Jason Liberty on $9-plus EPS in 2024, Israel, impact on Europe, new-to-cruise clout

So far, demand for 2024 sailings has continued to accelerate, with Royal Caribbean bookings 'significantly and consistently' outpacing 2019 levels. Booked load factors and rates are higher than all prior years while the booking window has continued to extend.

Group President/CEO Jason Liberty on Thursday told analysts earnings per share are expected to be 'at least' $9 next year, which is above Wall Street's $8.41 consensus estimate and today's elevated 2023 guidance range of $6.58 to $6.63.

That higher 2023 guidance includes the negative impact of Israel, higher fuel costs and currency.

Israel 'pretty immaterial' to the industry

About 1.5% of Royal Caribbean's fourth quarter capacity was scheduled to visit Israel but those sailings were quickly adjusted, and Liberty thanked his teams shipboard and shoreside for enabling Rhapsody of the Seas to evacuate Americans from Israel, at no cost to the US government.

In 2024, Israel represents just a 1.5% sliver of the Group's capacity. Industry-wide that number is in the low single digits, according to Liberty, who said some competitors may have a little more capacity there but it is 'pretty immaterial' for the broader business.

Impact on demand for Europe?

It's too early to know if Israel will impact demand for travel to Europe, Liberty said, with the typical six- to eight-month booking window for European cruises just starting now.

'It's not something we're seeing today,' he told the Q3 earnings call. 'We don't know how long this war/conflict is going to go on, which could very much inform where the consumer wants to go next year.'

What's important, he added, is that Royal Caribbean is getting very "sticky" consumers, who want to sail with its brands no matter where they go. They're also racking up many more on-board purchases in advance of their cruise.

Typically the company's Europe business is sourced about half from North America and half from Europe.

Caribbean capacity spike

In any case, the bulk of Royal Caribbean's 2024 capacity is in North America, with Caribbean deployment up double digits, European capacity slightly reduced and Asia Pacific up thanks to Spectrum of the Seas' return to China.

Capacity distribution goes up to 55% Caribbean with the addition of Icon of the Seas and seven months of Utopia of the Seas with its short cruises, while Europe capacity will be at 15%, Asia Pacific 10%, Alaska 6% and the balance in South America, repositioning and expedition cruises.

CocoCay's Hideaway Beach sales 'going gangbusters'

Some 3m passengers are set to visit Perfect Day at CocoCay in 2024, up from 2.5m this year.

Michael Bayley, president/CEO, Royal Caribbean International, toured the private island's new Hideaway Beach last week. It's scheduled to start taking ships in January, ready in time for Icon's introduction.

Hideaway Beach sales opened three weeks ago and are going 'gangbusters,' Bayley said, with the brand already starting to push up pricing.

China bookings/rate ahead of 2019

Spectrum of the Seas resumes sailing from Shanghai in April and Bayley said booking volumes and rate are ahead of 2019, a record year, 'so we're feeling quite optimistic.'

In response to an analyst's question, he doesn't anticipate shifting any capacity from Northern Europe or the Eastern Mediterranean to China at this point.

More new to cruise and brand

Royal Caribbean Group is seeing a 'significant' increase in new to cruise and new to brand customers — in Q3, they comprised about two-thirds of its business.

New customers typically book short cruises and Royal Caribbean is heavily indexed on those. Liberty also said new customers are returning at double the rate than in the past.

According to him, a 1% market shift from land to cruise vacations represents the capacity of 10 or 11 Oasis-class ships.

'The younger generations,' Liberty said, 'are looking to us like going to Orlando or Vegas or skiing.'