Demand for cruises by repeat cruisers surprises Royal Caribbean

In:
20May2020
By: Matt Hochberg

Royal Caribbean held a call with investors this morning to discuss its first quarter 2020 results, and touched upon a variety of topics related to the current business climate, as well as what the future may look like.

During the hour-long call, Royal Caribbean Cruises Ltd. executives answered questions related to return to service, refunds, future demand and more.

Surprisingly high demand by cruise fans

Despite all the upheaval in the cruise and travel industries, Royal Caribbean reports its brand loyalty members are showing surprising dedication to the cruise line.

Royal Caribbean Cruises Ltd. Chief Financial Officer Jason Liberty touched on the subject, "Our loyalty guests have really just been absolutely incredible in their support, and you can really see their love of cruising as they begin to want to focus further out."

Royal Caribbean International President & CEO Michael Bayley also spoke about the loyalty of cruise fans, "I think we've really seen surprising demand from our loyalty members, and remember we've got close to 20 million loyalty members. Their response to various promotions that we've put into the market, just to understand what the demand looks like is been surprisingly positive. So, as we move into Q4 and into '21, we've been honestly surprised in terms of the demand that we've seen coming in, particularly from loyalty guests."

Outlook on cruising resuming

Of course, the question everyone wanted to know is about Royal Caribbean starting cruises again. While Royal Caribbean provided no firm dates on when they plan to cruise again, executives did touch upon its approach to resuming sailings.

Royal Caribbean Cruises Ltd. Chairman and CEO Richard Fain started off the call touching on the matter, "While it's very difficult to have any certainty around the timing or shape of a recovery we do intend to make sure that we are prepared for it and for the changes it will entail. To this end, we are focused on all aspects of our safe return just to serve as strategy with special emphasis on safety security and health. We know that the public expects that we will elevate our health and safety protocols to a new level. We are prepared to make sure that we meet and exceed those expectations."

"We have been and are working on ways to up our game in this field to ensure that we use our ingenuity, our passion, and our innovation, raise the bar to new heights. We are calling our aspirational program the healthy return to service program. The program will have four main focuses: upgraded screening prior to boarding, enhanced processes and procedures onboard, special focus on addressing the destinations we visit, and procedures for dealing with any reports of exceptions."

"It is tempting to start talking now about all the individual components of how things will change. However, we still defining all those enhancements, and we're still taking guidance from our expert advisors. And this process will continue in keeping with our mantra of continuous improvement."

"The one thing that won't change is our determination that we will not start operations until we are fully ready to do so with all the hygiene and other health protocols solidly in place."

Not all ships will start up at once

Continuing comments made over the last few weeks, Mr. Fain reiterated that when Royal Caribbean starts sailing again, the entire fleet will not resume at once.

"We don't expect that... someday somebody blows a horn, and all the ships start operating right away. We think that it will be a gradual start, a little bit like society is opening up gradually."

"So we would imagine that we would start with fewer ships, and more likely to be more drive markets in the beginning, and then it would then evolve and grow from there."

Millennials vs. Baby Boomers

An intriguing stat shared during the call was Mr. Liberty's breakdown of who is taking refunds versus future cruise credits based on age.

Younger cruisers, specifically millennials, typically opt for a cash refund, whereas families and baby boomers are more likely to take a future cruise credit.

Big ships vs small ships

One of the questions asked was if bigger or smaller ships made more sense to start cruising first, and Mr. Liberty talked about how bigger ships are better situated to handle the demands, both financially and socially.

"Load factors can be lower because they have great economies of scale, they're extremely fuel efficient, and the cabin cabin category makes it very rich. Really more broadly within the fleet, public space per berth is very good. But certainly the newer ships have more public space per passenger. And would be heavily in consideration for the return to service, as well as other ships that we've modernized and having more venues on to."

Royal Caribbean will cancel all sailings through July 31 due to coronavirus

In:
20May2020
By: Matt Hochberg

During a call with investors, Royal Caribbean International CEO Michael Bayley announced on Wednesday the cruise line will cancel all sailings through July 31, 2020 due to the coronavirus pandemic.

When asked directly by a Wall Street analyst, Mr. Bayley confirmed Royal Caribbean will match other cruise lines by extending its global suspension of cruises through July 31, 2020.

