While it is easy to see the big cruise lines fighting over the dollars spent by customers who want to cruise, Royal Caribbean is not like that. (RCL) – Receive the Royal Caribbean Group report CEO Jason Liberty sees the market. Surely the section of people who already enjoy the cruise can choose between Liberty or Carnival Cruise Lines’ main rivals. (CCL) – Receive the Carnival Corporation reportor Norwegian Cruise Line (NCLH) – Receive the report of Norwegian Cruise Line Holdings Ltd.
Another group of travelers – a much larger group – does not think about cruising first when it comes to vacation. Instead, they book land holidays and this is an area where Liberty believes Royal Caribbean can make big profits.
It is not about attracting customers away from its rivals, Liberty wants to bring more customers to the cruise scene. This would be good not only for Royal Caribbean, but also for Carnival and Norwegian.
Royal Caribbean wants to vacation on land
Liberty answered a question about competing with ground breaks from Wolfe Research analyst Fred Wightman during his company’s first quarter earnings call.
“Before COVID, the combination of things like Perfect Day, you could add things like high-end ships and so on, we saw a pretty significant reduction in this gap compared to land holidays, especially in commodities like Orlando and other products out there. “And I think we are very focused on that,” he said.
Liberty explained that many of Royal Caribbean’s investments were in creating this value for holidaymakers.
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We really managed to improve the experience, both on board and on land, really adapting the customer so we could go ahead and do that. So I think that’s why we see similar trends. But when you look at the overall fleet as a whole and compare them to land holidays in Europe or look at land holidays in Alaska or Vegas etc., there is still this gap and there is still this opportunity that we have I am very good at. I mean, this is really the point where, if you saw us before COVID or during COVID, where we focused our energy, it’s less about our peers on the cruise, but more about how we can close them the gaps in the land holidays.
The CEO never mentioned Walt Disney (DIS) – Get the Walt Disney Company Report or any other competitor by name, but it seems clear what he is talking about in general. A cruise can offer tremendous value compared to a theme park trip or a Las Vegas vacation due to the predominantly all-inclusive nature of a cruise. This is a value proposition to which Freedom seems to want to lean.
Would a recession hurt the Royal Caribbean?
The cruise industry has just begun to normalize after the long pandemic closure and its slow return to normalcy. The Royal Caribbean, Carnival and Norwegian were added to their debt during this period (it is very difficult not to do this when you are closed for more than a year).
Liberty has made it clear that he is not overly concerned about the prospect of a recession because he believes in his company’s value proposition.
“Well, when a consumer – let’s just say, if he feels a level of pressure and still needs and wants to go on vacation and create experiences and memories. And I think this difference in value, which we do every day, can “To close this gap is something that the consumer recognizes and that tends to have good prices compared to other travel or consumer products of discretion in times like this,” he said.
CFO “Naftali Holtz also made it clear that the company stands on a solid financial footing despite the events of the pandemic.”
And just to add quickly. “We are in a very strong liquidity position,” he said. “We are obviously at this turning point in free cash flow – operating cash flow. And our focus is, as I said in my remarks, to continue to refinance the balance sheet. “