Royal Caribbean demand is stronger than ever, and the cruise line is targeting more customers from multiple demographics. 

The cruise line held its second quarter earnings call on Thursday, telling investors that cruise sales continue to increase. 

Jason Liberty, President and Chief Executive Officer for Royal Caribbean Group, said that sailing purchases are still on fire.

"2024 bookings have consistently outpaced last year throughout the entire second quarter and into July, despite the fact that we have significantly fewer staterooms left to sell," he said.

Cruise bookings are quite a bit higher in the second quarter of this year compared to the same time last year. 

In the second quarter of 2023, Royal Caribbean carried 1,900,810 guests at 105% occupancy.

In contrast, the second quarter of 2024 saw 2,040,242 guests at over 108% occupancy.

Throughout 2024, earning goals have exploded for the company.

Royal Caribbean announced today that the second quarter of 2024 earned $4.1 billion in revenue, and the cruise line is just getting started.

Cruising demand is higher than ever, particularly in North America

Thanks to several factors, demand for Royal Caribbean cruises is stronger than ever.

North American consumers, who represent 80% of the line's purchases, continue to be a robust market.

North American workers have 10% more vacation time than in 2019, and they're spending half of those extra days cruising.

Jason Liberty cited "a resilient economy, low unemployment, stabilized inflation, and record-high household net worth" as influences on the growing amount of bookings.

With more vacation time and the opportunity to relax, cruises are a great option to enjoy multiple destinations and amenities within one experience. 

Royal Caribbean's research shows that consumers are spending more on travel than on any other leisure category.

Consumers prefer to spend their money on experiences, particularly travel and vacation. 

Not only that, but buyers also intend to increase their travel spending over the next 12 months.

According to Liberty, "Cruising remains an attractive value proposition, and cruise purchase intent is high and continues to strengthen."

It doesn't look like spending on sailings is going to slow down anytime soon.

The booking window for cruises continues to expand—consumers are planning their vacations further out.

Royal Caribbean research also shows that cruisers are willing to pay more for the experience, so pricing (and brand revenue, as a result) is increasing for 2025 and 2026.

Cruisers are spending more and more on their sailings, buying more onboard add-ons than last year. 

Pre-cruise add-ons like drink packages, WiFi, and shore excursions are optional, but currently in huge demand.

Guests are buying more add-ons than ever, both earlier before the cruise and at higher speeds.

Read more: When should you buy Royal Caribbean drink package, wifi, tours & other add-ons

According to Liberty, this translates "into higher satisfaction rates and higher onboard spending."

Thanks to higher spending and customer satisfaction, "Our market is growing and we are attracting more customers into our vacation ecosystem."

Guests who enjoy their first cruise with Royal Caribbean are likely to book more and bring friends and family along with them.

1 in 2 cruisers are a millennial or younger

Multiple Royal Caribbean strategies serve to attract multiple demographics to its brand, including a strong number of younger cruisers.

Half of Royal Caribbean cruisers are now millennials or younger, and they're not the only demographic increasing their bookings.

As the baby boomer generation reaches retirement age, more of that demographic is expected to cruise.

Royal Caribbean's research shows that retirees take 50% more vacations than non-retirees who are still working.

Not only is the baby boomer generation expected to cruise more, but they also serve to draw in the younger generations.

The baby boomer generation currently holds 50% of the United States' wealth but is expected to transfer its wealth over to the younger generations over the next two decades.

One form of wealth transfer is traveling together, with the baby boomers taking their younger family members on cruises.

Jason Liberty said that Royal Caribbean is already profiting "from that active and real-time wealth transfer through multigenerational travel."

Additionally, working generations such as millennials and Gen Z are benefiting from the 10% increase in vacation time.

Read more: Almost 1 in 2 Royal Caribbean cruise ship passengers are millennials

Younger generations intend to spend more time and money on travel than any other leisure activity.

Millennials and younger generations continue to make up a percentage of Royal Caribbean cruises "at a faster pace than any other generation," according to Liberty.

Today, one out of every two Royal Caribbean cruisers is a millennial or younger.

Shorter sailings cruising the Caribbean are one draw that serves to hook both new and younger cruisers.

Utopia of the Seas, in particular, a new and hyped Oasis-Class ship, entered the market by offering short Caribbean sailings out of Port Canaveral.

Short Caribbean cruises serve as an "on-ramp" for new cruisers to enter Royal Caribbean, "an important entry point" for those new to cruising or the Royal Caribbean brand, according to Jason Liberty.

Read more: Is a short cruise on one of the biggest cruise ships in the world a crazy idea?

Shorter sailings serve as a cheaper, faster taste of what Royal Caribbean has to offer.

Nearly 70% of guests on a short Caribbean cruise fall in the new cruiser or new to Royal Caribbean category and many of them are younger cruisers.

40% of guests in the younger demographic intend to book a short vacation in the next 12 months.

According to Royal Caribbean's research, 90% of guests who sail a short cruise intend to cruise again, and half of those respondents plan to return for a longer cruise.

"New to cruise customers are up double digits versus last year," Liberty said.