"Our plan is this afternoon we'll be announcing further suspension for voyages until the end of July, until July 31st. The only exception to the suspension will be our China operations."

Due to the COVID-19 pandemic, Royal Caribbean International suspended its global cruise operation starting on March 13, 2020. This new set of cancellations will extend that suspension from June 12, 2020 through July 31, 2020.

NOON UPDATE: Royal Caribbean has issued this official update: "Given ongoing global public health circumstances, Royal Caribbean Cruises Ltd. has decided to extend the suspension of most sailings through July 31, 2020, with the exception of sailings from China, which will be suspended through the end of June."

"We expect to return to service on August 1."

For those currently confirmed on sailings departing June 12–July 31, 2020, and not previously cancelled under our Cruise with Confidence offer, a few options have been prepared for consideration.

Lift & Shift: Select next year’s sailing on the same itinerary type, sailing length, stateroom category, and within the same 4-week window of the original cruise date and your clients are all set. Act quickly — option expires on June 10, 2020!

125% Future Cruise Credit: To account for the inconvenience this has caused, guests are eligible for a 125% Future Cruise Credit (FCC) that is based on the total cruise fare paid at the guest-level and will be automatically issued on-or-before June 30, 2020 — if neither of the other options is selected.

Taxes and fees, as well as any pre-purchased amenities or onboard packages will be automatically refunded to the original form of payment within 45 days from the cancellation date. 

If you previously opted to take advantage of our Cruise with Confidence policy, the 100% FCC will stand, and this new option is ineligible.

Additionally, if you redeemed your Cruise with Confidence Future Cruise Credit on a sailing that is now cancelled, their original FCC will be reinstated, plus 125% of any amount paid by the guest on the cancelled reservation.

Refund: If you prefer a cash refund, you can do so by requesting this option on-or-before December 31, 2020.

You can expect their refund to the original form of payment within 45 days from the cancellation date. 

If you redeemed a Cruise with Confidence Future Cruise Credit on an impacted sailing and would now prefer a refund instead, Royal Caribbean will process this request in the amount of any new funds paid above the original certificate and, in turn, will reinstate the Cruise with Confidence FCC for future use.

Royal Caribbean reports over $1 billion first quarter loss

In:
20May2020
By: Matt Hochberg

Royal Caribbean Cruises Ltd. released its first quarter 2020 results to investors on Wednesday morning, outlining the impact of Coronavirus on its business in the first few months of the pandemic.

As expected, the global pandemic had a major impact on the business, with the cancellation of 130 sailings during the first quarter.

The Company reported US GAAP Net Loss for the first quarter of 2020 of $(1.4) billion or $(6.91) per share compared to US GAAP Net Income of $249.7 million or $1.19 per share in the prior year.  The 2020 results include a non-cash asset impairment loss of $1.1 billion.  The Company reported Adjusted Net Loss of $(310.4) million or $(1.48) per share compared to Adjusted Net Income of $275.8 million or $1.31 per share in the prior year.  The Net Loss for the quarter is a result of the COVID-19 pandemic on the business.

"Responding to the dramatic change in business conditions caused by COVID-19 has required focus, dedication, ingenuity and improvisation from all our people, and their efforts have been nonstop," said Richard D. Fain, Chairman and CEO.  "We understand that when our ships return to service, they will be sailing in a changed world.  How well we anticipate and solve for this new environment will play a critical role in keeping our guests and crew safe and healthy, as well as position our business and that of our travel agent partners to return to growth."

Bookings update

Prior to the COVID-19 pandemic, bookings were strong and at higher prices on a prior year comparable basis.

Since then, the impact of the virus has seen booking volumes for the remainder of 2020 at meaningfully lower levels compared to last year, with prices down low-single digits.

Although still early in the booking cycle, the booked position for 2021 is within historical ranges when compared to same time last year with 2021 prices up mid-single digits compared to 2020.

As of April 30, 2020, approximately 45% of the guests booked on cancelled sailings have requested cash refunds. Additionally, as of March 31, 2020, the Company had $2.4 billion in customer deposits.  The Company also continues to take future bookings for 2020, 2021 and 2022, and receive new customer deposits and final payments on these bookings.

