Royal Caribbean Group brands experienced a Wave Season boost, with a 30% increase in new bookings since the beginning of 2021 compared with November and December.
CFO Jason Liberty said the bookings bump occurred despite a lack of marketing spend, which indicated the success of its programs to entice passengers to rebook, as well as demand for new bookings. He said that new bookings constitute 75% of business on the books.
"Clearly 2021 is not going to be a traditional year, and we did not plan for a traditional Wave Season," he said. "Our sales and marketing activities still remain anemic and extremely strategic. Currently, we don't expect to broadly ramp up our marketing until more ships are back in operation."
Royal said it lost $1.4 billion in the fourth quarter and $5.8 billion in 2020, as its ships remained idle during the global cruise shutdown. "These results reflect the staggering impact that the pandemic brought to our company and the whole industry during 2020," Liberty said.
CEO Richard Fain said that despite Covid-19's "painful and profound impact on our world and our business," the company is optimistic.
"We remain confident about the ability of our company to recover and return to the positive trajectory we were on previously," he said.
Fueling that positivity is pricing on cruises for the second half of 2021; even with the dilutive impact of future cruise credits (FCCs), pricing is better than it was during the same period in 2019. Bookings for the first half of 2022 are also at higher prices and within historical ranges, which Royal called indicative of "strong long-term demand for cruising."
"We have been constantly impressed and humbled by the number of cruises booked throughout this period," Liberty said. "It is clear a lot of people want to cruise."
Royal said that about 75% of its 2021 bookings are new and 25% are redemptions of FCCs: Since the suspension of operations, about 53% of the guests booked on canceled sailings opted for cash refunds.
The vaccine boost
Royal believes that vaccine progress helped push Wave bookings. Royal Caribbean International CEO Michael Bayley said that during January, the line saw an increase in the number of guests aged 65-plus booking cruises, which the company attributes to people in those age brackets getting vaccinated and thus, "more comfortable with booking."
"That's something we think is a major positive," he said. "As the vaccine spreads down in the population by age, we'll see that accelerate."
Liberty also said that there is a "strong relation to booking volumes and vaccines." And as "more shots in the arm are being rolled out," more first time cruisers are booking again, a welcome addition to the disproportional amount of loyalty guest and experienced cruisers that were part of the booking mix for much of 2020.
Royal said that on its ships with limited operations, the Quantum of the Seas out of Singapore and its TUI Cruises brand in the Canary Islands, guest satisfaction is higher than normal and that the ships are seeing a higher proportion of first-time cruisers than the company expected. They also give the line a good blueprint for resumption of service elsewhere.
"We believe that these cruises, even before the availability of vaccines, are helping us learn and demonstrate to others how we can operate successfully under the current Covid-19 environment," said Fain.
As of Dec. 31, Royal said it had $1.8 billion in customer deposits of which 50% are related to FCCs. Since the suspension of its global cruise operation, Royal said its action to enhance its liquidity, including cost and capital reductions, cash preservation measures and obtaining additional financing, enabled it to raise approximately $9.3 billion in 2020 through a combination of bond issuances, common stock public offerings and other loan facilities.