Winter cruises don't look like they'll become a thing with Royal Caribbean.

The cruise line doesn't plan on having any Christmas cruises out of the UK, according to its CEO.

Michael Bayley, Royal Caribbean International President and CEO, explained why the line won't be having a Christmas cruise in Europe.

On this year's President's Cruise, held on Oasis of the Seas, he answered guest's burning questions during a Q&A session.

One cruiser from the UK asked, "Please, can we have a Christmas cruise coming out of Southampton?"

The CEO, although sympathetic to his fellow Brits, explained why the cruise line isn't planning on a Christmas cruise out of England.

Transatlantic cruises aren't practical in the winter 

Michael Bayley told cruisers that a Christian cruise out of Southampton isn't in Royal Caribbean's plans: "I don't think it's going to happen in the near future."

The main reason for that, he said, is the weather. "The weather's terrible," he said frankly, citing "gale-force winds and seas at 30 feet."

Because a Christmas cruise out of the UK requires the ship to be in the UK, this often involves a Transatlantic journey: "To operate a ship out of Europe, we have to bring it to Europe."

The Atlantic Ocean is particularly rough and stormy in the winter, the exact time a ship would need to start traveling to arrive for a Christmas cruise.

A Transatlantic cruise would take between 11 and 12 days, also requiring the cruise line to sell the sailing.

Because Transatlantic cruises are so long, they don't sell as quickly.

"They're extremely expensive," Mr. Bayley said, "and they don't sell very well because nobody's got the time during late October [or] November, to take that much time off to sail."

Most people are already taking off work and school in late December and January, October and November aren't popular times to sail, especially on such a long cruise.

Plus, the ships for a Christmas cruise are bigger vessels, so "we need a lot of people to stay on."

Sailing out of the UK would require the line to sell out a Transatlantic voyage on a larger ship, which isn't likely.

"It becomes [about] economics," Mr. Bayley explained. "It's difficult for us to operate it and make it profitable."

Considering the climate, timing, and economics of a Transatlantic cruise in the winter, it doesn't make sense for Royal Caribbean to schedule a Christmas cruise out of the UK.

Independence of the Seas is scheduled to home port in Southampton, England, in the summer of 2025, giving her plenty of time to cross the Atlantic on smoother seas.

Read more: The worst months to cruise to Europe

Mr. Bayley also addressed winter cruises out of the Canary Islands.

"There's just not enough demand for those ships at the rates that make it economical. It doesn't work," he said.

"There's a seasonality to the business and you've got to be very careful about how the ships are deployed."

Cruise ship schedules depend on a variety of factors, from weather to customer demand, to holidays and vacations.

Royal Caribbean has to carefully choose when ships are deployed in certain regions, and it won't be able to offer every cruise guests desire.

Will there be an Icon Class ship in Europe? 

Following up with more requests from Royal Caribbean's European audience, a cruiser from Spain also posed a question.

Rebecca from Madrid wanted to know: "Please, will an Icon Class ship be in Europe?"

Cruisers want to know if one of Royal Caribbean's newest classes will homeport in Europe.

She also asked that Royal Caribbean add more short, weekend cruises to Europe's itineraries, saying that the only one available to her (sailing out of Barcelona) was already sold out.

Mr. Bayley immediately answered in the positive. 

"I think that's a great idea," he said.

Royal Caribbean sees "a big opportunity [right] now for shorter cruises in Europe, especially at the Spanish ports."

Shorter, weekend cruises will be in the plans for the cruise line, especially with how much demand it's seeing from the market.

Although Mr. Bayley didn't specify if these weekend cruises could take place on an Icon Class ship, he did answer Rebecca's questions in the affirmative. "We have looked at that."

However, weekend cruises will be focused around major ports in Spain.

Where are Royal Caribbean's Christmas cruises?

Royal Caribbean offers a variety of holiday sailings on all its ships. 

The cruise line tends to sail most of its ships on Caribbean itineraries during the winter, taking advantage of the warmer weather and classic vacation areas.

On a Christmas cruise, you can expect the vessel to be brightly decorated, complete with a Christmas tree in a central location (such as the Royal Promenade).

The sailing is likely to also have Christmas-themed activities, such as caroling, holiday movies, and appearances from Santa and his elves.

There is also a menorah lighting, and a priest onboard to conduct public mass on Christmas Eve and Christmas Day.

