Royal Caribbean Blog Podcast Episode - NextCruise

Crew members can now disembark cruise ships in port during their time off once again.

One of the many Covid-19 protocols on cruise ships prohibited crew members from visiting ports of call, but that rule has been changed.

Ovation of the Seas crew member Chris Wong shared a video update recently that crew members are getting once again free flow.

"We have just been told that we are officially getting once again free flow surely for crew members, which means we can go back out into port, just like it was pre-pandemic days."

"Since the restart, crew shore leave or any crew members to go out into port was not allowed."

He explained that small changes were made over the last few months, but it just wasn't the same, "towards the end of last year, they slowly started allowing crew to get off again. But it was a very it was in a very controlled environment. These were bubble tours. So it wasn't really the same thing. And to be honest, it wasn't that much fun."

Mr. Wong cited a crew newsletter email that explained the new policy, "we're thrilled to announce that our shore leave pilot was a success. And beginning May 1st, free flow shore leave will be extended to all ships and participating ports of call."

"As we ease back into free flow, capacity limits of 250 crew per port will be implemented."

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Mr. Wong added that the updated policy excludes turnaround ports, which do not have capacity limits.

Mr. Wong was visibly excited for the change because being limited to staying on the ship during a contract meant missing out on some real fun that one can have while working on a cruise ship, "this is certainly a lot better than how it used to be."

"I cannot wait to just visit the first port of call wherever it will be, to walk off the gangway and to just be able to walk around wherever I want and not, you know, having to think, oh, am I allowed to go there?"

"This is a really big deal for us crew members."

Royal Caribbean has been slowly relaxing certain protocols for crew members and guests alike.

Following the Omicron variant, Royal Caribbean began to slowly open up shore leave for crew members in February. This week's update follows up on that initiative even further.

Will Royal Caribbean's new Icon Class cruise ships be the largest in the world?

When Royal Caribbean announced plans for a new class of cruise ship, they provided very few details, but becoming the new biggest cruise ship in the world wasn't part of the announcement.

It now looks like perhaps the Icon Class ships will be larger, according to recent comments made by a Royal Caribbean executive this week.

Travel Weekly is reporting the newly promoted Senior Vice President of Hotel Operations, Sean Treacy, indicated Icon of the Seas will be larger than the Oasis class cruise ships.

"Icon will be the biggest. It launches in the fall of next year and will be the first new ship class for Royal in a decade," Mr. Treacy said while onboard Wonder of the Seas during a trade event.

Travel Weekly went on to say a Royal Caribbean spokesperson confirmed the fact Icon of the Seas, which will be the first Icon Class cruise ship, will be larger, "Icon-class ships will be bigger than our Oasis class."

The disclosure by Mr. Treacy is the first public statement about the fact Icon will be larger than Oasis Class, although it's not clear in what aspect will Icon be larger.

According to Royal Caribbean's Form 10-K filing with the U.S. Securities and Exchange Commission on May 5, 2022, it still lists Icon of the Seas has having slightly less passenger capacity than Wonder of the Seas or Utopia of the Seas.

In the filing, Icon and the other unnamed Icon Class ships have approximately 5,600 berths compared to Wonder and Utopia's 5,700 berths.

When Royal Caribbean first announced the Icon Class in October 2016, they estimated the ship would be able to handle approximately 5,000 passengers. Of course, the cruise line indicated at that time and for some time thereafter that the concepts were still being developed.

There are three Icon Class ships on order:

• Icon of the Seas delivery in 3rd Quarter 2023
• Unnamed second Icon class ship delivery in 2nd Quarter 2025
• Unnamed third Icon class ship delivery in 2nd Quarter 2026

The keel was recently laid for Icon of the Seas at the shipyard in Finland, which signals the official start of construction.

Royal Caribbean International President and CEO Michael Bayley confirmed that Icon will initially debut in the UK, and then sail from Miami.

While Royal Caribbean has not announced yet what the ship will look like, itineraries, or other important features, they have hyped the vessel as a game changer.

“The ship is unbelievable," said Mr. Bayley in a recent interview. "It's an amazing ship. What’s fascinating about Icon is the sheer amount of product."

Bayley indicated Icon of the Seas will feature a combination of ‘tradition, evolution and revolution’ cruising elements from Royal Caribbean. 

Favorites, such as the Schooner Bar, will continue to be found on Icon.

On the other hand, evolution elements revolve around continuously improving elements that cruisers love, such as entertainment venues and waterslides. Finally, revolution elements are ‘industry-firsts’ and are meant to be WOW factors for the company.

The days of Royal Caribbean cruise ships sailing at reduced capacity are limited.

It's no secret that the cruise industry is moving back towards normalcy with getting more ships back into service and more passengers onboard.

The only question cruise ship passengers had was when would full capacity return, and it looks like sooner than later this summer.

