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Now to another stock moving big time today.
Yep, we are talking about Royal Caribbean Cruises shares a writing quite a wave higher, up about thirteen percent, more than thirteen percent at their high, almost fourteen percent, in fact, hitting a record intraday, up the most in more than two years. It is the top gainer in the S and P five hundred, and it's lifted the entire group because Norwegian and Carnival also top gainers in the S
and P five hundred. This is coming after Royal Caribbean reported a full year profit forecast that blue past expectations as cruise demand continues to ramp up. They're also talking about getting into another area of the cruising world. For more on the outlook and what's driving metrics, we welcome the President CEO of Royal Caribbean Group. He is Jason Liberty. He joins us from Miami, Florida. Jason, it's great to have you here with us. How are you.
I'm doing great, Carol, and thank you and Tim for having me today. Obviously it's a it's a great day on the share price, but it's a great representation of another incredible year here at the Royal Caribbean Group and a really strong outlook for twenty twenty five.
Tell us what surprises you about the consistency in demand and the optimism that you are seeing, certainly in the cruising world and what comes to demand. What's surprising you in how the strength the strength that you are seeing.
Yeah, well, I think I think there's a few things that I would point to. I mean, certainly, we have a lot of great demographics on our side in terms of more millennials coming into the space, multi generational travel, a lot of active wealth transfer, and we see that more and more, which has been a surprise to me. Just how much multigenerational travel where you have the patriarch and matriarch of the family paying for generations. I think that's been a little bit of a surprise. And there's
also been just a continued flight to quality. We've invested so much in our ships and our brands and our destinations for so many decades. We're really now seeing these flowers bloom as we see consumers who are very healthy, you know, they have great balance sheets, they have great jobs, and they're high paying jobs. Having this flight to quality for our brands and for our destinations.
When you talk about that flight to quality, break that down for us, where there's strength in the business and where you're seeing particular strength and if there are any areas where you're not seeing strength.
Yeah, well we're really we are actually seeing strength in all markets that we source from. We're also seeing strength for all the different places that our ships go, whether that's in the Caribbean, Alaska, the Northeast, Europe, Australia, Southeast Asia, China. We're seeing strong demand kind of across the board, which is I think really great. We're also you know, seeing again elevated spend on our ships, and that's really across
the board. A lot of it is in the gaming, the beverage area, on the culinary side, spa short excursions, so people are really looking to make sure that they grab the experiences that they want to have and there and there, and they're and they're willing to not only pay a little bit more money for that, but they're also willing to have more repetition of that, and that's how they're expanding the memories that they're building with their friends and family.
How much is that wrapping up, Jason, that is something that I've seen throughout the cruise industry that it's not just about buying the ticket to get you on the ship, but it's about what you do once you're on the ship and possibly go off to other destinations. Those bookings, right, that add to the experience, but they also add to your revenue line, right, and your profit line.
Yeah, that's exactly right. One. I think that we we've gotten a lot better, whether it's you through AI or other other disruptive tech to really take friction out of the experience of shopping with us, whether that's on the ticket side, whether that's also on the on board side. And what we're doing is we're able to enhance the experience so they can do all the different things that
they want to do. And then in reality, while it's still very frustrating to me, while there we're increasing share of wallet, we're still a very significant discount to land based vacation. And so for us, like we we focus a little bit less on what's happening with our cruise competitors.
We're trying to take a larger share of the two trillion dollar marketplace and travel leisure, and for us, having the experiences that our guests want to do, and also being able to make it easier for them to shop with us is winning for us.
The pace of bookings this year relative to last year. What does that tell you about demand where we're you know, when we're a little over a month past what is referred to in the industry as wave season.
Yeah, so you know, the past couple of years, you know, wave has been elevated, not just for us, but also for the entire industry, and we're seeing we're continue to see those waters rise here on on on the on the wave season. So we're seeing record booking weeks, we're seeing elevated pricing, and we're seeing a consumer that is not only willing to pay a little bit more money for their vacation experience, but they're also looking to book
further out. So the booking window is continuing to extend, and they're also doing more and more pre cruise booking activities for the activities that happen on the ship and off the ship to make sure they get the vacation experience that them and their family and friends want to have.
Are you surprised by it? You've been doing this a while, Like, are you surprised by the pace of demand.
Well, I have been doing this. I mean I've been in the sea for a little over three years, and of course I was the CFO before that, so I've been in the industry a while. Certainly you're seeing an elevated demand for experiences. So clearly, coming out of COVID, you've seen a few different changes in behavior, one of which is very comfortable booking and interacting through technology, so we're able to take friction out of that experience. But you're also seeing just a trade by a lot less stuff.
We want to buy experiences. We really appreciate the time with our friends and family, and we want to make sure that that time that we have is one that is not only exceptional, but it's also with somebody who we trust will deliver that for us. And I think we have that trust. We value that trust with our customers each and every day.
All Right, we want to talk a bit more about
the business. But you know, Jason, we've been asking everybody who comes on a CEO or anybody who runs an institution, a company, an organization, Uh, the dynamics and the backdrop anything that could be impacted by policies out of the Trump administration, anything coming out of government, and I think about you know, we've talked about various policies that could lead to inflation, tariffs, you know, on possible goods that could increase costs, immigration, the impact on the labor force.
So I'm just curious. You guys are floating cities, your massive ships, so you you know, the dynamics of kind of the economy of the US economy certainly impact you. So I'm just curious anything in particular that could come out of DC that you're watching very closely.