Cost-cutting measures

RCCL is actively working on cutting costs to improve its cash situation, as well as secure additional financing. Steps taken include:

  • Reducing operating expenses
  • Reducing or deferring capital spend
  • Increasing its available cash position through various financing sources

Among these efforts, the Company highlighted an approximate $4.0 billion increase in additional financing through a secured bond issuance and increased revolver capacity; a $3.0 billion reduction in its 2020 capital expenditures, a $0.8 billion 12-month debt amortization holiday from certain export-credit backed facilities, and a substantial reduction in its operating expenses due to the fleet layup and significant actions to meaningfully decrease the Company's sales, marketing and administrative expenses.

RCCL's cash burn is, on average, approximately $250 million to $275 million per month during a prolonged suspension of operations.

The Company is considering ways to further reduce the average monthly requirement under a further prolonged out-of-service scenario and during start-up of operations.

Once again, Royal Caribbean stated it believes COVID-19 has impacted shipyard operations and will result in delivery delays of ships previously planned for delivery in 2020 and 2021.

The future

Compounding the issue for Royal Caribbean is the fact its cruise ships are remain shut down as part of the global containment effort.

While it works to finish repatriating crew members to their home countries, the Company's future focus now turns to four key principles:

  • Ensuring the safety of guests and crew
  • Proactively enhancing liquidity
  • Protecting the Company's brands, and
  • Defining and preparing for a "new normal."

RCCL has engaged the services of distinguished external experts in relevant fields, including public health, epidemiology, design and sanitation, to bring additional expertise to its internal teams that are envisioning the Company's new standards and procedures for its return to service strategy.

What changes will Royal Caribbean make to keep guests healthy once cruises resume?

In:
19May2020
By: Matt Hochberg

While many cruisers are anxious to return to cruising, some are wondering what the cruise experience will be like in first few months once cruises resume.

Without a doubt, Royal Caribbean will implement a wide variety of policy changes to the onboard experience, but it remains to be seen exactly what these changes will look like until a formal announcement is made.

Here is a look at  the changes we know about, as well as what we think is reasonable to expect, once cruises start back up again.

Confirmed changes

Royal Caribbean has been very quiet in terms of announcing specifics to what it will be like once cruising resumes, but a few bits and pieces are generally known.

Prior to shutting down cruises, Royal Caribbean implemented some rules, as well as retracting others.

Temperature Checks

One of the first policies the cruise line added even before sailings stopped was to add mandatory temperature screening for guests.

Beginning on March 6, 2020, the cruise line conducted mandatory temperature screenings that looked for temperatures above 100.4°F or 38° C. Anyone with that kind of a high temperature would undergo a secondary health screening and have a medical professional evaluate and determine if they are fit to sail.

Enhanced sanitization

For the last few sailings, Royal Caribbean also took additional steps onboard its ships and in the cruise terminals by thoroughly sanitizing the cruise ship terminal before and after every sailing.

The cruise line also added extra medical staff on each sailing, special sanitizing of high traffic areas onboard the ship, and complimentary consultations with medical experts for all guests & crew.

No doctor's note will be required to cruise

Although never implemented on any sailings, Royal Caribbean added a rule to prevent any guest 70 years or older from boarding a ship without a doctor's note, but then rescinded it in April.

The rule came from Cruise Lines International Association (CLIA)  and said guests who are 70 years old or older, or have a pre-existing chronic medical condition would not be able to sail unless a doctor's note affirmed the guest's good health.

Royal Caribbean Senior Vice President of Sales and Trade Support & Service Vicki Freed confirmed a health form is no longer required for those travelers ages 70 plus, nor are there restrictions for those guests with underlying health conditions.

Buffet eliminated

It looks like the buffet is also going to be done away with in light of health and safety concerns.

Royal Caribbean International President & CEO Michael Bayley spoke on the topic recently, and indicated the Windjammer buffet will not be a traditional buffet, and instead transformed into something else.

"We've got teams working on every single element of the guest experience, and we obviously have a team working on the buffet. I think in the beginning, there will not be a buffet in the beginning, that's how I see it. It depends again upon the timing. We will utilize the space, we will utilize the Windjammer, but in all probability it won't be a classical buffet. It will be something more akin to a restaurant."

"I think the key focus on dining, for example, is making sure that our guests have plenty of choice. But now, that plenty of choice has to be put through the lens of distancing, and safety and health, etc. in a more acute way. I think there will be changes for sure, and I think the word 'buffet' will diminish and we'll replace it with a new concept."

