The paragraph is a transcript from a Royal Caribbean Group earnings conference call for the fourth quarter and full year 2024. The call begins with the operator, Regina, introducing the event and explaining the procedure, followed by Blake Vanier, VP of Investor Relations, introducing the key speakers involved: Jason Liberty (CEO), Naftali Holtz (CFO), and Michael Bayley (President and CEO of the Royal Caribbean brand). Blake mentions that the call will include forward-looking statements subject to risks and uncertainties, along with non-GAAP financial measures. Jason Liberty is set to provide a strategic overview and business update, and the session will conclude with a Q&A after Naftali's insights on the financials and 2025 outlook.

The paragraph highlights Royal Caribbean Group's impressive financial performance in 2024, including record vacation deliveries, high customer satisfaction, significant cash flow, and early achievement of financial and environmental goals. The company remains focused on growth through its innovative fleet and strong brand presence, aiming for a larger share of the global vacation market. An exciting development is the introduction of Celebrity River Cruises, set to launch in 2027, which will expand destination offerings for guests and create new business opportunities.

The paragraph outlines the company's strategic expansion into river cruising with an initial order of 10 new ships. They see river cruising as a significant growth opportunity that aligns with their strategy to extend vacation offerings, capturing a larger market share in a rapidly growing and fragmented market. River cruising offers high margins and returns on investment and appeals to a similar demographic as Celebrity's existing premium ocean cruises. The company aims to leverage its reputation for exceptional hospitality to attract both seasoned cruisers and new customers to river cruising, promising innovation and excellence in this new venture.

The paragraph highlights the achievements and future outlook of Celebrity Cruises and its parent brand. It discusses the introduction of Edge-class ocean ships, which feature cutting-edge design, sustainable technologies, and unique experiences, with a sixth ship, Xcel 2, set for delivery in 2028. In 2024, the company experienced significant financial success, with double-digit yield growth and $0.5 billion more revenue than expected, aided by strong team performance and strategic investments leading to enhanced margins and a high return on investment. The year also saw the launch of innovative ships and private destinations, leading to high guest satisfaction and a record number of guests. The company continues to focus on investing in its offerings and improving its financial strength.

In 2024, the company enhanced its digital distribution channels by launching over 300 new capabilities, integrating AI for improved personalization, and introducing a new Loyalty Status Match program. This led to more efficient customer experiences, reduced booking times, and increased guest satisfaction. In 2025, the company is experiencing its best booking period ever, with higher Average Per Diems (APDs) and robust demand across all channels, including strong direct-to-consumer performance and increased travel partner contributions.

The paragraph highlights strong demand for cruises, particularly from North America, where 80% of guests will come from this year. The brand's global appeal and flexible sourcing help attract high-yield guests by positioning ships worldwide. There's a positive sentiment due to strong labor markets, high wages, and wealth, with Americans prioritizing travel. Spending on vacations is expected to increase, especially among Millennials and Gen Z, who value multiple destinations—an advantage for cruises. Cruise consideration is rising among younger travelers, with high guest satisfaction. The brand is well-positioned to capitalize on these trends with its innovative ships, exclusive experiences, and advanced commercial capabilities.

In 2025, the Royal Caribbean Group anticipates significant growth with a 23% increase in earnings and expanded capacity by 5%, facilitated by new ships and the full-year benefits of existing ones. The introduction of these ships is expected to boost yields between 2.5% to 4.5% due to enhanced vacation experiences and improved profitability. Adjusted earnings per share are projected to be between $14.35 and $14.65, despite fuel and FX headwinds. The company's strategy of moderate capacity and yield growth, coupled with strong cost control, is credited for its financial success. Royal Caribbean continues to innovate, with plans to expand its private destinations, enter new business lines such as Celebrity River Cruises, and develop digital and AI capabilities, ensuring its vacation offerings exceed customer expectations.

