Five important facts from Royal Caribbean's business update yesterday

In:
09May2020
By: Matt Hochberg

Royal Caribbean provided an operating update on Friday that gave a fairly positive outlook on its business operations, despite a major impact by global cruise suspension.

While the information was mostly provided for the context of financial disclosures, cruise fans can glean some important tidbits from the announcement.

New ships will be delayed

The most striking announcement was new cruise ship construction is certainly going to be delayed.

Royal Caribbean said that impacted shipyard operations, "will result in delivery delays of ships previously planned for delivery in 2020 and 2021."

While none of Royal Caribbean's ships were named specifically, Odyssey of the Seas is/was scheduled for delivery at the end of 2020 and Wonder of the Seas in 2021.

Booking levels for 2021 have not taken a major hit (yet)

Perhaps the most surprising statistic of the disclosure was executives suggested a growth recovery as early as 2021.

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.

While there are "elevated cancellations for 2020", it appears the public has not yet made such stark decisions for vacations next year.

Royal Caribbean is going through around $150 million per month

With no real revenue coming in since cruises were cancelled in mid-March, Royal Caribbean said its average ongoing ship operating expenses and administrative expenses is approximately $150 million to $170 million per month during the suspension of operations.  

Royal Caribbean is doing its best to mitigate costs during this time, and may seek to further reduce this average monthly requirement under a prolonged non-revenue scenario.

More than 5,000 employees have been cut

Many companies have been forced to lay off workers in order to deal with reduced demand and income, and Royal Caribbean is no exception.

Royal Caribbean Cruises Ltd reduced workforce by approximately 26 percent of more than 5,000 shoreside employees in the United States.

The reduction was made through a combination of permanent layoffs and 90-day furloughs with paid benefits.

More people want credits instead of refunds

A good sign for Royal Caribbean is the fact approximately 55% of its guests who had a cruise cancelled opted for a 125% future cruise credit in lieu of a 100% refund.

Don't miss these captivating Royal Caribbean cruise photos

In:
09May2020
By: Matt Hochberg

Royal Caribbean is known for its cruise ships that not only take guests to destinations around the world, but offer an incredible onboard experience as well.

In fact, the cruise ships are as impressive as they are photogenic and Royal Caribbean has taken some truly impressive photos of their vessels.  These photos capture the majesty of their design, as well as incorporating the vistas and cityscapes in the background.

I have hand-picked some of my favorite Royal Caribbean cruise photos shared by the cruise line recently to show off the intriguing look these vessels offer.

If there was a recipe for a great photo, you would not want just a sprinkle or dash, but instead a heaping of sunset. Photo by Volnei M.

In the first year since Perfect Day at CocoCay debuted, there has been no shortage of jaw-dropping photos of this private destination. It is impressive to consider how closely the island ended up looking like the concept art that proceeded it. Photo by Adam H.

If you have been on an Alaska cruise, then you know just how amazing your surroundings look every time you visit. No matter the port or location of the ship, there is always sweeping landscapes to take in, and this photo is a shining example of what happens when you combine the scenery around you with a sunny day. Photo by twangster

Earlier, I talked about how a great sunset and Perfect Day at CocoCay never disappoints from a photography perspective, so it should come as no surprise to see when combined, the results are awe-inspiring. Photo by Pieter D.

The sleek lines of a Royal Caribbean ship have been eye-catching for decades, and the contrasting color you will find across its decks are always a visual treat.

In photography, the golden hour is the period of daytime shortly after sunrise or before sunset, during which daylight is redder and softer than when the Sun is higher in the sky. Combine that with the ship's lights and you have a great photo!

 

The Ultimate Abyss may be a polarizing topic among cruisers, but the ten story plummet will capture the attention of pretty much anyone. Photo by Nick M.

 

It is always an interesting contrast between the natural wonders created thousands of years ago, and the latest in cruise ship design.

Fireworks, anyone? The launch of a new ship is cause for celebration and it makes for a great photo too.

Our final photo may not have lens flare, fireworks or even an amazing sunset behind it, but during its prime, this would have been an incredible sight to see, because Royal Caribbean made a name for itself from the beginning with cruise ships that commanded the attention of anyone who caught a glimpse.

