Royal Caribbean Group said that as a result of a record-breaking WAVE season and accelerating demand for its cruise experiences, the company is increasing its 2023 Adjusted Earnings per Share (EPS) guidance to $4.40 – $4.80.

This compares with an earlier guidance of $3.00 to $3.60, published in the winter when the company released its 2022 result statement.

Full Year 2023 Outlook:

• Net Yields are expected to increase 6.25% to 7.25% as-reported and 6.75% to 7.75% in Constant-Currency, compared to 2019.
• NCC, excluding Fuel, per APCD is expected to increase 5.2% to 6.2% as-reported and 5.5% to 6.5% in Constant Currency, compared to 2019.
• The company expects to significantly exceed prior record Adjusted EBITDA, achieved in 2019.
• Adjusted Earnings per Share for the full year are expected to be in the range of $4.40 to $4.80 per share.

Second Quarter 2023 Outlook:

• Net Yields are expected to increase 9.6% to 10.1% as-reported and 10.1% to 10.6% in Constant-Currency, compared to the second quarter of 2019.
• NCC, excluding Fuel, per APCD is expected to increase approximately 8.6% as-reported and approximately 8.9% in Constant Currency, compared to second quarter 2019.
• Adjusted Earnings per Share for the second quarter are expected to be in the range of $1.50 to $1.60 per share.

Update on Bookings

Booking volumes in the first quarter were significantly higher than the corresponding period in 2019 and were considerably better than expected. This year, WAVE started earlier and extended further, generating a record level of bookings. These strong booking trends resulted in an acceleration of the company’s booked position in relation to prior years. In addition, the company is generating significantly more bookings at meaningfully  higher prices than in prior years, particularly from the North American consumer. 

The remarkable WAVE booking period resulted in strong close-in demand at higher prices for the first quarter, and enabled a significant improvement in revenue expectations for all three remaining quarters. The increase in yield expectations for the year is  predominantly related to higher load factors in the first quarter and higher prices for all four quarters, especially for Caribbean sailings. Consumer spending onboard, as well as pre-cruise purchases, continue to exceed 2019 levels driven by greater participation at higher prices. The company expects load factors to reach historical levels by late spring.

As of March 31, 2023, the Group's customer deposit balance was at a record $5.3 billion.  

Fuel Expense

Bunker pricing net of hedging for the first quarter was $733 per metric ton and consumption was 411,000 metric tons.

The company does not forecast fuel prices and its fuel cost calculations are based on current at-the-pump prices, net of hedging impacts. Based on today's fuel prices, the company has included $276 million of fuel expense in its second quarter guidance at a forecasted consumption of 409,000 which is 55% hedged via swaps. 

Forecasted consumption is 54% hedged via swaps for the remainder of  2023, 25% and 5% hedged for 2024 and 2025, respectively. The annual average cost per metric ton of the hedge portfolio is approximately $577, $664, and $753 for 2023, 2024, and 2025, respectively. 

The higher average cost in 2024 is driven primarily by the hedged fuel mix with Marine Gas Oil ("MGO") consumption hedged higher than Intermediate Fuel Oil ("IFO") consumption. The higher average cost in 2025 is driven by only MGO consumption hedged that year.