More sailings on Quantum of the Seas will have to skip scheduled glacier visits in Alaska this season.

Guests booked on late August and some September Quantum of the Seas sailings received an email from Royal Caribbean on Wednesday informing them due to "a speed limitation caused by a technical issue with one of the ship’s engines", planned visits to Dawes Glacier have been cancelled.

This new round of itinerary changes are a follow-up on cancelled visits to the glaciers for some August sailings that Royal Caribbean cancelled last month.

Previously, the August 1, 8, and 15 Alaska cruise sailings were impacted.

As a result of the "technical issue with one of the ship's engines", Quantum will skip visits to Endicott Arm & Dawes Glacier and instead spend more time in Juneau, Alaska.

Quantum of the Seas is sailing 7-night Alaska cruises from Seattle.

Why the cancellation

In the email to booked guests, Royal Caribbean said Quantum of the Seas has four engines, but one of them needs to be repaired.

"One requires some repair and there's a delay in receiving the parts needed. Additionally, another engine is schedule for routine maintenance soon, which means we'll have to reduce our overall speed."

"Our ships can safely sail in these kinds of situations at reduced speeds, and while we're working to expedite the repair process, the global supply chain issues that we're all experiencing are complication the situation."

Royal Caribbean is offering onboard credit to guests booked as compensation for the change.

• $75 USD for Interior and Ocean View staterooms
• $100 USD for Balcony staterooms
• $200 USD for Suites

Alternative ways to see a glacier

While the glacier viewing at Dawes Glacier is not replaceable, there is still a way to see a glacier for anyone still booked on the cruise.

Juneau is home to Mendenhall Glacier, which can be accessed via helicopter, boat, or by driving to it by road to the Mendenhall Glacier Recreation Area.

Mendenhall Glacier is one of the most accessible glaciers in Alaska. 

You could see it from many spots in the park, such as from Nugget Falls, a 377 foot waterfall located near Mendenhall Glacier.

There are also helicopter tours you can book for a guided walk on the glacier or a dog sledding excursion.

Additionally, there are boat and kayak shore excursions that can take you close to the glacier.

Read more: Top 10 things to do in Juneau, Alaska

While in Skagway, there are more glacier viewing opportunities via shore excursions.

Helicopter tours leaving from Skagway generally visit either Chilkat Glacier or Denver Glacier. 

Upon landing on the glacier, most tours will either include a guided glacier hike or dog sledding expedition.

Read more: Top 10 things to do in Skagway, Alaska

Full letter

Here's a copy of the full letter Royal Caribbean sent.

Thanks to Dan Goodlife for sharing the email.

Have you ever wondered how much Royal Caribbean makes on average per cruise ship passenger?

Before the global health crisis, the cruise industry was a very profitable business, with revenues approaching record numbers. That took a major hit in 2020 and 2021, but Royal Caribbean posted numbers in its quarterly report that indicate it's on the verge of becoming profitable again.

With that in mind, it's sometimes fun to take a peek behind the curtain of the business and see the numbers breakdown.

If you care to look in the Form 10-Q that Royal Caribbean Group filed with the U.S. Securities and Exchange Commission, there's some interesting takeaways from how your cruise fare is spent and how much of it comes back as profit.

Revenue per passenger

In Royal Caribbean Group's filing for the second quarter of 2022, we get a breakdown of revenue and costs that contribute and takeaway from the company's bottom line.

Just like any business, they aim to have more revenue than expenses. 

Keep in mind these numbers encompass all the Royal Caribbean Group brands, including Royal Caribbean International, Celebrity Cruises, and SilverSea.

In the second quarter, Royal Caribbean Group carried 1,340,622 passengers. In case you're wondering, that amounts to 8,443,745 days of cruises.

The company breaks down its revenue across two types: "Passenger ticket revenues" and "Onboard and other revenues".

Passenger ticket revenues refers to the money you spend on your cruise fare.

Onboard revenues is the money you spend on cruise add-ons, such as drink packages, shore excursions, wifi, the casino and anything else not included with your cruise fare.