The following Royal Caribbean cruises will take place over Christmas Day, 2024:

• Explorer of the Seas: 11-day Southern Caribbean cruise
• Jewel of the Seas: 10-day Western Caribbean cruise
• Ovation of the Seas: 10-day New Zealand cruise
• Vision of the Seas: 8-day Bahamas and Perfect Day cruise 
• Serenade of the Seas: 9-day Eastern Caribbean cruise
• Anthem of the Seas: 4-day Penang Phuket cruise
• Spectrum of the Seas: 9-day best of Japan cruise
• Navigator of the Seas: 7-day Cabo cruise cruise
• Radiance of the Seas: 7-day Western Caribbean cruise
• Icon of the Seas: 7-day Western Caribbean and Perfect Day cruise
• Enchantment of the Seas: 5-day Western Caribbean cruise
• Brilliance of the Seas: 7-day Western Caribbean cruise
• Quantum of the Seas: 7-day South Pacific cruise
• Adventure of the Seas: 6-day Western Caribbean cruise
• Freedom of the Seas: 8-day Eastern Caribbean cruise
• Grandeur of the Seas: 5-day Eastern Caribbean cruise
• Wonder: of the Seas 7-day Eastern Caribbean and Perfect Day cruise
• Symphony of the Seas: 7-day Eastern Caribbean and Perfect Day cruise
• Oasis of the Seas: 6-day Western Caribbean cruise
• Rhapsody of the Seas: 7-day Southern Caribbean cruise
• Odyssey of the Seas: 7-day Perfect Day and Bahamas cruise 
• Harmony Of The Seas: 7-day Western Caribbean cruise 
• Allure Of The Seas: 4-day Bahamas and Perfect Day cruise
• Liberty Of The Seas: 4-day Bahamas and Perfect Day cruise 
• Independence Of The Seas: 5-day Western Caribbean and Perfect Day 
• Voyager Of The Seas: 5-day Western Caribbean and Perfect Day 
• Utopia Of The Seas: 4-day Bahamas and Perfect Day cruise 
• Mariner Of The Seas: 5-day Western Caribbean cruise 

Royal Caribbean's demographic is shifting to attract younger passengers. 

"Millennials and younger generations have gained 11 percentage points share compared to 2019," said Jason Liberty, Royal Caribbean Group's CEO, "And today, almost 1 in 2 guests are millennials or younger...it's a very powerful statement."

This isn't necessarily a new trend, as the 2023 State of the Cruise Industry Report released by the Cruise Lines International Association (CLIA) revealed that passengers between the ages of 20 and 59 are now making up over 50% of passengers onboard cruise ships. 

Additionally, 88% of millennials expressed enthusiasm for cruising within the next few years. 

The Caribbean remains the company's largest product group. In 2024, sailings to this region make up 55% of their deployment. 

Perfect Day at CocoCay, Royal Caribbean's exclusive destination in The Bahamas, is a favorite. With activities designed for those who crave adrenaline rushes or a day of blissful relaxation, the island was created to appeal to a wide array of interests. 

Additionally, Royal Caribbean continues to launch new builds across all of its brands, including Celebrity Cruises, Royal Caribbean, and Silversea. 

Whether cruisers are looking for a refined, destinated-focused sailing onboard Celebrity Ascent or a jam-packed cruise onboard Icon of the Seas, the company continues to provide exciting products and experiences that redefine what it means to take a cruise vacation. 

Royal and Celebrity have plans to grow even more, with Utopia of the Seas scheduled for debut in July 2024, followed by Star of the Seas and Celebrity Xcel in 2025. 

They're also working on creative more exclusive experiences for guests, such as the Royal Beach Clubs in Nassau and Cozumel, indicating that it's both the ships and destinations that are appealing to millennial guests. 

Those who sail with Royal Caribbean are five times more likely to sail with them again

From top-tier service to delicious dining, one-of-a-kind production shows, and more, the onboard experience onboard Royal Caribbean Group ships is unmatched, regardless of which line appeals to you the most. That, combined with the destinations, created a well-rounded experience. 

"There [are] 25,000 guests a day that come into Nassau," said Liberty, "And we're going to take some of those guests [and] bring them over to the [Royal] Beach Club."

Utopia of the Seas, for instance, will visit both Nassau and Perfect Day. "That's really a phenomenal game charger,' said Michael Bayley, Royal Caribbean CEO and President. 

"It really is drawing in a huge amount of new to cruise, and it's beautifully positioned in Canaveral right fundamentally in Orlando."

In short, creating exclusive and elevated experiences is attracting a high level of demand from consumers, whether it's a private beach at a popular port or an entire island.

Royal Caribbean's website is seeing record demand

As a result of the COVID-19 pandemic, consumers got used to online shopping. 

"In the first quarter, we had 100 million visits to our websites...that's twice what we had pre-COVID," said Liberty.

"We have really upped our game, not just on a marketing basis, but [to make our websites help our customers] dream about what they want to do and help them get to the experience that they're looking for."

The Cruise Planner allows guests to easily browse all available options for their sailing, including drink packages, shore excursions, specialty dining experiences, spa treatments, Wi-Fi packages, and more. 

In essence, those who take advantage of the online portal can have their entire cruise planned out before stepping onboard, making the cruise itself as hassle-free as possible. 

Liberty went on to talk about the growth of the mobile app, too. 

We are removing friction and unlocking travel planning by investing in a modern digital travel platform, making it easier than ever for guests to book their dream vacations while allowing us to expand wallet share," said Liberty.

Our digital experiences delight guests. Our mobile app is consistently adopted by 94% of our guests on board, and we continue to enhance its capabilities."

It's not your imagination, a cruise vacation is so in demand right now that even Royal Caribbean can't believe how hot their product has become.

