It's no secret cruise lines are building and expanding their private island and beaches, but Royal Caribbean Group's CEO doesn't see it as purely a money grab.

Private islands have become a major difference maker for cruise lines like Royal Caribbean, and they are working on building a second one in Mexico, along with beach clubs around the world.

The appeal is undeniable, but Royal Caribbean Group CEO Jason Liberty thinks the media has gotten it wrong when it comes to the bigger picture involved.

"While there is economic benefit, we're building in these communities. We're creating jobs," he said this week while speaking at the Seatrade Cruise Global conference in Miami Beach earlier this week.

His view is the benefits go well beyond simply a money making endeavor, and there are important things missing from the narrative.

Economic growth for local communities

Mr. Liberty isn't denying that private destinations are profitable, but he believes that is not the only story to be told.

With its new projects they are working on, his company is partnering with the local communities to provide value to them too.

He explained, "The economic element of this is not concentrated per se in just the company. It's the broader economic activity that's happening within the area."

"In many cases, we're partnering directly with local citizens."

He's talking about how in places like The Bahamas and Mexico, Royal Caribbean is offering opportunities and incentives to the people living and working nearby to benefit too.

In the case of the Royal Beach Club Paradise Island, one percent of the annual gross revenue from there will be allocated to a National Investment Fund. 

Additionally, Bahamians will have the opportunity to invest in the project owning up to 49 percent equity, with the remainder held by the cruise line.

Over in Mexico, Royal Caribbean is going to bring its Perfect Day concept to Costa Maya, which is nearby the village of Mahahual.

The entire project will create 3,000 jobs, of which at least 1,000 will be in the construction phase. The rest will be jobs tied to the operation once it opens.

In addition, Royal Caribbean is partnering with Quintana Roo’s Agency for Strategic Projects and the University of Quintana Roo to ensure Perfect Day Mexico has a positive social impact. 

Royal Caribbean has promised environmentally sustainable facilities, including a dedicated water treatment plant and a reverse-osmosis system to provide a self-sustaining drinking water supply.

A recent Wall Street Journal publication talked about the how cruise-owned private islands are becoming more prevalent, "the idea is to keep them [passengers] in these private destinations for a particular amount of time, and to basically keep them spending there and not leave, "said Martha Honey, CEO of Responsible Travel Consulting.

Mr. Liberty explained there's more to these operations than simply the guest experience, "The articles that have been out there, they have just focused on we're building these things...they don't get into the experience we're trying to solve for."

"They don't get into the partnering that we're doing. They're not getting into the supply chain. They're not getting into all the employees that we're hiring."

Bringing more people around the Caribbean

Another benefit to building more private destinations is it brings a greater focus on ships sailing within the Caribbean, and that means more people to visit more islands.

Harry Sommer, President and Chief Executive Officer of Norwegian Cruise Line Holdings Ltd., explained there's a net effect to consider as well. His company is looking to grow the amount of passengers sailing the Caribbean from 1.2 million to 2.2 million guests a year by 2026.

"The fact that we're bringing a million more guests to the Caribbean that are going to visit lots of different islands doesn't only mean that Great Stirrup Cay will have a benefit, it also means all the other islands that were that were visiting will have twice as many visitors as well," he explained.

"We think that's part of partnering with the local communities, and we're very proud to do that."

Executive Chairman of MSC Cruises, Pierfrancesco Vago, agrees that the media has it all wrong.

"I heard about the news saying the private destination to keep our passenger spending is actually exactly the opposite," he retorted.

"It's a very good example of how we can support a circular economy in so many ways with the local population and obviously with our neighboring islands."

The Wall Street Journal video used MSC's Ocean Cay as an example of how the visit and some amenities are included, but there are extra cost add-ons, such as cabanas or ice cream.

Mr. Vago points out prior to MSC leasing the island, it was an "an industrial site dredging for aragonite."

"We developed that island from being an industrial site to replenish 700,000 plants so we can create the paradise."

