Bloomberg Audio Studios, Podcasts, radio news. It's time now for our Stock of the Hour, and we're watching Royal Caribbean. The shares are higher following a strong earnings report, the company raising it's full your forecast above some analyst estimates, quelling fears of higher fuel prices weighing on the company. Jason Liberty is Royal Caribbean Chairman and CEO, and he joins us now from the Symphony of the Seas in Miami. Jason, a pleasure to speak with you. Thank you so much.
I want to get from you just a snapshot of what bookings look like, because my understanding from your earning support is that the bookings moderated in March and early April for some Mediterranean cruises, and I'm wondering what you're seeing now.
Yeah. Well, first, Carlo, great to be here. It's a great day for Royal Caribbean and all of our employees. So I think first starting, I'll talking about the booking activity.
We're coming or coming off a record waves season, and with inside that wave season, we had really high expectations for the Mediterranean and those expectations we're a little bit moderated based off of the geopolitical activities that were happening, But outside of that, all of our core products are booking exceptionally well, and we have about one hundred and seventy thousand guests on our ship every day spending we're taking tens of thousands of bookings every single day for
twenty twenty six and twenty twenty seven, a little bit for twenty twenty eight, and we continue to see a very strong consumer that has good jobs, good balance sheet, and is always looking to have a great vacation experience and they have great trust with us to do that.
And you mentioned the wave season of course, as January through markets, the industry's peak sales period. People tend to book their cruises months in advance, if not longer, so they're committed to going. They're going to go on that trip no matter what. I'm wondering how onboard spending trends are evolving right now, what you're forecasting, what you've seen so far in the last two months.
Yeah, well, we obviously watched the consumer very closely, and as I mentioned, you know, we have a one hundred and seventy thousand people any given day, very activated on our ships, very engage on our ships and spending on our ships, and we continue to see a very healthy consumer and they're not really you know, when you look at what they're spending money on, it's still the very similar things, right. They're spending quite a bit on land based experiences, spending a lot in our in our in
our bars and in our restaurants, spa, et cetera. So they seem to be very healthy. And of course, you know, we're somewhat insulated because we typically traded about a fifteen percent discount to land based vacation and so that insulation I think is giving them a little bit more spending power in their wallet.
Has Royal Caribbean seen any changes in demand from new to cruise passengers versus long time serial cruisers in the last few months.
Yeah, well, what we have seen in the past few months, those those stats haven't really changed. A few things, I would say. First off, you know, a little under half of our guests are millennial or younger, so we're really attracting a lot of new to cruise into our environment.
But we do have an elevated amount of loyalists that are cruising with us, and it's for several reasons, One of which, and find most importantly is we have done a lot to create an enterprise loyalty program across our brands. We've invested a lot of money and data and AI in order for us to better cureate and engage with those guests. And those guests typically spend about twenty five percent more with us than somebody that's new to cruise or or first to brand.
Gotcha, So you're investing in this new passenger, this demographic. I'm wondering in general, and you mentioned, of course the Mediterranean cruises being somewhat affected by geopolitical events. How are you responding to the volatility and the threat of changing global macro and geopolitical trends overall.
Yeah, Well, first off, you know, we're a company that we we operate global brands, and so we source from every from any market in the world, and we have sales and marketing presence some everywhere, and we have very strong brand presence. So for us, when we when we look at at demand, we're watching different demand patterns and we're sourcing the highest yielding guests from anywhere in the world.
In reality, you know, while there's been a lot of geopolitical activity that has not really stunted demand, it has moderated it in certain products like the Mediterranean. Most of that was actually driven more by just the increase in air costs, you know, during during that period of time. But for the most part, you know, our guests are
are you know, are appreciating the vacation experience. And you know, of course some some I'm sure there's somewhat affected to some degree by the geopolitical activity, but we're not really seeing that in their day to day spending behavior, and we're not seeing that in their day to day planning for today and into the future.
Right like everyone else, you're dealing with higher fuel costs and that's certainly a headwind. How effective have hedges been in managing the cost effect of rising funker fuel.
Pri Yeah, well, you know, we're we're we're for twenty twenty six, we're a little over sixty percent hedged and next year we're a little under half hedged with with pre crisis hedge costs. So yeah, we have a pretty
active hedging program. But still, you know, despite that, you know, fuel costs are going to impact us a little over sixty cents this year based off of where current spout rates are and that you know, that's you know, that's a that's a reality that we're having to deal with in our P and L and fortunately we were able to recover some of that through different business activities and and things that are you know, that are happening with our joint ventures.
Do you have any contingency plans in place, Chase and if disruption of the strait of hormones and higher crude prices become more protracted become kind of our normal.
Well, I would say on contingency plans, I mean, I mean, for one thing about our business or our industry is our assets move, So you know, our ability to move our assets out of places is that you know that might be more challenged is something that we that we that we can do uh pretty quickly. And that's typically how we try to manage risk in different parts of the world as it relates to things that can impact it, especially with the straight up from moves like fuel prices.
You know, that's something we try to manage through our our our our hedging program and and and being thoughtful about the amount of consumption of fuel that that we that we take all.
Right, Jason We really appreciate your joining us. Jason Liberty is the chairman and CEO of Royal Kruby and talking to us from Miami.