An "acceleration" in close-in bookings
during Royal Caribbean Group's second quarter helped the company
outperform its earnings expectations, the company said today when delivering its Q2 results.
The company reported $1.2 billion in net income for the second
quarter and $4.5 billion in revenue, according to its earnings report
released Tuesday. It increased its earnings guidance for the year.
The majority of Royal Caribbean Group's customers say they are now booking closer to the date of the cruise than they would previously, and most who plan to travel in the next year haven't booked yet, CEO Jason Liberty said during the company's earnings call.
He attributed the trend, in part, to the habits of younger consumers. Seventy percent of customers that are millennials or younger are more likely to book closer to the date of the cruise, he said, "reflecting a desire for spontaneity and flexibility."
With these generations representing half of Royal Caribbean customers, it is prompting a shift in consumer behavior, said Tracey Ryniec, a stock strategist at Zacks Investment Research. "They want to travel more and are choosing cruise," she said. "Millennials are more spontaneous and last minute."
The company is also seeing more close-in demand due to an increase in shorter sailings, said Michael Bayley, president of Royal Caribbean International.
"We call it the big weekend, and people just decide later on to jump on board and have a great time," he said.
In a research note, UBS analyst Robin Farley said that Royal Caribbean Group's booked loads were consistent with prior years and at a higher rate for 2025 and 2026 and added that the close-in acceleration "could just suggest that since April, consumers waited 'till closer in to departure to book, given the volatility in the macro outlook."
Higher onboard spending
The close-in booking trend paired with continued higher onboard spending.
"Holistically, as we get to see millions of spending activities per day, we see a very healthy customer," Liberty said.
"When we dig into that customer, they have great jobs, they have strong balance sheets, and they're confident in spending and making sure that they're receiving the vacation experience that they're looking for."
Strong capacity and demand
The company carried 2.3 million guests in Q2, representing a 10% year over year increase amidst a 5.8% increase in capacity. It reported a 110% load factor, which it said was driven by the introduction of high-capacity ships.
Royal Caribbean Group said that bookings for upcoming ships, Royal Caribbean International's Star of the Seas and Celebrity Cruises' Celebrity Xcel, were performing "extremely well and building on the success of their respective classes." And it added that early demand for its Royal Caribbean Beach Club Paradise Island has been "very robust."
This report was updated with new details throughout.