Naftali Holtz: Yes. Just one other comment, not just on the volume, but also the pricing. Obviously, we are on more booked versus last year on a volume, but also on a pricing level as well. So, we’re very encouraged with where we are.
Operator: Your next question comes from the line of Matthew Boss with JPMorgan. Please go ahead.
Matthew Boss: Great, thanks, and congrats on another great quarter.
Jason Liberty: Thank you.
Matthew Boss: So, two-part question. Jason, when you talked about taking things to a whole new level, could you size up where you stand today versus the larger total addressable market share opportunity? And maybe you see beyond cruise and just the multigenerational customer base that you’re attracting. And then for Naftali, maybe just how best to think about the breakdown of the 4% cost guide this year and multiyear what you see as the right run rate for costs going forward?
Jason Liberty: Yes. Well, I’ll start off, Matt, by I think it’s important to understand what our orientation is. Our orientation is experiences, and we keep trying to advance experiences that our customers are not only do they desire, but they’re also willing to pay for. And so when you have an experience, mind focus, obviously there are a lot of things that we’re adding onto our ships. I think Icon is an incredible example of the dreaming and the delivery of endless experiences for multigenerational travel. But you also see those, for example, in Silver Nova and what that does for the ultra-luxury space in terms of the dreaming and innovating to deliver those experiences that our guests seek and are willing to pay for. You see that also extend into the destination and what we’re doing in the private island space, whether it’s with Hideaway that we just announced we have the Royal Beach Club into the Bahamas and we continue to think about and dream about other opportunities that are there.
Our goal is to keep our customers in our ecosystem, and we’re building, as I mentioned in my notes, a travel platform on a technology basis that makes sure that our guests, through loyalty as well as experiences, stay within that ecosystem. That all kind of comes into continuing to grow what we believe are the best brands in each of the segments and invest in those experiences for us to deliver each and every day.
Michael Bailey: Hey Matthew, it’s Michael. Just to add some comments to Jason. There’s quite a big difference, and we’ve had these conversations before, between the addressable market for traditional cruise and the addressable market for land-based vacations. When you consider Orlando, Las Vegas and all of those different land-based options, we really believe that with ships like Icon and Perfect Day, Hideaway Beach, the coming of Royal Beach Club in 2025, Utopia coming straight into the short product market to perfect day, that we are really kind of transcending and moving, particularly the royal brand, from that traditional cruise space where the addressable market is big, but smaller than the land-based. And we feel that now we’re beginning to really attract a lot of demand from those land-based options with better quality product, more exciting product and great price points.
So, I think we feel there’s a big opportunity with the addressable market, particularly as it relates to what we’ve done with kind of repositioning the brand and becoming acutely focused on the multigenerational family and particularly with the kind of new products that we’re introducing now. And I think Icon really is a great example of that. We’ve never seen such incredible demand reaction and pricing power that we’ve seen with a new product that we’ve introduced. It’s really been phenomenally successful.
Naftali Holtz: Hi Matt. So, on your question on cost, so this year we gave the guidance of 3.75% to 4.25% cost growth and I think it’s just important. Obviously, I mentioned it in my remarks that there’s 300 basis points throughout the year impact from both increased drydock days and also the operations of Hideaway Beach, that while it is very accretive to margin, just does not have an APCD, so that’s the reason. But I think if you put that into context of all the things that we have done over the last couple of years and our really relentless focus on enhancing margins and controlling cost is really coming into play as we continue to grow the business. For the cadence of the year, because we have most of our drydocks really in the last — latter part of the first quarter and early in the second quarter and that will weigh on cost.
Also, I mentioned in the first quarter, we have specifically for that quarter more impact from starting Icon as well as just catching up on the load factor, but obviously it normalizes throughout the year. And the second half will benefit from those lower drydock days and also the addition of Utopia, which will add APCDs to the half part of the year. But all in, we’re very pleased with how we’ve really, in a durable way, enhancing margins that will help us as we continue to grow the business and create operating leverage. For the long-term, our formula really remains unchanged. Moderate capacity growth, moderate yield growth and strong cost control really leads to enhanced financial returns. And the formula is basically, we’ve got to grow yields faster than we grow our cost and double enhanced margins, more cash flow and more earnings.