With the announcement of new tariffs from the United States, the cruise industry is starting to weigh what it means to them.

Speaking at Seatrade Cruise Global conference in Miami, Florida, Royal Caribbean Group CEO Jason Liberty joined a panel of other CEOs during the keynote "State of the Global Cruise Industry" session to address the geopolitical issues facing cruising.

It's quite early since the policy change was announced, but the question of what new tariffs and visa requirements will have on cruising.

Overall, none of the cruise line CEOs thought the tariffs would have an immediate impact.

Tariff question

One of the first questions addressed was the nature of new tariffs, but all of the cruise line CEOs said there was no direct impact from tariffs at this point.

They collectively shook their head, "no" and then talked about that tariffs will impact consumers.

Carnival CEO Josh Weinstein spoke more candidly about them, "The short answer is no, for various reasons."

"Because of how we could resource a lot locally," Mr. Weinstein said. "And we also go to different places, we're not we're not landlocked, so to speak."

But he did caution that a greater economic impact to cruises is not out of the question, "The uncertainty and the ripple effects absolutely has an impact on the industry.

"The hard part about that is that as of now, the answer is we don't know. And so anytime there's an answer, we don't know, it just takes some time for people to get comfortable with the uncertainty."

He went on to say that part of working with any government is to engage with them, "we listen well, we educate, and it's also one of the powers of our platform is it's flexible."

Ambitions to continue to grow

Mr. Liberty talked about his outlook given the recent economic woes by simply saying, "Current economic noise will not prevent our collective ambitions to grow this industry."

He pointed to the fact that all cruise lines are ordering ships further and further out, demonstrating the strong demand to build new ships.

He also pointed out that new ship growth isn't necessarily for the sake of adding new vessels.

"Because we are also looking further out, some of these ships are getting to 35 to 40 years in age, some of these (new ships) will be net replacement,” Liberty said.

That reality is paramount for Royal Caribbean as the Vision Class ships are approaching that milestone in age.

The cruise line has danced around the topic of replacing them with a new class of cruise ships, but so far there has been no official confirmation.

Destination is an important factor

One of the major topics discussed was the role of destinations, both private and traditional ports.

The moderator of the discussion alluded to recent mainstream media coverage of cruise line private destinations as, "building these to keep the money all to themselves," such as coverage by the Wall Street Journal.

Mr. Liberty dismissed this sort of coverage as missing the broader picture, "They focus on well, you must have a completely captured audience in doing that, they don't get into the experience we're trying to solve for."

What he means is new projects like Perfect Day Mexico and an array of private beach clubs are about making the guest experience better and partnering with local communities to create new jobs for them, and expose the cruise ship passenger to new opportunities.

"We're trying to elevate the experience and making sure that the end to end experience lives up to what our guests are expecting it to be," Mr. Liberty explained.

"The economic element of this is not concentrated per se in just the company. It's the broader economic activity that's happening within the area."

As an example, Royal Caribbean created an equity fund to provide fair market value of the four acres of crown land that the government contributed to the project.

There's also an investment fund to essentially buy shares in the investment fund to buy equity into the fund.

On top of all of that, a new tourism tax that will be part of this project that benefits local Bahamians, where 1% of gross profits are moved into a new tourism levy in perpetuity.

River cruises are about expanding choices for their customers

Mr. Liberty also talked briefly about the news that Celebrity Cruises will launch a river cruise division in 2027.

"We're trying to meet all of our customers, where they are, and the vacation experiences that they're seeking," he said after being asked about plans for this new venture.

Their research indicated customers wanted to try a river cruise to augment their cruise vacations.

"We look at what our guests are doing when they're not with us. One of the things that they tell us that they're looking to do, not as as a substitute for a cruise, but as an additional vacation experience is, is to go on river."

It's an opportunity to serve a need Royal Caribbean Group customers have while retaining business within their own ecosystem.

Royal Caribbean Group's CEO recently offered three predictions for trends that he's seeing for cruising this year.

