Specialist
Former Strategy Executive at Royal Caribbean International (Royal Caribbean Cruises Ltd)
Agenda
- Return-to-sail environment, focusing on Royal Caribbean (NYSE: RCL)
- Potential impact of the COVID-19 Delta variant on forward bookings and consumer sentiment – vaccine implications for cruising and current CDC (Centers for Disease Control and Prevention) guidance
- Royal Caribbean's key brands' positioning in a volatile environment and post-pandemic outlook
Questions
1.
What are your thoughts on the state of the cruise industry?
2.
What’s happening with the booking windows? You mentioned an impact due to some negative headlines. Are people booking closer to the actual sailing date, or taking a different approach and booking significantly ahead, more than a few weeks to months from their sailing date?
3.
You mentioned vessels returning to 100% occupancy or capacity. Are these only for vaccinated individuals?
4.
Do you think the industry can return to 100% occupancy without children being vaccinated? You mentioned children as the reason that occupancy is typically over 100%.
5.
Do you worry that summer 2022 demand for families may be lower, as children may not be vaccinated until early 2022?
6.
What portion of 2022 volumes do you think is booked at this time vs where we would be in 2019 for 2021 bookings?
7.
How do you think Royal Caribbean is positioned vs peers to navigate the uncertainty around COVID-19 variants, in light of bookings targets?
8.
Does Royal Caribbean have an advantage in its international markets around access points and having access to destinations? How might this favour bookings?
9.
Could you discuss the risk behind potentially overcrowding Royal Caribbean’s international destinations, if people prefer to be more on land vs on the cruises in light of variant uncertainty?
10.
What are your thoughts around Royal Caribbean’s Project Excalibur? The company had to pull back for capital preservation and impacted its continued roll-out.
11.
You mentioned Excalibur will allow Royal Caribbean to implement some form of response to protocols. Does this give the company an advantage on response times and being able to implement these protocols vs competitors?
12.
What are your thoughts around recent CDC [Centers for Disease Control and Prevention] guidance? The latest was issued on 27 August 2021 and included technical instructions to ship operators.
13.
When Royal Caribbean began to cruise, management forecasted that about 80% of ships would be on the water by year end 2021. What is your take on this, given the latest updates?
14.
What are the best- and worst-case scenarios for when Royal Caribbean’s entire fleet may be back to full operation?
15.
Based on your estimates, Royal Caribbean can break even with occupancy levels at 35% for the newer, more efficient ships. Does that bake in any assumptions around the operational cost to run those ships while coronavirus protocols are around, or is that 35% occupancy break-even in a non-pandemic scenario?
16.
What percentage of Royal Caribbean’s fleet would you say can break even at 35% occupancy? What percentage can break even at 70%?
17.
Would you expect Royal Caribbean to return to 2019 occupancy levels at 2019 pricing or better, given that 30-40% of the market is new-to-cruise and potentially impaired as well as the negative press the industry has received?
18.
When do you think Royal Caribbean could return to average full-year 2019 occupancy and net yields? We’ve discussed when the company might get 100% of its fleet back on water by the end of Q1.
19.
We discussed some potential cost scenarios with implementing coronavirus protocols. How could this change if there is an outbreak during a cruise? How might that impact the cost base and yields, and show up in
the bottom line?
20.
How would you estimate the cost to lay up vessels? How costly might it be to re-lay ships if necessary?
21.
Do you have any estimates on cash burn scenarios for Royal Caribbean and the cadence of cash burn over Q4 2021-Q2 2022 or the next year?
22.
What are your thoughts on pricing environment dynamics? We’ve heard from management on earnings calls that pricing for 2022 is up vs 2019 levels.
23.
Where do you expect pricing to wind up for 2022 as we get closer to sailing?
24.
If customers book something and received 125% of their original booking value, can they use that extra 25% as onboard credit, in voucher form for spending money? What happens to the extra 25%?
25.
Is there reason to believe that 100%-vaccinated cruises have been selling at premium pricing vs other cruises, for comparable itineraries?
26.
There’s been a recent data point from the UK, where players have been more aggressive at filling up occupancy, and bookings are down about 10% vs 2019 on pricing that’s down 10% since 2019. Do you think that could happen in the US?
27.
Would you note any data points on consumers surveyed that might indicate any part of Royal Caribbean’s customer base may not return to cruise this year, next year or ever?
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