It is incredible to consider that from this one ship, Royal Caribbean would go onto build ships like Oasis of the Seas or destinations like Perfect Day at CocoCay.

Royal Caribbean entertainment team creates uplifting video that promises a return

In:
08May2020
By: Matt Hochberg

Royal Caribbean's in-house production company has been away from the office during the current shutdown, but put out a powerful new video sung to the popular Styx song, "Come Sail Away".

The video is narrated by Senior Vice President of Entertainment for Royal Caribbean International, Nick Weir, who starts off the video at a vacant production studio in North Miami, but quickly turns to the casting team who engage in their rendition of the 70's song.

The video includes scenes from various stages and venues aboard Royal Caribbean's ships, as well as ships around the world.

This is one of many videos that Royal Caribbean crew and employees have created during its voluntary cruise suspension. Many have been posted on social media and quickly shared between guests, crew, and executives.

Royal Caribbean offering up to bonus instant savings to repeat cruisers

In:
08May2020
By: Matt Hochberg

If you have cruised on Royal Caribbean before, you could get up to $400 instantly off your cruise fare when you combine promotions.

The Crown and Anchor Bonus applies to new bookings made between May 8 – May 11, 2020 to Gold, Platinum, Emerald, Diamond, Diamond Plus, and Pinnacle Crown & Anchor Society members.

The CAS Bonus provides up to $50 USD instant savings per stateroom on select sailings departing on or after June 12, 2020.  

Savings amount determined by sailing length:

  • Sailings 5 nights or less, $25 savings
  • Sailings 6 nights or longer, $50 savings

Savings are not redeemable for cash and are non-transferable. When reserving, a valid Crown & Anchor Society membership number must be included in the reservation. 

Dive and Discover Sale applies to new bookings made bet‌we‌en 5‌/8‌/2‌0– ‌5/1‌0‌/2‌0. Dive and Discover Sale offers up to $200 USD instant savings for select sailings departing on or af‌ter 6/‌12‌/2‌0. Savings amount is per stateroom and determined by category booked and sailing length:

  • Sailings 5 nights or less, $25 savings for Interior and Ocean View, $75 for Balconies and $75 for Suites
  • Sailings 6 nights or longer, $50 savings for Interior and Ocean View, $100 for Balconies and $200 for Suites.

Instant savings applied as instant rebate to the price of cruise fare at checkout. Instant savings do not apply to China departures.

Royal Caribbean provides an update at Coronavirus impact on its business

In:
08May2020
By: Matt Hochberg

Royal Caribbean issued an update on Friday on how the COVID-19 pandemic has impacted its business.

The cruise line has not offered any cruises since it announced a voluntary suspension of its global cruise operations from March 13, that will last through at least June 11, 2020. More cancelled cruises are possible, as continued disruptions to travel and port operations in various regions may result in further suspensions. 

Royal Caribbean also said it is working towards, "developing a comprehensive and multi-faceted program" that addresses the public health challenges posed by COVID-19. These efforts will include among other things, enhanced screening, upgraded cleaning and disinfection protocols and plans for social distancing.  

The Company will continue to work with the Centers for Disease Control and Prevention, global public health authorities and national and local governments to enhance measures to protect the health, safety and security of guests, crew and the communities visited when we are out of service and once operations resume.

Cruise Bookings Situation

It should come as no surprise to hear that the COVID-19 outbreak has taken a hit on the cruise line's bookings.

Prior to the pandemic, Royal Caribbean began the year in a strong booked position and at higher prices compared to the previous year. But since the virus, booking volumes for the remainder of 2020 are meaningfully lower than the same time last year at prices that are down low-single digits.

Due to the suspension in sailings, booking trends reflect elevated cancellations for 2020 and more typical levels for 2021 and beyond. 

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 March 31, 2020, the Company had $2.4 billion in customer deposits.  This includes approximately $0.8 billion of future cruise credits related to previously announced voyage cancellations through June 11, 2020.

Liquidity Situation

"Since late January, we have undertaken several proactive measures to mitigate the financial and operational impacts of COVID-19." said Jason T. Liberty, executive vice president and CFO.  "Our focus is on bolstering liquidity through significant cost cutting, capital spend reductions, and other cash conservation measures.  In addition, the Company is considering additional financing sources.  We continue to evaluate all options available to us to further enhance liquidity."