During his company's fourth quarter earnings call a few weeks ago, Mr. Liberty pointed to a few trends he expects Royal Caribbean to encounter, and each one is likely to help its bottom line.

Consumers should pay attention to these trends as an indicator of what we can expect from a pricing standpoint.  Key indicators such as demand, demographics, and booking volume all contribute to the prices we pay later.

As the cruise industry moves into 2025, there's a lot of momentum from last year, and with record demand, Royal Caribbean appears well-positioned to lead the market. 

With the cruise industry experiencing some of the highest demand ever, the price and destinations your next cruise take could be determined by these market shifts.

Travelers want to make memories through experiences

Right at the onset of the call with Wall Street analysts, Mr. Liberty talked about the importance consumers are placing on travel experiences over material goods.

Liberty noted that American households are wealthier than ever, with continued wage growth and low unemployment driving strong consumer spending. This economic strength is leading to a shift in how people allocate their discretionary income.

That wealth growth is fueling this desire among consumers to spend more on a vacation that will deliver wow moments and make memories they can look back on fondly.

He believes a cruise vacation is particularly well-positioned to benefit from this trend, as it offers a blend of adventure, luxury, and relaxation in one package.

Liberty emphasized that consumers are planning to take more trips and increase their vacation budgets, "Consumers plan to spend more on vacations and take more trips in the coming year and our guests over index in their intent to spend more on leisure travel."

"We continue to see very positive sentiment from our customers bolstered by strong labor markets, high wages, surplus savings, and elevated wealth levels, at the same time; they continue to prioritize travel experiences."

He believes the combination of cruise ship diversity and private destinations positions the company well to meet this demand.

Millennials and younger travelers are more interested in a cruise than ever before

A big trend that you may have already noticed is that cruises are no longer for the "newly wed and nearly dead".

Mr. Liberty sees growing interest in cruising among young people, particularly Millennials and Gen Z travelers.

Earlier in 2024, he talked about how impactful younger people have been on a shifting demographic, "Millennials and younger generations have gained 11 percentage points share compared to 2019." 

"And today, almost 1 in 2 guests are millennials or younger...it's a very powerful statement."

This shift is driven by several factors, including the affordability of cruises compared to traditional land vacations and the increasing desire for unique, shareable experiences.

Plus, Royal Caribbean has invested a lot of money in tailoring its experiences to younger passengers through technology, onboard activities, and entertainment.

They're using more AI in their business to make it easier to book restaurants, excursions and more, "We launched over 300 new digital capabilities across channels in 2024, improving the overall experience and reducing friction points while increasing spend."

Piggybacking on the first trend, younger travelers see a cruise ship as an easy way to explore different places in one trip, "Consumers place significant value on visiting multiple destinations and this is even more important to Millennial and Gen Z consumers; something that cruising is uniquely positioned to deliver on."

Strong demand is not slowing down

If 2024 was a record year in terms of demand for a cruise, the future looks bright heading into 2025.

Mr. Liberty mentioned at the beginning of the earnings call that Royal Caribbean experienced its best five booking weeks in company history at the start of the year, with bookings outpacing previous years across all key products.

This surge in demand is fueled by a combination of factors, including high guest satisfaction rates, the appeal of Royal Caribbean’s exclusive private destinations, and the growing appeal of short getaways. 

This strong demand is helping the company keep their ships sailing completely full and at higher prices.

As the cruise industry stands on the merits of multiple quarters of financial success, cruise line executives see a lot of reason for even better days ahead.

Speaking at Seatrade Cruise Global conference in Miami, Florida, Royal Caribbean Group CEO Jason Liberty joined a panel of other CEOs during the keynote "State of the Global Cruise Industry" session to share insight into where cruising is going next.

The overarching theme for the keynote is cruise lines see many opportunities ahead.

Trends favoring taking a cruise

Mr. Liberty sees good times ahead for the cruise industry, thanks to secular and demographic trends that are favoring going on a cruise.

Thanks to a very healthy U.S. consumer, Mr. Liberty thinks so many data points are leaning in the direction of cruises.

