RCL - Earnings call transcript Q1 2018 | Royal Caribbean Cruises Ltd.

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Operator

Good morning. My name is James, and I will be your conference operator today. At this time, I'd like to welcome everyone to the Royal Caribbean Cruises Ltd.'s First Quarter 2018 Earnings Call. All lines have been placed on mute to prevent any background noise and after the speakers remarks there will be a question-and-answer session. Thank you. introduce Officer, to Liberty. like now Chief Jason Financial I'd Mr. yours. Liberty, is the floor

Jason T. Liberty

morning, Thank first for today you, quarter and call. you operator. Good thank for joining us earnings our

and Miami and Caribbean President Operating International; of our Michael Officer, become Mengolini, Fain, here Bayley, Goldstein, soon Chief are Vice will and Investor Vice me Officer; Adam Carola in our Joining Relations. President Royal Chairman our Chief who President Executive our CEO Richard of Chairman; and

referring to posted be few During slides, website, been this will call, have a on www.rclinvestor.com. which we investor our

Before we which you about get is started, our statements, refer I'd like forward-looking slide. to to on first our notice

risks Please call, do information are non-GAAP described on with full-year all will we I all and update a are a items we and of for forward-looking. financial During the strategic a defined, currency our follow and provide will on and quarter adjusted found provide the undertake in comments change. second-quarter to results, then an making be by overview our our update XXXX. constant an begin in as These our first our a we recap of Richard providing SEC measures, metrics basis. will environment, on state we discussing of not note the update that Also, guidance disclosures. do performance, can circumstances website. Unless on business. historical otherwise, statements non-GAAP booking certain future filings are will are as involve that not which uncertainties. reconciliation filings this guarantee other Examples be do and and be

Richard? your the call We will then for questions. up open

Richard D. Fain

our really first it being some morning, to going been I that happy a about able like quarter, I'm be great another Thanks, year Jason, a about it's it. an everybody. have there may been more was little year, to able beat It's year slight that so last and talk such admit bit and good to do trepidation be it. looks exceptional great to

really to year today, XX% the by and outlook, last or even looking so. forward Fortunately by we're encouraged we're beating

fact, encouraged for about about very longer-term potential also the the In future. only not XXXX, we're feeling but

was strong. year markets a there similar simply or from virtually weren't unusual, demand following area but our more This actually takes. last key as a was Now, year the are puts and There somewhat any few of weakness. pervasively is pattern, any,

of this in out For sailings Puerto issues to little perception due the San example, Juan. a year hurricane logistic are weaker and to Rico

the was year But anticipated about that of most last where hard Our for are. be regardless, original year disappointed it's this. guidance to we so too strong

our operating been what benefits enviable looking over the also hand, true On original year XXX they point even destinations. I'd to Overall, typical out line we bit are show costs for better have our accelerate, be These revenues the the a a types and last is to diversified, are revenue thought. global aberrations above like having strengths. demand are sourcing platform cruises that our in even and generally we other continues Onboard strong, particularly European very revenues year's while expected. with going than ticket of to up to of for expectations. over

line. we bottom times, middle many said the we've not company As manage the maximize the line, to

a increase trade-off. will I identified a view of which benefits. we're We revenue, amount these expected some additional worthwhile costs have our steps, that small highly to incurring future specific and Personally, as realize we think

People for on with term. success robust. with to important, and we've supply/demand structure of position had popularity be the We just that focus the this to we're so with continues the by be past, and the our balance non-refundable while our many focus price really fortunate memories we the with gravitate deposit other so nice to vacations on pleased as of in year that seeing integrity a for we're continues we equation experiences across and and take and so that solid, on that That's towards we our implications The and do heavily what in the the the industry, I've Now, give aware brands, which we're precisely of that as of the demand our enterprise. there's impact side balance the a be our in side that's that. cruising continues new continue and But on of I'm as grow, supply individual lot to of to something of focus side appropriate. lot power are well equation. from demand why comfort ships, way. to initiatives them program, well cruises discussed is growing the a encouraged a as our longer

social capabilities, continue to exceptional guests with In growth on Internet allow to lead to healthy success media. environment. the which recent the some attribute in social addition, I memories our of others the in share these demand our industry, our media

At Our new we amazing doing about the teams products. job. are have social and recently our time, really more been same an media revealing more

will she media ships, Rarely the summer, us. Oasis such familiar ship reaction though many the so to sister blown Symphony has new I is by in Mein the Lisa it. We've of visited rarely the which Bayley, of of towards end you our amazing received is construction and same sitting been fourth Pursuit, and even also that a recently to the [X], been can of starts May; attractions in this and Michael Edge, amenities the here in a this with ship justifies deserving Azamara his interest overwhelmed so Lutoff[-Perlo] Seas many simply year. I'm all Even of think in and really from I and which the ship, new which level and press is the is how which months out be It that Edge, the face very still operating that much was it series I she's all Seas from At she coming has of so The You're attention, start about France. generated. class people later Schiff new that tell the they surprising, is Europe; when and to see she Celebrity Symphony away. across her has in the were started talk to very delivers. guests just Europe; later Celebrity operating that this beaming before the public such will happy has I'm report see inaugurals. year. time, impressed staggering under there

respond we're of Caribbean short This calls, preferences about addresses but adapt vacations. quickly. up to year, me is these that example for more In and that the our talk and the of customers. importance changes opting also needs changes One we're seeing more amping frequent topic of people being another onto moving Now, getaway. shorter, past to consumer heard good the in you've and able more