At last week's earnings call with investors, Royal Caribbean International President and CEO Michael Bayley said most ships should be back to full capacity again.

"And as we head towards Memorial Day weekend," Mr. Bayley explained to a Wall Street analyst during the call. "We're going to see significant percentage of our ship sailing at 100% and greater."

In fact, ships sailing at full capacity has already happened on select sailings, "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."

Mr. Bayley further broke things down by saying the Oasis Class ships ship capacity has been around 80% or so.

In Royal Caribbean Group's quarterly results, the company as a whole (including Royal Caribbean, Celebrity and SilverSea) had ships  sailing in the first quarter averaging a capacity of 59%. Month-by-month, capacity generally went up with March capacity averaging 68%.

By the time Royal Caribbean gets to the third quarter of the year, they expect the entire company to be at "triple digits" in terms of capacity.

Cruise ships sailing full was the norm prior to 2020, so the experience this summer should be more familiar for long-time cruise fans.

Getting back to profitability

Not only are full cruise ships a strong sign of demand for cruising, but it's what makes the cruise industry profitable.

Royal Caribbean Group Jason Liberty recently told Barron's the threshold for a profitable sailing is when a ship gets to 90% capacity in the current conditions.

"When you get to about a 90% load factor, you start to generate profit. Historically, that line of profitability can be lower, roughly 80%. But we have a lot more debt now. "

When Royal Caribbean can start making money instead of losing money, not only is the welfare of the company accounted for, but they can start doing more expansion and re-investment.

Many projects during the pandemic were put on hold, such as ship upgrades. 

Happy Mothers Day! All the moms out there deserve a big hug, thank you, and hopefully a new cruise booking too.

Royal Caribbean is searching for a godmother for Wonder of the Seas on TikTok.

The cruise line announced it will hold a #SearchForWonderMom contest by nominating a mom who inspires those around them to discover, wonder and make memories. 

The call for submissions is open through Monday, May 16, at 11:59 p.m. ET, and the winner will be announced on Royal Caribbean’s TikTok this summer.

Royal Caribbean News

• Royal Caribbean Group reports first quarter loss, but cash flow approached breakeven in March
• CDC lowers number of vaccinated passengers on 'highly vaccinated voyages' from 95% to 90%
• Royal Caribbean talks higher demand than before Covid, higher capacity, and more
• Royal Caribbean changes its minimum age infant policy
• Royal Caribbean updates: Wonder arrives in Europe, executive changes & more
• Here's where you can get a Covid test in South Florida before your cruise
• Read our live blog from Alaska on Radiance of the Seas
• Local guide of places to visit in Ketchikan, Alaska
• Best travel clothes for women on shore excursions

Royal Caribbean Blog Podcast

The 453rd episode of the Royal Caribbean Blog Podcast is now available, which compares Odyssey of the Seas and Wonder of the Seas.

This week, Matt looks at why you might want to sail on Wonder of the Seas vs Odyssey of the Seas.

Please feel free to subscribe via iTunes or RSS, and head over to rate and review the podcast on iTunes if you can! We’d appreciate it.

New RCB Video: Oasis of the Seas Cruise Ship Tour

Have you subscribed to the Royal Caribbean Blog YouTube Channel? We share some great videos there regularly, all about taking a Royal Caribbean cruise! This week, we are sharing our latest video — Oasis of the Seas Cruise Ship Tour — and don’t forget to subscribe here.

Royal Caribbean doesn't require back to back cruisers to do a covid test anymore

There's one less covid test you'll have to take if you go on more than one Royal Caribbean cruise in a row.

Royal Caribbean has updated their policy for consecutive cruisers to not require a covid test between sailings when doing multiple cruises.

Up until now, Royal Caribbean required passengers who were staying on for another sailing to get a Covid test done while onboard the ship.

Royal Caribbean trademarks names for Perfect Day at CocoCay expansion areas

Royal Caribbean has filed two new trademarks that are likely intended for areas of its private island in The Bahamas.

"Hideaway Beach" & "Secret Cove" have both been trademarked, and they look like the names of areas of Perfect Day at CocoCay.

Royal Caribbean opens My Time Dining back up to unvaccinated cruise ship passengers

Families with unvaccinated children will be able to choose a My Time Dining dinner option once again.

Prior to this change, Royal Caribbean had restricted My Time Dining to vaccinated passengers only.

This allows families with unvaccinated children to have the choice to eat at My Time Dining for dinner.

It looks like anyone doing more than Royal Caribbean cruise in a row does not need to take a Covid test again between sailings.

A number of Royal Caribbean cruisers have alerted us that the cruise line informed them while on a back to back cruise a new Covid test is no longer necessary.

Among the many people to tell us about the policy change is Royal Caribbean's top cruiser of all time, Mario "Super Mario" Salcedo.

