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How Royal Caribbean Plans to Change Cruising

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To most people, a company’s quarterly report is the stuff naps are made of. But if you spend enough time digging into a cruise line’s financial report, you can almost always find some interesting tidbits. So what did we glean from Royal Caribbean’s first-quarter earnings call? To quote Richard Fain, the line’s chairman and CEO, “The future for [cruising] has never been brighter.” Here are some takeaways from the call.

They see Celebrity Edge as a game-changer.

Many cruisers don’t realize it, but Celebrity Cruises actually functions under the umbrella of Royal Caribbean Limited, and has since their merger in 1997. And Fain is extremely excited about their new ship. “While I’ve been lucky enough over the years to have been involved with a number of transformational ship designs,” he said, including, most recently, Oasis of the Seas. “Based on all that experience, I believe Celebrity Edge will be yet another transformational ship which will influence the design of ships to come. Everything about the Edge-class is new and exciting. The decor is highly unique, and the new spaces are totally inspired.”

More suites means more money.

One of the reasons the company is so high on Edge is the fact that the ship offers more suites. Fain says that the new class of ships offers “a little more than double the amount [of suites] for most of our existing ships. Since our guest pays more for a suite, doubling the suite count is not a bad thing to do.”

People will pay a higher price for more stateroom space.

There’s also the fact that the ship’s standard veranda cabin is nearly 25 percent larger. “This is due to an innovation in the way that cabins are designed and built,” Fain explained. “It involves changing the very structure of our rooms so that all the veranda space can be converted into air-conditioned living areas at the push of a button. For all of you who’ve traveled on a ship before, you understand well that the space comes at a huge premium at sea.” And again, this is obviously something that passengers will happily pay a premium price to enjoy.

Technology, not orange, is the new black.

Like Princess and their Ocean Medallion plan, Royal is going all-in with what they’re currently referring to as Project Excalibur. Fain says the company has “found intuitive digital applications to make the guest experience simpler and more comfortable. You’ll be able to open the door to your room without pulling out a card or key, request a beverage real-time from the comfort of your lounge chair and get recommendations for your traveling companion based on their preferences. We take our guest’s vacation time seriously, and technology is a great enabler to improve the use of that.”

The way cruisers spend money is changing.

In taking a closer look at the spending habits of cruisers, Jason T. Liberty – Royal’s chief financial officer and executive vice president – says the company has noticed a definite change. “As I’ve mentioned over the past couple of quarters,” he reiterated during the call, “guest [spending] has been continuing to shift towards areas that involve experiences over buying things.” In other words, while on board the ships, we’re more interested in shore excursions and internet access than we are shopping in the various stores. Liberty said that some of the company’s grown “was driven by a combination of our new hardware, shore excursions, and utilization of VOOM and Xcelerate, our high-speed internet offerings.”

The Korea situation is causing some disruptions.

Fain says that they’re dealing with problems in that region of the world by rejuggling their itineraries as needed, but admits “it is hurting. It’s reminiscent of the China-Japan dispute from several years ago. But fortunately, bookings in Europe and elsewhere have compensated.” Liberty added that Americans tend to spend more on European cruises, including doing more shore excursions.

You won’t likely find a bargain on Harmony anytime soon.

Liberty told those on the conference call that “Harmony of the Seas is commanding premium prices for her first summer Caribbean season.” Translation: You might get a stateroom, but it likely won’t be cheap. And how are Alaska cruises selling? “Our summer Alaska sailings benefited from a strong wave period and remain on track to outperform last year’s record season,” he reported.

Mariner of the Seas is coming home with a new look.

Miami will get another ship when the Voyager class Mariner of the Seas is repositioned in 2018. “That was really about timing,” said Royal’s CEO and President Michael W. Bayley, adding that the company has “some revitalization and dry-dock work that’s quite extensive” in the works for Mariner.

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