In positive earnings call today, Royal Caribbean Cruises (RCL) executives noted that Q3 results (see previous news posting) were better than forecasted and the company is increasing its guidance for Q4 and the full year, and expects further improvement for 2014.
RCL said that both bookings and pricing were up for next year.
For Q3, while gross revenue was up 2.7 percent year-over-year on a per passenger day, net income per passenger day was down 1.6 percent, however. Gross ticket revenue was up 1.2 percent, compared to net ticket revenue, which was down 1.2 percent. And while gross onboard revenue was up an impressive 7 percent, net onboard venue was down 0.6 percent.
The impact of the Millennium being out service was $0.09 per share or approximately $20 million.
The average ticket price paid per passenger was $1,327.86 this year, up from $1,311.46 last year. The average onboard spend per passenger per cruise was approximately $508.01 this year, compared to $474.33 last year.
Richard Fain, chairman and CEO, said that Q3 was the 14th consecutive quarter that has shown yield improvement for Royal Caribbean and he expects 2014 to the fifth consecutive year with yield improvement.
Fain commented that the company’s heavy investments in new ships, its global deployment, and guest satisfaction are paying off, driving higher yields, demonstrating the strength of the business model and the power of its brands.
He also noted that the results of this year are coming despite what he called external pressures.
While most markets are expected to be up in 2014, Fain said that the Caribbean is expected to be flat to down slightly in terms of yield, due to a double-digit capacity increase. However, any weakness in the Caribbean will be offset by strength in other markets, he added.
Adam Goldstein, president and CEO of the Royal Caribbean International brand, said that most of the growth in the Caribbean will be out of Southern Florida, while Royal Caribbean is building up capacity in Galveston. In addition, the Oasis- and Solstice-class ships are commanding premium pricing out of Florida.
While Pullmantur has been struggling in the Spanish and has been what Fain said was a drag on corporate earnings, the brand is establishing itself in Latin America and will soon open a headquarters in the market.
Europe, Alaska, Australia and Asia are all expected to be up in 2014, according to Michael Bayley, president and CEO of the Celebrity Cruises brand, although Goldstein added that 2014 Asia itineraries out of China will still be excluding Japan.
Bayley said that 22 percent of the fleet capacity will be in Europe next year and 10 percent in Alaska, with both markets expected to drive a proportionally higher revenue share.
Asia capacity for Royal Caribbean will up 20 percent in 2014 with the full-year deployment of the Mariner.
In other news, Goldstein said that the revitalization of the five-ship Voyager class will soon get underway and that each ship will get an additional 75 state rooms.