Royal Caribbean Group reported its third quarter 2023 results on Thursday, along with its 2024 outlook. Not only did the company have a one billion dollar profit, but they see even stronger demand to come.

Royal Caribbean Group raised its full-year profit forecast for a third time, which is an important sign of how strong demand is.

During an call with investors, Royal Caribbean Group CEO Jason Liberty talked about how well-positioned a cruise vacation is with consumers, "The unprecedented acceleration in demand and pricing for our leading brands, combined with stronger demand for onboard experiences, were certainly the main drivers of our outperformance."

The business of cruising across the three primary brands of the Royal Caribbean Group: Royal Caribbean International, Celebrity Cruises, and SilverSea, have resonated with consumers in bookings.

Some interesting facts:

• More than 130,000 guests sailing on their ships every day
• Guest median household income of at least $125,000
• Guests spending on experiences is currently up 25% compared to 2019, with twice the amount spent on goods
• A third of pre-booking purchases now coming through the mobile app
• Cruise fare rates were up approximately 18% in the third quarter compared to 2019

Mr. Liberty pointed out that while airlines and hotels have concerns related to the financial health of those businesses, cruises are seeing no slow down, "our commercial apparatus is firing on all cylinders."

A closer look at who's booking cruises

Royal Caribbean said it saw a significant increase in new to brand and new to cruise customers this year. This is important, because those that have never cruised before represent the single most viable source of new business.

In the third quarter, approximately two thirds of guests were new to cruise or new to brand, all while also doubling the repeat booking rate. Mr Liberty said this indicates, "strong loyalty and satisfaction."

He added that about 70% of guests made pre-cruise purchases, and this is important because customers who purchased onboard experiences before their cruise spent two and a half times more than those who only bought once on board.

"We have thousands of people making bookings for experiences that are at least 6 to 8 months from today," Mr. Liberty explained. "They're making bookings into 2025. They're even making bookings into 2026."

"So our visibility in terms of how the consumer is looking at things going forward, at least on a vacation experience on our incredible brands is is pretty good based off of where the consumer is standing today."

Moreover, Royal Caribbean is seeing a customer that wants to stay with a Royal Caribbean Group ship, more than any other, "I think what's important is what we're getting is a very sticky consumer who wants to be sailing with us, staying within our ecosystem."

"And so sometimes it's not a question of where they're going to go... but they're going to go somewhere with us. And that's what we're focused on making sure they're doing."

Cruise vs land vacations

Mr. Liberty once again beat the drum of comparing cruises to land vacations, and reiterated how competitive cruises are instead.

He admitted the cruise industry is just "a sliver of overall vacation and travel and leisure", but he sees even a 1% shift of that travel demand to cruise would have an incredible impact on cruises.

"We're seeing that with the younger generations who really look at us very much similar to how they would look to go to Orlando or Vegas or skiing, etc."

He is fond of referring to the value gap that exists between cruises and land vacations, where cruising is such a better value compared to a land resort.

"If we can close half of that gap and get back to where we were, that's also worth probably about ten Oasis class ships."

Europe was the difference maker

There are many reasons why Royal Caribbean Group has a great third quarter, but European cruises were at the top of the list.

Royal Caribbean Group Chief Financial Officer Natali Holtz explained, "Overall, about 50% of the better than expected yield performance was driven by European itineraries, with the remainder mainly driven by Caribbean and Alaska."

About half of passengers on Royal Caribbean Group's European sailings come from the US, and the other half come from around the world.

The Caribbean and Alaska have always been strong performers, but Europe essentially outperformed itself and catapulted itself up this quarter.

Despite being shutdown for almost two years, Royal Caribbean is doing so well in 2023 that it's already outpacing its previous high water marks.

Royal Caribbean Group reported incredible results for the second quarter 2023 that demonstrate a common theme: demand for cruises is higher than ever, and people are willing to pay more for it.

The company's resurgence is remarkable considering the low point it found itself in during the global health crisis between 2020 and 2021.

Royal Caribbean had already started the year off with good numbers, but the second quarter really saw the resurgence come full circle.

More people cruising

Royal Caribbean Group CEO started off the earnings call with some incredible numbers, highlighting how strong demand is for cruises.

The company saw positive indicators in May, and the second quarter proved to be even more fruitful than anticipated.

"During the second quarter, we delivered a record 1.9 million memorable vacations at exceptional guest satisfaction scores. We achieved record yields that were 12.9% higher than 2019."

Yields refers to revenue coming in, and that means people paid more for their cruises than in 2019.

2019 is an important statistic to Royal Caribbean, because it represents the previous high water mark for demand and profits.

Perhaps the most important segment of cruisers Royal Caribbean wants to see grow are people that have never cruised before, and they did just that.

"In the second quarter, the percent of guests who were either new to brand or new to cruise surpassed 2019 levels by a wide margin."

Getting people that have never cruised before is important because it's how to grow the customer base since the vast majority of the public has never been on a cruise before.

Not only are they attracting new cruisers, these new cruisers are coming back for more.