The paragraph outlines Royal Caribbean Group's vision to create personalized travel experiences that build loyalty and redefine vacations, aiming to lead the travel industry. In 2024, the company achieved significant milestones, setting the stage for future growth. They plan to expand their presence in the broader vacation market in 2025. Naftali Holtz then discusses the company's strong fourth-quarter performance, highlighting an adjusted earnings per share of $1.63, which exceeded expectations due to increased revenue and effective cost management.

In the fourth quarter, the company's net yield grew by 7.3%, surpassing guidance, with better than expected pricing and onboard spending. Net Cruise Costs, excluding fuel, rose by 13.5% due to increased stock-based compensation. The company achieved a 10% year-over-year growth in Adjusted EBITDA, reaching $1.1 billion, and operating cash flow was $1.5 billion. For 2025, capacity is projected to grow by 5.4%, aided by fewer dry dock days than 2024 but more than 2023. The dry dock schedule will affect capacity growth differently across quarters, with the fourth quarter seeing the biggest benefit. Annual new hardware will contribute 4% to capacity growth, down from 8% in 2024. The year began strongly.

The paragraph discusses the strong demand and growth expectations for 2025, highlighting robust bookings and increased pricing in the Caribbean, Europe, and Alaska. The Caribbean, with 57% of deployment and a 6% capacity increase, is performing well due to innovative ships and private destinations. European capacity is up 5%, and sailings are strong in both rate and volume, while Alaska accounts for 6% of capacity with expectations surpassed. The company projects a 23% earnings growth driven by moderate capacity and yield growth, alongside strong cost discipline, with anticipated yield growth between 2.5% and 4.5%.

The paragraph outlines the company's financial outlook and strategic plans for the coming years. It expects a 2025 yield growth following an 11.6% increase in 2024 and anticipates flat to 1% growth in net cruise costs excluding fuel. The company projects fuel expenses of $1.17 billion for the year, with adjusted earnings per share expected between $14.35 and $14.65, accounting for a $0.65 headwind from foreign exchange and fuel rates. They foresee a 13% growth in adjusted EBITDA and a 150 basis points increase in gross EBITDA margin. The company plans to invest $5 billion in strategic initiatives, ensuring asset maintenance, with the delivery of two new ships, Star of the Seas and Celebrity Xcel, later in the year. Non-ship capital investment will total $1.6 billion, including acquisitions and developments in their private destination portfolio.

In the first quarter, the company expects a 3% year-over-year increase in capacity, with the majority in the Caribbean and the rest spread across Asia-Pacific and other itineraries. Net yields are projected to rise by 4.75% to 5.25%, benefiting from new and existing hardware including Icon, Utopia, and Silver Ray. Net Cruise Costs, excluding fuel, are expected to increase by 1.6% to 2.1%, with dry docks contributing to this rise. Adjusted earnings per share are forecasted to be between $2.43 and $2.53. The company has $4.1 billion in liquidity and a strong balance sheet, aiming to reduce leverage and cost of capital. The focus remains on providing excellent vacation experiences and achieving solid results, with a question-and-answer session to follow.

In the article paragraph, Jason Liberty addresses a question from Brandt about the company's yield guidance and comparable performance. He explains that strong demand in the fourth quarter elevated the baseline for comparisons, noting significant yield improvements in previous years (13.5% in 2023 and 11.6% the year before). This makes current comparisons more challenging, especially since load factors have been recovered. However, strong booking activity during the WAVE period, including the highest booking week ever, is encouraging. The guidance of 2.5% to 4.5% improvement reflects current bookings and trends, with optimism around both new hardware and existing offerings like Icon and Utopia.

In the paragraph, the discussion revolves around the entry into the river cruise market and how the new Celebrity brand offering compares to the established competitor, Viking, known for its luxury rates. Jason Liberty acknowledges Viking's prominence in the market and describes the river cruise market as fragmented. He suggests that Celebrity will position itself below the luxury price point of Viking, but notes that as the river cruises will be more inclusive, the average per diem (APD) rates are expected to rise. The emphasis is on not compromising on quality, even if the pricing is below luxury competitors.

