Royal Caribbean Group is on a roll with another great quarter, and even better outlook for the days to come.
The company shared its third quarter financial results, which were better than expected.
Net income for the third quarter was $1.1 billion, compared to Net Income of $1.0 billion for the same period in the prior year. The company also reported total revenues of $4.9 billion.
The driving force behind its strong quarter was higher prices on last-minute cruises, continued high demand for cruise extras, and lower costs due to timing.
Another factor was balance sheet actions taken in the third quarter resulted in lower interest expense and the company's return to its pre-Covid unsecured balance sheet.
In a statement, Royal Caribbean Group President and CEO Jason Liberty celebrated the robust earnings, "Our exceptional third quarter results and increased full year expectations reflect the robust demand for our differentiated vacation experiences."
He's already looking ahead to 2025 as a year where Royal Caribbean will grow significantly more, "We see elevated demand patterns continuing as we build the business for 2025, and although the yield comparable will be a high bar, our proven formula of moderate capacity growth, moderate yield growth and strong cost discipline is expected to continue to deliver strong financial results."
Third quarter results
There were interesting statistics to come out of Royal Caribbean Group's strong quarter.
In the third quarter, across all of the company's brands, the occupancy rate was 111%. This means cruise ship cabins were not just sold out, but more cabins had more than two people in them.
Royal Caribbean Group saw higher pricing overall, but European and Alaska cruises saw particularly higher prices. In addition, the company made more money through selling add-ons, such as drink packages, WiFi, shore excursions, and more.
Strong demand is a major factor, as Royal Caribbean Group is actually seeing the demand and pricing environment accelerated since last quarter, exceeding 2023 levels.
"Consumer spending onboard, as well as pre-cruise purchases, continue to significantly exceed 2023 levels driven by greater participation at higher prices," the company said in a statement.
They believe their success is due to vacationers preferring their new cruise ships, existing ships, and private destinations.
"Support our growth ambitions"
Another important success for the company this quarter was the company's return to its pre-Covid unsecured balance sheet.
A balance sheet refers to a company's assets, liabilities, and owner's equity at a specific point in time.
Royal Caribbean Group has spent many months paying back loans, refinancing loans, and structuring its debt to not hinder the company's operations.
Like all cruise lines, Royal Caribbean Group took on a lot of debt during the 2020 cruise industry shutdown to stay in business through a variety of loans.
Royal Caribbean Group CFO announced, "This quarter, we achieved an important milestone of returning to a fully unsecured capital structure while also reducing cost of capital and recapturing a portion of our Covid-era share dilution."
He went on to say this change allows them to, "further support our growth ambitions and expand capital allocation." That's an important indication for cruise fans who are always eager to see their new plans.
Capital spending is the category of expenses the company refers to when it builds a new cruise ship or builds a new private island.
As an example, the next private beach experience was announced during the third quarter to build Perfect Day Mexico, which will open in 2027.