"And we have seen post-cruise repeat booking rates nearly double 2019 levels," Mr. Liberty said to illustrate that they are booking more cruises after trying their first cruise.

The higher demand coupled with higher prices than in 2019 is at the heart of why Royal Caribbean wants to continue to raise cruise prices.

Europe is back

Perhaps a surprising fact is how strong demand was for European cruises in the second quarter.

"While the Caribbean remains the standout performer this year, we were particularly pleased with the strength and quality of close in demand for European itineraries," Mr. Liberty said near the beginning of the call.

Essentially, more European consumers looking to book a summer cruise vacation came to Royal Caribbean.

Royal Caribbean Group Chief Financial Officer, Naftali Holtz, talked about the increase in revenue from Europe, "The better than expected performance has mostly been driven by our European customers, which underscores our nimble and global sourcing model."

Later in the call, Mr. Liberty said Europeans were ready again to travel and spend, "their willingness to spend was very competitive with the North American consumer."

"We expected Europe to be a little bit lighter versus '19 in terms of load factor. And it came roaring back."

"And that's a story of one of the North American consumer just feeling that they needed to for certainly certainly vacation in Europe. But also the European consumer was very much part of that story."

Doing better than ever

If you listen to just what Royal Caribbean Group's CFO had to say about the quarter, it pretty much sums up the demand environment.

The company delivered 17% higher adjusted earnings than they expected to with their prediction in May. Capacity overall was at 105% and net yields up 12.9% comparted to 2019 numbers.

In fact, booking volumes since the last earnings call significantly exceeded 2019 for both North American and European consumers.

So what drove this incredibly high demand?

Mr. Holtz said, "half of the yield growth was driven by new hardware and half driven by a significant increase in rates on like for like hardware, despite being a bit behind on load factors."

This translates to new cruise ships brought in more revenue, and there were higher prices on smaller, older cruise ships.

In addition to more revenue, cost cutting seemed to have an effect too.

"Our operational and commercial teams are doing an exceptional job, driving strong top line growth and maintaining focus on operating expenses to expand margins."

Caribbean and European sailings saw strong demand, and Alaska cruise capacity is up about 60% versus 2019.

Great cruise ships + Great destinations

Royal Caribbean International President and CEO Michael Bayley talked about the company's new strategy to attract new cruisers by positioning impressive cruise ships on itineraries with well-received ports.

"We've been very thoughtful...about the strategy of putting really outstanding hardware combined with excellent destination into the short product market because it truly is the on ramp for new to cruise and also first to brand."

Read more: Royal Caribbean has a plan to dominate short cruises with a new ship and private destinations

"Utopia will be the first Oasis-class ship that will be entirely focused on short cruises in the Caribbean, supporting our strategy of competing with land-based vacation alternatives and driving new-to-cruise customers into our vacation ecosystem as we seek to close the value gap,” Liberty said.

"Demand and pricing for Utopia has far exceeded our expectations."

Demand for CocoCay

Royal Caribbean's private island in the Bahamas is certainly doing its part to bring in cruisers.

Mr. Bayley talked about how much customers are clamoring for sailings that visit Perfect Day at CocoCay.

"Perfect Day is that, it really is perfect, and it is driving a lot of the demand and people are booking the ships and the itineraries that sail to Perfect Day."

"We see the repeat rates going back to Perfect Day accelerating."

He also mentioned the plan is to open the new adults-only beach area at the end of December of this year, "that'll come online at the literally in December of this year."

Royal Caribbean Group held its earnings call with Wall Street investors and touched on a number of interesting things happening in the company that are beyond what you would find in the balance sheet.

Each quarter, the company holds a conference call to go over the quarter results and answer questions from analysts.

Most of the discussions are purely financial back-and-forth, but there are some interesting anecdotes worth noting for cruise fans.

After listening to the entire 2022 first quarter earnings call, here is the most interesting things to come out of the discussion.

Demand is higher than pre-pandemic

While Royal Caribbean Group lost another billion dollars this quarter, things are rapidly improving for the company's bottom line.

Royal Caribbean Group CEO Jason Liberty said the last two months have seen very high demand for a cruise ship vacation, "Over the past sixty days, demand has materially surpassed, both pre-Omicron and 2019, levels. 

"The robust secular trend of experiences over things, that propelled our business in the past years, is now recovering towards pre-Covid levels. Consumers are now re-engaging with the world, and as a result, spending on travel in 2022 is set to out pace pre-pandemic levels with consumers planning to travel more frequently."

"Cruise consideration is the highest it has been in two years, and nearing pre-pandemic levels, with the most significant recovery among those new to cruising."

Guests are spending more thanks to better cruise planner enhancements

If you've noticed more Royal Caribbean emails about buying a drink package or shore excursion, it's no accident.

Royal Caribbean invested heavily in its e-commerce system to provide better sales pitches to guests, and the result is now materializing in passengers spending more money than ever before their cruise begins.

The company reported in the first quarter, total revenue per Passenger Cruise Day in the first quarter was up 4% versus record 2019 levels. This was such a strong driver that cash flow from ships in operation was positive in the first quarter. 