We Bahamas same thrilling are destination tongues Perfect CocoCay with responding of the And a that the I'm is modernizing great Voyager shape, class private in has just we're our At add, our announced the to at upgraded Mariner cruise get to Day. our we the Perfect to certain short Seas, to will as that raising that of we and I our and that much by It's ships. market take the are done. be see Day Caribbean addition upgrade destination will this new another appropriately really the vessel. work might one time, our major also this hardware call destination which wagging game calling, offering. as in

to XXXX, on very offerings, as the strength our highly technological So develops the up exciting continued is exciting destination XXXX Jason. be microphone of shaping based and a very such in the focused innovations to which indeed on way, the enhancements turn Jason? I'll constructive focus With our also that, year people. our brands, to we're of a back

Jason T. Liberty

begin about Thank on our results I of XXXX. by you, for talking first quarter are summarized These the X. will results slide Richard.

adjusted XX% year. were is the our higher of For yields is time Net $X.XX which X.X% approximately share, than and XXX same last higher of net per quarter, we than generated up which yield revenue, X.X% the an which Ticket was points improvement than the higher up revenue approximately basis $X.XX income for strength than guidance XXXX. midpoint onboard X.X% This result revenue first follows expected. better in that of the in main from was of driver our continued positive quarter the quarter. for is it The considering variance was the guidance. quarter, notable

above continued As driving couple no over mentioned to shift spend onboard quarters, past and XX.X% first packages, favorability buying experiences that from driven the Internet helped the quarter revenue fuel was per were timing. beat. has things, quarterly contribute quarter, the costs activities the areas by excluding beat over and which Cruises quarter. towards slightly APCD restaurants for and main specialty up the different. involve Net the in was guest mainly earnings Depreciation, I've Beverage this were from TUI outperformance to cruise streams guidance of the

return program dividends. year, in shareholder repurchase from $XXX our front, paid last in the shares quarter, we $XXX completing share during repurchased the On million million and

on are to shared earnings was environment. call On last like that were I'd Now, in we booked Wave that in our we what to ahead a update rate in The and good off of remainder we start very by Those period period you the both seeing each volume. for demand the for the core and XXXX strongest trends Wave Wave even been our history XXXX has better. and itineraries. fueled was of demand and continued strong brands our the

continued factor will from in from continued strong Edge, we opening year despite TUI in both opened for are we lofty our and are sale, QX are Azamara Symphony best Pursuit Edge Celebrity's Europe comparable very and begin ownership a a August. been very will been already sailings and expectations, at sale and sister perspective. even better fleet major have of than delivery ago. only upon Azamara ships a year modernization, result, our ships, the window weeks Four has Symphony has the respective of year of year. volume. high new our brands for of and outperforming Celebrity than fleet same at factors. demand few Outside and from our enjoying European QX their Pursuit's increased time sailing just guidance. each both Mein is We her the we welcoming to The Cruises' has load Seas, the following book price in for booked this saw Harmony European and of load Azamara in year strong not our her since for fleet Symphony at in ship the ahead extend and booked the of join XXXX ships, Schiff a been season further line Edge booking booked a took prices. smaller they've with rate exceeded last rest markets. for in the Galapagos Prices to also Pursuit But X and she As January to later end remain last Demand

German successful take Mein accelerate to venture next month. TUI destination Schiff as strong exceptionally very Cruises further their joint Cruises' Our continues new delivery will offering. brand they is expand X Demand and for TUI of

an half Now, will provided our Cuba The to season comparable. year-over-year provide which last I'd winter full-year on and very has than of you XXXX, difficult core XXXX, update for each In just both strong over seeing like Caribbean an products. was in a Caribbean year, Symphony Caribbean feature and inaugural more sailings we're capacity. in of The our the for what accounts for Edge.

been year. our capacity However, demand been account been ahead last demand. XX% consistently receiving of for of strong have has have bookings itineraries and and same strong, European trending time

strong, Trends results in not As higher North levels. record year also a which ahead is have increased last result, booked spend. particularly for remained America ticket only but prices, the of at product onboard

expectations. Overall, Southeast of through year, Asia-Pacific booking Australia, QX our our itineraries book strong QX and ahead trending very with in our itineraries in with are nice These quarter expand with and for position environment for for a to by in in and remains line well the capacity, efforts yield the China market. had previous strong supported Asia. Chinese the distribution account XX% the first growth particularly a good XXXX China

If you you will the turn to see XXXX. our slide updated for full year X, guidance

versus increase the net expect to an the outperformance quarter. guidance in revenue of X.XX%, due We yield growth to X% first January

to be Our anticipating further to X.X%. strengthened we QX Since earnings activities of line. U.S. related joint guidance operating reflects benefit unchanged. remain cruise demand-generating bunker decision cost reflected excluding a $X.XX. by and prices expectations to per our share dollar cost previously and to ventures guidance versus now net essentially perspective, fuel, a The for QX The negatively call, expected has combination has From some that costs, costs consider the approximately profit operating were updated in our are impacted ships basket be and our approximately up through invest our currencies. higher below dollar stronger will last the of our

expense of the $X.XX business current year we along to in the the exchange earnings fuel and on expected per expect prices, our previously $XXX We for adjusted described, be Based range per and with previous current are higher $X.XX fuel million outlook hedged. XX% are our of share, interest rates, share $X.XX guidance. I to currency than