"Just been informed that back-to-back cruisers no longer need to be Covid tested for the following cruise," Mr. Salcedo wrote in an email.

Read more: Back-to-back cruises tips and advice

Royal Caribbean's website has also been updated to note the change that fully vaccinated guests and/or guests with a valid certificate of recovery to not need a test.

New policy on Royal Caribbean's website

Old policy on Royal Caribbean's website

"Fully vaccinated guests and guests with a valid certificate of recovery do not require additional testing to board their subsequent sailing. Unvaccinated guests will require a new precruise test prior to boarding their subsequent sailing."

In addition, RoyalCaribbeanBlog reader CruiseGus shared a copy of his back to back cruiser letter from his sailing. 

Up until now, Royal Caribbean required passengers who were staying on for another sailing to get a Covid test done while onboard the ship.

Guests would head to a designed area of the ship to get a complimentary Covid test on the last day of the cruise.

What about people changing ships?

According to Royal Caribbean's website, guests who are changing ships on consecutive sailings or have a day or more inbetween subsequent sailings will not have a change in policy.

"If you are moving to a different ship for your subsequent sailing, or your subsequent sailing on the same ship departs the following day, you will need to meet the precruise testing requirements for your subsequent sailing. "

The website says complimentary testing will be conducted onboard for those passengers changing ships, with instructions provided while onboard.

To be considered back-to-back, the time between sailings must not exceed 1 day. 

For example, if Sailing A disembarks on Monday, Sailing B must embark on Monday or Tuesday to be considered back-to-back. 

Guests whose sailings are not considered back-to-back will be responsible for procuring their own Covid-19 test at their own expense to meet the precruise testing requirements for the subsequent sailing.

The search for a ceremonial role on Royal Caribbean's newest cruise ship is headed to social media.

Royal Caribbean announced it is looking to find a godmother for Wonder of the Seas by searching through TikTok.

Wonder of the Seas is the newest Royal Caribbean cruise ship and the fifth Oasis Class cruise ship. She's currently sailing in Europe, but will return to Florida in November.

Every cruise ship has a godmother, which serves as a ceremonial position.  Other ships have had women hold the role, including renowned athletes, celebrities and royalty.

The godmother's job is to give the ship a blessing for the safety of the crew members and passengers who will sail onboard it.  She will also be present for the ship's  naming ceremony in Port Canaveral, Florida, in December. 

U.S. users of the popular video-sharing platform can now take part in the #SearchForWonderMom contest by nominating a mom who inspires those around them to discover, wonder and make memories. 

The call for submissions is open through Monday, May 16, at 11:59 p.m. ET, and the winner will be announced on Royal Caribbean’s TikTok this summer.

The winner and their family will set sail on an exclusive cruise to the cruise line’s private island destination, Perfect Day at CocoCay in The Bahamas.

They will also stay in the Ultimate Family Suite and receive first-class flights, three nights in a five-star hotel before the cruise and up to $1,000 in spending money. 

In addition, four finalists can enjoy all Wonder has to offer on a 7-night cruise in a balcony stateroom for up to four guests.

How to enter the contest

Think you might want to be the godmother? Here's what you need to know:

• Users must follow @RoyalCaribbean on TikTok.
• Submissions must be posted on TikTok and share why their nominee would be the ideal Godmother for the world’s largest cruise ship.
• Uploaded videos must use Royal Caribbean’s original #SearchforWonderMom contest audio track pinned on the cruise line’s profile.
• Entries must tag @RoyalCaribbean and include #SearchForWonderMom and #Contest
• Contest is open only to legal residents of the fifty United States, including the District of Columbia, and Puerto Rico who are at least sixteen  years old at the time of entry. 
  • Nominees must be at least 21 years old.

You can read the full rules and requirements here.

The minimum percentage of vaccinated passengers on a cruise ship has gone down.

The U.S. Centers for Disease Control and Prevention (CDC) announced updates to its highly vaccinated program, which lists the requirements for cruise lines to follow.

Royal Caribbean is one of many cruise lines in the CDC's highly vaccinated program.

CDC will reduce the percentage threshold requirement for determining ‘highly vaccinated voyages’  from 95% to 90% of eligible passengers (90% of passengers who are 5 years of age and older).

The crew vaccination percentage will remain at 95% or greater for highly vaccinated voyages.    

Up until now, cruise ships in this program were required to sail with at least 95% vaccinated passengers.

By lowering the number of required vaccinated passengers, this opens up more capacity to unvaccinated children.

The CDC also made another change related to cabins used for isolating Covid-19 passengers.

Isolation rooms no longer need to have negative pressure but must still be in predesignated areas. The exception to transferring individuals to predesignated cabins if within 36 hours of disembarkation remains in effect.

