Royal Caribbean Reports First-Quarter Losses, Strong Long-Term Demand
The Royal Caribbean Group reported financial results for the first quarter of 2021 and the outlook moving forward now that the Centers for Disease Control and Prevention (CDC) said it was working to resume cruise operations in the United States by mid-summer.
While Royal Caribbean CEO Richard D. Fain revealed a first-quarter net loss of $1.1 billion— which was down from the first-quarter losses of $1.4 billion reported in 2020—bookings for the second half of 2021 and beyond are on the rise as anticipation for the resumption of U.S. voyages reaches a fever pitch.
The cruise company said advanced bookings for the first half of 2022 are within historical ranges and at higher prices when compared to 2019. The bookings were achieved with minimal sales and marketing support, which Royal Caribbean believes highlights strong long-term demand for cruising.
“Last night, the CDC notified us of some clarifications and amplifications of their Conditional Sail Order which addressed uncertainties and concerns we had raised,” Fain said. “They have dealt with many of these items in a constructive manner that takes into account recent advances in vaccines and medical science.”
“Although this is only part of a very complex process, it encourages us that we now see a pathway to a healthy and achievable return to service, hopefully in time for an Alaskan season,” Fain continued.
Fain said the company has approximately $1.8 billion in customer deposits, with around 45 percent associated with Future Cruise Credits (FCC). Royal Caribbean continues to provide guests on suspended sailings with the option to request a refund, to receive an FCC or to “lift & shift” their booking to the following year.
Since cruise operations were suspended in March 2020, around 50 percent of the guests booked on canceled sailings have requested cash refunds.
Despite Royal Caribbean announcing new itineraries for this summer for eleven additional ships from the Caribbean and Europe—in addition to the four vessels already sailing—the company is still heavily impacted by the consequences of the COVID-19 pandemic. Fain said the cruise brands expect to incur a net loss for its second quarter and the 2021 fiscal year.
On Wednesday, the CDC announced several new steps to speed up the approval process for resuming sailings, including requiring cruise lines to prove 98 percent of its crew and 95 percent of its passengers are vaccinated if the ships are to skip simulated voyages and move directly to open water sailing.