to the onto gave the regarding year. on cadence move call I quarter, our we Before the the reiterate guidance I'd for like second yield last

and quarter, new particularly the drydock higher is due improvement an to Easter, comparables expected of timing tougher earlier yield Our to be summer the timing, and hardware. first in last

guidance X. our quarter, for second turn to on we Now, is the slide which can

open revenue exchange up plus operator quarter We in quarter our of above, for that, activities. interest are expressed $X.XX comparable adjusted expect be be prices, and approximately the on share during to currency fuel, Strong Based fuel tougher With impacted per are net drydock our second XX.X% to growth to of outlook quarter. made earnings to expected X%. current ask the demand-generating cruise timing for days (XX:XX:XX) of share. the Net our yields increase the for per and to in investments a XXXX, our QX range more the expected up X.X% by $X.XX the to yield net costs, I'll to and for up decision be rates, Costs are excluding year-over-year. Easter, X% the

Operator

first line question And your of Go from comes Felicia from please. Barclays. the Hendrix ahead

Felicia Hendrix

Hey, good morning. Hello.

Jason T. Liberty

morning. Good

Felicia Hendrix

Hi.

in your I in kind you release quarter questions. the in the that prepared wanted through fourth comment So is second just previous and unpack saying remarks your quarter with that to line both basically your few of a expectation. made press

is we did say better that you that Now, the out far, XXXX. know XXXX booking curve is than

of just wondering, Or out? far performance like I'm have expected? this booking – have is to upside curve a expect hard that kind you it something So would you that when the is

Jason T. Liberty

you in booking Well, were than when a year actually quarter, But in I thought. I in took think curve, think, look always this. the the first that your first we implementing factor Yes. some faster we the the at on things is of commentary early

activities side, on were but quarter And expected those better pick kind so of first we in to the QX we had the QX. onboard up revenue onboard revenue through

And which the trends better so it quarter, expected, as the little ticket bit those a environment, really for we first was and was had continued. commented on, we basically have

Of on activities we off that has year for the and the be strong to the based date. to year expected consistent early of balance pretty year, the in booking course, the been

behaving on something I into, is not pretty so except is had to our side, And think much to. the commentary more year, that read how it ticket the expected we

Felicia Hendrix

demand in kind if the Eastern. bookings Can about talk said the can, just through the And of you're the in you in what Okay. pricing – like seeing you were talk you Caribbean. Caribbean would the That that just Western versus be environment? you And helpful. can call about better

Michael W. Bayley

year. the Cuba and which Western been particularly almost Southern, Hi, Rico at Yeah, and between Eastern the the have so Western, has we're year pleased as ahead into But has look of Caribbean Felicia, performing the this itineraries, Caribbean, Michael. When demand performance. we'd strong it's itineraries Cuban well, commented doubled the same we've in been booking slightly you earlier, with the differential time sluggish. we're been Puerto other capacity quite last including then and

worth about total are Caribbean are think So of in that numbers pointing the XXXX. things The the in look Caribbean you I our when think overall, at of quarter it's out it's also then XX% And I different. quite good. quite balance the by capacity

announced. So Caribbean, over total just we XX% QX, was as good of capacity pretty the we've in quarter a our and had

down below drops to into QX and move QX mid-XXs, QX, then XX%. and around you As it XX% the just

lot for in the strength So good. expectations. of our of meeting we've And bookings environment is fairly our quite in seen last a the weeks, It's Caribbean. couple fact,

Felicia Hendrix

That's super of the of a on final, just helpful. moving some just stuff changes housekeeping, and we're And questions about lot the JV. with Jason, accounting getting costs,

So that? about specific maybe you be could more

Jason T. Liberty

on the but in do really JV some to just Yes. be going line. continued had to we're terms has that – benefit mean, more exceptionally first below actually of I the line, the and it's are our there would are geography, there accounting off, well favorability for it us small estimated – cost we

Felicia Hendrix

that is... there more is – kind said, of or of And of is you auditor kind is an Okay. that your or choice like advice

Jason T. Liberty

No. and it. appropriate the that's way also of Well, choice to for it's account a combination

Felicia Hendrix

all great. right, Okay, Thank you.

Jason T. Liberty

Thanks You got Felicia. it.

Operator

question please. the of next Your UBS. ahead Go line Farley from comes Robin from

line open. Your is

Robin M. Farley

timing to things wanted you ask Great, might little give higher expense about. just the about, about the typically we that about or I from TV just thanks. demand-generating so if that booking One think Two is same the would color Can can in activity sort revenue-generating on the you're be, what increased impact of like because us a you you'd activities. quarter. expect maybe to think ads, spending

question. that more do a spend wondering something the out? just few today And on quarters is is it bookings like so And focused something will demand-generating or have impact one if other I

Jason T. Liberty

Yeah. Sure.

on on there demand invest to that improve the which of the rise. So customers, to demand-generating, high-value attract certainly lots different in is and choosing things we're are

this heavily booked XXXX and into will a again, the high-value we're But specific money. – continue wouldn't money. keep the what – of to for I a opportunity and small But we're year, amount that's influence so looking is that except to talking in beyond. accelerate customers, a it's anything is attraction there go Now, we invest and again, that to of think this as to help about we mind are of say the yet, lot

