A billion dollar profit last quarter has left Royal Caribbean at the top of its game, but it doesn't measure itself against other cruise lines.
While there are other big players within the cruise industry, Jason Liberty, CEO and President of Royal Caribbean Group doesn't pay any attention to them. He's eyeing a bigger prize.
In an interview with Skift, Mr. Liberty dismissed any notion other lines are what his company worries about, "We spend almost no time thinking about our cruise competitor."
Instead, Royal Caribbean Group is more interested in lining itself up against land-based attractions, "We think of ourselves as an experience company. We’re competing directly with places like Orlando and Las Vegas. We are competing with Taylor Swift concerts."
This isn't a new strategy, as Royal Caribbean has made it clear they want in on the substantially bigger $1.9 trillion vacation market.
How will Royal Caribbean achieve this? By offering the best cruise ships with the best amenities that as compelling as what you can find on land.
During Royal Caribbean Group's third quarter 2024 earnings call with investors last week, Mr. Liberty answered a question about pricing in relation to how his product stacks up against land resorts, not other cruise lines, "there's still a significant value proposition versus land-based vacation."
In 2022, Royal Caribbean International President and CEO Michael Bayley told Wall Street their goal with the new Icon of the Seas cruise ship is to lure vacationers who would traditionally visit Walt Disney World or Universal Studios Orlando with a cruise vacation.
"The Icon product, along with Perfect Day, with the kind of experiences that we're offering, with the kind of new accommodations that we have on Icon and the experiences that we have for young families, older families and of course couples and singles and what have you, is really squarely standing shoulder to shoulder with Orlando and those kind of destinations," he said.
Mr. Bayley sees the Royal Caribbean International brand being more "aggressive" with how it competes with the Orlando attractions, "And what we're beginning to see is us moving certainly the Royal brand into that space far more aggressively."
To that point, Royal Caribbean will place its next new cruise ship right on Orlando's front door, with Star of the Seas being homeported in Port Canaveral.
Star of the Seas will be built around the same design as Icon of the Seas, and offer a few tweaks and enhancements, including the full Back to the Future Broadway musical.
Placing Star near Orlando is actually the second step, because Utopia of the Seas already debuted in Port Canaveral earlier this summer.
Utopia is a brand new Oasis Class ship that offers just 3- and 4-night cruises. This puts the very best new ship near Disney World so families can combine a couple days in the theme parks with a cruise vacation.
In July 2024, Mr. Bayley said he believes many customers will combine a theme park visit with a cruise on Utopia, "one of the reasons we put this brand new Oasis class into this market is that we really expect to see a certain amount of demand coming from tourists who are going in... some kind of combo where they're doing Disney or Universal or they're doing something in Orlando."
"They can also package themselves with vacation, which includes a three night, four nights, a Perfect Day. If you're a family, that's a great vacation."
If a weekend cruise is too short, then they can jump right to Icon or Star. In either case, Royal Caribbean thinks these ships have the right product that no other line can match.
Moreover, short cruisers on Utopia are seen as a way to attract first-time cruisers. The notion is by taking just a weekend cruise, they can give cruising a try without committing to too many days off work or school.
A better quality product
At the time Icon of the Seas launched, Mr. Liberty talked about how a ship like Icon of the Seas positions itself to be not just a great ship, but a truly compelling alternative to a land vacation.
"We’re beginning to really attract a lot of demand from those land-based options with better quality product, more exciting products and great price points," said Liberty.
One of the major goals is to keep customers within Royal Caribbean Group's ecosystem of brands, something land-based experience providers do very well. The cruise company wants to incentivize stronger customer loyalty with repeat experiences.
In an interview with CNBC in July, Mr. Liberty talked about how his cruise ships are being designed to be just as engrossing as a land vacation, "What we’re trying to do is make sure that our experience, whether on the ship or at our private islands, is something that is highly competitive with land-based vacation."
