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Questions investors are wondering ahead of Royal Caribbean Group's earnings call this week

02 May 2022
Matt Hochberg

Royal Caribbean Group's first quarter 2022 earning call is scheduled for this week, and a lot of investors are going to be eager to hear about the financial well-being of the cruise giant.

Explorer of the Seas docked

Each quarter, every publicly traded company releases its financial results from the previous three months and then discusses what happened in-depth in a conference call that anyone listen to online.

Earnings calls are hosted by Royal Caribbean Group's top executives, and it is a combination of disclosures, prepared statements and answering questions from Wall Street analysts.

Royal Caribbean Group will host their call at 10:00 a.m. Eastern Time, on Thursday, May 5, 2022.

To get a sense of the top things Wall Street wants to know this quarter, I reached out to Dan Kline, Managing Editor, TheStreet.

Have they seen a rise in average prices?

Harmony of the Seas in Barcelona

You don't need to be an investor to know that prices for cruise fares have been trending up lately.

Cruise vacations have always been a tremendous value, but like so many things in life, prices tend to go up over time.

People paying more for a cruise might not be what the average cruiser wants to see, but it is a good indicator for investors who want to see how quickly Royal Caribbean Group can knock down the debt it accrued during the pandemic.

Are people still spending more onboard?

Ever since cruise ships restarted sailing in 2021, guests have been spending more than ever beyond their cruise fares, and an update on that trend will be important to track.

Sometimes referred to as "revenge spending", consumers have demonstrated a strong desire to make up for lost time over the last couple of years by buying up drink packages, gambling in the casino, and booking lavish excursions.

It's not just cruise lines seeing this trend. Airline and hotel stocks have been surging this year thanks in part to what some are dubbing the "YOLO economy".  United  and American Airlines both reported strong earnings last week. Shares of Marriott, Hilton and Wyndham are near all-time highs. Theme park owner SeaWorld is not far from a record high, too. 

For Royal Caribbean, the question will be are cruise ship passengers continuing that trend.

How much of the record bookings use FCCs?

AquaTheater suite on Wonder of the Seas

An important indicator of Royal Caribbean's demand is how many bookings are being booked with cash or existing future cruise credits (FCC)

Future cruise credits are something given out when cruises are cancelled, and to get a better sense of the company's financial state, comparing the amount of cash the company has versus FCC is another common question.

Are there plans to retire more ships?

Granduer of the Seas

With Royal Caribbean taking on Odyssey of the Seas and Wonder of the Seas in less than a year, and four more ships on order in the next few years, will existing ships be shed?

The cruise company has always said they would be strategic with selling or transferring older ships out of the fleet.

Whether or not the resale market for cruise ships has improved since the depths of pandemic remains to be seen, and it's not clear what to expect from the aging Vision Class ships.

Do they plan to refinance more debt?

Royal Caribbean headquarters in Miami

It will be a while before Royal Caribbean Group can emerge from under all those loans it had to take out during the pandemic, but they're going to need to be creative to avoid it becoming a massive boondoggle.

No one expects the debt to disappear tomorrow, but investors will want to hear about how Royal Caribbean Group plans to handle it all.

How you can listen to the earnings call

There will be full coverage of anything intriguing that comes out of Royal Caribbean Group's first quarter 2022 earnings call on RoyalCaribbeanBlog, but if you would like to listen on your own, here's how.

The call will be available on-line at the company's investor relations website,  

You will be able to listen via the link provided close to the start of the call.