Robin M. Farley

spending it sounds And you're that. not you're like basically so saying,

more yields hit that... guided. really for that you the had to You're to sort yield, not having spend is is spend of next This year's

Jason T. Liberty

obviously, the but This margins, – – XXXX it's there's can on mean, you I more there's Yes. beyond. influence it year, much about and

Robin M. Farley

of the package to initial people when wallets which sort here. as all And a just that to they before driving as onboard, for those deciding onboard getting I'm actually Or more is onboard that to whether it's and maybe and about Thanks. it this board? get all some then it out you're activity, part just this great. getting if upside it of selling mentioned lot then? of Or Is they actually things? part and it's the of sense spending That's is you a their fact wanted pre-selling – ask more? spend that the package the ticket it's of trying a accounting you're sort of get and you're people pre-selling of

Michael W. Bayley

mean kind It's I a if driver – we've a that XX% for Michael. we in earn of seen been mean, sales, years, between and every pre-cruise obviously, increasing uplift we of of XX% I really uptick we've the our it's it's big the spend. Hi for that a pleased couple a dollar past pre-cruise Robin, figure spend. onboard and see both. significant been that's we onboard we'll with and year-over-year somewhere

see provide. our new kind and positive it's course we're because now new years those of attractions beginning they a that yielding those we've are superior in then invested lot many a of the revenue-generating. quite of the environment. of really ships of venues heavily and So services onboard of to revenue over And And

say people we'd third are experiences. So And in mentioned, it's the combination. I'd element seeking then as really is, the really

shore very uplift really significant So then there. we've like et our seen And been selling course Internet excursions, cetera, of well. a has things

Richard D. Fain

pre-booking But the understand, It a on spend. on Robin, you're this, just you've marginal I sort looking total it's increases Good increases and your real clearly more advantage. is Richard finger as as says, these I'll morning. focusing, add, the satisfaction. Michael of the things It revenue all margin. their at together something change. also a the We're here. put also as at

think cost a there's the it's that But there's also technology. board, to next the thing terrific this across But associated that and paying And year but it's the do. with time quickly only over a pays specifics, the cost. there's a it's the think no off it's for of year. We cost question cost So we itself. not is

Robin M. Farley

about yield it's very is the think expense helpful. I needing not – that's your spend No, guidance. And to think not Great. helpful just it's to more Okay. how to that really you're maintain

kind that's about think to future. for being as helpful So that of

Okay. Thanks.

Jason T. Liberty

Great. Robin. Thanks,

Operator

Beckel comes next from please. Bernstein. ahead, Your David the Go of question from line

Your line is open.

David James Beckel

the for thanks Yeah, question.

into the Caribbean drill to environment bit. wanted a Just little

it that period confirm, period I hurricanes. a you as Caribbean have last of two think as think are of parts there ahead said calls last whole? also or I year's of was today? mentioned made that just the the in up and a curious, And the after was all Caribbean you I ago wanted maybe softness that softness to a Michael call of I'm follow-up. you just And then have

Michael W. Bayley

we're ahead Caribbean. in of in it's Yeah, obviously David, lot Yeah, a the Caribbean. Michael. mean of different I got we've Caribbean, parts overall in product hi, the the

earlier as the We is was different the mixed of across story commented had Puerto Rico that So out softer. product usual, products.

through September, and period, impacted Puerto portfolio extremely hurricanes XX coming or it really unique one in it time we while of where see quite and Caribbean. have ports was ships. Western that about in negatively out only Western total it's the of worth think did ship whole It's ports. sluggish. very full I Caribbean to took Eastern Rico of weeks we that year if mentioned operating Caribbean performed a those And back the it out three five previously, at around the it whole we'd period storms you the also a Caribbean for few September, course, Southern after start then Eastern look in that same of the during well, Of blew pointing six out was that Caribbean, a with

for done and product are plenty well and this during have there's very itineraries even that very, opened of period. sale being So

Jason T. Liberty

I wanted just in on about position in. consider area add, comment year short a And booking I product. the product the Mariner we a that that's David, would – book increase Caribbean, add other And, with point much with year-over-year in Michael's have think because I significant strong also it's that the to to this in a to in important coming us closer being

for us of of a combination strength So short in with to position be closer think, the of, testament position in of like type in Caribbean, I kind is a – booked really product in the today. strength Caribbean our to the the

David James Beckel

because about there? and demand curve Or of can better wasn't Great. the a pricing really forward? forecasting push as upside where is sort sort of surprise you extension close-in any lapping that a And the ask itself you're upside. helpful. at close-in pricing. called I follow-up, first future the in to I out in the of That's terms amount going is now getting a Is it that and as to can wanted while remember the close-in This quarter that

Jason T. Liberty

think it to much relates on in of past. I focus Well, as very obviously, we behavior the close-in pricing,

four as have we the position we we that's over especially where would in close-in, book so in as how be saw quarters, and our quarters behaviors And accounting those we six something look guidance. well that for at strength our how the in – to past

Richard D. Fain

how the kind turned out. strong I view. surprised your year also Yeah. constantly David, of say, we Last share were at would I year, really

was year, that And I year, I a this think saying think exceptional And during but think had not pleasant we the has it year. so the surprises very are we an that seeing extraordinary kept strong we we last year. been

David James Beckel

Thank you. Got it.

Jason T. Liberty

Thank you.

