With the ever growing impact of COVID-19 outbreak, Royal Caribbean announced it has increased its revolving credit capacity by $550 million bolstering the company's liquidity.

In addition, Royal Caribbean Cruises Ltd. is looking into other ways to improve its liquidity by reducing capital expenditures, operating expenses and taking other actions to improve liquidity by at least a further $1.7 billion in 2020.  The company is also planning reductions to the 2021 capital expenditures and operating expenses.

Liquidity refers to a company's ability to use its current assets to meet its current or short-term liabilities.

The company also said it is withdrawing its first quarter and full-year 2020 guidance, due to the, "magnitude, duration and geographic reach of COVID-19."

"These are extraordinary times and we are taking these steps to manage the company prudently and conservatively," said Richard D. Fain, chairman and CEO.  "I am proud of the work our teams are doing to address this unprecedented situation." 

Royal Caribbean will hold a conference call on October 30, 2019, at 10am to discuss its third quarter 2019 financial results.

The call will be available on-line at the company's investor relations web site, 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. There is no passcode or meeting number.

A replay of the webcast will be available at the same site for a month following the call.

Royal Caribbean held a conference call with investors earlier today to go over its 2019 second quarter earnings, which shed light on a few interesting anecdotes.

Perfect Day at CocoCay is attracting new cruisers, not steal from other lines

If there was one theme of the earnings call, it is that Royal Caribbean has hit a grand slam with its private island makeover earlier this year, Perfect Day at CocoCay.

Richard D. Fain, Chairman and CEO, Royal Caribbean Cruises Ltd. said, "To describe Perfect Day as a home run, wouldn't do it justice. It really resets the bar in the short-cruise market."

"But it's important to note that Perfect Day wasn't designed to steal customers from other cruise lines; it was designed to attract customers who otherwise wouldn't be taking a cruise. And it's doing that beautifully."

Perfect Day at CocoCay is bringing in big returns

In addition to being well-received by cruisers and reviewers alike, Perfect Day at CocoCay is also making a giant impact on the cruise line's bottom line.

Royal Caribbean Cruises Ltd. Chief Financial Officer, Jason Liberty, spoke to this point, "What has been particularly impressive over the past few months is the pricing we are receiving for sailings visiting Perfect Day at CocoCay. Pricing on these sailings has been consistently outpacing our lofty expectations. It has been a major contributor to our improved, non-Cuba revenue outlook."

Royal Caribbean International CEO Michael Bayley said, "In total in '19 and through into '20, eleven of the Royal Caribbean ships will be going to Perfect Day at CocoCay, so you can imagine the volume that we are taking to Perfect Day has gone up by a factor of about four. And we are already taking a lot of guests to CocoCay before we underwent all of this work and changed the whole experience."

"I think today we've taken maybe 350,000 people to Perfect Day since we opened. It's now rated the number one resort globally for Royal Caribbean, and it's knocking it out of the park in terms of truly delivering a phenomenal day. The guest satisfaction is extremely high."

"The demand we are seeing comes from all segments. It competes very well with Orlando. It's got a truly wonderful day, both in thrill and chill. It is also driving new-to-cruise, because approximately 40% of the short market is new-to-cruise."

Sustainability and accountability is important

Mr. Fain provided an update on the cruise line's sustainability efforts, and how well it is following the plan it laid out earlier.

"As most of you know, in 2016, we launched a partnership with the World Wildlife Fund (WWF) to take our sustainability efforts to a new level. At Royal Caribbean, we believe that what gets measured, gets better, and we established specific goals in three areas of sustainability. The three areas where we established these quantifiable goals were the areas of carbon footprint, sustainable destinations, sustainable food production."

"Specifically, we undertook a 35% reduction in carbon footprint of our 2005 base, offering one thousand tours certified to the GSTC sustainability standard, and responsibility to responsibly sourcing 90% of wild-caught seafood globally, 75% of farm seafood in North America and Europe. We set a public goal to reach these objectives by the end of 2020."

