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08/04/2021

Royal Caribbean Reports $1.3B Loss for Q2 2021 But Not All is Lost

Bookings are rising significantly each month with bookings for 2022 practically back to 2019 levels. Plus, on-board revenue is spiking.
Michal Christine Escobar
Senior Editor (Hotels)
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During its Q2 2021 earnings conference call, Royal Caribbean shared that company is reporting an adjusted net loss of $1.3 billion for the second quarter. While unfortunate, Jason Liberty, EVP and CFO, explained that Q2 2021 was also a positive “turning point” for the company. During the quarter, the company welcomed back an additional 10 ships into service (with 29 of its 60 ships now welcoming guests) and is in the processes of ramping up seven more ships to welcome guests in July. The company anticipates having 65 percent of its fleet in service at the end of Q3 2021 and 80 percent by the end of the year.

Booking Ramps Up

The company was also happy to report that it saw a significant increase in booking activities. Currently, Royal Caribbean has welcomed more than 136,000 guests on board its five brands during the first half of the year. While bookings are still below 2019 levels – due in part to reduced capacity limits for 2021 – the company has received about 50 percent more bookings in Q2 2021 that during the previous three months.

a man wearing a suit and tie smiling at the camera
Jason Liberty, Executive Vice President, Chief Financial Officer

By June, we were receiving about 90% more bookings each week when compared to Q1, with bookings for 2022 practically back to 2019 levels,” Liberty noted. “July was our second highest booking month of the year and bookings for 2022 are strong. We are particularly encouraged by the continued strong demand for the important spring and summer months.”

Also comforting is the fact that overall booking activity for 2021 sailings are consistent with expected capacity and occupancy ramp-up at prices that are higher than 2019. Plus, the company is seeing both record Net Promoter Scores and onboard revenue for ships that have resumed service.

“This is very encouraging as we are not only seeing pent-up demand for cruises, but we are also seeing pent-up demand for our onboard revenue experiences,” Liberty explained. “Guests are really enjoying our shore excursions, casinos, spas and restaurants after spending a year in isolation. We are also seeing an increased demand for our WiFi services as more and more consumers have flexibility to take vacations and work remotely.”

Vaccines Required to Cruise

When discussing how the company is handling vaccination, Richard Fain, CEO and Chairman explained that it was of the utmost importance to Royal Caribbean to create trust among its guests.

Our goal from the beginning of the pandemic has been to make cruising not just as safe as comparable land vacations but safer,” he explained. “We believe that the unique attributes of a cruise ship could allow us to control the environment to an unusual extent. We can ensure a level of vaccinations and testing that would be impossible for most other places to even contemplate. Specifically, we require 100% of the crew to be fully vaccinated. And we require the bulk of our guests to be fully vaccinated as well.”

An average of 92% of the people on board Royal Caribbean’s ships in July were fully vaccinated, reported Fain. And while there have been some cases of COVID-19 reported on its ships, the ships have managed to keep COVID-19 to just that -- isolated cases --instead of a widespread outbreak.

“That's the goal, rare individual cases and no significant spread,” Fain explained. “Repeat this with a few hundred thousand or million cruisers, and that creates the trust that will drive our resurgence. …We have gone from cruises being a source of concern to cruises being an exemplar for how to deal with COVID-19. I'm thrilled that we're making this dream a reality.”