Mr. Liberty believes more spending on pre-cruise purchases is the result of better software behind the scenes, "Our investment in a new pre-cruise planning system allows guests to better plan and book their onboard experiences. As a result, we continue to see increased penetration of pre-cruise purchases, which is leading to significantly higher total spend per guest."

Royal Caribbean Group Chief Financial Officer Naftali Holtz indicated strong consumer spending and "higher pre-cruise purchase penetration" is what's driving people to spend more on their cruise vacation.

Royal Caribbean International President and CEO Michael Bayley said the increased spending has been, "wonderful", and attributed it in large part to the investment in better software, "The investment that we made in the software for pre-cruise revenue, which continued through the pandemic. We've really leveraged that now, and we've seen a significant increase in penetration and uptick with up-tick sales."

Mr. Bayley illustrated how important the purchases of these items before the cruise is to Royal Caribbean's bottom line, "one pre-cruise dollar gives us another $0.50 onboard spend."

Mr. Holtz added spending isn't limited to one or two categories, "It's everything...from spa to retail, shore excursions, casino, food and beverage."

"It seems like the consumer is really willing to spend on great experiences...make sure that we capture that spend as much as we can as they enjoying our cruises."

Digging into what the guest wants

Mr. Bayley talked about the level of sophistication Royal Caribbean has to be able to cater the pre-cruise sales to the individual person, "We've over time developed the sophistication and the ability to, not only use the analytics and the information that we know about the customer, to offer them products and experiences and services that we think they're going to like."

"In some cases, we've got customers who prefer gaming and dining. In other cases, we've got families who prefer shore excursions. And we now have the ability to tailor our communications and our promotions to those customers based upon what we think their key preferences are."

Cruise ship capacity

A big focus of the call was about increasing capacity as Royal Caribbean moves into the summer.

It's no secret that the cruise line is not only bringing more ships back online, but also allowing more and more passengers onboard in an effort to return to pre-pandemic passenger loads.

Mr. Holtz said all remaining cruise ships across the brands will be back in operation by June, we expect load factors of approximately 75 to 80%. Our low factor expectations reflect the higher occupancy we are seeing the Caribbean and lower expectations for repositioning voyages and early season Europe sailings."

He also added that capacity should reach "triple digits" by the end of the year. In short, expect pre-pandemic capacity by the time 2022 ends.

Mr. Bayley added full capacity should come faster on Royal Caribbean International, "we have ships now sailing at 100% and we've had ships sailing at 100% now for several weeks out of the Caribbean, into the Caribbean market and a short product.

"And as we head towards Memorial Day weekend, we're going to see significant percentage of our ship sailing at 100% and greater."

Interestingly, more people are booking suites rather than inside rooms, "From a cumulative standpoint, our load factors on sailings in the second half of the year are booked slightly below historical levels, with a greater mix of high yielding, suite inventory booked versus inside and outside state rooms."

Read more: Is a suite on Royal Caribbean worth it?

Capacity lower in Europe partially due to testing requirements

While demand for cruises in North America was exceptionally strong in the first quarter, demand for European cruises was lower, and perhaps the protocols could be at play.

When asked about what is impacting the lower numbers for European cruises, Mr. Liberty talked about the need to get a covid test to return to the United States as an issue.

He said they expect to have lower capacity in Europe due to maintaining price integrity, but also the covid test requirements to re-enter, "It is very much related to price integrity, but some of it's also, that relates to the testing requirement to come back into the U.S. for for Americans."

"The combination of those things weighs on the consumer in terms of their their travel expectations."

Mr. Bayley added, "many European countries now are stopping that requirement. So they're kind of freeing up the ability for the Europeans to travel around. And I think we're all hopeful that that's going to change fairly soon in returning to the United States."

Mr. Liberty said the Ukraine war has certainly weighed on reducing demand for European cruises, especially for Central and Northern European cruises.

Royal Caribbean just had one heck of a week in terms of record demand, echoing a strong desire for people to go on a cruise ship.

In a statement, Royal Caribbean said two different internal booking records were eclipsed during the week of March 26 - April 1, 2022.

The company saw both the most bookings in a single day and the higher booking volume booking week that it has ever seen in the entire history of the company.

The record number of bookings came via the Royal Caribbean website, over the phone, and through travel agents.

Royal Caribbean isn't surprised by the news given how well-received cruising has been among the 1.5 million people that have cruised since January 2021 on its line.

Royal Caribbean International President and CEO Michael Bayley thinks not only do people want to cruise again, but they are eager to get out and vacation, "The enthusiasm and excitement for the successful return of cruising is undeniable."

"We could not have reached this incredible milestone without the unwavering support of our loyal guests, our valued travel advisors and partners, and the Royal Caribbean International team around the world."

"Everyone has made an incredible impact and contributed to this accomplishment in every single way."

Royal Caribbean's strong rebound from two years of shutdown and a cautious restart stems largely from its effective health protocols that demonstrate how safe going on a cruise can be, especially when compared to land-based alternative leisure travel that require few, if any, protocols.

Today's announcement shows consumer demand remains quite strong for cruise ship travel.