As of April 30, 2020, the Company had liquidity of approximately $2.3 billion all in the form of cash and cash equivalents.  On May 4, 2020 the company increased the 364-day senior secured credit facility and drew $150 million, further enhancing the Company's liquidity profile.

In order to cut costs, Royal Caribbean has taken the following actions:

Reduced Operating Expenses

The Company has taken significant actions to reduce operating expenses during the suspension of its global cruise operations:

  • Significantly reduced ship operating expenses, including crew payroll, food, fuel, insurance and port charges
  • The Company's ships are currently transitioning into various levels of layup with several ships in the fleet transitioning into cold layup, further reducing operating expenses
  • Eliminated or significantly reduced marketing and selling expenses for the remainder of 2020
  • Reduced workforce by approximately 26 percent of more than 5,000 shoreside employees in the US
  • Suspended travel for shoreside employees and instituted hiring freeze across the organization.

The Company estimates that its average ongoing ship operating expenses and administrative expenses is approximately $150 million to $170 million per month during the suspension of operations.  The Company may seek to further reduce this average monthly requirement under a prolonged non-revenue scenario.

Reduced Capital Expenditures

Since the last earnings call, the Company has identified approximately $3.0 billion and $1.4 billion of capital expenditure reductions or deferrals in 2020 and 2021, respectively. The 2020 reductions and deferrals are comprised of:

  • $1.2 billion, of non-newbuild, discretionary capital expenditures and
  • $1.8 billion in reduced spend or deferred installment payments for newbuild related payments which the Company is currently finalizing.

The Company believes COVID-19 has impacted shipyard operations and will result in delivery delays of ships previously planned for delivery in 2020 and 2021.

Debt Maturities, New Financings and Other Liquidity Actions 

Since the last earnings call, the Company has taken several additional actions to further improve its liquidity position and manage cash flow:

  • Increased the capacity under its revolving credit facilities by $0.6 billion, and fully drew on both facilities
  • Entered into a $2.35 billion 364-day senior secured credit facility with an option to extend (secured by 28 ships with a net book value of approximately $12 billion as of March 31, 2020) 
  • Obtained a $0.8 billion, 12-month debt amortization and financial covenant holiday from certain export-credit backed facilities
  • Amended its non-export-credit backed bank facilities to incorporate a 12-month financial covenant holiday
  • Agreed with its lenders that it will not pay dividends or engage in stock repurchases.

As of May 5, 2020, expected debt maturities for the remainder of 2020 and 2021 are $0.4 billion and $0.9 billion, respectively. 

The Company estimates its cash burn to be, on average, in the range of approximately $250 million to $275 million per month during a suspension of operations.  This range includes ongoing ship operating expenses, administrative expenses, and debt service expense, hedging costs, expected necessary capital expenditures (net of committed financings in the case of newbuilds) and excludes cash refunds of customer deposits as well as cash inflows from new and existing bookings.  The Company is considering ways to further reduce the average monthly requirement under a prolonged out-of-service scenario and during start-up of operations.

The Company continues to identify and evaluate further actions to improve its liquidity.  These include and are not limited to: further reductions in capital expenditures, operating expenses and administrative costs and additional financings.

On March 10, 2020, the Company withdrew its first quarter and full-year 2020 guidance.  The magnitude, duration and speed of COVID-19 remains uncertain.  As a consequence, we cannot estimate the impact of COVID-19 on our business, financial condition or near or longer-term financial or operational results with reasonable certainty, but we expect to incur a net loss on both a US GAAP and adjusted basis for the first quarter ended March 31, 2020 and the 2020 fiscal year; the extent of which will depend on the timing and extent of our return to service.

2020 Royal Caribbean Annual Shareholder Meeting Scheduled for May 28

In:
07May2020
By: Matt Hochberg

Royal Caribbean Cruises Ltd. has scheduled its 2020 annual shareholder meeting for May 28.

The meeting will be held at 9am at Royal Caribbean headquarters in Miami.

The meeting is for shareholders as of April 6, 2020.

Online voting and materials are available to view online.