"The appreciation for building memories with your friends and family coming out of Covid is at extraordinarily high levels of cruise."

In addition, he talked about the wealth transfer going on between generations, "Grandparents wanting to see that wealth transfer live, watching their kids and their grandkids experience that is also at all time highs."

He seemed to agree a lot with Carnival Corporation CEO Josh Weinstein's outlook on state of the cruise product, "we have evolved our product and our experiences to be at the very forefront of what our different customers and their different segments are looking to achieve."

One interesting statistic mentioned was there was 30.7 million people cruise passengers last year, and Mr. Liberty said about a third of them were brand new to a cruise ship.

"And you think about 10 million new people, coming in and will that number will grow each and every year. They are 4 or 5 times more likely to cruise again once they've had the experience."

Ambitions to do more private destinations

One question asked of Mr. Liberty was for an update on destination developments.

While he did not announce anything, he did allude to the idea that Royal Caribbean wants to offer more of those experiences, "I think for us, between the Royal Beach Club and Perfect Days, we have ambitions to do more of that."

"It's by far our highest rated experience that happens on land and that connected to other destination visits to other places is what's winning for us."

People that go on a cruise want a story

Mr. Liberty thinks people are going on a cruise not just for the typical vacation reasons, but to be able to share a humble brag when they get home.

"Our guests want to walk away with a story and they want to build a story," Mr. Liberty explained during the keynote.

"They're less focused on city tours. They're more focused on those kind of immersive culinary experiences that might happen on land, and then they want to build memories on the ships."

Pushing the experience with innovation

When the topic of innovation within the cruise industry came up, all eyes turned to Mr. Liberty because of the early wins on Icon of the Seas.

Royal Caribbean's first Icon Class ship has been a major innovation, setting a new standard for a family vacation and it was clear all the executives knew it too.

First and foremost, Royal Caribbean wants to ensure they are matching their customers' needs, "we all, I think, do is meeting our guests on the experiences that they're looking to deliver. Also meeting our guests when we think about in the dreaming and booking process, how do we take friction out of that customer experience, which I think is very important."

He also says while not necessarily super innovative, the progress with their land projects stands out, "you're seeing more immersiveness because the guests expectations of what their vacation experience should be like has broadened."

"If you want to compete with land, you want to take that share, and you need to have a product from end to end. You need to have an experience from dreaming to delivering that matches those expectations."

Nuclear power and the future of cruise ship fuels

How to make cruise ships more sustainable was a big topic of the keynote, with each executive talking about the challenges facing them. Supply of a next-gen fuel source seemed to be the overarching issue.

There are a number of options to help their cause, but cruise ships needs more options from suppliers. Shore power, marine bio fuels, and hydrogen are all options but severely lacking in availability.

Mr. Liberty pointed to the U.S. power grid as improving, but he wants more from it, "getting access to green sourcing, like nuclear as an example for shore power, we think is an important thing."

More importantly, he wants better access to cleaner fuel sources, "I think the key thing is bringing forward in the US to have those fuel sources, whether it's a green methanol or LNG, etc., available to us at the ports of call that we that we access and most of our bunkering takes place."

With reliable supply, then cruise ships can truly prepare for the future, "how do we make sure that when we come in and we fuel, we bunker our fuels, that those fuels are going to be available to us? And once we know that, then we can think about how do we retrofit our ships or what other actions can we be taking on the newer ships to get them ready to take on those alternative fuels into the future?"

Demand for China

When asked about future plans for China, Royal Caribbean Group has Spectrum of the Seas ready to go there now, with Anthem of the Seas going there in 2025.

Mr. Liberty said his company is "thoughtfully growing" in the Chinese market in order to return to their position there pre-2020.

"They are continuing to look for a Western experience that has the fine details of their Chinese culture and culinary etc. and we're all collectively very good at putting that together."

"We see very kind of prosperous future there, but we're going into it with a measured approach."

Travel has its challenges, and a rising anti-tourism sentiment is one of them that is affecting cruise ships just as much as land tourists.

