Royal Caribbean CEO Richard Fain told CNBC on Monday that the cruise operator had seen a number of optimistic signs in his early booking data suggesting the coronavirus pandemic was recovering positively.
“Some of the things we thought were going to happen are not happening. It’s better than we thought,” Fain said in an interview with CNBC’s Seema Mody.
According to Fain, the age of customers signing up to take trips is one example where the reality has deviated from the expectation of the company. “We really thought older people would be more careful. It seems they want to get out of the house too,” Fain said, explaining that a likely factor is that older people have gained priority access to Covid vaccines.
Cruise history is another unexpected feature of customers booking travel, said Fain, who has been leading Royal Caribbean for more than three decades.
“We thought almost everyone would be an experienced cruiser because it’s them who understand cruising and are eager to come back,” Fain said. “In our operation in Singapore, however, 80% of our guests were first-time beginners. So we get a lot of surprising data as things come out, and that’s mostly positive.”
In December, Royal Caribbean’s Quantum of the Seas began operations from Singapore. And since November, TUI Cruises, a subsidiary of Royal Caribbean, has had three ships in the Canary Islands. But mostly, the cruise industry is idle for almost a year because the coronavirus dominates the world and governments have imposed sailing restrictions. In the US, operations remain suspended due to an order from the Centers for Disease Control & Prevention.
Shares of Royal Caribbean rose Monday after the company’s fourth-quarter results were announced. In addition to reporting a smaller-than-expected loss, investors also encouraged Royal Caribbean’s booking insights. The company in Miami indicated that booking prices were higher than pre-pandemic levels, while being within historical volumes for the volume.
Royal Caribbean reported a net loss of nearly $ 5.8 billion in 2020 on total revenue of $ 2.2 billion. The company raised about $ 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 $ 201 million deal.
“We have built up enough of our liquidity … so that we have the luxury of not dealing with a crisis, but gradually improving our liquidity, our financial health, because we want to return to investment just as quickly.” Fain said.
Fain said he believes “serious talks” about resuming cruise travel from U.S. ports could begin if U.S. coronavirus cases continue to decline as before, and because a broader section of the U.S. population is being vaccinated against Covid .
The CEO said that Royal Caribbean and its advisory Healthy Sail Panel, along with the CDC, all agree that there is no single Covid-related measure that would give a green light to get back in the water.
“You look at everything. You look at what we can do to protect people – who do the vaccine, who do the testing, and those who are together. I think we’re getting closer to the time when things work together,” Fain “Unfortunately, there is no magic threshold that says, ‘Now is the day.’
A key focus of Royal Caribbean’s health protocols is what to do if there is a positive Covid case on board, Fain said. “There will be cases on a ship, just as there are always cases in a society. Our job is to make sure that it stays business and that it does not become an outbreak,” Fain said, stressing the need of isolation. “I think that’s where the Healthy Sail Panel comes from. That’s a lot of our discussion with the CDC and others, and the vaccines are a big part of that.”