The paragraph discusses a company's plans to elevate its brand by enhancing the design, culinary offerings, entertainment, and staterooms of its small ships, aiming to match the superior level of its Edge class. The company serves over 8 million guests annually and has a database of 35 million repeat customers, highlighting the potential to generate high-quality demand using its loyalty program. The focus is on meeting customer expectations and delivering memorable vacation experiences, which the company excels at, particularly in cruising. There's also mention of entering the river cruise market with 10 ships starting in 2027, seeking to differentiate from the Viking offering. Brandt Montour congratulates the company on a successful quarter, and a question follows from James Hardiman of Citi regarding the river cruise plans.

The paragraph discusses the company's expansion plans, emphasizing the delivery of new ships, including a couple by 2027 and around four per year afterwards, highlighting a focus on growing their fleet as a serious endeavor. There's anticipation for a significant year in 2027 with the launch of various attractions and facilities. The company prides itself on a globally sourced customer base with sophisticated yield management tools that allow them to attract high-yielding guests from around the world, though currently, about 80% of their guests are from the U.S. The sourcing patterns could vary, similar to their ocean operations.

The paragraph discusses the plans for a new cruise ship experience that will attract high-quality demand from Royal, Celebrity, and Silver Sea brands. The ships will hold around 180 passengers and aim to elevate design, aesthetics, and onboard activities, offering a comprehensive experience connecting land and sea. There is notable excitement and interest from travel partners and guests. The narrator mentions the importance of trust from their guests, who are eager to try the new riverboats. Additionally, there is a brief discussion on capital expenditure projections, noting an increased guidance to $5 billion for 2025, with expectations for more detailed financial outlooks to be shared at a future Analyst Day.

Naftali Holtz discusses the company's financial planning and capital allocation strategies for the coming years, particularly focusing on the $5 billion number related to ship deliveries and other investments. He explains that ship deliveries like the "Star of the Seas" and "Celebrity Xcel" are planned for this year, with the capital already committed, contrasting with last year's deliveries. Additionally, there are maintained priorities such as private destinations and modernization efforts. Notable projects include the Costa Maya port acquisition and the Nassau Beach Club, with a significant portion of the capital investment directed towards these developments. Maintenance capital expenditures are expected to remain stable year-over-year.

The article discusses the company's financial performance and future outlook. It highlights that the company delivered $6 billion in EBITDA last year and is projected to increase EBITDA by 13% this year. Significant progress has been made in reducing interest expenses, which are now below $1 billion, and the company is generating substantial cash flow. The focus is on expanding margins, investing in key priorities, maintaining an investment-grade balance sheet, and returning capital. During a Q&A, Steve Wieczynski of Stifel notes that the EPS guidance was better than expected despite FX and fuel challenges. He questions whether the guidance includes buybacks or debt refinancing and suggests that without the headwinds, EPS could have been even better. Jason Liberty responds by explaining that adding $0.65 to the guidance range would increase the EPS above $15, noting that the cost guide might have been a surprise.

The paragraph discusses the strategic efforts of a company to leverage scale and improve performance through moderate capacity and yield growth, along with strong cost control. The company is not planning capital returns in the current guidance but may opportunistically repurchase shares to enhance earnings per share. It has accounted for normal debt payments, capital investments, and announced dividends but not other unspecified factors. The conversation shifts to questions about river operations, noting the necessity of securing berthing rights for access to ports, which the company, Celebrity, is in the process of acquiring. It hints at possible future expansion into river operations globally with their brand, Silversea, to attract more high-end customers.

The paragraph discusses the company's strategy to enhance guest experiences, particularly for their ultra-luxury clientele. They plan to introduce river experiences under their Celebrity and Silversea brands, starting with Celebrity due to perceived large-scale opportunities. They emphasize their thorough and serious approach to this initiative, aiming to deliver top vacation experiences responsibly. Additionally, Jason Liberty responds to a question from Matthew Boss of J.P. Morgan, noting strong demand across all products for 2025 and discussing the company's market share opportunities in the global vacation market.

