I have an exclusive interview to share with you this week with Royal Caribbean Group CEO Jason Liberty about where he sees things right now, and what the short term future holds for the cruise line!
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With the new year nearly upon us, Royal Caribbean is looking forward to a new year of growth and its top executive seems very optimistic for what the future holds.
Royal Caribbean Group CEO Jason Liberty took the helm of the company at the beginning of 2022 and has worked through guiding the company to rebound from the depths of the cruise industry shutdown.
There's no doubt things look better today on the company's balance sheet than a year ago, but beyond the numbers, what does he think of where things are going?
During the naming ceremony for Wonder of the Seas, Royal Caribbean Blog had an exclusive sit down interview with Mr. Liberty to get his sense of where things are today and what the future holds for the brand.
When asked about how he sees things at the moment, he feels confident in the sense things are returning back.
"All the assets that made us everything that made us so great pre-pandemic is all back," he started saying about the business today. "Our load factors are returning to normal, the experience is exactly what it was pre-COVID, if not even better. Our incredible crew are well trained and enthusiastic and ready to go."
In short, he sees the trajectory on the right course, "when we look at our business, whether it's corporately or by brand, everybody's accelerating."
When Mr. Liberty was the Chief Financial Officer in 2019, he told investors he regretted the company didn't spend more money on new ship orders during the financial crisis of 2008.
There is definitely regret that we have in terms of our pullback 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 an even stronger position than we are today.
It seems to me given the financial slow down of today coupled with the fact Royal Caribbean Group hasn't placed any orders for new ships recently that history is repeating itself and if we can expect new ship orders soon.
One thing he mentioned was the time to build is different today.
"Back in the financial crisis, on average, it was taking about three or four years to get a ship when you ordered it, especially a ship that was not a new design. "
"The level of demand for new ships was so high that you had to order ships much further out in order to have access to those slots. So you were seeing people order ships six or seven years out."
"We have a little bit more runway here than what we had pre-pandemic or in the financial crisis."
"If you think about the Icon one's and the Icon two's, there's a little bit more breathing time for us to have to place in those orders because of that structural change pre-pandemic."
While he didn't commit to any kind of plan or reveal anything new, he did talk about the direction of growth, "we're going to grow our business over the next five years at about 6% a year."
"We have to get our footing here into 2023. But I think we want to continue to grow our fleet."
Just before the cruise industry shut down in 2020, Royal Caribbean had announced plans for a number of new port projects that would provide cruise ship guests more to do while ashore.
These plans included new private islands, beach resorts, and revamping a current private island. The promise was exciting new places to spend your day while on a cruise.
Then the world had to deal with Covid-19 and those plans seemed to fall to the sidelines as Royal Caribbean struggled with an extended shutdown coupled with crippling loans to stay in business.
But what about those other projects? Are they cancelled? Still planned? And when can we expect to see them?
"Certainly we had to put a pause on some of these things... but our ambitions around Perfect Days around the world, Beach Club concepts, are still very much there."
Mr. Liberty also pointed out that construction on land can take significantly longer than you might thing. Perfect Day at CocoCay took almost seven years, as an example.
I asked Mr. Liberty if it's fair to say all the projects announced pre-pandemic were in some status of pause or moving forward, as opposed to being cancelled.
"Yeah, there's nothing that has has been canceled."
Both Mr. Liberty and Royal Caribbean International President and CEO Michael Bayley both said the new adults-only beach expansion to Perfect Day at CocoCay is slated to open towards the end of 2023.
It's no secret that prices for travel are up in general, so what is Mr. Liberty's outlook on the price of a cruise and how that affects the average cruise ship passenger.
"Our customers tend to have a pretty strong personal balance sheet. They're not overly levered. And that space just in the US alone, has trillions of dollars of savings sitting there on the sidelines."
Coupled with the fact consumers are interested in experiences more so than acquiring things, along with demographic trends, he feels good about demand for a cruise vacation.
He also still believes the value of a cruise is second to none in the leisure travel market.
"The value gap between a cruise and land based vacation during the pandemic expanded quite a bit."
"As we increase our pricing, we're still at a significant value to what it would cost for you to have anything close to a similar experience on land. That's also why our pricing, what our guests are willing to spend on our ships, continue to rise because of the demographic secular trends as well as just that value gap to land based vacations."
Last month, Royal Caribbean Group signed a deal with PortMiami to build a new Terminal G cruise terminal.
Mr. Liberty said it won't quite be on the same scale as Terminal A in PortMiami, but it will help support the company's needs, "we have a lot of ships coming online. We need infrastructure. We need to make sure the experience from from when you arrive to getting on our ships is seamless and free and has no friction inside of it."