In the second quarter, Royal Caribbean Group revenue broke down as follows:

• Revenue    $1,418,203,000.00 (64%)
• Onboard spending    $766,039,000.00 (35%)

Total revenue for the quarter was $2,184,242,000.00 and total revenue per passenger came out to $1,629.28.

That's just the money coming in, so what about the costs of running a cruise ship?

The cruise operating expenses are the costs for running the ships themselves. There are additional overhead costs that the company has shoreside, which we are not considering for this article because we want to look at just the ship operating revenues.

Commissions refers to travel agent commissions paid for booking the cruise, as well as air and other transportation expenses, port costs that vary with passenger head counts and related credit card fees.

Payroll is the salary of all the shipboard crew members. 

Other operating expenses consist primarily of operating costs such as repairs and maintenance, port costs that do not vary with passenger head counts, vessel related insurance, entertainment and gains and/or losses related to the sale of ships, if any.  

I think the rest of the categories are self-explanatory.

Here's Royal Caribbean Group's expenses for the quarter:

• Commissions, transportation and other: $329,859,000.00 (19%)
• Payroll: $327,141,000.00 (19%)
• Food: $155,226,000.00 (9%)
• Fuel: $275,179,000.00 (16%)
• Onboard costs: $155,570,000.00 (9%)
• Other operating costs: $447,887,000.00 (26%)

Total onboard expenses for the quarter came out to $1,690,862,000.00. 

If you divide expenses by passengers, you come out with $1,261.25 expense per passenger.  Thus, when you subtract expenses per passenger from revenue per passenger, Royal Caribbean Group made $368.02 per passenger this past quarter.

How cruise ships make money

If we've learned anything from the economics of the past two years, it's Royal Caribbean is profitable when there's as many cruise ship passengers onboard.

Part of the reason Royal Caribbean Group is starting to see profitable days ahead is their ships are mostly sailing full again.

The company shared that over the quarter, its ships were sailing at about 82% full, with June just about 90%.

Here's a breakdown of how full the ships were based on the region of the world they sailed.

• North America: About 100%
  • Caribbean: 103%, with some ships reaching 107%
  • Northeast and West Coast (including Alaska): 90%
• Europe: 75% in June

A percentage in excess of 100% indicates that three or more passengers occupied some cabins.

As a high fixed-cost business, a cruise ship relies on getting as many passengers as possible onboard.

Royal Caribbean Group CEO Jason Liberty said on the post-earnings conference call with analysts to turn a profit, the company needs to maintain occupancy levels above 90%. In the third quarter, occupancy is slated to fall in the mid-90s range.

Pre-pandemic, Royal Caribbean had a profit margin of around 20%, and the amount of money guests were spending on add-ons was the driving factor.

According to Royal Caribbean Group executives, every dollar a guest spends before the voyage, translates into about $0.70 more on the dollar when they sail and double the overall spending compared to other guests.

Helping their cause, Mr. Liberty said guests are spending at least 30% more "across all categories" than they did in pre-pandemic 2019.

"The spending trends have been consistent across our customer base, even as we were approaching full load factors," Liberty said.

In terms of costs, operating expenses have gone up for the company. 

Mr. Liberty said that while food and fuel are the main categories that are susceptible to inflation, "there are some initial positive signs" with respect to inflation trends for food.

"Our most recent month-over-month FNB (food & beverage) inflation indicator has increased at the slowest pace thus far in 2022," Liberty said. "This, combined with direct conversations with our key suppliers, indicate inflation levels are peaking, so we should start seeing some relief in the coming months."

Regarding fuel, Liberty said the company continued to "optimize" consumption and has partially hedged its costs to below market prices.

Can you believe it's the last day of July already? It is the middle of Summer and there is a lot of Royal Caribbean news to catch up from during this week.

It looks like some unvaccinated passengers above the age of 12 will be able to go on a cruise soon.

We confirmed with Royal Caribbean an update shared by Royal Caribbean International President and CEO Michael Bayley that the line intends to open up space for unvaccinated adults without the need for an exemption.

Royal Caribbean promises an update next week, but a spokesperson for Royal Caribbean indicated that, "starting August 8th, 2022, we’ll be transitioning so that we can welcome all guests onboard our ships."

