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RCL shares soar as management allay investors' Caribbean concerns

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Michael Bayley - 'Overall we're feeling good about the Caribbean for 2018'
The 2018 wave season is 'off to a very good start,' following last year's 'incredibly strong' wave period, Royal Caribbean management said Wednesday, and despite some investor concerns the company is 'feeling good about the Caribbean.'

Their comments were effective. After opening lower, RCL shares soared to $134.76, a record high.

Bookings are ahead year over year in both load and rate, driven by strong demand, particularly from North Americans for cruises on both sides of the Atlantic, CFO Jason Liberty said. All core products are performing well.

The first quarter Caribbean program was very strongly booked before hurricanes softened business for four to six weeks, but bookings recovered. Royal Caribbean has added a second ship in Cuba and two more ports there. Meanwhile, Mariner of the Seas will be returning from Singapore to the US and, following a major dry dock, will embark on short Caribbean cruises.

'Overall we're feeling good about the Caribbean for 2018,' Royal Caribbean International president and CEO Michael Bayley told analysts who voiced investor concerns during the company's fourth quarter earnings call.

Later in the year, the new Symphony of the Seas and Celebrity Edge will be entering the market, and they're generating lots of excitement. Mariner of the Seas' deployment means 'quite a lot of product' in the short cruise market, however Bayley said it's booking very well, even early out.

The promotions travel agents may be seeing could be for a small volume of inventory. Or, Bayley suggested discounts could be for a 'new product entering from competitors' who 'may have challenges.'

Concerning other geographic regions, RCL's and industry capacity are slightly down in China, where Bayley said the company's current booked position is good, adding: 'We're not seeing pricing down for our product in China.'

RCL has a tad more capacity in the eastern Mediterranean this year, and more Europeans and European tour operators are returning to the region as it stabilizes.

A 'significant percentage' of the Royal Caribbean brand's 2018 bookings are in the nonrefundable deposit pricing introduced a few months back, 'which means we'll see significantly less churn in 2018 and as we move into 2019,' Bayley said. Also, 2019 inventory was opened for booking four months earlier than usual and bookings for next year are 'significantly ahead' albeit on small numbers.

'Consumer confidence is in a good place, globally, across many markets,' Bayley said.

Even with Symphony of the Seas arriving in April, Azamara Pursuit in August and Celebrity Edge in November, RCL has a modest 3.9% capacity increase this year.