"I am happy to report that we are on schedule. We achieved our carbon footprint goal earlier this year, and just two weeks ago, we certified our one thousandth sustainable tour operation. We're not there yet on our sustainable food sourcing goal, but we're walking diligently to do so, and hope to reach that target soon."

Cost of Cuba

Earlier this year, the United States government ended the ability of cruise lines to sail to Cuba and the impact of that policy change was quantified during this call.

Mr. Liberty explained, "The abrupt removal of calls to Cuba on June sailings on Majesty of the Seas and Empress of the Seas costs us 30 basis points in year-over-year yields for the quarter. While the Cuba policy change was financially and operationally painful, our underlying business remains very strong, as we both outperformed on onboard revenue and saw further close-in demand for our core products."

If they could go back in time, Royal Caribbean would have done more

One of the analysts on the call asked Royal Caribbean if they had a "do over" during the last recession, would they have held back as much as they did for ship orders.

Mr. Liberty said bluntly, "There's definitely regret that we have in terms of our pull-back on our growth. We would all be talking about higher earnings numbers today, better return profile today if we hadn't slowed down our growth, or our investment efforts in expanding our global footprint, investing in different projects that would have put us in an even stronger position than we are in today."

Royal Caribbean will hold a conference call on July 25, 2019 at 10:00 a.m. to discuss its second quarter 2019 financial results.

The call will be available on-line at the company's investor relations web site, 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. There is no passcode or meeting number. A replay of the webcast will be available at the same site for a month following the call.

In a press release, Royal Caribbean commented on the impact the U.S. government's policy change on travel to Cuba and provided a range for its financial impact.

The company estimates that the financial impact of this regulatory change is a reduction to the Adjusted EPS for 2019 in the range of $0.25 to $0.35 per share.

"While the affected sailings impact only 3 percent of our 2019 capacity, the extremely short notice period for this high yielding destination amplifies the earnings impact," said Jason T. Liberty, executive vice president and CFO. "The result of this policy change has created a short-term impact to our guests, operations and earnings; fortunately, we have many alternative and attractive destinations for our guests to choose from."

On June 4, 2019, the U.S. government announced that effective June 5th, 2019 authorized travel to Cuba under the People-to-People program is rescinded and travel to Cuba via cruise ships is prohibited. Therefore, effective June 5th, cruise ships will no longer be allowed to travel between the U.S. and Cuba.

After each fiscal quarter, Royal Caribbean Cruises Ltd. holds a conference call with investors to go over their quarterly results that were released earlier in the day.  While most of this discussion is mired in financial discussion, there are some interesting tidbits that guests can pull out of these discussions.

We rounded up the most intriguing bits from the earnings call that may provide guidance or a view of where the cruise line is going, and how leadership sees things currently.

No changes to Cuba...yet

Ever since the U.S. Administration made an announcement that it intends to clamp down on recent changes to America's policy towards Cuba, many have wondered what impact that will have on cruises to Cuba.

Royal Caribbean Cruises Ltd Chairman and CEO Richard Fain took a little time to speak on the subject, saying essentially that nothing has changed quite yet,  "If such legislation does ensue, we believe that we possess all defenses. And we're not expecting to change our itineraries as a result. The administration also commented on possible changes to the regulations that apply to travel to Cuba."

"At this point, we don't know if there will be any changes, what those changes might be? Or to what extent they would impact us. Only 3% of our itineraries currently go to Cuba. And any impact would depend on what the regulations say. And how much advanced notice we and our guests would receive."

Perfect Day impact

Throughout the call with investors, Royal Caribbean's executives were very bullish on the potential Perfect Day at CocoCay will bring to the cruise line's offerings. Not only is it looking like a really fun place to spend the day, but it also looks like it will bring a big return for the company.

Mr. Fain started off the call saying, " To say that, she is a beauty is a massive understatement and we believe that we have created a truly game changer for the cruise industry, in fact for the vacation industry."