As more people than ever are choosing to travel around the world, some popular destinations are pushing back on encouraging more tourists.

Whether it's limiting the amount of cruise ships that can visit in a day, or banning ships from city centers, anti-tourism is one of the top concerns for Royal Caribbean Group CEO Jason Liberty.

While speaking aboard Celebrity Ascent, Mr. Liberty was asked what he thought was the biggest threat to the cruise industry.

"There are parts of the world that the volume of passengers going to those locations create a local sentiment of anti tourism movement," is what he responded with first.

He was also quick to point out that it's not necessarily cruise ships that evoke that reaction.  He mentioned Airbnb as an example of something else causing elevated tourist numbers.

European cities such as Amsterdam, Barcelona and Venice have recently moved to get rid of cruise ships from their city centers.

Venice banned cruise ships in 2021 and has went as far as to introduce an entrance fee of €3 to €10 to access the city and its islands to reduce the number of visitors.

In Amsterdam, they voted to ban cruise ships from coming into the city after instituting a "discouragement campaign," that did things such as ban outdoor marijuana smoking in the red-light district and put posters around the city that told young British men to "stay away."

Regarding cruise ships, Amsterdam officials argued cruise ships in the city, "do not fit in with the task of combating mass tourism and are not in line with the sustainable ambitions of the city."

A prediction by the World Tourism Organization is by the end of this decade, the flow of international tourists will exceed two billion.

To address it, Mr. Liberty sees a changing gameplan, "we need to be sensitive to make sure that we continue to diversify our destinations. We need to continue to build incredible concepts like the Perfect Days and beach clubs, et cetera across our brands."

He also said the company needs to keep its ear to the ground, "make sure that we're really good listeners in our community, and we build up our communities that support us."

Reducing their carbon footprint

The other threat that Mr. Liberty sees is an environmental one.

"The second thing, which I think is just we all, you know, we're all trying to figure it out, which is how do we decarbonize or how do we get to a net zero emissions basis," he went on to say in his response to the initial question.

Companies around the world are looking for solutions to getting to carbon neutral, and Royal Caribbean Group is no stranger to this task, "we spend hours around the clock trying to figure out how do we solution that. And so we need to make sure that we're set on a path to prepare ourselves to take on alternative fuels as they become available."

The company already has a plan in place to be carbon neutral by 2050, known as "Destination Net Zero".

Announced in 2021, it has two primary goals: get to net zero emissions by 2050 and take delivery of a net zero emissions cruise ship by 2035.

To achieve this, there isn't one thing to do, but a series of steps. As an example, the company has experimented with using biofuels on some of its ships.

Royal Caribbean Group said it plans to continue to use alternative lower carbon fuel as part of its overall plan.

In addition to biofuels, Royal Caribbean Group is building ships that can leverage liquefied natural gas, or LNG, to reduce emissions.

Incredible tailwinds

While those issues that Mr. Liberty brought up are challenges, he sees a very positive outlook for cruising.

He sees a lot of demand for a cruise vacation, "the tailwinds for cruise on the demographic standpoint, secular trend standpoint, population standpoint is really exceptional compared to other forms of travel and other and other forms of where people spend their consumer discretionary dollars."

"The propensity to cruise is at all time highs," he explained.

"As the younger generations come in, as people started having more and more families and multigenerational families, as people have more time, whether that's through retirement, more discretionary funds, and most of all, as we kind of came through Covid, we all really appreciated what we have."

While it's no surprise that demand for cruising has never been higher, you might be intrigued to hear how much those that have never cruised before are booking cruises.

Royal Caribbean Group saw terrific results in the first quarter of 2023, and its top executive is seeing all sorts of positive signs that the cruise giant has rebounded significantly.

One metric that stands out is how much demand for a cruise resembles pre-2020, signaling that the effects of the cruise industry shutdown are all but forgotten among consumers.

Jason Liberty, Royal Caribbean Group CEO, said in a recent interview demand from people that have never cruised before is actually better today than in 2019.

