Bloomberg audio Studios podcasts radio news now to another stock moving big time today. We are talking about Royal Caribbean Cruises. Shares are riding quite a wave higher, up about 133%, more than 133% at their high, almost 14%, in fact hitting a record intraday, up the most in more than two years. It is the top gainer in the S&P 500 and it's lifted the entire group because Norwegian and Carnival also top gainers in the S&P 500. This is coming after Royal Caribbean reported a full year profit forecast that blew past expectations as cruise demand continues to ramp up. They're also talking about getting into another area of the cruising world. For more on the outlook and what's driving metrics, we welcome the president and CEO of Royal Caribbean Group, he is Jason Liberty. He joins us from Miami, Florida. Jason, it's great to have you here with us. How are you?
I'm doing great, Carol, and thank you and Tim for having me today. Obviously it's a great day on the share price, but it's a great representation of another incredible year. I'm here at the Royal Caribbean Group and a really strong outlook for 2025.
Tell us what surprises you about the consistency in demand and the optimism that you are seeing, certainly in the cruising world, and what comes to demand. What's surprising you in how the strength that you are seeing?
Yeah, well, I think there's a few things that I would point to. I mean, certainly we have a lot of great demographic trends on our side in terms of more millennials coming into the space, multigenerational travel, a lot of active wealth transfer, and we see that more and more, which has been a surprise to me just how much multigenerational travel where you have the patriarch or matriarch of the family paying for generations. I think that's been a little bit of a surprise. And there's also been just a continued flight to quality. You know, we've invested so much in our ships and our brands and our destinations for so many decades. We're really now seeing these flowers bloom as we see consumers who are very healthy. They have great balance sheets, they have great jobs, and their high-paying jobs having this flight to quality for our brands and for our destinations.
When you talk about that flight to quality, break that down for us. Where is there strength in the business and where are you seeing particular strength, and if there are any areas where you're not seeing strength?
Yeah, well, we're actually seeing strength in all markets that we source from. We're also seeing strength for all the different places that ships go, whether that's in the Caribbean, Alaska, the Northeast, Europe, Australia, Southeast Asia, China. We're seeing strong demand kind of across the board, which is I think really great. We're also seeing again elevated spend on our ships, and that's really across the board. A lot of it is in the gaming, the beverage area, the culinary side, spa, shore excursions. So people are really looking to make sure that they grab the experiences that they want to have, and they're willing to not only pay a little bit more money for that, but they're also willing to have more repetition of that. And that's how they're expanding the memories that they're building with their friends and family.
How much is that wrapping up? Jason, that is something that I've seen throughout the cruise industry, that it's not just about buying the ticket to get you on the ship, but it's about what you do once you're on the ship and possibly go off to other destinations. Those bookings that add to the experience, but they also add to your revenue line and your profit line.
Yeah, that's exactly right. One thing I think that we've gotten a lot better at, whether it's through AI or other disruptive tech, is to really take friction out of the experience of shopping with us, whether that's on the ticket side or on the onboard side. What we're doing is we're able to enhance the experience so they can do all the different things that they want to do. And in reality, while it's still very frustrating to me, while we're increasing share of wallet, we're still at a very significant discount to land-based vacation. So for us, we focus a little bit less on what's happening with our cruise competitors. We're trying to take a larger share of the $2 trillion marketplace in travel and leisure. And for us, having the experiences that our guests want to do and also being able to make it easier for them to shop with us is winning for us.
The pace of bookings this year relative to last year, what does that tell you about demand? Where we're a little over a month past what is referred to in the industry as wave season.
Yeah, so the past couple of years, wave has been elevated not just for us but for the entire industry, and we're continuing to see those waters rise here on the wave season. So we're seeing record booking weeks, we're seeing elevated pricing, and we're seeing a consumer that is not only willing to pay a little bit more money for their vacation experience, but they're also looking to book further out. So the booking window is continuing to extend, and they're also doing more and more cruise booking activities for the activities that happen on the ship and off the ship to make sure they get the vacation experience that them and their family and friends want to have.
Are you surprised by it? You've been doing this a while. Are you surprised by the pace of demand?
Well, I haven't been doing this that long. I mean, I've been in the CEO seat for a little over three years, and of course I was the CFO before that, so I've been in the industry a while. Certainly you're seeing an elevated demand for experiences. So clearly coming out of COVID, we've seen a few different changes in behavior. One of which is very comfortable booking and interacting through technology, so we're able to take friction out of that experience. But you're also seeing just a trade: buy a lot less stuff, we want to buy experiences. We really appreciate the time with our friends and family, and we want to make sure that that time that we have is not only exceptional but it's also with somebody who we trust will deliver that for us. And I think we have that trust. We value that trust with our customers each and every day.
All right, we want to talk a little bit more about the business, but, you know, Jason, we've been asking everybody who comes on, a CEO or anybody who runs an institution, a company, an organization, the dynamics and the backdrop, anything that could be impacted by policies out of the Trump administration, anything coming out of government. And I think about we've talked about various policies that could lead to inflation, tariffs on possible goods that could increase costs, immigration, the impact on the labor force. So I'm just curious, you guys are floating cities, your massive ships, so you know the dynamics of the U.S. economy certainly impact you. So I'm just curious, anything in particular that could come out of D.C. that you're watching very closely?
Well, look, I think we, as we always have, we're going to work very closely with the administration. But I think what we're looking for is a healthy and happy consumer. And I think as long as the consumer has confidence in their spending and of course they seek great vacation experiences, which we think they're going to do, I think we feel very bullish about the future spending behavior of our customers. The other point that I would just add, which I think also brings us great comfort, is that whether costs do rise in some form or fashion or there is inflation, that point I made earlier that there is a significant gap to land-based vacation. There's a lot of value for the consumer in our different vacation products, and that's a good hedge for us if there is any type of change in the winds.