Following these changes, the Cruise Lines International Association (CLIA) issued a statement in support of the CDC changes.

"The Cruise Lines International Association (CLIA) and its member cruise lines welcome the recent update to the Centers for Disease Control and Prevention (CDC) COVID-19 Program for Cruise Ships Operating in U.S. Waters."

"The CDC’s adjustment of vaccination and quarantine and isolation room requirements recognizes the highly protective measures in place on board cruise ships and is in keeping with the CDC’s lifting of any travel-related advisory against cruising. CLIA-member cruise lines continue to provide one of the highest levels of COVID-19 mitigation for the traveling public with higher-vaccination rates and higher frequency of testing than most any other setting."

"We look forward to the further development of the program to bring greater alignment across the travel and tourism sector."

Inside the highly vaccinated program

Royal Caribbean opted into the CDC's highly vaccinated program at the end of February 2022 once the CDC's Conditional Sail Order became voluntary.

The program regulates foreign-flagged cruise vessels operating in U.S. waters with a common set of Covid-19 protocols for guests and crew members to abide by.

Even before Royal Caribbean opted into the program, its ships were usually sailing right around the 95% vaccinated mark.

In late December 2021, Royal Caribbean International President and CEO Michael Bayley said a typical sailing has anywhere between 95 to 98 percent fully vaccinated onboard population.

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 Group posted its first quarter earnings on Thursday, which reported another billion dollar loss. 

The good news for the company is it expects a return to net profit for the second half of 2022. In fact, operating cash flow significantly improved throughout the first quarter and approached breakeven in March. Operating cash flow turned positive in April 2022.

Royal Caribbean Group had a first quarter 2022 operating loss of $1.2 billion. 

Cruise ships sailed with more passengers in the quarter, and total revenue per Passenger Cruise Day up versus record 2019 levels.

Royal Caribbean's quarter by the numbers

Royal Caribbean Group shared some interesting facts in its update to Wall Street.

First and foremost, Royal Caribbean Group expects a return to net profit for the second half of 2022.

Read more: Who owns Royal Caribbean?

By the end of the quarter, 90% of the company's worldwide fleet was back in service, with 54 out of 62 ships back in service. The plan is to return the full fleet to operations before the summer season of 2022.

Approximately 800,000 guests sailed on a Royal Caribbean Group ship in the first quarter.

Bookings in the first quarter were higher than in the fourth quarter of 2021, and throughout the first quarter, bookings improved each week. In March and April, booking volumes have been significantly higher than the same period in 2019.

Looking to the future, 2023 is booked, "within historical ranges at record pricing."

The supply chain issues the entire world is dealing with is no stranger to Royal Caribbean Group.  The primary issues facing the cruise giant is mainly related to fuel and food costs, as well as transitory costs related to health and safety protocols, which are expected to weigh on 2022 earnings.   

First quarter results

Royal Caribbean Group posted a $1.2 billion dollar loss in the first quarter. The Company also reported Adjusted Net Loss of $1.2 billion.

The Net Loss and Adjusted Net Loss for the quarter are primarily the result of the continued impact of the COVID-19 pandemic on the business.

Cruise ships sailing in the first quarter averaged a capacity of 59%. Month-by-month, capacity generally went up with March capacity averaging 68%.

Total revenue per Passenger Cruise Day in the first quarter was up 4% versus record 2019 levels driven by continued strong onboard revenue performance. The term "onboard revenue performance" refers to passengers buying extras for their cruise, such as drink packages, wifi, or excursions.

In fact, spending onboard was so strong that cash flow from ships in operation was positive in the first quarter. 

Royal Caribbean Group Chief Financial Officer Naftali Holtz said getting back to profitability is the focus now, "Our near-term focus is to return to full operations and profitability as we execute on our recovery and build for long term success."

Bookings

Booking volumes in the first quarter improved consistently week-over-week and reached typical Wave levels at the end of the quarter.  The term "wave season" refers to the sales period in the beginning of the year when cruise ship bookings are generally the best of the year.

Bookings have now been surpassing comparable 2019 levels for the last two months with particularly strong trends for North America based itineraries. 

The amount of cancelled cruises the company was seeing subsided to pre-Omicron levels in February.

Effect of the Ukraine War

Bookings for Europe sailings improved throughout the first quarter but softened due to the war in Ukraine with a bigger impact on Baltic itineraries.  

While bookings for Europe are now exceeding 2019 levels for the same period, the situation in Ukraine is expected to weigh on load factors in Europe this summer. 

Future cruise credits

As of March 31, 2022, the company's customer deposit balance was $3.6 billion. This is a $400 million increase from the previous quarter.

Approximately 27% of the customer deposit balance is related to FCCs compared to 32% in the prior quarter, a positive trend indicating new demand. To date, approximately 56% of FCCs have been redeemed.