Royal Caribbean – return-to-sail environment & post-pandemic brand positioning

Is the tide turning for the cruise industry?

In terms of how Royal Caribbean is positioned versus its peers, “they definitely have a lot of advantages in terms of brand name, brand recognition, especially vs their competitors like Carnival that had a lot of COVID issues.” Other aspects working in Royal Caribbean’s favour are its technology and reputation for safety protocols. 

Adding to the perception of safety, as the company has a greater share of newer ships than some of its competitors, Royal Caribbean has a higher share of cabins with balconies – and therefore “you’re having a greater percent of people who potentially might not want to sail in an inside cabin and would prefer a balcony, or something that has fresh air.” 

The company has also spent “a lot of money” on its private destinations. “A country in the Caribbean can close down if they have high levels of COVID, and then they won’t allow cruise ships to come and go. Then, you’re having to reschedule itineraries and have to potentially refund some guests if you miss a port, anything along those lines, but Royal Caribbean have a couple of different places that they can go. They at least have two in their Caribbean, they’re working on a third.”

The discussion turned to Royal Caribbean’s Project Excalibur, which is a digital transformation initiative. “I think they definitely pulled back the reins in terms of some of the crazier enhancements on some of the different projects they were working on long-term.” However, they mentioned, what is going ahead will focus on boosting ROI.

Other talking points included pricing dynamics, best- and worst-case scenarios for when full capacity will be reached, and break-even rates.

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