Other cruise lines seeing big demand too

There's something in the water, as Royal Caribbean isn't the only cruise line that broke records recently.

Earlier this week, Carnival Cruise Line said it had the busiest booking week in its entire history between March 28 - April 3, 2022.

Oceania Cruises set a new single-day booking record for its 2024 Around the World in 180 Days voyage.

The last two years were anything but easy for the cruise industry, but things look to improve in 2022.

Cruise Lines International Association (CLIA) put out its annual State of the Cruise Industry Outlook that highlights how the cruise industry is bouncing back from the pandemic, as well as progress in environmental stewardship and other initiatives.

Royal Caribbean is one of many cruise lines that are part of CLIA, which represents the cruise industry in many aspects of the public and government sectors.

CLIA believes this report highlights the responsible restart process cruise lines have undertaken, which rely heavily on the proven Covid-19 protocols that have been implemented onboard ships.

Here's a look at some of the major highlights from the report.

Restart process

More than 75% of ocean-going member capacity has returned to service.

CLIA projects 100% of that capacity will be back in service by August 2022.

In addition, 16 new cruise ships will debut in 2022, including five LNG-powered vessels and nine expedition ships. The class of 2022 will be 100% equipped with Advanced Wastewater Treatment Systems.

Royal Caribbean will have one of those new cruise ships when Wonder of the Seas makes her debut this spring.

Economic impact of cruisers

It's no secret cruise ship passengers bring extra income to the ports of call they visit, and CLIA demonstrated this fact with specific figures.

• Every 24 cruisers creates one full-time equivalent job
• Cruisers spend an average of $750 USD per passenger in port cities over the course of a typical seven-day cruise
• 6 in 10 people who have taken a cruise say that they have returned to a destination that they first visited via cruise ship

Facts & Trends

CLIA also included in their report some interesting facts about who goes on cruise ships.

Top Five Source Regions on Average from 2018-2020

1. North America: 51%
2. Western Europe: 21%
3. Asia: 12%
4. Australasia: 5%
5. South America: 5%

Top Five Destinations by Average Passenger Volume from 2018-2020

1. Caribbean, Bahamas & Bermuda: 44%
2. Asia & China: 13%
3. Central & Western Mediterranean: 8%
4. Australasia: 5%
5. Panama Canal & South America: 5%

Cruise Tourist Age Averages from 2018-2020

1. 60+: 33%
2. 40-59: 32%
3. 20-30: 20%
4. 0-19: 14%

47.6 is the average age of cruise tourist

Percentage of Cruise Passengers Who Plan to Cruise Again

1. Traditionalists: 73%
2. Baby Boomers: 77%
3. Gen-X: 82%
4. Millennials: 85%
5. Gen-Z: 79%

Carbon Neutral by 2050

The cruise industry is pursuing carbon neutrality by 2050, which is an initiative the Royal Caribbean Group committed to in October 2021.

Royal Caribbean Group calls it "Destination Net Zero", but the goal is the same for all CLIA members:

• Delivery of a net zero emissions cruise ship
• A path to net zero emissions by 2050

To that point, over the next five years, CLIA's ocean-going cruise line member fleet will include 26 LNG-powered cruise ships, 231 ships fitted with Advanced Wastewater Treatment Systems, 174 cruise ships with shoreside power connectivity, and 176 cruise ships equipped with Exhaust Gas Cleaning Systems installed.

Read the full report

You can read the entire State Of The Cruise Industry Outlook 2022 here:

Did you know that modern cruise ships are not built at all in the United States?

Regardless if it is Royal Caribbean's newest mega ship, a super yacht for SilverSea, or anything inbetween, no cruise line builds their ships in the United States. Why is that?

When U.S. Senator Lisa Murkowski (R-AK) proposed legislation to permanently allow foreign flagged cruise ships to sail to Alaska without having to stop in Canada, she included a condition that would eliminate the bill once there is a U.S.-built ship that carries more than 1,000 passengers, if U.S. shipbuilders ever aspired to build cruise ships.

That little caveat in the bill by Senator Murkowski highlights the fact that modern cruise ships simply aren't built in America.

Cruise ships are primarily built in shipyards in Europe, such as Meyer Werft in Germany or Chantiers de l'Atlantique in France. All of Royal Caribbean's ships have been built in one shipyard or another in Europe over the years.

I asked Commander Don Goldstein, Retired United States Coast Guard, who has over 32 years of experience working with the cruise industry why ships are not built in the United States.

As you may have guessed, the primary reason why cruise ships are not built in the United States comes down to cost. In short, it costs too much to build a cruise ship in the United States for a few reasons.

Commander Goldstein pointed to three primary reasons why it's just too expensive to build a ship domestically:

Labor costs

Just like so many other aspects of manufacturing, labor is cheaper overseas than it is in the United States. The automotive industry is a prime example of why companies choose to build their products outside of the United States.

Union labor in particular is not cheap, and labor costs on a vessel as massive as a cruise ship can add up costs quickly.

Cruise ship construction is a labor intensive industry, and when you factor in the cost of American labor and the tax structure, it becomes unreasonably expensive.

