Executives used an earnings briefing to shrug off worries about pricing and yields in China, talk up strong bookings in Europe, shooting down concerns generated by Caribbean promotions, and highlight that the company’s share of part of its Pullmantur brand will bolster the bottom line.
The bullish talk from the world’s second-largest cruiseship owner came after it delivered a better-than-expected third-quarter result.
The combination of the earnings beat and the assertion that it is on track to meet its goal of doubling 2014 earnings by 2017 led its shares to surge by 13.8% in the two days after the release, adding roughly $2bn to its market capitalisation on the New York Stock Exchange.
Royal Caribbean executives said the company’s forward bookings showed strong trends across the North America, Europe and Asia markets. “Although it’s still early in the booking window, these insights provide added confidence in our path toward the ‘Double-Double’,” said finance chief Jason Liberty. “And we expect that 2017 will be our eighth consecutive year of yield improvement.”
The Miami company’s executive team brushed aside many of the key concerns that have had investors worried. Asked about pricing in China, which analysts have warned of market softness, Liberty said the company has seen encouraging signs for bookings into the first quarter.
When an analyst asked about promotions in the Caribbean, which have led to pricing concerns in that market, Royal Caribbean International chief executive Michael Bailey tied the activity to the short-term impact of Hurricane Mitch.
The executive said the company’s flagship brand and its competitors tried to stimulate demand after the storm, and the response was “very good”.
“We had a promotion last week which was the second best performing promotion in the brand’s history,” he said.
Bailey added that the 2017 bookings for the European market are also positive.
Royal Caribbean logged $693m in third-quarter profit, up from $229m a year earlier.