Plan is in the works

Beyond what is listed here, Royal Caribbean has indicated repeatedly they are working with health officials to craft a plan of new policies and requirements to keep guests safe.

"You need to be timing your return to service so it fits with how consumers are thinking about taking a vacation. We have some protocols that we need to really get right, and of course we need to be working with the CDC on all of these things," Bayley said recently about returning to service.

Royal Caribbean Cruises Ltd. Chairman and CEO Richard Fain has spoken on numerous occasions about the work going on behind-the-scenes to prepare for the resumption of cruises.

"Looking forward to restarting, health and safety are absolutely paramount as I've said before, what was fine just a few weeks ago is no longer adequate. Good enough just good enough. We need to raise the bar to new heights, and we have teams of doctors, of scientists, of epidemiologists, and teams of people who know our business, all looking hard and charting the safest and surest path forward that we can."

"At Royal Caribbean, we're using this time of the suspension to learn as much as we can about this disease, and how to contain it. We're using this time to consult with experts in the field. We're trying to understand the science. We're using this develop new ways of doing things to protect the health of our guests, and our crew. Our objective is to make our ships not just good enough, but the best they can be."

Unconfirmed changes

In lieu of much information on what policy changes Royal Caribbean is planning, lots of people have speculated on what could be coming based on what other cruise lines, theme parks and municipalities are announcing.

There are plenty of steps Royal Caribbean could take to keep guests safe, including screenings, temperature checks, on-site medical professionals, social distance markers and additional shields and safeguards, mandatory PPE training for all staff, and more.

Face masks while cruising

The role of wearing a face mask in some capacity onboard the ship is a topic of discussion among many cruisers who are concerned with what level of social distancing will be required.

While Royal Caribbean has not commented at all on the role masks will play, the cruise line did file a trademark application with the United States Patent and Trademark Office for "Seaface".

The trademark lists the description of the trademark simply as:

Trademark applications usually quite vague in regard to their intended use, so it remains to be seen precisely how it will be used, if at all.

Anecdotally, while a great majority of cruisers have no issue with going back on a cruise without a vaccine, many seem to be concerned about being forced to wear a mask.

Digital muster drills

Another trademark filing made during the shutdown is for something called "emuster".

There is no other information provided, but the name has many thinking it indicates Royal Caribbean might be changing its safety drills to make them more of a self-service role.

The muster drill is a compulsory drill required of all guests to gather in designated areas around the ship in order to understand where to go and what to do in the case of a real emergency.

Currently, the muster drill involves large groups of guests lining up in close proximity to each other while being counted and briefed on what to expect in the case of an emergency.

Your thoughts

What changes do you think Royal Caribbean will make to keep its guests safe? What sort of protocols or policies do you see as absolutely necessary, and will any of these stop you from cruising? Share your opinions in the comments!

Royal Caribbean ends option for travel agents to complete online check-in for guests

In:
19May2020
By: Matt Hochberg

Royal Caribbean announced effective May 21, 2020, the option for travel agents to assist guests in completing their online check-in will no longer be supported.

Instead, guests will have to choose between conducting online check-in via the Royal Caribbean App (available for both iOS and Android) or through RoyalCaribbean.com.

The cruise line recommends using the Royal Caribbean app as the preferred method for check-in, although it can be completed via the website as well.

Step-by-step instructions for completing Royal Caribbean's online check-in

The reason why using the app is preferred is because it is simpler and offers guests the benefit of Expedited Arrival, any boarding enhancements, and also supports mobile boarding passes where applicable. 

The rationale for retiring the Advisor-Assisted Check-in was, "to ensure your clients are able to unlock the best possible, most customized experience onboard, by taking advantage of any boarding enhancements or cruise details available to them via the Royal Caribbean App."

Guests can complete the check-in process from 90 days to 72 hours prior to their sail date. Check-in at the pier is still an option upon arrival to the cruise terminal.

United States and Canada extend non-essential travel border shutdown an additional 30 days

In:
19May2020
By: Matt Hochberg

The United States and Canadian governments announced they have agreed to extend their agreement to close the border between both countries to non-essential travel until June 21, 2020.

The original agreement for the border shutdown was to expire this week, but the Associated Press is reporting the agreement has been extended an additional 30 days.