Operator

of comes from line question Steve ahead, Stifel. please. Go the next Wieczynski from Your

open. is line Your

Steven Moyer Wieczynski

Hey, morning. guys. Good

like-for-like simple or be Symphony, year-over-year from quarters? the would your removed in is four for know of Caribbean still bit I I the straightforward a on question I a for ask ask want if I So But price up little want harping little – just Michael. Caribbean. a Jason Edge more guess to bit kind Mariner, all maybe is to portfolio, you everybody differently,

Michael W. Bayley

That question one to course, other because, we is answer as in, exceptionally ship difficult of comes ships. redeploy

to lot times. specific of we deployment that put into products So there's accommodate a movement of during specific ships

when the an coming of mentioned, that easy obviously tell excited ship. sure knocking we Symphony And look I'm of in the our introduced that at previously the in fact Caribbean not out before So in, exceptionally you in fourth week we're the the in that's I by the Symphony mean, you terms I is we can our was I as we of XXXX, beat about think question. deployment Seas answerable we'd XX%. quarter. well it. introduced it Symphony little after literally, That's after booking. week park Seas, it statistic, the track introduced And bookings doing the of one the is

is is, To into coming really new product we're performing the having Mariner Mariner coming into about Caribbean, Mariner because about product excited ship So well. very market. an – a Jason's and three days, as is on it's just market, and for much shorts it's in X,XXX X,XXX, and A. and that's of four Mariner terminal, That really focused into or as and class new-to-cruise the well. for ship It's our comments every the the Terminal spot capacity over sweet short And its X,XXX, on-ramp coming is then that like just millennial, is market course, that coming literally up. Edge very Oasis the Celebrity

away months ship launching three sales and are into about already shorts we're from market, the that good for product. So the

Steven Moyer Wieczynski

around would color. Thanks that Got Okay. then be you. question the second And buybacks. for

quarter. $XXX back bought first million You

looking you guess produce stock program. And question execute repo the to – results. continue now, solid working. your today, to to And You it's pretty is exhausted your not I and continue obviously, good really results

program now right capital think guys, you in place guys kind we see? of a about the should plan how So not having repo you deployment and

Jason T. Liberty

calling Yeah, pretty Well, as performance but... – thanks qualifying Yes. for our well.

Steven Moyer Wieczynski

I'll to change great. that

Jason T. Liberty

you, Thank Okay. Steve. Thank you.

include to program. basis, – share generally capital that the a on repurchase the continue first board, continue not dividend or time. shares should But always believed the something change so we on opportunistically. performance this I whether deployment would going that would I So returns point have i.e., would you're it's and at There that of shareholder say nothing off, mix the a with our the we also price, of of in is to growth at repurchasing say we share think is discretion behavior that that that business,

Steven Moyer Wieczynski

appreciate I Thanks, Great. it. Okay.

Jason T. Liberty

it. got You

Operator

Your from of ahead Wedbush. line James next the please. question comes Hardiman from Go

Your line is open.

James Hardiman

Thanks morning. call taking good my here. for Hey,

Jason T. Liberty

Good morning.

James Hardiman

on that I obviously, this, capacity on. quarter. notion edges bear think but the we've heard two the head of I third could we got I XQ, guess, first particularly around the isn't address and touched I concern the was of guidance Obviously, this, time accelerates first, but major this the is hoping lot year in maybe a Caribbean think but the cases you've XQ. any bigger for we've this

guess So points about you extent pricing capacity really Caribbean anecdotes the data accelerates. comfortable, once there or feel to I any

phasing any and XQ but on You XQ, gave do next that of expect front XQ an industry-wide points valid XQ you I any that the guidance, guys, be next not to is this are bear year match big a guidance that yields us And basis, assume that's difficult about as global XQ on you going know that But expected XQ as demand year don't strong. to to we on we as be of obviously, supply-demand, XXXX worse sort best, not, is that capacity to going next I disprove would to any know on that think I and that in if data have if guess the about worse going notion than a think be think of Pretty should negative XXXX, obviously, there And case is there will I helpful. is that that that the it? yields. – be then accelerates. April than accelerate or year yield thoughts mean, that? is to assumption to we we year, this don't from supply accelerate, reason but

Jason T. Liberty

Yeah.

bookings a a I first rate being with tell product on we've for book and side, and So Caribbean. position is book question will on position strong what I Caribbean volume position you in the we a for quarter both is, accelerating basis. commented the won't what get book just about specifically are obviously, but also in our that on strong third the into by the

where so yes, – supply is. And understand we we the

time, around year. at the people dialogue window think a of of strong of should having consider extended being in for turn a position our I period the booking us strength the very

so regions And in anticipating obviously the the of a say supply we good coming I very But are that in been the different to would been has we've for that QX. position products and world.

of the though side, think obviously, it's what strength would there about environment seeing, capacity we're the the also booking in in our period which we're the still we're early, commentary the but On what very that – seeing and sailings I XXXX. include acceleration XXXX time about is reflects talking that

cruise. media have are becoming really about think past different levers shifts, demand, fans and lot footprint like strong and through markets. these very year strong helping world. in We're are continue of pretty we've script stuff. all seen And on of of in also penetrating consider each our expanding we consistent social volumes. experiences been focus we different when around a so our a stereotypes are the suggesting there the detractors of rise, every demographic we think consumer markets and cruise. are in I new-to-cruise real That's his trends perception also, the I forth And on this, think and buying that break versus very change on some the there penetration we about to Richard those people cruise commented

we are that's supply reasons and and in we're different of you the the make demand years. quarters the coming of sure the environment on and of a And different why to So that lot consideration us in booking of course, very managing we about think investors future need there's excited cruise.

