Royal Caribbean CEO Richard Fain told CNBC on Monday that the cruise operator has seen several optimistic signs in its early backup data suggesting a positive recovery from the coronavirus pandemic.
“Some of the things we thought would happen don’t happen. They’re better than we thought,” Fain said in an interview with CNBC’s Seema Mody.
According to Fain, the age of customers who sign up to travel is an example in which reality has diverged from the company’s expectations. “We really thought older people would be more prudent. It turns out they also want to leave home,” Fain said, explaining that a likely factor is that older people have had priority access to Covid vaccines.
The history of cruises is another unexpected feature of customers booking trips, said Fain, who has run Royal Caribbean for more than three decades.
“We thought almost everyone would be an experienced cruiser because they were the ones who understood the cruise and were eager to return,” Fain said. “Still, in our operation in Singapore, 80% of our guests came first. So we get a lot of amazing data as things come out, and most of all they are positive.”
In December, Royal Caribbean’s Quantum of the Seas began operating outside 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 inactive for nearly a year, as the coronavirus swept the world and governments imposed navigation restrictions. In the United States, operations continue to be suspended due to an order from the Centers for Disease Control and Prevention.
Shares of Royal Caribbean grew on Monday after the company’s fourth-quarter results were released. In addition to reporting a smaller-than-expected loss, investors were also happy to book information provided by Royal Caribbean. The Miami-based company indicated that reserve prices were above pre-pandemic levels, while they were within historical volume ranges.
Royal Caribbean reported a net loss of about $ 5.8 billion in 2020 for a total revenue of $ 2.2 billion. The company raised approximately $ 9.3 billion in new capital during the year, including debt offers 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 accumulated enough of our liquidity … so we have the luxury of not having to deal with a crisis, but of gradually improving our liquidity, our financial health, because we want to return to the degree of investment so quickly as you can, ”Fain said.
Fain said he believes “serious talks” could be initiated on the resumption of cruise ships from U.S. ports if U.S. coronavirus cases continue to decline as they have been and if a wider portion of the U.S. population is vaccinated against Covid.
The chief executive said Royal Caribbean and its adviser Healthy Sail Panel, along with CDC, agree that there is no Covid-related metric that would represent a green light to touch the waters again.
“Look at it all. Look at what we can do to protect people: what the vaccine does, what the tests do, and who’s together. I think we’re getting closer to the time when these things work together,” Fain said. “Unfortunately, there is no magic threshold that says, ‘Now is the day.'”
One of the main focuses of Royal Caribbean health protocols is what to do when 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 it stays that way and doesn’t become an outbreak,” said Fain, who stressed the need of an isolation. “I think that’s where the Healthy Sail panel came from. That’s a big part of our debate with CDC and others, and vaccines are an important part of that.”