Beyond Covid: Royal Caribbean Sees Big Changes and Gets Good News
During the pandemic, while cruise lines sailing from U.S. ports were not able to take passengers, getting an email from Royal Caribbean International (RCL) – Get Royal Caribbean Group Report usually meant something bad. When cruising stopped in March 2020, the cruise line kept selling future sailings.
That’s because if it didn’t, and the Centers for Disease Control (CDC) lifted its no-sail order, it would have been an exponentially harder task to start back up. Royal Caribbean kept selling and passengers kept booking because few, if any, people believed that covid would shut the industry down for over a year,
When the closure first happened in March, most people assumed that in a few weeks, maybe a few months at most, the ban on sailing would be lifted, That did not happen until July 2021 and in those long months, emails from the cruise line meant your sailing was getting canceled.
It was a depressing time that did build up a lot of anticipation for a return to cruising. Now that ships are sailing again Royal Caribbean has seen a big change in consumer behavior which counts as good news for investors.
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Royal Caribbean Passengers Make a Big ChangeThe cruise line has built back its business with some ships — including most North American sailings — sailing at over 100% capacity. That’s an impressive comeback, but it has been done partly by lower prices on cruise fares and customers having future cruise credits (FCCs) from cruises canceled during the closure.
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That spending trend has led the company to be cash-flow positive, Liberty elaborated on exactly how that spending has occurred during the call.
“Approximately 60% of our guests book their onboard activities before they ever step foot on our ships,” he said. ” As we said in the past, every dollar guest spends before the voyage translates into about $0.70 more on the dollar when they sail with us and double the overall spending compared to other guests.”
Another Good Sign for Royal CaribbeanIn the early days of the cruise industry’s comeback many, if not most of the people sailing, were past passengers. That makes sense because experienced passengers would be the most likely to miss cruising and return while pandemic-related restrictions remained in place.
Now, masks have gone away, pre-cruising testing has been dropped on sailings under six nights, and some unvaccinated passengers 12-and-over will be allowed to sail. That has changed the demographics of the company’s passenger load, according to Liberty.
“The attractive new-to-cruise segment is now returning faster with non-loyalty guests doubling in Q2, compared to Q1, and the mix is essentially on par with 2019 levels. Our attractive brands as well strategically adjusted deployment toward shorter itineraries are driving more new-to-cruise,” the CEO added. “We also continued to benefit from secular tailwinds anchored in the shift of consumer preferences from goods to experiences. And we are squarely in the experience business.”