The border shutdown was announced on March 18 and then extended in April.

Royal Caribbean had already cancelled all of its cruises to Canada through June 30, 2020, primarily due to the Canadian government closing its ports to cruise ship traffic until at least July 1.

Essential cross-border workers like healthcare professionals, airline crews and truck drivers are still permitted to cross.

Americans who are returning to America and Canadians who are returning to Canada are also exempted from the border closure.

7 family games that bring a Royal Caribbean cruise to your house

In:
19May2020
By: Matt Hochberg

With everyone spending lots of extra time at home and no Royal Caribbean cruises sailing, you might be as anxious as I am for a cruise "fix" to bring back those vacation vibes.

Whether you are looking for a fun activity to try out, or something to keep the kids occupied, Royal Caribbean has provided some fun activities you can do at home.

Many of these are right out of the Adventure Ocean playbook, with mind-bending puzzles, coloring and crafts designed to educate, cultivate creativity, sharpen motor skills, and help pass the time!

Kids Coloring Book

Coloring is the ultimate kids activity, as it can be done pretty much anywhere and at anytime. Not to mention, coloring allows kids to express themselves in crayons, markers or whatever other coloring tools they have.

You can print out these fun coloring sheets and let your children's imaginations run wild.

There are designs with cruise ships, pirates, marine life and more to enjoy.

Adult Coloring Book

While coloring is a favorite pastime of kids, adults should not be left out of of the experience either.

Royal Caribbean's adult coloring book features some intense designs that will require fine skill to stay within the lines.

You can print out Royal Caribbean's adult coloring sheets or try some of ours!

Activity Placemats

A traditional way to keep kids busy at a restaurant is an activity placemat the includes tic-tac-toe, mazes, and more. Now you can serve up some restaurant fun with that PB&J for lunch.

These printable activity placemats are straight out of Royal Caribbean's main dining room, and feature a few different designs from across the world.  Not only are they fun, it may mean a quieter meal experience for everyone!

Digital Backgrounds

How about adding a taste of Royal Caribbean to your office computer or phone?

Perhaps its time to swap out that photo of your kids from a few years ago for a background that has a fun cruise vibe (at least until you can get a new photo of the kiddos).

These digital backgrounds are available for desktop computers, as well as iPhones (and I am sure will work on Androids as well) in a few different sizes.

Learn how to make towel animals

One of my favorite things about cruising is returning to my stateroom at night and seeing what towel animal creation my stateroom attendants may left as a surprise.

The artistry of folding bath towels into animals and other creations has become a favorite tradition of cruising, and now you can learn to make them at home!

There are easy to follow towel folding instructions for dogs, monkeys, swans, frogs and elephants wearing sunglasses.

Royal Riddles

Want to see who is the Royal Caribbean guru in your house? Test your family's knowledge with these Royal Riddles.

These 13 fill-in-the-blank questions will pit your Royal Caribbean know how against everyone else, to determine who is the most up-to-date with what our favorite cruise line has to offer.

Just in case you are stumped, there is an answer sheet provided too.

Printable postcards

While we cannot visit Perfect Day at CocoCay, the next best thing is to send a postcard as if we were visiting.

These printable Perfect Day at CocoCay postcards are something the kids can drop off at grandma's house, or give to friends.  Challenge them to come up with what fun activities they would want to be doing and then write about it on the card!

Royal Caribbean Group schedules conference call for business update & first quarter

In:
18May2020
By: Matt Hochberg

Royal Caribbean Cruises Ltd. announced it has scheduled a conference call with investors to discuss its first quarter results and provide a business update.

The call is scheduled for 10am Eastern Daylight Time on Wednesday, May 20, 2020.

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

To listen to the call by phone, please dial (877) 663-9606 in the US and Canada.  International phone calls should be made to (706) 758-4628. 

American biotech coronavirus vaccine shows positive results in early human trials

In:
18May2020
By: Matt Hochberg

An American biotech company announced its coronavirus vaccine resulted in positive interim clinical data in its first human safety tests.

Moderna published the results of its vaccine candidate against novel coronavirus (SARS-CoV-2), from the Phase 1 study led by the National Institute of Allergy and Infectious Diseases (NIAID), part of the National Institutes of Health (NIH).