James Hardiman

look Cuba we to go up we Cuba. I have able helpful. more really And of as me, hoping constraints lastly then sailings a And touch there opened been to been up first you on obviously, limitations. do And to about That's leadership Is forward, Cuba. lot When there's to and infrastructure be for more I was the and guess, to capacity a opportunity you continue yet, discussion for could there that? to seems Cuba change was move in sailing as forward? going how Cuba.

Adam M. Goldstein

has of satisfaction a time. to over of been been the either probably functioning takes there fact years. one The type Yes, considerable Hi. just side that first still is good of Cuban the improvement high. take several can the that has reality is ships time go But next very, about for That that all, will be pier been Havana there's going we've the infrastructure about on to that us customer It's in place Adam. Havana, commenting very market, the pier market have over to enter. some to

been seeing able increased. sailings government been even company getting has sides, been our that at we've increase ships a and the bit little what at the the a of to their better beneficiary efficient number We've They've though use is been more of capacity gotten on on year-over-year that. definitely basis, a the hasn't has lately both our think berth. into of pier maximizing just the I Cuban

terrific. our fairly overall of haven't whatsoever change So in still government change portfolio, for us what it towards is, it in in it's small. their attitude this with point. or it's any to their to And the But us their relates seen been sense as dealings we

James Hardiman

you. it. Got Thank

Jason T. Liberty

Thanks, James.

Operator

Greg please, comes Badishkanian line Your is from ahead line Citigroup. the from your question of next open. Go

Gregory Robert Badishkanian

Great. Thank you.

as you that you you easier the did in throughout the then the yields improve first And Jason, China. industry? just and on trend First, quarter? the positive to in mention year lessening compares capacity get further would were have expect

Jason T. Liberty

course but a be of quite quarter. Asia that we be We up first China strong comment what did to China yield comment was didn't for specifically Pac quite China guidance nicely in I do yields is expect that. of terms contributor the area. in in our the And would of

Gregory Robert Badishkanian

between the European-sourced called terms How Med, Eastern demand as was I as – European-sourced would in mentioned out. passenger in well. was strong American-sourced the you're North And you seeing that Okay. could was then Europe Western and strong business, that of assuming demand what differentiate And passenger Med? you I'm overall know you the well? the Med, you characterize

Michael W. Bayley

European been stronger. of European North strong. for even American Greg. product say would demand I for Yeah, has course, And products European demand been Hi, has

it's And there seeing and a in for Eastern the – good to year capacity it Med a the going an a all Northern. lot to in issues, was with it's increase a ago from so season was Western, it's great regards be operators a it's shift shift I like far of taking several Northern of years tour Western are European in of months, with So Med, Eastern Europe. Eastern of couple people looking the and of over we've we seen think With the terms past to destinations. the demand lot and geopolitical to

So coming demand back. is

increased customers. I I from see the more into our in interest that's think we think and region stability translating

We We've year and more have if the Eastern demand started Eastern and and stays we've be may next I and And year looks capacity some I increase got to think into our situation lucky geopolitical the itineraries slightly the Med. we're returning. this think got good. Med the stable

Gregory Robert Badishkanian

you. Thank

Operator

please. Go from Nomura question next Curtis comes of Harry Instinet. ahead Your from the line

Your line is open.

Harry C. Curtis

marketing marketing look give to what and year spend focus you to us Could now? XXXX how morning. a or is able Good of Hi. ahead still are sense degree you on in this targeted for much

Jason T. Liberty

Sure, Harry. Yeah. Sure.

and on in little – especially be I on by really generation on high-value activities. for margins is further Certainly, really bit is this booked. increasing what influencing well But So guests we're this can we the demand-generating this earlier, but focused out. year commented year demand very improving a investments

more than XXXX. related beyond is significantly to So and influencing it XXXX it's

Richard D. Fain

territory to is it a And covered. And well Yeah. to bit year. on Robin positive that, raised at think overall, this just you're expected Harry, covering our I We the the least that same as some is it. year. Richard, for we performing we've to guidance proving think back at own coming it's a add as little of very be its

technology Our marketing, investments, things. long-term investments other are our generally really demand-generating of kinds our fairly

And that the keep invest had order in heavily to marketing. so in I'll disabuse the to yields notion we've up,

be also will long our focus with we help think et think continues some us we're of talking just future, again, technology, I cetera. us I want marketing to helps in the emphasize, The these not to things. and And term.