"That commitment to us is really just our commitment to our growth that we know is coming on."
The cruise industry is poised for a major comeback, and Royal Caribbean sees better things to come over the next year and a half.
Speaking at Seatrade Cruise Global conference in Miami on Tuesday, Royal Caribbean Group CEO Jason Liberty shared his thoughts on the prospects for emerging from the depths of the pandemic.
"We expect the back half of this year to normalize and 2023 to look and behave like the pre-Covid period," Mr. Liberty shared when asked about his thoughts of the future.
Mr. Liberty expects this to be a transitional year, with 2023 performing better than pre-pandemic, "That means all ships back up and running and full capacity."
A strong 2023 has largely been Royal Caribbean Group's plan since talking to Wall Street in February.
During the company's earnings call with investors in February, executives said they expected a a return to profitability in the second half of 2022.
Part of getting customers back is establishing confidence in the experience, "By doing our jobs and building that confidence, the desire to cruise is back to where it was before Covid."
"Throughout the pandemic, we’ve learned a lot about the capabilities of our organizations, especially in terms of health and safety."
Joining Mr. Liberty at the keynote event was Carnival Corporation CEO Arnold Donald and MSC CEO Pierfrancesco Vago.
Mr. Donald also thinks things are looking brighter in the near future, "The overall trajectory for the cruise industry is good … it’s resilient and there is a tremendous amount of growth potential. The overall future for cruise is extremely bright."
The same day of the keynote, the cruise industry took a moment to celebrate some important milestones that point to more people wanting to get back on a cruise ship.
Cruise Lines International Association (CLIA) shared their new findings of how strong demand has been for cruises despite all the challenges.
In a statement, CLIA President and CEO Kelly Craighead talked about the recovery process, "As the industry resumes operations, passenger volume is expected to recover and surpass 2019 levels by the end of 2023, with passenger volumes projected to recover 12% above pre-pandemic levels by the end of 2026.
"Cruising is accessible, responsible, and experiential - making it the best way to see the world for people of all ages and interests. With the support of an incredibly resilient community, the future of the cruise industry is bright."
CLIA's consumer research had some interesting facts:
Royal Caribbean Group has a new CEO, Jason Liberty, but who is he and how did he get to be the new head of the cruise giant?
Just a few weeks ago, Royal Caribbean Group began the year with a new CEO, following the departure of former CEO Richard Fain. The company announced in 2021 that Richard Fain would be stepping down from his CEO role and would be promoting Jason Liberty to Chief Executive Officer and President.
According to Royal Caribbean’s website, Jason Liberty, 46, will be the President and CEO of the company’s three global cruise brands: Royal Caribbean International, Celebrity Cruises and Silversea cruises.
In addition, Liberty will oversee TUI Cruises and Hapag-Lloyd cruises, which it is a 50% owner in a joint venture. Liberty will also oversee the Group’s strategy, technology, supply chain, port operations and legal functions.
Stepping into this role, Liberty will oversee the company’s 60 ships that carry more than 7.5 million passengers to ports around the world, including all 7 continents.
Fain’s departure from Royal Caribbean Group came as a surprise to some, as he was the third-longest serving CEO among current S&P 500 leaders. When it comes to contributions, Fain was an instrumental leader for the Royal Caribbean Group. He introduced new ship categories and helped transform Royal Caribbean’s classes of ships from Sovereign, Voyager and Oasis ships to Celebrity’s Solstice and Edge classes.
Fain most recently was a leader for the company through the unprecedented nature of the pandemic’s shutdown on the cruise industry. Many have praised his role and involvement as CEO during the cruise shutdown, including his visionary leadership and creation of Royal Caribbean's Healthy Sail Panel.
Liberty is not a new name to the Royal Caribbean Group, as the new CEO joined the company back in 2005. With more than 16 years of experience under his belt, Liberty has held many positions with Royal Caribbean Group.
Liberty joined Royal Caribbean Group as a Vice President of Audit and Advisory Services before moving into Corporate Strategy, Revenue and Planning. In 2012, Liberty transitioned into his role as Senior Vice President of Finance and Strategy. The following year, he was promoted to Executive Vice President and Chief Financial Officer. Liberty held those positions for 8 years before his current promotion to President and Chief Executive Officer.
Prior to his positions at Royal Caribbean Group, Liberty worked for the account firm KPMG LLP as a senior manager. According to LinkedIn, Liberty held this position for 8 years before transitioning to Royal Caribbean Group.
Throughout his many roles with the Royal Caribbean Group, Liberty has been heavily involved in the company’s biggest strategic initiatives. He’s also been praised for his leadership during the pandemic, an especially difficult time for the cruise industry.
