I think that will continue to support revenue per staff per day into 2024.
Sharon Zackfia: And then, I guess, a follow-up question on debt. I mean it seems like just given the trends in the business that you’re going to delevered pretty quickly in 2024 and probably could be debt free at some point in 2025. I just want to level set that, Stephen, if that’s kind of a realistic outlook because I assume that keeping debt on the balance sheet is not kind of very advantageous for you given your kind of tax-free status.
Stephen Lazarus: Correct. Broadly speaking, that is absolutely the case. We do have a portion of the debt that we allocate to the U.S., which helps where we do, therefore, get the interest leverage benefit from that. But outside of that, it really doesn’t make sense, particularly as close to 10% interest rate. So debt paydown will continue to be a focus of our excess cash flow. I do think though at a point in time, it doesn’t have to be mutually exclusive like the company, we’ll get to a point where we will consider avenues for returning capital to shareholders as we deem appropriate.
Operator: Your next question comes from Maks Rakhlenko with Cowen & Company.
Maksim Rakhlenko: Great, and nice job in the quarter. So you called out a number of key initiatives and priorities. Can you rank them in order of magnitude? And any key unlocks we should be looking for?
Leonard Fluxman: Maks, we’re always looking, obviously, for market share pickups, right? There’s not that many out there we still continue to focus on that. We did pick up one more. At the end of the day, it could be perhaps focusing on other segments of cruising, whether it be river cruising, maybe there’s more to pick up there, albeit that the ships are smaller, further even smaller than what we have on some of the small luxury ships. So we focus on where the opportunity is. We think there could be some forthcoming. But it’s too early to say what we’re working on and what we’ll develop, right? So I would say market share and new ship introductions continue to be a high priority. But at the same time, we want to focus on productivity at the same time as launching and expanding our menus on board, particularly in the wellness and medi-spa area.
And that’s going to be a focus over the next two years. And I would say that, that’s a key focus of ours is how we can augment that, how we can increase our footprint, how we can increase more staff by convincing the cruise lines that there’s definitely an opportunity there given the high ticket prices. And ultimately, to the extent that we can move those two modalities to a higher level of participation in our total gross revenue, that’s obviously going to help expand revenue opportunities on board, the 135 ships that we have medi-spa on.
Maksim Rakhlenko: And then can you speak to the level of conservatism embedded in the 4Q guidance as data from the cruisers seem to suggest that you are being quite modest in your outlook?
Leonard Fluxman: Look, I don’t want to get too far ahead of our skis. We’ve raised guidance, I think, in my mind, accurately to the extent that we have an opportunity in this, sort of, softer quarter to outperform, so be it. There’s still a lot of balls in the air that who knows what happens. But I just feel that — gosh, we’ve raised guidance each quarter since we’ve popped out of the first quarter. I think, if you’ve known us long enough, we definitely err a little bit on conservatism in case something does sort of wobble around, but we’re pretty confident about where this fourth quarter is going to end up.
Maksim Rakhlenko: Got it. And just very quickly, any early thoughts on 2024 given such strong bookings called out by your cruise partners. And just any learnings from this year that will help you outperform next year?
Leonard Fluxman: Maks, it’s early to start talking about 2024. We typically do that sort of the weaker by CR, we’ll give a high-level guidance and feel. We’re still receiving inputs from the cruise lines with respect to change in itineraries, et cetera, there could be some changes until we’ve totally circled the wagons here and everything. I think it’s too early to comment at this juncture. But we’ll have that guidance out typically as we do the first or second week of January.
Operator: Our next question comes from Laura Champine with Loop Capital.
Laura Champine: I just wanted a little more detail on, there’s a sense in the press release about deploying enhanced technologies to drive productivity. Could you be more specific on what types of things you’re referring to there.
Leonard Fluxman: I think it’s looking at scheduling. It’s the most important thing that we do is we look at scheduling the day we sale. Obviously, the first day and vacation day is very important. We look at that demand. We look at the prebooked demand. We look at where the gaps are, and we focus on that. We have a lot more in our marketing toolkit that we use for promotions, et cetera, bundling, getting more and more people to have more frequent services as opposed to just one and all of that’s paying off.
Laura Champine: Got it. And then a follow-up to a prior question. I mean you’ve got — we’re looking at good-looking bookings from the public companies, how different do the private cruise line booking trends tend to be relative to public company booking trends.
Stephen Lazarus: Look, overall, load factors this year have moved very positively across both the public and nonpublic companies. They tend to move in lockstep. I would imagine it’s the same. I mean, sometimes you’ve seen some of the higher end, perhaps not move at the same level. But generally speaking, I would say the confidence that the cruise lines see around near-end bookings and into 2024 should be similar across the entire industry.
Operator: Our next question comes from Assia Georgieva with Infinity Research.
Assia Georgieva: Excellent quarter. Great job. I had a couple of quick questions. First of all, one of your major cruise partners is kind of going into more longer, more exotic itineraries, is that structural change going to affect you in 2024? Or do you think given possibly a higher level revenue-generating client that it shouldn’t have an impact.
Leonard Fluxman: In the scheme of the 180 to 193 ships that will be on in this year, last year, I mean. We’ve had cruises move into those longer itineraries. We’ve had many more world cruises than we’ve seen in the last year. We still know that the sweet spot is obviously the 7-day market. So can it impact some of the cruises, yes, a little bit compare to — It will be built into our guidance next year, if it’s so — I just don’t see it being a material impact at all. I think it’s more companies moving back into more normalized itineraries as opposed to perhaps what they’ve had as they come out the pandemic. So I don’t see this being a big change from what we saw in 2019 when we had those cruises.
Assia Georgieva: That’s good news. And kind of a related question, I think we will have more dry docks in 2024 than we would have typically relative to 2019, that will probably be sort of a short-term event, I would imagine.
Leonard Fluxman: Yes, I agree. Yes, exactly.