Royal Caribbean Cruises Ltd. Chief Financial Officer Jason Liberty spoke to the early returns the cruise line is seeing, "Perfect Day at CocoCay hasn't officially opened yet, but it's clearly fueling additional and higher-yielding demand for our Caribbean itineraries. Bookings and pricing have been exceeding our expectations overall for the Caribbean, with sailings visiting Perfect Day up by more than other Caribbean itineraries."

Guests spending onboard the ship is at the heart of higher revenue

If you are looking for a common thread among the recent strong financial results that Royal Caribbean has shown lately, the onboard purchases guests have been making is a good place to start.

Once again, onboard spending was up and clearly guests are enjoying the various packages they can purchase for their sailing.

Mr. Liberty mentioned, "On the onboard side, which has been exceptionally strong we saw an over index of spend on shore excursion our packages like beverage packaging, internet package and again more focused on the experiential stuff versus seeing more spend occur within the retail shops."

Perfect Day at CocoCay is engineered around guest experience

One of the analysts on the conference call inquired about the prospect of Perfect Day at CocoCay might seem overcrowded.  More generally, he wanted to know how all the new additions and expansion will not impact the  customer experience that would create a negative passenger experience.

Royal Caribbean International CEO Michael Bayley responded by saying, "We've designed Perfect Day to deliver what we think will generally be a perfect day for our customers. And we, from what we've seen so far with between 4,000 and 6,000 people on the island, we've got a huge amount of space available."

"So we've engineered designed for peak and the peak was way up close to 10,000. We obviously know we'll operate it with bigger ships coming to Perfect Day, and we'll see how we go. I think we're kind of feeling pretty optimistic about the potential for three ship calls versus two ship calls that could take us up to 12,000 a day. And remember, it's a fairly large island and we've only developed about a third of it."

New cruisers versus loyal customers

One analyst noticed a trend that Royal Caribbean is able to hold on to pricing premiums on new ships.

Mr. Bailey answered by talking about the cruise line's strategy of attracting people new to cruise, while retaining loyal customers, "I think we stated a few years ago one of our key areas of focus was on new-to-cruise in particularly in market like the United States we've been quite focused on growing our new-to-cruise segment. "

"We have changed some of our strategy so everything that we've done with the short product where we took the Voyager class ships and put them through role amplified and then place them into the short product with Perfect Day CocoCay has really stimulated that new-to-cruise segment. So that's part of it."

"Our loyalty customers continue to grow. They like the brands and they enjoy what we provide. I think the new ships, we've been very focused on not only the continuation of kind of on innovation in bringing new products and services to our guests. But we've done a lot more analytics on, really trying to understand what's going to attract those customers and bring them back and also be able to maintain higher yields."

New app rollout update

Many guests have been wondering when will a certain ship in Royal Caribbean's fleet gain support for the cruise line's new smart phone app.

Mr. Fain provided a brief update on the project rollout at the start of the call. "I'm particularly excited this is already been so broadly deployed that 60% of our guests can get it available. And, towards the end of the year it will be virtually all our guests. And the ratings that it's getting in the Apple App Store are 4.7."

Royal Caribbean will hold a conference call on May 1, 2019 at 10am to discuss its first quarter 2019 financial results.

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. There is no passcode or meeting number. A replay of the webcast will be available at the same site for a month following the call.

Royal Caribbean will hold a conference call on January 30, 2019 at 10am to discuss its fourth quarter 2018 financial results.

The call will be available on-line at the company's investor relations web site,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. There is no passcode or meeting number. A replay of the webcast will be available at the same site for a month following the call.

Royal Caribbean will hold a conference call on October 25, 2018, at 10am to discuss its third quarter 2018 financial results.

The call will be available on-line at the company's investor relations web site, 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. There is no passcode or meeting number.

A replay of the webcast will be available at the same site for a month following the call.

Royal Caribbean will hold a conference call on August 2, 2018 at 10am to discuss its second quarter 2018 financial results.

The call will be available on-line at the company's investor relations web site, 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. There is no passcode or meeting number. A replay of the webcast will be available at the same site for a month following the call.