Royal Caribbean News

• Royal Caribbean redeploys 4 cruise ships for 2023-2024 cruise season due to new speed restrictions
• Royal Caribbean executives talk higher demand for cruises & why cruises are better value than land vacations
• Royal Caribbean Group reports positive cash flow for first time since cruises restarted
• Mexican Riviera cruise guide
• Where to keep Seapass Card, phone, and cash when on a shore excursion?
• A new cruise planner sale began this week
• 10 Royal Caribbean cruise destinations not to be missed

New RCB Video: 6 cruise ship main dining room rules to follow — Plus 1 to break

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Have you subscribed to the Royal Caribbean Blog YouTube Channel? We share some great videos there regularly, all about taking a Royal Caribbean cruise! This week, we are sharing our latest video — 6 cruise ship main dining room rules to follow — Plus 1 to break — and don’t forget to subscribe here.

Royal Caribbean Blog Podcast

The 462nd episode of the Royal Caribbean Blog Podcast is now available, featuring a review of the Mariner of the Seas group cruise.

Matt sailed on Mariner of the Seas with a group of friends for the first RoyalCaribbeanBlog group cruise of the year, and shares a look back at the fun they had onboard.

Please feel free to subscribe via iTunes or RSS, and head over to rate and review the podcast on iTunes if you can! We’d appreciate it.

Covid-19 testing will be dropped for vaccinated cruisers on shorter sailings

Royal Caribbean announced it will stop requiring a pre-cruise test for vaccinated passengers on shorter sailings.

Starting Aug. 8, testing will be required for unvaccinated guests on all voyages and for vaccinated guests only on voyages that are six nights or longer. 

Up until now, all guests were required to get a Covid-19 test completed prior to their cruise, regardless of vaccination status.

Why Wonder of the Seas might the perfect cruise ship for a first timer

Know someone that has resisted trying a cruise ship for one reason or another? Wonder of the Seas might be the perfect first cruise ship for them!

Whether they think they'll be bored, overwhelmed, or stuck at sea, Royal Caribbean designed Wonder of the Seas to address all those concerns.

Anthem of the Seas Guide & Review

Anthem of the Seas is a popular Royal Caribbean cruise ship because of her innovations and fun itineraries.

If you have a cruise booked on Anthem, here's a full rundown of what to expect onboard!

For the first time in two years, unvaccinated guests of all ages will be allowed to sail on a Royal Caribbean cruise ship later this summer.

Royal Caribbean International President and CEO Michael Bayley posted on social media the news about the change in testing coming next month, in which Covid testing for vaccinated passengers on short sailings will no longer be required.

Mr. Bayley also said, "Unvaccinated guests will be required to take one test within 3 days of departure. We will also continue to operate highly vaccinated cruises with a vaccinated population greater than society and which continues to exempt kids 12 and under and we will welcome unvaccinated guests over 12 and guests with a certificate of recovery within 90 days to travel keeping in mind our ships will typically sail with 80 percent plus vaccinated guests onboard. "

I reached out to Royal Caribbean's communication department to get confirmation on the Facebook posting.

Royal Caribbean confirmed for RoyalCaribbeanBlog.com that starting August 8th, 2022, unvaccinated guests of any age will be allowed onboard.

A spokesperson for Royal Caribbean verified the change in policy, "starting August 8th, 2022, we’ll be transitioning so that we can welcome all guests onboard our ships."

"We will maintain a high percentage of fully vaccinated guests onboard all our sailings, far above the general population."

"Vaccination and testing requirements may vary by port of departure, ports of call, and age group. We are working through this with our destination partners."

Up until now, only unvaccinated guests under the age of 12 have been allowed on Royal Caribbean ships.

The change in policy is a result of the the CDC ending its Covid-19 Program for Cruise Ships.

No further details on the policy change were shared, but Royal Caribbean said further details will be released the week of August 1.

A major change in policy

Allowing unvaccinated passengers on ships is a big change, as this segment of the population has been left out of the cruise industry restart until now.

Ever since cruises restarted in the United States in 2021, all cruise lines have required anyone eligible for the Covid-19 vaccine to be vaccinated in order to sail on a cruise ship.

