Royal Caribbean Cruises Ltd. (NYSE:RCL) Q4 2023 Earnings Call Transcript

Operator: Your next question comes from the line of Robin Farley with UBS. Please go ahead.

Robin Farley: Great, thanks. I wanted to ask, you alluded to potential changes with some of the itineraries in the Red Sea. Is it fair to say that your guidance stay, your EPS guidance for 2024, already includes what you think you may have to do in terms of rerouting anything that would be transiting there. I don’t know if you can help us quantify what — if there’s downside that’s already baked into your EPS guidance for that? And then I do have a follow up, but I’ll start with that one. Thanks.

Jason Liberty: Yes, well, thanks for the Robin. And I think just as we talk about how we guide, our guidance does not plan for perfection. And so when we consider things like the Red Sea and there are things that come up from time to time within the course of the year, we very much kind of take those kind of things into account. And so I don’t think, we think the handful of sailings that will sail through or expected to sail through the Suez is something that’s going to impact our guidance at this point in time. And I think that’s how we just generally set up our guidance to not plan for perfection.

Robin Farley: Okay, perfect. Thank you. And then I don’t know if you have any initial thoughts on potential tax changes, the global minimum tax, and how that might impact you, given your incorporation and your itineraries, and kind of anything that you may be able to do to mitigate that? Thank you.

Naftali Holtz: Hey, Robin. So, yes, the global minimum tax is obviously out there, and it’s been there for quite some time. If we — so we continue to evaluate it, and if we do nothing, that doesn’t really impact us until 2026, so I think that’s important. And of course, we believe that we can do with some mitigations, mitigate majority of that impact, so that’s kind of that.

Operator: Your next question comes from the line of Brandt Montour with Barclays. Please go ahead. Hi, Brandt, please check to see if your line is on mute.

Brandt Montour: Can you hear me?

Operator: We can.

Jason Liberty: Hey Brandt.

Brandt Montour: Okay, great. Sorry about that, guys. Congrats on the results this morning, and thanks for taking my questions. So, the first one is, given the European slowdown in bookings that you saw in sort of November, which is great to hear that that came back. But taking into account the seasonality of Europe and thinking about yields for the back half or sort of for the balance of this year, that’s baked into your full year guide, is it fair to assume that the yield growth cadence for the balance of the year will sort of correlate with the quarters that are strongest in the Caribbean? Right? Given you have Hideaway Beach and Icon sailing there, just anything else you can help us to think about how that cadence will progress?

Jason Liberty: Well, we’re very happy that the demand for Europe came back and we saw this acceleration soon after our last call. I really don’t think anybody should be reading into any concern around Q2 going forward in terms of any kind of slowdown. We’re seeing acceleration in pricing and volumes from all of our key markets for all of our key deployments. And obviously the first quarter is higher because of what I talked about with load factor and the normalization of rate. So, I would just leave it at that. We expect Q2 forward to continue to be strong and our yields to grow across like-for-like new hardware onboard, et cetera. And of course, we are lapping, as you commented, Brandt, on some very high comps year-over-year, and I think that’s an important line to appreciate.

Brandt Montour: Okay, great. That’s helpful. And then my second question is on the booked position record book, the commentary, obviously upbeat in your release and your prepared remarks. Are you willing to sort of give us a sense for how much of the first half or the full year is booked at this time and how much different that is year-over-year? And to the extent that you don’t want to answer that, I would also just be curious if you want to refresh your sort of philosophy on the optimal curve. Right? And if you’re at that point where you wouldn’t want to become any more booked, unless you leave money on the table or how you’re thinking about that revenue management strategy?

Jason Liberty: Well, I’ll start off with the latter. I mean, I think on an optimal curve, the answer is, we always get it wrong. It’s — there are always estimates, we do not give out the percent booked that we’re in, but it is meaningfully higher, obviously, than last year, for sure and also versus our highs in 2019. We have installed very sophisticated yield management systems. Those yield management systems, we’ve obviously seen them perform exceptionally well in 2023 and what we’re now seeing here in 2024 through Wave, and they continue to allow us to get more and more share of the wallet. And also taking those practices in which we also saw this last year, and feeding them into our onboard activities, our pre-cruise sales activities, is also something why, I think as we look at the 2023 results and what we’re seeing in the 2024 estimates on the top-line is what’s causing just, I think, continued outperformance.