Well, look, I think we're we as we always have. We're going to work very closely with the administration. But I think I think what we're looking for is a healthy and happy consumer. And I think as long as the consumer has confidence and their spending and and and of course they seek great vacation experiences, which we think they're going to do, I think we feel very bullish
about the future spending behavior of our customers. The other point that I would just add, which I think also brings us great comfort on whether if costs do rise in some form or fashion or there is inflation, is that point I made earlier that there is a significant gap to land based vacation. There's a lot of value for the consumer and in our different vacation products, and that's a good hedge for us if there is any any any type of change in the winds.
How are you guys doing it controlling costs right now? Specifically when it comes to labor, are you are you getting all the employees you need and where are you getting them from?
Yeah? Well, most of our our employee base our international crew, So we're not really that impacted by rises on the wage side, you know, short side. Certainly like every other company, you know, there's there's inflationary pressures that can impact your wages.
For our shore side and our corporate offices and so forth, we actually are you know, our cost guide for this year was for us to be flat to up one percent, and we've been able to do that by really managing our supply chain, leveraging the scale as our business grows, and having a team that wakes up every day and
says how do we do it better? And and doing all that and making sure we're enhancing the guest experience and we're not cutting the guest experience because we feel that it's it's you know, it's important for us to live up to our marketing and our reputation each and every day.
Jason, Could any of that supply chain be impacted by tariffs?
I don't think so, you know, because we source a lot of the things that we source are are are really from here here in the US. We're not really expecting any any any tariff impact. But you know, we're watching it, just like we're watching other things on more and more in terms of how it would impact our customer less so how it's going to impact our cost space.
What about when it does come to that international labor pool, Are there concerns about a crackdown on immigration affecting the way that employees on your ships are able to be on your ships when they're docked in the US. How do you handle that?
Yeah, well, it's obviously something that we're always looking into, but I don't think that's a very high risk. We're an international maritime organization. Our crew or international maritime they're really focused on being on the ships. So you know, obviously we watch it and we try to manage it, but we don't see that as a high risk in terms of any policies that can come forward. There.
Hey, listen, we want to talk about you guys getting into the river cruise market before we do. So you talked though a lot about destinations and experiences for those
who get on ships. You guys have had great success with Cococae, private island destination that's in the Bahamas specifically, how could Perfect Day Mexico, which is another such destination, kind of drive some of that onboard spending that you were talking about a little bit earlier and ticket prices when it opens in twenty twenty seven.
Yeah, So I would say a few things about the destination experience. So you take as you gave an example of Perfect Day of Cocoka, which by the way, is the highest rated, has the highest net promoter score of
any other destination we go to in the world. Because we do an exceptional job of delivering thrill and delivering chill, but we're not able to deliver that experience to all guests, all all guests in the Caribbean, and so Perfect Day in Mexico will allow us to not only ensure that every especially on our Royal brand, has at least one Perfect Day when they're in the Caribbean, but it's also going to expand the catchment area of areas like Texas
and west of the Mississippi, which will have an easier way to get to places like Galveston where they can go in and have a Perfect Day. We're also adding royal beach clubs which will also expand the experience in places like Nasa, Bahamas and also and case them melt. So what we're trying to do is gain continue to
enhance the experience offering. We see ourselves as as an experience organization with really a vision of you know, what we've always been done great is delivering delivering the best vacations in the world, and we want to be able to deliver a lifetime of those vacations over somebody's life.
And I just want to make sure I heard correctly. But in terms of Perfect Day Mexico specifically driving on board spending and ticket ticket prices when it opened, can you give us any kind of color on that or specificity.
Absolutely, you know. I think one of the surprises when we when we open Perfect Day at Coco Ka is not only do we get high demand to go to the island and people were willing to pay for things like water parks and overwater cabanas. But we also saw ships that touch Perfect Day in Mexico got elevated pricing, and so we expect that's going to be the same thing here is when you deliver the destination and the experience mark, guests are willing to pay for that, and
that's what we expect to occur in Mexico. It's also what we expect to occur with our Royal beach clubs as well as well. You know, we'll deliver an experience that far superior to what is currently being offered in those in those different destinations.
I'm just gonna say I'd like some thrill and chill right now, because I'm tired of cold New York. I'm just going to put that.
Out there, all right, sign up, Carol. Speaking of.
Available, available, no no, I woud say it's available and I'm happy. I'm happy to help you book a cruise.
Well, let's let's talk about what's going on in the river cruise market. I mean, my in laws are back from a river cruise this fall. My sister's back from river cruise, both of those with different companies in Europe. Now, you guys are getting in through the celebrity business. Why now.
Yeah, well why now is you know, we've been seeing for some time, you know, a growing trend with our guests that they're looking for additional vacations, not a substitute for going on a cruise, but additional vacations. And when we look at what are those additional vacations that they're going on, one of the things that we've seen arise
in is on the river side. And so as we again seek to deliver a lifetime of vacations and we want to leverage you know, all the having a single loyalty program, great reciprocity across our different brands, we're enhancing the flywheel and we're investing in that flywheel so that we can get more reps out of our guests. And so we had to listen to what our guests are looking to do, and we have to be focused on
how do we keep our customer in our ecosystem. And one of the ways of doing that is is expanding the offering. And we think River is you know, it's it's similar, it's it's sotly not exactly the same as as an ocean cruise, and we think we can elevate that vacation experience significantly, not just on the ship in itself, but also on land.
So where are you going to go with those cruises?
Well, it's gonna start off. You know, we've ordered you know, ten ships so far and it is an initial order and those ships will be in Europe, but our expectations will continue. We'll grow it in Europe and we're also going to grow it around the world. We have a massive global footprinm We go to a thousand different destinations. We source from all over the world, and there's a great opportunity to match those guests also on the river side.
All right, kenn Of lead with there. Listen, Jason, thank you so much, covered so much ground and really appreciate it joining us to talk about the business and the outlook. Jason Liberty folks there, he's President, chief executive officer of Royal Caribbean Group, joining us from Miami, Florida.