This year was about getting back to normal for the cruise line, but the next one will include some major changes.
Royal Caribbean Group (RCL) – Get Free Report spent most of 2022 getting its business back to normal. It began the year under the shadow of the pandemic with limited capacities, covid testing, vaccine requirements and the looming shadow of the Centers for Disease Control (CDC) monitoring its actions.
As the year went on, those covid-era rules slowly went away. It took until August for the cruise line to fully drop its vaccine requirements (except for cruises where the destinations still have mandates in place), but when it happened business jumped.
CEO Jason Liberty shared just how far the cruise line has come when he spoke during the company’s third-quarter earnings call.
“A powerful and nimble commercial apparatus, coupled with strong execution by our operating teams have delivered another quarter of strong performance that exceeded our expectations. Our entire fleet is operating globally in our key destinations, demand for our experiences was very strong, and we achieved 96% load factors overall with the Caribbean at close to 105% at record pricing and high satisfaction scores. We delivered adjusted EBITDA of $742 million and positive earnings per share of $0.26, which was above our guidance,” he said.
Basically, after a long dark period, Royal Caribbean is back and it’s headed into a very different 2023. In the coming year, the company plans some major changes that will be met with mixed feelings by its customers.
TheStreet
1. Faster Internet Coming to Royal Caribbean
Royal Caribbean has slowly been rolling out Elon Musk’s SpaceX Starlink internet to its ships. The company started with Freedom of the Seas, which sails three- and four-day itineraries out of Miami and the reports on social media from passengers have been stellar.
The new service takes the cruise line’s Voom, which it billed “the fastest internet at sea,” and actually delivers on that promise. While the old service was technically faster than what other cruise lines offered, the fastest at sea claim was a bit like saying “this is the best menu item at Applebee’s.” Sure, it’s true, but it’s of dubious value.
Royal Caribbean plans to bring Starlink to all the ships in its namesake and Celebrity fleets in early 2023. The company has not said whether it will charge more for the service, but so far it has not increased prices on ships where the much-improved internet has rolled out.
2. Royal Caribbean Making Major Main Dining Room Menu Changes
While customers may love faster internet speeds, they’re probably not going to be happy with the changes Royal Caribbean is making to its main dining room (MDR) menus. The cruise line tested new menus on Symphony of the Seas in late 2022 and plans to implement the change across the fleet in early 2023.
Basically, each night will now have a theme like “Italian,” “Mexican,” or American favorites. Not every menu item offered will fit the theme, but the number of choices will be smaller and “classics” section of the menu would no longer be offered.
That section offered a few basic items — New York strip steak, spaghetti bolognese, a basic chicken, and a few others every night. Not offering those choices won’t be received well by picky eaters or parents of teenagers who aren’t all that daring.
The cruise line is being careful with the changes, which are being made at least partially to speed up service and reduce waste.
“We’re very thoughtful and conscious about any changes that we make. But we do think that where we’re heading with the new menus is going to be better and more enjoyable,” Royal Caribbean President Michael Bayley said in December.
3. Royal Caribbean Wants Higher Prices
During its comeback from the pandemic, Royal Caribbean has generally kept prices low. Holidays and newer ships have sometimes been an exception, but cruise fares were low compared to where they were in 2019 and Liberty wants to see that change in 2023.
“The value proposition of cruise remains incredibly attractive, I would say too attractive,” he said during the earnings call.
Liberty has talked about how cruise prices have been low compared to land-based vacations, but he does see that trend changing in 2023.
“We received twice as many bookings for 2023 sailings in Q3, as we did in Q2, resulting in considerably higher booking volumes than during the same period for 2019 sailings,” he said. “As a result, all four quarters of 2023 are booked well within historical ranges at record prices, with bookings accelerating every week.”
