Icon of the Seas predicted to have halo effect on cruise industry

Certainly the ship's introduction is perfectly timed to the traditional wave season takeoff.

During an investor meeting aboard Icon of the Seas, Royal Caribbean Group CEO Jason Liberty and CFO Naftali Holz had a 'bullish tone on demand trends' and visibility for hitting the 2025 'Trifecta' goal ($100-plus adjusted EBITDA per available passenger cruise day, $10-plus earnings per share and 13%-plus return on invested capital), William Blair analyst Sharon Zackfia said.

'Significantly higher than average yield'

Zackfia expects Icon to post a 'significantly higher than average yield given more on-board revenue opportunities and a richer cabin mix' — 80% of cabins can accommodate third, fourth or fifth passengers — while 'generating a strong ROI as it is 24% more fuel-efficient than Oasis-class ships.'

Royal Caribbean, she said, typically targets a five- to six-year payback per ship.

Zackfia added Icon furthers the brand's evolution to appeal to multigenerational travelers, with the potential to support stronger shoulder seasons thanks to the Surfside neighborhood designed for families with younger children, either pre-school or whose parents are more willing to pull kids out of school for a trip.

Icon price points already equaling upscale Disney World resorts

'We believe investments in innovative ships, top-of-funnel marketing and Perfect Day at CocoCay have greatly enhanced Royal’s ability to compete against its land-based peers, and see the potential to eventually zap the price gap to land-based options,' Zackfia said, adding Icon is 'already achieving price points in keeping with upscale resort options at Disney World.'

Eastern Med not impacted by Red Sea issues after a 'blip'

While it's still early to call wave season, 'Our sense is that trends remain strong so far ... reflecting both strong momentum in the fourth quarter ... and management’s comment that it is seeing no impact on Eastern Mediterranean trends as a result of Red Sea issues after an initial blip,' Zackfia said.

Royal Caribbean is set to report Q4 results on Feb. 1.

William Blair reiterated its 'outperform' (buy) rating for RCL at a multiple of 14 times the brokerage's $9.06 EPS estimate in 2024.

Shares were up $1.19 to $128.19 before market open Monday.

Seatrade Cruise News will be reporting from Icon of the Seas starting late Tuesday when the ship is due to be named by sports icon Lionel Messi

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