Royal Caribbean Cruises hosted a very upbeat and optimistic earnings call today, with Chairman and CEO Richard D. Fain pointing out that the year’s earnings ended spot on with the guidance given a year ago, despite all the bad media coverage.
The company reported adjusted net income of $2.40 per share for the full year of 2013 and the 2014 forecast is for $3.20 to $3.40.
Fain said earnings were driven by onboard spending, close-in bookings coming in at good prices, and ship revitalizations beginning to pay off.
He continued to say that Royal Caribbean International is the strongest brand in the group. Celebrity is undergoing what he called a dramatic shift, with yields showing strong growth and costs significantly down.
Azamara is expected to achieve the highest yield improvement the company has ever seen, according to Fain.
And Pullmantur is undergoing major changes, with a new headquarters being established in Latin America while selling its tour operation. This is setting the stage for a transformation. Fain said, who added that he expects immediate growth to come from Latin America, but that Spain will remain the brand’s major market.
He said that 2014 will be a transitional year for Pullmantur and that positive results should come in 2015.
Altogether Fain said the company is forecasting a 40 percent increase in profitability in 2014, without any significant new capacity, as the Quantum will only enter service in October/November.
Fain also promised that the Quantum is a totally new class of vessel and not merely an evolution of the Oasis class.
“We expect that the Quantum will generate a fantastic return on investment,” he said.
For 2014, the Royal Caribbean brands will have 46 percent of their capacity in the Caribbean, up 13 percent year-over-year; 22 percent will be in Europe, down 17 percent from last year; 12 percent will be in the Asia/Pacific, up 12 percent; and the balance will be spread over other regions.
With the industry concentration in the Caribbean, yield there is expected to be down, but that is expected to be offset by yield improvements in other markets.
Overall, Royal Caribbean will see a 1.7 percent capacity increase in 2014.