Royal Caribbean Chief Executive Officer Richard Fain told CNBC on Monday that the cruise operator has seen a number of optimistic signs in its early booking data suggesting a positive recovery from the coronavirus pandemic.
“Some of the things that we thought were going to happen are not happening. They are better than we think,” Fain said in an interview with CNBC’s Seema Mody.
The age of customers who sign up for trips is an example where reality has moved away from the company’s expectations, according to Fain. “We really thought older people would be more cautious. It turns out that they want to get out of the house too,” Fain said, explaining that a likely factor is that older people have received priority access to Covid vaccines.
The history of cruise ships is another unexpected characteristic of customers booking travel, said Fain, who has led Royal Caribbean for more than three decades.
“We thought almost everyone was going to be an experienced cruise ship because they are the ones who understood the cruise and were eager to get back,” Fain said. “However, at our Singapore operation, 80% of our guests have been new. So we are getting a lot of surprising data as things come up, and most of it is positive.”
In December, Royal Caribbean’s Quantum of the Seas began operating in Singapore. And since November, TUI Cruises, a subsidiary of Royal Caribbean, has had three ships sailing in the Canary Islands. But for the most part, the cruise industry has been dormant for nearly a year when the coronavirus swept the world and governments imposed shipping restrictions. In the United States, operations remain suspended due to an order from the Centers for Disease Control and Prevention.
Royal Caribbean shares rose on Monday following the release of the company’s fourth-quarter results. In addition to reporting a lower-than-expected loss, investors were also encouraging the reserve information offered by Royal Caribbean. The Miami-based company indicated that reserve prices were higher than pre-pandemic levels while still within historical volume ranges.
Royal Caribbean reported a net loss of nearly $ 5.8 billion in 2020 on total revenue of $ 2.2 billion. The company raised approximately $ 9.3 billion in new capital during the year, including debt offerings and a $ 1 billion share sale in December. Last month, Royal Caribbean announced the sale of its Azamara brand to private equity firm Sycamore Partners in a deal worth $ 201 million.
“We have built up enough liquidity … so that we can afford not to have to deal with a crisis, but to gradually improve our liquidity, our financial health, because we want to get back to investment grade as soon as we can,” Fain said.
Fain said he believes “serious talks” about resuming cruise travel from US ports may begin if US coronavirus cases continue to fall as they have and if a broader portion of the US population is vaccinated against Covid.
The CEO said Royal Caribbean and its healthy boating advisory panel, along with the CDC, agree that there is no single Covid-related metric that represents a green light to hit the waters again.
“You look at everything. You look at what we can do to protect people: what the vaccine does, what the tests do and all of us together. I think we’re getting closer to the time when those things work together,” Fain said. “Unfortunately, there is no magic threshold that says, ‘Now is the day.’
An important focus of Royal Caribbean’s health protocols is what to do when there is a positive case of Covid on board, Fain said. “There will be cases in a ship, just like there are always cases in a society. Our job is to make sure that it remains cases and does not turn into an outbreak,” Fain said, emphasizing the need for isolation. “I think that’s where the Healthy Sailing Panel comes from. That’s a big part of our discussion with the CDC and others, and vaccines are a big part of that.”