We asked our readers if they received their Royal Caribbean cruise refunds yet

In:
07May2020
By: Matt Hochberg

It is no secret that refunds for the cancelled Royal Caribbean cruises has been taking longer than expected. The cruise line has even apologized for the delay in getting money back to guests.

I wanted to know what our readers' Royal Caribbean refund status is, and how many have gotten their money back.

With thousands of guests impacted by the cancelled sailings, it is impossible to get a good sense of where things are, but talking to RoyalCaribbeanBlog readers helps provide some insight into the current status.

Royal Caribbean has announced cruise cancellations three separate times, beginning in March and extending over the last two months. Each time, a large swath of sailings were impacted and guests had to choose between opting for a refund or a future cruise credit.

Refunds were expected to take 30 days to process, but some refunds are taking up to 45 days.

If you browse the comments on this site, or most Facebook groups, you will quickly run across posts from cruisers that are frustrated by having not received their refund or credit yet.

I posted a Facebook poll asking, "If your cruise was cancelled, have you received your refund or future cruise credit yet?"

The poll ran for the last six days, and 585 people responded with their experience.

The leading poll answer was "no" (they had not received a refund or future cruise credit yet) with 327 votes. In second place was "yes" (they had received their refund or future cruise credits) with 167 votes, and "some, but not all" coming in third with 91 votes.

Comments from those that took the poll run the gamut of experiences, from people that received their refunds, to those that received some, and others that are still waiting.

"We were part of the first round of cancellations...we were told our Future Cruise Credit would appear by April 13. We got it late in the day April 10. I canceled all my cruise planner stuff early on so I got that refund within 72 hours."

"I was due to sail on Majesty today and it was cancelled on March24 . I got an email last night to say my Future Cruise Credit was sent to my travel agent but I haven't received any refunds for taxes and gratuities or Cruise Planner yet."

Refund status is also proving to be difficult to track for some, as there are add-on purchases that are refunded separately from the cruise fare refunds.

"Received refund for May 17 on Oasis but have not received drink package and beach club refund. That was really fast. Only 2 weeks"

It seems those that had multiple cruises cancelled were impacted the most, with some refunds being issued, but not all.

"We have thousands outstanding want to book more cruises but need the money to do so."

Have you received your refund or cruise credit yet? Share your Royal Caribbean refund status in the comments.

How to plan your cruise vacation for when Royal Caribbean resumes sailing

In:
07May2020
By: Matt Hochberg

While there are no Royal Caribbean cruises to go on currently, the day when they will sail again is coming, and now is a great opportunity to prepare for that vacation.

One of the best ways to ensure you have a fantastic vacation is to plan ahead, as I see too many cruisers that do little to no research into their vacation.

Make the most of your cruise with these top tips.

Learn everything about your ship from a past Cruise Compass

Royal Caribbean does not post or publish Cruise Compasses for upcoming sailings in advance.  Nor do they publish their entertainment schedules prior to a cruise. With that in mind, many veteran Royal Caribbean cruisers reference past Cruise Compasses to get an idea of what to expect on an upcoming sailing. 

There is no way to know in absolute terms what your upcoming Royal Caribbean cruise will or will not offer, but Royal Caribbean insiders will consult past Cruise Compass' to see what was available on those similar sailings to get an idea of what to expect.

Generally speaking, Royal Caribbean sailings on a particular ship do not change that much from week to week in terms of the activities or entertainment offered.  There will be some discrepancies, but an old Cruise Compass can give you a good ballpark of expectations to plan around.

By reading an old Cruise Compass, you can prepare yourself for activities and events that you might want to participate in, such as themed dance parties, sporting events and anything inbetween.

You can reference our Cruise Compass archive for a listing of past Cruise Compasses that we have found.

Make sure you have proper documents

One of the most important things you need to get on any cruise ship is the proper travel documents.

Just like going on an airplane flight, you need to have the right paperwork, and depending on your nationality and where you are sailing from, this may vary.

The simplest answer is to have a passport. While Americans sailing from the United States do not need a passport, I advocate everyone sail with a passport.

If you have a passport, it is a good idea to check expiration dates and ensure your passport will be valid before and after your cruise sails.

Plan how you will get to the cruise ship

You will need to arrange transportation to get you and your family from your home to the cruise ship terminal, and that can involve taxis, buses, airplanes or more. 