There as we're the in feeling other company. think response XXXX interests strategic marketing, a is keep what long-term pretty we out, we pointed said And our to actually this – and anything remarks, we best course is Jason kind the in than process. are, and of of this as good not the tactical a of marketing long-term is balanced. But try So and that there's prepared about and future.

bit think much surprised little we're that So so a of questions I on the topic. at

Harry C. Curtis

calls. covering jumping conference for covered, I've between apologize I And ground been already around

the at let me doing know So it risk already... again, of it's if

Richard D. Fain

here as can, have as much purpose is we we The all don't to you welcome Harry, to and opportunities that. apologize. communicate to

Harry C. Curtis

How other Okay. been and Thank extent you onboard you the go? to is there. your very to, much to did guys one out that fleet has pertains the onboard to question much. I as improving renovated what the spend? have relating degree results spend To it intended your more strength quick yet in calling to you renovation-driven is

Michael W. Bayley

Caribbean and and significant with Revolution Amplified. for Celebrity Royal announced both upgrades recently we Celebrity modernization programs with International Harry, Well, Royal

includes Voyager, that which taking venues features, we're Royal of modernization, cetera, onboard and upgrades, stimulate attractions, class, Oasis all them elements literally through will fact, Allure our Freedom and adding putting significant Caribbean, in For et and spend. further of

I of So if – terms think percentage, I answer to the don't question do a that. could in

guest think between that improved by always I for and do to taking our opportunity that improving we Net but focus is Promoter balance the is going with generating Scores that every us. satisfaction, combining revenue think

Richard D. Fain

gives respond consumer point made industry The your to me opportunity And, a that we've to to actually question before. the its needs. has proven amplify Harry, ability

have is are to for have doing the responses doing off Michael at that changed, things desires that doing about paying their tastes joint and the Azamara we're of at other some really us. at Celebrity, that ventures are and peoples' talking we're changed, that we're our Royal, way So it's –

the think about, to think has you and to tend product kinds gives activities, We're that's demand. demand the the experiential side that think entertainment, And of that evolving we Royal chance evolving things on as continue definitely focus that cetera, really evolving. this the the supply-demand memory-producing Caribbean. to driving And et will drive we're an been we're industry, balance. also and of a kind We of the why I evolution, So me upgrading food, the point. other reemphasize as We're in but activities. terms of we standard both within think our offering, that of actually that's increased brands this thing

Harry C. Curtis

That me. Thank does you. it for

Jason T. Liberty

Thanks, Harry.

Operator

Wells question from please. next Go Your comes of Fargo. from Tim Conder line the ahead,

open. Your line is

Timothy Andrew Conder

hopefully, had at or Thank I'll Day, the think Seas, the you couple especially maybe Michael, focused things you maybe, look with Symphony of you social marketing a here, almost at you. But virtually I talked solely of little that the that Analyst a back Good morning, – November mentioned, about angle. gentlemen. in different ship media. via

total millennials, in your as years So Symphony? I that an it how whether to whether with us social that Edge, also, Pursuit, was with any where guess, three guests ago, you be there? a can update And be a now is, shifting marketing update percent ago, media, versus general of give with be your your whether then that year percentage-wise,

Michael W. Bayley

unhappy social through we my better say is media that we actually promote And of an in marketing with We're have people Royal universe. fact, team our exceptionally significant utilize of Royal social well Internet journey ourselves really into the over of presence, with past in media I in space. our brands, continue in information, and traditional also entire out accelerated targeting from lens social onboard terms how to with that more are Caribbean me. strong and maneuvered where that effective. just been really we it's to a Tim, that are channel. seeing from been with there independent we view would I using response that they're people digital we Internet years couple and the would Caribbean. how that has to we gave media a recently of marketing, efficient engaging And certainly, it if the fairly think survey quite believe how you our which that of positioned conducted came made We really journey. it's we've position terms a And be and and the

It's a preferred it's obviously also a channel obviously, new-to-cruise. the that channel. good and is, So millennial by

great it's that activate channel a to group. So

relates of very much the and And going all of the Day of ship the really and we new-to-cruise with that operate the a new significant when along started media. Perfect think modernized it in on-ramp that ship through in with Seas strategy social will CocoCay market, heavily course, our to and combining Mariner, combine we've the be X- for X-day millennial, with that of Day, you that's an terms features that reveal that adding are we're Mariner Perfect that how to Day marketing and creating investment of modernization to millennial. CocoCay, accelerated into pushing that it Perfect new-to-cruise programs into experiences the to we're putting and As kind product, ship that with the of

I So from direction we're aggressively you positive moving that actions. seeing and give are those very All is numbers. I tell results in can't that can we you really

Timothy Andrew Conder

directed it surmise or that we of that this is spending majority some Could vein? of a increased in

Jason T. Liberty

Richard Certainly, those of enhance as be further like would that term, would again, I our the focus some and is elements noted. of that more to spending, millennials. segments say longer the connectivity to marketing

Timothy Andrew Conder

And as maybe of here. you purposely Okay. a there the how to there Related And or capacity feel hedge extending ones have that we in a get are – little XXXX, then do bit coming, particular, putting base – Caribbean, a faster. do you industry you're curve then you, to bit on to the and the industry? you as product about should the performing two you're given build this on last think that little that the the given booking bit a year relative just – little

Jason T. Liberty

curve. the on others relating comment relates Well, to I are industry can't booking what to as it doing their

put because, forward capacity, I is managing in for that's we offering a to ourselves and yield it's have that's our proactively to using demand. and especially Royal its that, success. percentage consideration and tools leading product management strong supply think that the and are, do the coming our large why sophisticated the continue the continue We of demand their very to a posture Caribbean offering of Caribbean International brand, in in very is obviously, see certainly been,

If products on kind Mariner, been look Symphony, for as and exceptional. just new core it's you demand of quite Harmony Caribbean, the the at just into commented, Michael and

Timothy Andrew Conder

Thank you, gentlemen. Congratulations.

Jason T. Liberty

Thanks, Tim.

Operator

from Your Jared next ahead, question from Research. of Wolfe the Shojaian please. comes line Go

is Your line open.

