Royal Caribbean sees China restart a year from now and market's return to pre-pandemic level

'We're now more encouraged by all of the signals that we've had for our reopening in China in '24. We've still got some work to do, but we've now started to rebuild our sales organization in China, and we expect, hopefully, by late spring, early summer [2024] to be back operating out of China,' Bayley, RCI president/CEO, told analysts during Thursday's earnings call.

Significant pre-pandemic business

He noted that pre-pandemic, Royal Caribbean had built 'significant business' there and suggested the brand was No. 1 in the cruise market by volume, with a few homeporting ships. 2022's Wonder of the Seas, the fifth Oasis-class vessel, had been planned to debut in China before the global cruise shutdown.

During part of the pandemic RCI operated the Quantum-class Spectrum of the Seas from Hong Kong on cruises to nowhere but redeployed the ship to Singapore in early 2022 as measures to contain the Omicron variant waged on. Spectrum's Singapore deployment subsequently was extended into 2024.

Chinese customer's value 'very high'

'Our expectation is that this market will return to how it was pre-pandemic. The value of a Chinese customer is very high,' Bayley said. He put net revenue from a Chinese passenger as 'around the same level and slightly higher' as an American, adding that onboard spending skews differently in different areas.

The brand's deployment has been more heavily weighted to the Caribbean and shorter cruises on strong US customer demand, particularly for itineraries calling at Perfect Day CocoCay.

Slight deployment shift seen

Jason Liberty, president/CEO, Royal Caribbean Group, signaled deployment will shift 'a little bit' going forward with China's expected comeback and the Asia-Pacific region lighting back up in 2024 and 2025.  

But the Caribbean is 'going to continue to be where the majority of our capacity is,' Liberty said. 'And I think our broader portfolio of deployment more or less look like it does this year with a little bit more indexing into short [cruises] and a little bit more indexing into China.'

Meanwhile, Bayley noted outbound travel from China has started to return 'but on a much smaller base.'