These results have not been published in a scientific journal and are only a first step toward showing the experimental vaccine is safe and effective.

The results show an increased level of antibodies in the 8 patients given various dose levels that matched the levels of antibodies blood samples from people who have recovered from COVID-19.

The vaccine, known as mRNA-1273, was generally safe and well tolerated. The only side effect was in one patient where there was redness around the injection site.   

"With today’s positive interim Phase 1 data and the positive data in the mouse challenge model, the Moderna team continues to focus on moving as fast as safely possible to start our pivotal Phase 3 study in July and, if successful, file a BLA," said Stéphane Bancel, Chief Executive Officer at Moderna. "We are investing to scale up manufacturing so we can maximize the number of doses we can produce to help protect as many people as we can from SARS-CoV-2."

Countries and private companies around the world are in a race to create a working vaccine, and the U.S. is aiming to have hundreds of millions of doses of a vaccine broadly available by the end of the year.

The cruise industry has been especially hard hit by COVID-19, and the result has been ships not sailing since March and tremendous financial losses.

A vaccine is widely seen as a key step to restoring consumer confidence that going on a cruise, as well as various other aspects of daily life, is safe. Meanwhile, over 75% of cruise fans are willing to return to a cruise even without a vaccine.

Royal Caribbean currently has cancelled all sailings until at least June 12.

How to postpone your Royal Caribbean cruise until later due to coronavirus

In:
18May2020
By: Matt Hochberg

While it looks like the majority of repeat cruisers are willing to hop on their Royal Caribbean cruise as soon as they resume, you might be feeling a little hesitant and want to push back your vacation plans.

If you want to postpone your cruise vacation and give yourself more time to see how things around the world progress, here are the two easy ways to delay that cruise.

Cancel and get a Future Cruise Credit

If there is a silver lining to the current situation, it is that it has never been easier to cancel a cruise.

Royal Caribbean has come up with very flexible terms, with the option to cancel and get a 100% Future Cruise Credit up to 48 hours before your ship is scheduled to sail.

Known as the "Cruise with Confidence" program, Royal Caribbean will allow anyone to cancel their cruise up to 2 days before departure date and get a credit good for 12 months or more..

Once you have the credit, you can then apply it towards a future sailing. The Cruise with Confidence program applies to existing bookings and new ones made by August 1, 2020.

It is important to note that the vast majority of guests have reported long waits to get a Future Cruise Credit. Waiting 30 days is not uncommon, and closer to the norm.

Why get a FCC: If you are unsure when you want to rebook, or need flexibility in what you are going to rebook, this is the option for you.

Lift & Shift

More recently, Royal Caribbean introduced the concept of Lift & Shift, where you can push your existing reservation ahead by one year.

This is a simpler method for delaying a vacation by a year, provided you are able to meet all of these requirements for your 2021 cruise:

  • Same itinerary type
  • Same sailing length
  • Same stateroom category
  • New booking within the same 4-week period of their original cruise date same-time-next-year

You do not need to book the same ship or even class of ships.

Not only will this make the booking easier to move, but Royal Caribbean will protect your original price and promotional offering.  So the price you paid for that 2020 cruise will be exactly what you pay for 2021.

To be eligible, guests must move their booking on or before August 1, 2020.

Why Lift & Shift: If you take vacations around the same time every year, and want to punt on 2020, this is a very easy way to move it and keep your pricing intact.

Why you might want to wait to cancel

If these two options sound appealing, there is one more thing to consider: what happens if Royal Caribbean cancels on you.

In the event Royal Caribbean cancels your cruise, they have offered more lucrative terms to guests, including 125% Future Cruise Credits and/or 125% for onboard purchases previously made. 

Moreover, if you cancel and/or Lift & Shift, you no longer qualify for whatever the cruise line offers if they later cancel your original sailing.

Waiting for Royal Caribbean to cancel is a gamble, since they may not actually cancel the cruise you booked. Not to mention any related travel expenses (airfare, hotels, etc) are your responsibility to book and manage their cancellations.

Be sure to pay attention to when programs like Lift & Shift or the Cruise with Confidence program expire, as these are temporary options Royal Caribbean is offering, with no guarantee they will be extended.

More helpful posts

Here are a few other additional articles I think are helpful for those dealing with cruising during the COVID-19 pandemic.

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