Unlike cars, cruise ships aren't built in places like Mexico. They are built in Europe, so how are those countries that have similar standards of living to the United States able to build ships more reasonably? Essentially, they are heavily mechanized and are considered strategic assets.

Material costs

The cost of materials used in construction of the ship is going to cost more when it comes from the United States, especially U.S. built/manufactured materials.

As you may know, cruise ships are foreign-flagged. In order to be U.S. flagged, most of the material on a vessel must be from the United States.

Regulations

Building anything in the United States means more regulations by a variety of government entities during the process.

The United States Coast Guard (USCG) and Occupational Safety and Health Administration (OSHA) are just two of the agencies Commander Goldstein pointed to that would have oversight in the process, with others likely part of the process.

Following World War 2, the United States added strong protectionist legislation meant to preserve the maritime industry, but it actually had the opposite effect. Many shipyards domestically closed, and the few left are only focused on military work that rely on government paid contracts to ensure there is a profit.

An op-ed in the Los Angeles Times argued that instead of protecting U.S. jobs, these protectionist laws actually ruined American cruises and cost American jobs.

Commander Goldstein said the only reason a company would build a cruise ship in the U.S. would be to flag it here for coastwise voyages, like NCL's Pride of America.

By going that route, it brings into play a lot of regulatory protocols, such as using U.S. materials and equipment, U.S. shipyards which are subject to U.S. labor laws, OSHA requirements, and USCG inspection. 

"Most other countries do not have a regulatory agency like the USCG," Commander Goldstein explained. "Instead, they let classification societies do the majority of the inspection/certification work.

"Some are very good and some are not so carful about adherence to the international requirements.  OSHA rules, designed to keep shipyard workers safe, are expensive."

"When I worked on U.S. vessels in foreign shipyards, the difference is safety protocols was very obvious."

To illustrate the point further, Commander Goldstein recalled inspecting a U.S. flagged tanker that was at the Hyundai Shipyard in South Korea in 1987. He was dispatched to oversee the significant work being done there that was required to be reviewed by the USCG.

"Before the work was done overseas, the company that owned the vessel put the work up for bids, both in the U.S. and overseas."  

"The Korean shipyard won the bid, even though when work on a U.S. flagged tanker is done overseas, when the vessel is brought back to the U.S. to work in the Jones Act trade, there is a 30% tariff applied to the cost of the overseas work."

"Even with that tariff, I was told that the cost of the work at Hyundai was half what the cheapest bid from a U.S. shipyard."

As you can see, the extra costs to build a cruise ship in the United States are substantially more than overseas, and it is why cruise lines choose to build their ships elsewhere.

Foreign-flagged cruise ships

Since the cruise ships are built outside the United States, they cannot be flagged as an American vessel.

American shipyards are not equipped with the experience building modern cruise ships, nor do they have the capacity or supply chain to assemble cruise ships. 

Cruise ships these days are almost all foreign-flagged, with registrations in places like Panama, The Bahamas, Liberia or elsewhere.

To register a ship with any country - and fly their flag - a company has to pay them a fee to join their ship registry. Besides the issues outlined earlier in this article, the costs for a ship registry in the U.S. is much higher than other countries.

Is the cruise industry's newest cruise line, Virgin Voyages, competition for Royal Caribbean? Maybe not.

Speaking at Seatrade Global 2021, Royal Caribbean Group Chairman and CEO Richard Fain was asked how he viewed his newest competition in the cruise industry, and he said he thinks the new cruise line is actually a good thing.

Virgin Voyages is a joint venture between Bain Capital and Richard Branson’s Virgin Group, and their first ship has finally made her U.S. debut after many pandemic-related delays.

Scarlet Lady is the first ship for Virgin, and she offered sailings around Britain this summer, and is now in North America to begin sailings from here.

Mr. Fain was asked if he is worried about this new cruise line represents a new threat to Royal Caribbean's bottom line, but he thought it was actually the opposite.

"Actually, no," Mr. Fain responded quickly to the question. "I also think it's important to look at the industry and say that new players are actually are a big benefit to us because they attract attention."

Mr. Fain compared Virgin Voyage's entrance to the industry to when Disney started its cruise line in the 1990s.

"I do remember I was asked that question when Disney got into the cruise business. Oh, my goodness, isn't that going to be a terrible thing because Disney has come in and there's such a powerful brand name?"

In the case of Disney Cruise Line, the new line brought new customers to cruising.

"They added two percent to the supply in our industry, and they added 10 percent to the demand because it showed the important thing about our industry is getting the message across that we are an amazing vacation, just an amazing even on my competitor friends here."

"Having Virgin come in, I think all of that adds to the to the the impact of the cruise industry has."

"The important thing is they're adding more to the demand than they are to the supply. And so I think overall, I welcome them."

Mr. Fain said the real competition to Royal Caribbean isn't other cruise lines, but other forms of travel.

"We don't compete with each other as much as we compete with all the other activities that that compete for our dollar, whether it's a hotel or resort or a travel somewhere else."