Some options will be more economical than others, but here are a couple of tips you should be aware of to help get you there:

  • If you need to get from the airport to the cruise terminal, a Lyft or Uber ride is usually the simplest, and most economical option.
  • If you are flying to your cruise embarkation port, be sure to fly in at least one day early to avoid travel delays impacting your ability to make the cruise.
  • Royal Caribbean does offer transfers between the airport and the cruise terminal, but they come with an additional cost.

Find that perfect shore excursion

Shore excursions are a major part of any Royal Caribbean cruise because a large part of your overall vacation is exploring the ports of call you will visit.  You have just a few hours at each stop, but it should be enough to get a taste of the city you are visiting.

Before you even look at one shore excursion, you should research the most popular activities in each port. 

When looking at shore excursion options, you can book tours through Royal Caribbean or on your own. Each has its own benefits and drawbacks, so I advise to consult both.

The key is to determine which tours you want to book, and reserve it in advance. In some cases booking in advance will save you money, and everyone can benefit from having the luxury of time to consider all options.

Pre-purchase add-ons to save money

Everyone wants to save money, and one of my best tips is to pre-purchase as much as you can.

There are plenty of cruise costs out there, but you can save money by acting early. Royal Caribbean regularly discounts drink packages, shore excursions, wifi access and more if purchased before the cruise.

You can book these via Royal Caribbean's Cruise Planner site to take advantage of some big discounts.

Buy travel insurance

Now, more than ever, travel insurance is a good investment to consider.

Travel insurance is relatively inexpensive, and provides peace of mind that protects against trip interruption, cancellation, and even medical costs.

More than likely buying a travel insurance plan will be money spent that you end up not needing, however, the protection it includes feels a heck of a lot more important these days than ever before.

Start your vacation budget

The silver lining to a global pause in cruises is we have more time to save money for that upcoming vacation.

Saving for a vacation is often easier said than done, but with less money to spend on going to the movies or weekend trips, you might consider stashing away some of that cash for your vacation budget.

Whether you prefer a piggy bank, swear jar, or moving money around between checking accounts, putting away a few dollars now can help pay off cruise fun later.

Meet people online on your sailing

A fun way to make friends on the ship before you step foot onboard is to join a Facebook group for your sailing.

If you go on Facebook and search for your ship name and sail date, there is very likely a group set up for it.  It is free to join these groups, and often groups will set up special events, or simply provide a means of sharing in the pre-cruise planning excitement.

Every group is different, and depending on how many people have joined the Facebook Group, as well as everyone's level of participation in the group, you can get to know folks before the cruise. Plus it's just fun to find others who are as excited as you about your cruise (instead of annoying your friends).

Watch YouTube videos

To get a good visual of what you can expect for your Royal Caribbean, there are no shortage of videos on YouTube to check out.

Search for your ship name and odds are you will find hundreds of videos to watch.  Some are tours, some are family vacation videos and others explain aspects of the cruise.  Regardless, it's a fun way to see what you can expect on your cruise and add ideas to your little list.

While you are on YouTube, be sure to check out our channel of helpful trip planning videos.

Try to learn the lingo

If you have not been on a cruise before, you may quickly run across terms, options, and phrases that are unfamiliar to you.  Frankly, it can be a bit overwhelming.

Thankfully, we have taken precautions to help you adjust to a Royal Caribbean cruise in advance.  Our Royal Caribbean cruise ship term glossary will break down everything from Adventure Ocean to WOWband so that you understand everything in the cruise planning process.

Royal Caribbean greatly expands ability for guests to cancel and rebook cruises for later

In:
06May2020
By: Matt Hochberg

Royal Caribbean announced a massive enhancement and extension to its Cruise with Confidence program, which allows guests to cancel their cruises up to 48 hours before sailing.

The "enhanced & extended Cruise with Confidence policy" was announced on Wednesday , where guests can cancel up to 48-hours prior to sailing in exchange for a 100% Future Cruise Credit on sailings through April 2022 for bookings made on-or-before August 1, 2020.

In addition, Royal Caribbean announced "Lift & Shift", where guests can move their existing booking to next year, protecting their original price and promotion. 