Royal Caribbean is the second line to change its policy, following Virgin Voyages announcement last week that it would allow up to 10% of passengers on any given sailing to be unvaccinated for Covid-19.

In a statement to investors on Thursday, Royal Caribbean Group CEO Jason Liberty said the change is a move to be more like other forms of leisure travel, such as theme parks, casinos, or air travel. 

"We are continuing to adapt our protocols to align more closely with how the rest of society and other travel and leisure businesses are operating."

"This means that we're transitioning to the point where everyone will be able to vacation with us while always working with our destination partners to meet their regulations."

Mr. Liberty told investors during an earnings call on July 28th that the close work between the cruise industry and the U.S. Centers for Disease Control and Prevention (CDC) allowed this progression in policy to occur.

"The other major milestone for the group, and the industry, is related to the CDC ending its program for cruise ships, as we are now transitioning to the point where everyone will be able to vacation with us."

"After two years of successfully working with us, the CDC has transitioned from enforcing protocols and policies for the cruise industry to suggestions and recommendations to be in line with the travel and tourism sector."

"That speaks to the great work we've done together as an industry."

A new Royal Caribbean cruise planner sale has begun with savings on pre-cruise purchases.

The new sale begins on July 29, and promises up to 35% onboard prices.

The sale runs between July 29, 2022 – August 3, 2022 and is valid on sailings departing between August 1, 2022 – May 31, 2023.

Here's a look at what sort of discounts you might be able to find:

Beverage: Up to 40% off

• Classic Soda Beverage Package: 30% Off onboard prices
• Classic Soda Beverage Package + VOOM Surf & Stream 1 Device: Over 30% Off onboard prices
• Spring Water Cans: 40% off onboard prices.
• San Benedetto Water Cans: 40% off onboard prices.
• Evian Water Bottles: 40% off onboard prices.
• Deluxe Beverage Package: 30% Off onboard prices
• Deluxe Beverage Package + VOOM Surf & Stream 1 Device: Discount varies by ship.
• Refreshment Package: Discount varies by ship.

Shore Excursions: Up to 25% off

• Shore Excursions: Discount varies by ship.

Internet: Up to 50% Off

• VOOM Surf + Stream Voyage Package 1, 2, 3, 4 Device(s): Discount varies by ship.
• VOOM Surf Voyage Package 1, 2, 3, 4 Device(s): Discount varies by ship.

 Dining: Up to 50% Off

• Unlimited Dining Package on 3N – 9N sailings: Discount varies by ship.

Gifts & Gear: Up to 20% Off

• Anniversary Decorations with Champagne
• Happy Birthday Decorations with Chocolate Cake & Strawberries
• Happy Birthday Decorations with Vanilla Cake & Strawberries
• Inky Beach Set
• Inky Beach Towel (TicTacToe)
• Inky Travel Set
• Red Wine and Cheese
• Royal Caribbean Beach Towel
• Strawberries with Champagne
• White Wine and Cheese

Photo Packages: Up to 70% off

• Photo Packages: From 5 - 100 Print and/or Digital Options: Discount varies by ship.
• Photo Package: Private Photo Session: Discount varies by ship.
• Photo Package: All Digital: Discount varies by ship. 

Casitas: Up to 20% Off

• Casita Packages: 20% Off Onboard Prices

Spa: Up to 30% Off

• Spa Packages: Discount varies by ship

To check if your sailing has this new offer available, log into the Cruise Planner on Royal Caribbean's web site look for any available offers. Keep in mind that not all sailings may see the sale applicable, nor are all offers significantly cheaper than previously posted.

If you spot a better discount on something you already pre-purchased, you should be able to cancel the purchase and then re-purchase the same item under this promotion.

More helpful information

• Should you buy pre-cruise purchases now or wait to buy it onboard?
• 45 ways to save money on a Royal Caribbean cruise
• How much should I budget for a cruise?

Four additional Royal Caribbean cruise ships scheduled to sail in 2023 has been moved elsewhere.

Guests that were booked on Brilliance of the Seas for her summer 2023 sailings received an email today that their sailings have been cancelled.