The paragraph discusses strong demand across various cruise markets, highlighting the appeal of destinations like the Caribbean, Alaska, Europe, Southeast Asia, Australia, New Zealand, and China. It notes significant interest from guests worldwide, particularly from Europe and North America, with no weak areas identified. There's a focus on leveraging advanced technologies, such as AI and GenAI, to enhance guest experiences and optimize pricing strategies. The use of these disruptive technologies is in its early stages, promising future growth and success. The dialogue concludes with an acknowledgment of positive feedback from an individual named Matthew Boss.

In the paragraph, Robin Farley asks about the timeline and costs associated with ordering additional river cruise ships beyond the initial 10, suggesting the possibility of waiting until after the 2027 launch to assess success before ordering more for 2030 and beyond. Jason Liberty responds that the company won't wait until 2027 to order more ships. Each shipyard can produce about four ships annually, and while they won't disclose the exact cost per ship, the cost per berth is higher but still relatively low compared to ocean cruise ships. Liberty indicates that scaling into river cruising is financially feasible and has significantly lower entry barriers than larger cruise ships.

The paragraph discusses the challenges and expectations related to the execution of a business strategy involving river boats, which typically do not operate year-round. The speaker anticipates a positive impact on yield and margins, despite the seasonal limitations. They express an intent to find ways to make off-season operations more productive. Following this, a conversation about cost guidance for the year occurs, emphasizing the influence of dry dock schedules and capacity growth on costs. It also mentions the upcoming operational and cost change related to the purchase of Costa Maya, noting its impact on operations and financials.

The paragraph discusses operational costs and projections related to private destinations and capacity growth toward the end of the year, with a specific emphasis on how these will affect costs throughout the year. Conor Cunningham asks about the market demographics for river cruises compared to Viking and Celebrity, highlighting the opportunity with younger customers. Jason Liberty responds by emphasizing the broader market opportunities in the overall cruise industry and asserting that their strategy isn't about competing directly for Viking's customer base, but rather serving a diverse range of customer preferences.

The paragraph discusses a business strategy focused on maintaining a strong ecosystem by leveraging leading brands and a productive flywheel to enhance customer loyalty and lifetime value. It highlights the integration of enterprise loyalty and reciprocity programs to incentivize guest retention. Following this, Ben Chaiken from Mizuho inquires about the upcoming opening of a private destination in Nassau and its pricing strategy. Michael Bayley responds, noting that there is a pricing plan for the all-inclusive product, which will be available for purchase in April, and mentions significant brand volume going into Nassau.

The paragraph discusses the expected performance and operation of a new Beach Club near Nassau. The Beach Club anticipates around 1 million visitors in its first full year, unlike the larger CocoCay, which expects 3.5 million in 2025. Although the Beach Club operates on a smaller scale and with potentially less headcount, it remains efficient and profitable due to its proximity to ships and the unique experience it offers. Its operation complements CocoCay, offering a desirable cruise itinerary. The investment is seen as positive, without significant operational differences from CocoCay.

The paragraph discusses the success of a loyalty and reciprocity program across the brands Royal, Celebrity, and Silversea. This program, introduced around the second quarter of the previous year, aims to enhance customer awareness and engagement by recognizing the connection between these brands. It has been unexpectedly successful in increasing customer retention within the company’s ecosystem by offering benefits that encourage guests to continue choosing these brands for their travel needs. Despite initial customer unawareness of shared ownership, the program has made them more likely to stay within the brand family for diverse trip experiences.

The paragraph is part of a conference call discussion regarding expansion plans for Perfect Day Mexico, a project by the company. Vince Ciepiel asks about potential growth in the Caribbean, specifically in the Western Caribbean, with the addition of Perfect Day Mexico. Michael Bayley responds, highlighting the company's ambitious growth plans, mentioning that they expect volumes at Perfect Day Mexico to surpass those at CocoCay, thanks to new Icon-class ships and strategic opportunities in Texas. The session concludes with Naftali Holtz, the CFO, thanking participants and offering follow-up opportunities with a colleague named Blake.

This summary was generated with AI and may contain some inaccuracies.