Royal Caribbean Group chief executive Jason Liberty is not worried about the possibility of a recession, despite growing fears that one is on the way due to higher interest rates.
The US Federal Reserve raised them by 0.50% on Wednesday, prompting some economists to utter the “R” word as inflation remains high.
But Liberty refuted such a notion during Wednesday’s first-quarter earnings call with analysts, saying that consumers are more eager than ever to spend some money on cruising.
“I think a piece of that … are the trillions of dollars of cash sitting in the savings accounts and the low leverage of the customers just in North America alone,” he said.
“With the level of booking activity that we’re seeing and the spend levels that we’re seeing on the ship, we don’t see anything to date that would show that there’s some type of recession weighing on the consumer.”
The New York-listed owner of 63 ships posted a $1.17bn net loss for the first three months of 2022, but Liberty said it is finally “cash-flow positive” after two years of epic quarterly losses.
“I think we should just really pause and take in that statement,” he said.
“Our business model is incredibly strong and we have a long track record of growing revenue, earnings and cash flow.”
A big reason for that revenue-making ability is that cruises offer a much better value to land-based vacations, he said.
“When a consumer is not feeling a level of pressure and they still need and want to go on vacations and build experiences and memories, I think that value differential which we are everyday doing all we can to close that gap is one which the consumer recognizes,” he said.
And the pandemic has taught Royal Caribbean to operate with greater agility and efficiency and thus enable it to overcome challenges in any economy.
“We still expect 2022 will be a strong transitional year as you bring the rest of our fleet back up into operation and approach historical occupancy levels and return to our profit in the back half of the year.”
Royal Caribbean has said that booking volumes since March have exceeded 2019 record levels and should stay robust this year as it resumes full sailing during the second half of 2022.