"We're seeing more new to cruise than we had seen in 2019," he said in reference to who's booking cruises this year. "We're seeing more first to brand, which is very much in line with our growth expectations for our capacity, growth as our new ships come on."

"Historically, you know, pre-pandemic, about a third of our guests were new to cruise, a third of our guests were loyalists, and the third of our guests refers to brand."

"What we see now is one propensity to cruise has completely returned back that was in 2019."

The return of new cruisers to the market is what drives a cruise line like Royal Caribbean back to profitability, because the amount of people that have never cruised before is the largest source of new customers.

The cruise industry was unfairly singled out in 2020-2021 as it was the only industry federally prevented from restarting for months, then had to get approval to restart as well as reporting cases.

Any concerns of consumers being wary to get back on a ship since seem to have been abated with these new numbers.

Demographics of who is booking a cruise

In terms of who's cruising, Mr. Liberty explained what sort of customers the company is attracting in 2023.

"So we have really three core brands that are really in their different segments," he explained.

"And so they all address different age and demographic categories. Like our Royal [Caribbean] brand is very focused on multigenerational family. Our Celebrity brand, people that are in their early 50s, more Gen X in nature. And our SilverSea brand, which is Ultra Luxury and Expedition, tend to attract a little bit of the Baby Boomer side of things."

That being said, younger cruisers are definitely coming to cruise.

"What we are seeing is the guest is actually a little bit younger on average than what we saw pre-pandemic."

"And a lot of that is because there's more millennials that are now into the system as they got married and started to have kids and are looking to experience incredible travel experiences."

"We continue to see the ability to raise price in the current market"

It's not your imagination, the price of a cruise is going up and that's because the market is tolerating it.

In a question about pricing, Mr. Liberty talked about the fact the company sees an opportunity to raise prices without negatively impacting demand.

"We continue to see the ability to raise price in the current market," Mr. Liberty explained.

"The main driver of that, one, I think, is having best brands, best ships win. And our guests get this incredible experience on our ships. And that gets broadcasted through advocacy of our guests, who are experiencing that."

Essentially, Royal Caribbean Group believes a combination of their ship quality and word of mouth is helping their cause.

Mr. Liberty also brought up a point of how much value a cruise vacation has over a land vacation, a statistic he's talked about quite a bit in the past.

"There's also a pretty significant value gap to land-based vacation."

"That gap was about 15% to 20% pre-pandemic. Today, it's about 35% to 45%. And we're going to make, you know, a pretty good dent in it here in 2023."

Tipping

One of the hot button topics is gratuities on a cruise ship, and Mr. Liberty answered a question about tipping on a cruise ship.

He was asked about the backlash related to "tip-flation" that's happened recently.

"We have a gratuity. It raises typically just based off of how inflation is changing. And that's more what is. It's pretty much a standard fee. Of course, our guests and can provide more. The guests can also choose not to, you know, not to tip if they don't choose to."

Read more: Should you prepay gratuities for your Royal Caribbean cruise?

"But-- but a gratuity-based system, a service-based system, we think is really important. But we're not chopping at every corner here on tipping. We have pretty much a standard fee for it."

Read more: Can I remove cruise ship prepaid gratuities?

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.

State of the Cruise Union

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 will Royal Caribbean order more ships?

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."

What's happening with Royal Caribbean's port projects announced before the shutdown?

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.

Cruise prices in 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."

What can we expect with Terminal G?

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."

Cruise industry resilience

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:

• Intent to cruise is rebounding, with 63% of cruisers or potential cruisers indicating they are ‘very likely’ or ‘likely’ to cruise in the next two years.
• 69% of respondents that have never cruised said they are open to cruise, exceeding pre-pandemic levels.
• Millennial cruisers are the most enthusiastic about taking another cruise, with 87% indicating they will take a cruise in the next few years, followed by Gen X at 85%.

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. 

History with Royal Caribbean

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. 

Education

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. 

A New Chapter

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

‘Humbled and Honored’

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."