Lift & Shift is available by selecting a future sailing on the same itinerary type, sailing length, stateroom category, and within the same 4-week period of their original cruise date same-time-next-year.  It is not required that your client rebook on the same ship or ship class.

Guests are eligible to rebook under the Lift & Shift guidelines between now and August 1, 2020. After this point, Lift & Shift expires and is no longer eligible.

All pre-cruise purchases will be removed during the re-accommodation process and can be added to the future reservation, as desired, at prevailing rates. 

You can opt to Lift & Shift only one time.

Guests who take advantage of the Cruise with Confidence program can get a 100% Future Cruise Credit if they decide they would like to cancel their cruise vacation due to the current global situation.

Non-Refundable Deposit bookings are eligible for Cruise with Confidence and follow the same guidelines.

If you purchased a hotel or transfer, here is how it works:

  • When electing for a Future Cruise Credit
    • If you purchased hotel accommodations or transfers with Royal Caribbean, all charges will be automatically refunded.
    • If you booked outside of Royal Caribbean, you will need to contact the company you booked through directly.
  • When opting to Lift & Shift
    • If you purchased hotel accommodations or transfers with Royal Caribbean, these will be removed during the re-accommodation process, but can be re-added, if desired, once confirmed on the future ship/sailing of choice at prevailing rates. 
    • If you booked outside of Royal Caribbean, you will need to contact the company you booked through directly.

Lift & Shift blackout dates:

  • Christmas, New Year’s, and Chinese New Year’s cruises are ineligible, unless you are currently confirmed on one of these sailings and wishes to take advantage of Lift & Shift to move to the same sailing next year (assuming all other qualifying criteria is met). 

Best Price Guarantee Update

Another big change announced is guests can take advantage of Royal Caribbean's Best Price Guarantee up to 48-hours prior to their cruise vacation start date, ensuring the best rate and/or promotion.

This means guests can now take advantage of price drops after final payment date, up until 48 hours before the cruise.  This is applicable to all sailings made on or before August 1, 2020 (including ones made before today's announcement).

Price variances will result in a rate adjustment if requested outside of final payment or a non-refundable onboard credit when inside final payment period.

Prior to this change to the Best Price Guarantee, price adjustments after final payment date would incur cancellation fees that would offset any price adjustment advantages.

Will you be more willing to book a cruise because of this enhanced policy? What do you think of the Lift & Shift offer? Share your thoughts in the comments!

Royal Caribbean offering 30% off every guest and kids sail free in May

In:
06May2020
By: Matt Hochberg

Royal Caribbean's October offer features 30% off every guest, and Kids Sail Free during the month of May.

The May October offer is valid on cruises booked between May 6 – 31, 2020 and applies to select sailings departing on or after June 12, 2020.

It includes:

30% off cruise fare for all guests in the stateroom.

Kids Sail Free provides free cruise fare for 3rd guests and higher who are 12 years old or younger as of cruise departure date, booked in the same stateroom as the first two qualifying guests in a triple or quad-occupancy stateroom. Kids Sail Free applies to select 4-night or longer Alaska, Bahamas, Bermuda, Canada, Caribbean, CaribNE, Coastal, Europe, Hawaii, Repositioning and all 2020 Serenade of the Seas sailings departing between September 1, 2020 – December 17, 2020 and January 8, 2021 – May 17, 2021. Offer excludes 2020 Thanksgiving sailings (Sailings between November 21 - 28, 2020), 2021 President’s Day Sailings (Sailings between February 12 – 15, 2021), and 2021 Spring Break and Easter sailings (Sailings between March 13 – April 4, 2021). Taxes, fees, and port expenses are additional and apply to all guests.

30% Off Every Guest and Kids Sail Free are combinable with each other as well as promotional OBCs, NextCruise offers, Instant Savings, restricted discounts (for example, Seniors, Residents, Military), Promo Code driven offers, Free Upgrades, Crown and Anchor discounts and Shareholder Benefits. Offers are not combinable with any other offer or promotion, including, but not limited to, Standard Group, Interline, Travel Agent, Travel Agent Friends and Family, Weekly Sales Events, and Net Rates. Promo Code driven offers are based on select ships and sail dates and must be applied at time of booking, limit one promo code per booking.

Offer available to residents of United States, Canada, Puerto Rico, and select countries in the Caribbean. 

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