Royal Caribbean Group posted its fourth quarter 2022 earnings on Tuesday with a smaller-than-expected loss.
The company reported a loss of $500.2 million in its fourth quarter and losses of $1.12 per share, which beat Wall Street predictions of of $1.37 per share loss.
Royal Caribbean Group posted revenue of $2.6 billion in the period, which met analysts' expectations.
The better results were a result of better pricing on close-in demand, strong onboard spend, favorable timing of operating costs, and lower interest expense.
"2022 was a pivotal year as we successfully returned our business to full operations and delivered memorable vacation experiences to 6 million guests," said Jason Liberty, president and chief executive officer, Royal Caribbean Group.
"We also returned to positive Adjusted EBITDA and Operating Cash Flow by consistently growing revenue and controlling costs. Our teams have worked tirelessly to deliver the best vacation experiences, responsibly, and we are grateful for their extraordinary efforts."
Fourth quarter numbers
Here's a breakdown of Royal Caribbean Group's fourth quarter earnings:
Ship capacity (aka load factors) across the fleet were at 95%, with Caribbean sailings reaching 100%, and holiday sailings close to 110%.
For the entire year, load factors were at 85% full. This averages out every sailing, in every market, for the year.
Total revenues per passenger cruise day were up 3.5% as-reported and 4.5% in Constant Currency, compared to the fourth quarter of 2019.
Royal Caribbean Group incurred a $130 million hit as a result of a lawsuit stemming from the former owners of the cruise ship docks in Cuba. The company that owned a port terminal in Havana prior to the Cuban Revolution, sued the cruise lines under the Helms-Burton Act, which allows certain U.S. nationals with claims on properties confiscated by the Cuban government on or after Jan. 1, 1959 to seek compensation from the companies operating those properties.
Royal Caribbean Group said it, "continues to vigorously defend" against the lawsuit.
For the full year, the company reported Net Loss of $2.2 billion compared to Net Loss of $5.3 billion in the prior year.
Predictions for 2023
The year started off quite well for Royal Caribbean Group with a record-breaking WAVE season, driven by strong demand.
Demand is so strong that the company had its seven biggest booking weeks in its history since the last earnings call in November 2022.
Customers are returning to a more normal process of booking cruises in advance, which RCG sees as confidence for its business that the booking window returns to normal.
All those drink packages, shore excursions, and wifi purchases continue to exceed prior years driven by greater participation at higher prices, which the company sees as quality and healthy future demand.
North America sailings, many of which visit Perfect Day at CocoCay, are leading the way and are booked in line with record 2019 levels for the full year and ahead for the second quarter through the fourth quarter.
Bookings for European itineraries have been accelerating during WAVE and are now higher than 2019.
"Leisure travel strength continues as consumer spend is shifting towards experiences, with cruising remaining an attractive value proposition," said Mr. Liberty.
"The quality demand trends further exhibit the strength of our brands and the growing propensity to cruise."