Jared Shojaian

follow good want call. to questions. Michael, up said morning, the earlier taking Thanks something just my on for you Hey, everyone. I in

Symphony strength couple that you Caribbean an you've seen weeks, that? on is for And Can elaborate I from or say in think heard something Is or just the Edge you've else in itinerary, is driving acceleration that bookings. last Rican that? and specifically been Eastern is bit of what you Puerto it quite a it seeing? Caribbean that's I that

Michael W. Bayley

and that some upon of X,XXX-point And Obviously, rate manage the and point. constantly interesting we're track constantly calibrating in Yeah. investment of that is we with decisions based stock that against performance. and a the this track et course market things engaged brand. when and we're see marketing and terms at cetera, lot performance of our track of obviously, like volume revenue, the are in expectation by drop you product by And

was few a ago. it think I months

of yeah, over going weeks our Caribbean products our You soon on at But a obviously, seen the for and it curve last couple Caribbean. as Southern seen the in the weeks, bit on market the expectations past all we've stock above can strength that people of also Eastern see and what's and drop with little concern themselves, we've returns. two the

Jared Shojaian

want yields helpful. pricing close-in this explain It's why and upside potentially close-in discounting this Thank the an winds the quarter. And then didn't very has you. this to revisit if initiative. down, this But know I the that That's to as wondering interesting. could just been topic. surprise I'm I integrity

happening? you So hear still Is going now? where on? update. love certain discounting is Are markets do this there still initiative there price stand an We'd integrity that's some to with your where just

Richard D. Fain

to term We us I This overall. we're and hurt It's short and a personally think continuing it wasn't an us but had helped continuing in think hard on short these program initiative it. it's measure to timeframe. the that things, a help was us. It

In I my it. called it We're think out fact, exceptions. not make And to continuing we I in comments. are continuing

think that. a normal to initiative to discount. that's it mean, been it's won't continue run the of want we've And think has successful. its it's be. We part sticking it course, XX will process. we're a any What in We clear, not new we discounts place that I and to continue will in to program that the discounted to I in be says the be it's last it's continue We days, place. and and is add always

Jared Shojaian

then one one of a quick Okay. expecting Celebrity And How you Thank last yields tailwind online? just for Edge to me. when are much you. comes

Richard D. Fain

the didn't the I question sorry, on I'm side. hear yield

Jared Shojaian

average what and then it Celebrity kind premium tailwind is, system Edge premium does what to question a does how a of guess a yields The online? Yeah. of is much comes to get going Celebrity of I it average? your to when add maybe get ask the Celebrity to to differently, Edge kind

Jason T. Liberty

demand a definitely Celebrity it's higher fleet in yield in in average a terms new again, had its has that exceptionally strong. so ship not ship a performance. our Yeah. is Well, many – is than Edge new brand years, of many, And is

really will in in that certainly take few the So I XXXX, by month going Celebrity to quite as of Edge from really benefits a a us just sailings the it mind place higher are only average help keep in XXXX, bit. in December. that mainly would there's is than the

Jared Shojaian

you. thank Okay,

Jason T. Liberty

it. more got question. one You Operator, we have for time

Operator

ahead, comes question line Vince the Ciepiel last Research. of Cleveland your please. Go And from from

open. Your is line

Vince Ciepiel

question Thanks me quick the I in at Great. end. had for the fitting just guidance. here a on

$X.XX like it headwind, raise. $X.XX but a fuel there FX is So sounds was a

to And a seems of it it significant that, thought are on raise? other income within and JVs ago? the better. basis part about So the fair business say like is Is are the $X.XX things that core better you where a performing XX about versus days then

Jason T. Liberty

Yes.

the FX If the So the $X.XX. and January fuel our we the quite were of here basically raised pointing Pullmantur just have and both offsetting of are our this TUI – guidance, exactly were time definitely effectively, things at JVs, wouldn't we're kind those at and the $X.XX. they you they would have risen for and right. updated are are And what contribution. call. by increase costs by That's Certainly, that We that doing thanks, of a thank Vince, well part in time of out. we

that. offsetting basically they're yes, So,

lowered And so $X.XX. to of And relating that that raise fuel really and $X.XX course, FX the down then beat. is QX the by

it's it So $X.XX. been but have would $X.XX,

Vince Ciepiel

Thanks. Great.

Jason T. Liberty

Thanks.

Vince Ciepiel

SkySea joint And a you venture, then the don't mentioned know if it's could bit there. just talk I little been about yet, your but thinking

was I year. the think March the ends decision? that at it announced that end of in went What that into

Jason T. Liberty

Yeah.

decided I think was that to to the it that was And to which bit we to on for quite us a an Obviously, coming there years profitability on a from opportunity. an years, opportunity shareholder X actually will our going are for ship was were outlook improve business there move TUI venture. Mein that further forward will actually AG. hold and minority will help the TUI just It XXXX in Cruises on. as Schiff in we that that sell

Vince Ciepiel

Great.

Jason T. Liberty

Okay.

in all a today. Thank for we appreciate that wish you follow-ups day you your might for assistance, for your care. you and be the and You interest interest. Carola really And great participation all call the any got Take it. and the all James, company. with you available thank have, will we

Operator

This concludes today's conference.

You disconnect. now may

Royal Caribbean Cruises (RCL) 26 Apr 182018 Q1 Earnings call transcript