Royal Caribbean Releases Update: Despite $1.2 Billion Loss, Onboard Revenue Rises

With occupancy levels increasing almost daily and virtually all ships in the fleet operational right now, Royal Caribbean can look forward to a successful 2022, and that’s despite losing $1.2 billion.

The second-biggest cruise company in the world released the results from the first quarter for the 2022 fiscal year today, and they show the most robust numbers in more than two years. 

CEO Jason Liberty reflects on the pent-up demand that brings more and more cruise passengers to the ships, with bookings looking exceedingly strong.

Royal Caribbean has left the pandemic squarely behind with the release of the newest largest cruise ship in the world, Wonder of the Seas, and positive signals coming out on the build of the first LNG-powered cruise ships.

While Slow, Royal’s Approach Works

It might not be the approach that investors would have taken if they had the chance, but the slow and steady process that Royal Caribbean has taken over the two years is paying off. The company lost an estimated 11.1 billion dollars during the pandemic, significantly impacting the business.

Revenues are on the up. Onboard revenue has seen an enormous improvement, and bookings are stronger than in the record year of 2019. In 2021, 85% of the vessels returned to service, which further increased during the first quarter of 2022.

Currently, 54 out of 62 ships are back to operations across its five brands, representing close to 90% of worldwide fleet capacity.

Jason Liberty, president and chief executive officer of the Royal Caribbean Group: “It is gratifying to see our ships and crew returning to our mission of delivering the best vacation experiences in a safe and responsible way,” 

“Despite the impact of Omicron earlier in the year and the horrific conflict in Ukraine, we are encouraged by the strong demand for cruising and the steady acceleration in booking volumes. Since the beginning of March, booking volumes have exceeded the record levels achieved in 2019, and we are optimistic that 2022 will be a strong transitional year as we return to full operations and profitability in the second half of the year.”

The result is that Royal Caribbean expects to be returning to pre-pandemic sooner than expected. 

Is It All Good News For Royal Caribbean?

With an operating loss of $1.2 billion and a loss per share of $4.58, not all investors will be looking at these numbers and be overjoyed with the outcome.

Royal Caribbean still did not break even on operating cash flow, although it came close for the first time in more than two years in March, and managed a positive cash flow for the first time in April.

During the first quarter, Royal Caribbean Group, which consists of Royal Caribbean International, Celebrity Cruises, and Silverseas, carried approximately 800,000 guests and achieved record guest satisfaction scores and record total revenue per Passenger Cruise Day.

Read Also: All Royal Caribbean Cruise Ships Back Sailing by End of May

Also, while bookings seem to be slowing down somewhat, the bookings that are coming in are at higher prices and do, for the most part, not contain any future cruise credits (FCCs). And that’s not all.

By the end of the year, Royal Caribbean expects load factors to reach 100%, if that does happen, it would be the first time in two and a half years that Royal Caribbean cruise ships have sailed at full capacity. 

First Quarter 2022 by the numbers

Royal Caribbean reported a net loss of 1.2 billion dollars or 4.58 dollars per share for the first quarter. While this is higher than last year, this comes from the cost of bringing ships back to service, bringing the crew back to the ships, provisioning, and the results of the situation in Eastern Europe. 

For the first quarter, load factors were at 57%, with March topping out at 68%. Total revenue per Passenger Cruise Day in the first quarter was up. Cash flow from ships in operation was positive for the first time in the first quarter. 

“The performance of our core business continues to strengthen, fueled by strong demand and excellent operational execution,” said Naftali Holtz, chief financial officer at Royal Caribbean Group. “Our near-term focus is to return to full operations and profitability as we execute on our recovery and build for long term success.”

The fleet size expanded to 63 with the delivery of Wonder of the Seas and Celebrity Beyond. These ships, along with six other new ships that have joined the fleet lately, significantly contribute to yield growth and profitability. The Group expects its entire fleet of 63 ships to be operational in the next few months.