'It's almost as if we've stepped into the next quarter after 2019': Jason Liberty

'The business is back and operating. Booking activity is very similar to what we were experiencing in 2019 and it's accelerating,' President/CEO Jason Liberty said Thursday.

'The consumer is very healthy. They're spending a lot of money on our ships. Psychologically and experience-wise, it's almost as if we've stepped into the next quarter after 2019.'

2019 was a record year for Royal Caribbean and the industry.

Liberty spoke during his company's earnings call after the group posted better than expected third quarter results and reiterated its forecast for a record 2023.

Normalized environment

The removal of COVID-19 protocols expanded the addressable US market by almost 35m people 'and we saw it in our bookings, almost overnight,' said Michael Bayley, president/CEO, Royal Caribbean International. Globally, the picture is 'pretty similar,' with protocols easing and those in the Australia market, for example, expected to fall away in the coming weeks and months.

'We've entered into a very normalized environment and we've seen the customers respond with a huge amount of enthusiasm,' Bayley said.

Last week the company reported the highest single booking day in its history when sales opened for Icon of the Seas, and Bayley said the 'absolutely phenomenal,' demand has continued into a second week.

The Royal Caribbean brand is focused 'squarely on the family market,' with the Icon-class ships' family facilities and plans for further private destinations beyond Perfect Day at CocoCay.

According to Bayley, it's about competing with Orlando by moving into that family sector 'far more aggresively.'

Push to narrow the gap with land vacations

Liberty added: 'We've seen this 40% gap with land vacations; it used to be about 20%. Royal Caribbean closed the gap very significantly with the introduction of Perfect Day and the modernization of our fleet. We see a lot of opportunity to close that gap over time.'

To do so, the Royal Caribbean brand needs to increase the frequency its customers cruise and improve the loyalty program and one-to-one marketing 'so we're putting offers in front of our guests that are very relevant to them individually,' Liberty said.

About 80% of the US market lives within driving distance of Royal Caribbean homeports, and the company has upsized its short Caribbean product about 35% compared to 2019. Almost 65% of customers on a Royal Caribbean International cruise will visit Perfect Day at CocoCay in 2023, up from 30% in 2019.

2023 capacity, sourcing, destination distribution — no China

In 2023, Royal Caribbean Group will have 14% greater capacity versus 2019, with 10 ships joining during this period, net of ship disposals.

More than 80% of 2023 guest sourcing will come from North America, where there's 'particularly strong demand.'

Deployment across destinations will be relatively unchanged compared to 2019, wtih the Caribbean accounting for just over half of capacity, Europe almost 20% and Asia in the low single-digits with 'no planned deployment in the high-yielding China market.'

Liberty cited booking strength for Caribbean cruises, Alaska and Europe, weighted to the Mediterranean.

Booked 55%-60% going into 2023

The CEO told analysts he's 'very comfortable' with how Royal Caribbean is booked heading into 2023.

The company expects to be 55% to 60% booked as the year turns, and Liberty noted that's without China business — adding that historically most of China would be booked because it's a charter market. There's also more short-cruise product in 2023, which sells closer in.

Vs. NCLH 65% 

This projection compares to Norwegian Cruise Line Holdings' expectation of being 65% booked heading into the new year, according to NCLH's mid-October forecast.