Jason Liberty is a graduate from the University of Miami School of Business, where he holds a bachelor's degree in accounting. Liberty also attended Indiana University’s Kelley School of Business, where he earned a second bachelor’s degree in finance.
In addition to his bachelor’s degrees, Liberty attended University of North Carolina’s Kenan-Flagar Business School in Chapel Hill to earn his Master of Business Administration. He currently serves on the board of directors of WNS Limited, which is a business process management company.
With help from the board, Fain has stated that he had carefully planned a succession process for when the time was right for him to step down. After seeing most of the company’s ships return to service, Fain felt it was the right time for Liberty to take over as CEO and President.
On the topic of Liberty’s new role, Fain stated, “He is a highly versatile and strategic leader, who has been integral to all aspects of the company’s accomplishments and performance.” Fain expressed, “I couldn't be happier to have such a superbly qualified and principled leader succeed me as CEO. Jason will lead the Group to new heights.”
Additionally, Fain praised how Liberty has played a crucial role with organizing over $12 billion of financing during the pandemic cruise shutdown. Because of Liberty’s ‘methodical manner’, Fain is confident that the company will be well served for many years to come.
In his new position, Liberty will also join the board, which Fain will continue to chair. In addition, Fain will continue to be involved in the company’s ship construction program
Liberty will be stepping into his role as CEO as a very qualified and principled leader. With culture at the forefront of the Royal Caribbean Group’s business success, Liberty will be embodying the company’s values through his leadership.
In reference to his new role, Liberty shared that he is both honored and humbled to become CEO for the Royal Caribbean Group. He stated, “Our incredible people and culture, combined with our leading brands and the most innovative fleet in the world are what make our organization so successful."
"I'm grateful to both the board for selecting me, and to Richard, for his friendship, mentoring and guidance. I look forward to building upon the company's remarkable record in the years ahead."
Royal Caribbean Group's new CEO Jason Liberty talked on a webinar for the first time in his new role about a variety of topics, such as becoming CEO and the short-term impact Omicron variant is having on business.
Mr. Liberty took over for Richard Fain as CEO of Royal Caribbean Group on January 3, and he was invited to speak to travel agents during a Royal Caribbean International webinar.
Here are a few of the intriguing topics covered during his talk.
Mr. Liberty was asked what he wanted to do in his first 100 days as the CEO, and he is starting off by listening more
"Most of my time is going to be around learning and listening from others," he explained. "Spending time with our travel partners, I'm spending time with our customers and spending time with our employees, and I'm spending time with many of our partners ...to make sure that I have the kind of firm understanding of of what everybody is looking for."
He also said continuing the company's return to service is a priority, "we have about 80 percent of our fleet up and running, making sure that we continue to execute on that successfully is certainly a priority."
Mr. Liberty also asked about the effects of Omicron on the business, and his view on the rebound.
He indicated that the good news is people want to cruise, but consistency is the key, "[it's] really, really clear that there's really strong demand for cruise and I think people are just looking for consistency."
Mr. Liberty leaned in the direction of the second quarter for things to feel better overall, "I think to you as we get into Q2 and beyond, we're going to see a much more global state of things based off of where the experts believe the disease will be, as it relates to Covid, and us getting our fleet back up and running."
He later said he thinks the second quarter should look more like the first quarter was supposed to before Omicron, "as it relates to our expectations, when we look at kind of Q2 and beyond, it's very much in line with what we expected in Q1 because of some of the cancelled sailings impact."
Despite the challenges of Covid, Mr. Liberty was adamant about not allowing it to compromise what passengers can look forward to onboard its ships.
"I think it's very important to note that even through this entire journey, we have not, and we will not, compromise our guest experience."
"We have a strong long-term business. This is an exceptional business that does very well financially."
Mr. Liberty used a few different metaphors to describe the hit cruise lines have taken during the last two years due to Covid-19.
"This is a meteor that hit our industry and we have survived that hit," he said later in the interview. The silver lining, as he describes, is that it demonstrates they can adjust and overcome challenges by working together.
"I think that that comes through the innovation and continuous improvement oriented mentality that we have."
"These are good businesses that have just had to deal with a black swan event."
Since being named Richard Fain's successor, some have pointed out the fact Mr. Liberty comes from a financial background as a negative to choosing him to lead the company.
In response to such questions, Mr. Liberty explained he is not what you may think, "I know sometimes there are things that come along with, 'Hey, he was a finance guy, he's a CFO guy', but you really should understand and appreciate... that's actually the opposite of how I am."
He pointed to the fact he was a major proponent of the company providing commissions and loans to travel agents during the pandemic, as an example of putting the collective industry ahead of the company's bottom line.
