prices than usual, especially from North America, where demand is strong. During the first three months of the year, which is typically a very busy time onboard, ships were sailing at over 102% capacity. A good sign for a successful 2023.
First Quarter 2023 Financials
Royal Caribbean Group generated total revenue of $2.9 billion across its three brands, Royal Caribbean International, Celebrity Cruises, and Silversea. While significant, it was not enough to run a profit. The company posted a net loss of $47.9 million, or $0.19 per share.
However, it is likely the last time this year that there will be a loss. Earnings per share for the second quarter are expected to be in the range of $1.50 to $1.60 per share. For the full year, earnings are expected to range from $4.40 to $4.80 per share.
“First quarter results reflect continued strong demand for cruising and our teams’ focus on delivering the best vacation experiences that exceed guest expectations,” said Naftali Holtz, chief financial officer of Royal Caribbean Group.
“We also benefited from favorable timing of operating expenses, as well as our continued focus on improving margins consistent with our Trifecta goals.”
Royal Caribbean Group expects that its ships will be operating at the same occupancy levels as they did before the global pause in operations by Spring.
This would mean that the three cruise lines will then have fully recovered from the difficult last two years and bring the Royal Caribbean group back to being the highly profitable company it has always been.
This is despite much higher fuel pricing, the volatile global financial situation, and the problems surrounding Russia and Ukraine.