Royal Caribbean's original plan was for Brilliance of the Seas was to continue offering sailings departing from Tampa, Florida through April 29th, 2023 and begin its European season on May 15th, 2023, before making its way back to Tampa, Florida in November 2023.

The International Maritime Organization recently shared new speed regulations that Royal Caribbean must adhere to and as a result, they've repositioned some of ships for the upcoming 2023/2024 season.

Brilliance will now sail from Vancouver, British Columbia starting April 3rd, 2023 and Sydney, Australia beginning October 23rd, 2023.

Enchantment of the Seas will now take Brilliance's place in Florida and Europe and will offer similar itineraries.

The original plan for Enchantment of the Seas was to offer sailings departing from Vancouver, British Columbia on April 3rd, 2023 and Sydney, Australia on October 23rd, 2023.

Instead, Enchantment of the Seas will now continue offering sailings from Baltimore, Maryland through April 20th, 2023 and begin a European season with departures from Rome (Civitavecchia), Italy, Athens (Piraeus), Greece, and Venice (Ravenna), Italy starting May 15th, 2023, before making its way to Tampa, Florida in November 2023. 

Starting July 28th, 2022, we'll automatically move your clients to the new Enchantment of the Seas sailing departing on the same day as their original Brilliance of the Seas cruise. They'll receive like-for-like accommodations onboard Enchantment of the Seas, and their amenities will remain the same.

Guests that were booked onboard Enchantment or Brilliance of the Seas have 3 options:

• Automatically move to the Enchantment or Brilliance of the Seas sailing departing on the same day as their original cruise
  • Their new sailing will still offer the same beautiful ports as their original cruise, and it'll depart from the same destination. 
  • Move them to a like-for-like stateroom and their original stateroom category price will either be protected at their original cruise fare rate or reduced to the current cruise fare rate (whichever is lower).
• Re-book any other Royal Caribbean International sailing
  • Royal Caribbean will waive any non-refundable deposit change fees.
  • No price protection
• A full refund of any paid portion of your cruise fare (including non-refundable deposits) and any pre-paid amenities to the original form of payment within 14 business days

Guests have between now now and August 18th, 2022 to decide. If the person does nothing, they'll remain booked on the alternate Enchantment of the Seas sailing.

Voyager and Adventure of the Seas

Another swap was announced for Voyager of the Seas and Adventure of the Seas.

Due to the same International Maritime Organization speed regulations, Voyager of the Seas was to offer sailings departing from Fort Lauderdale, Florida through November 4th, 2023, and Orlando (Port Canaveral), Florida beginning November 10th, 2023. Instead, Voyager will now sail from Galveston, Texas beginning May 9th, 2023.

Adventure of the Seas will now take Voyager's place in Florida place and will offer similar itineraries.

Guests will be automatically moved to the new Adventure of the Seas sailing departing on the same day as your original Voyager of the Seas cruise. They'll receive like-for-like accommodations onboard Adventure of the Seas, and their amenities will remain the same.

Just like Brilliance and Enchantment, guests have the choice of the automatic move, a move to another ship, or a full refund.

Another ship moves away from Europe in 2023

Brilliance of the Seas is the second Royal Caribbean cruise ship to be redeployed away from Europe.

Earlier this month, Serenade of the Seas had her summer 2023 cruise season cancelled.

Serenade of the Seas was to offer sailings departing from Copenhagen, Denmark and Stockholm, Sweden starting May 21st, 2023. 

Instead, she'll be homeported in Florida in summer 2023.

Unlike Brilliance, Royal Caribbean cancelled Serenade's European season due to the war in Ukraine.

Top executives from the Royal Caribbean Group hit on a number of topics with investors during the company's second quarter earnings call on Thursday.

Each quarter, Royal Caribbean Group hosts a conference call with Wall Street analysts to go over the financial results and share more insight beyond the earnings sheet.

During the course of these calls, the public gets insight into what the company sees and that provides more visibility into the cruise business.

Here are the important tidbits from the hour-long call that cruise fans should be aware of as it relates to how the company is doing.

Over 100% capacity in Caribbean itineraries

Demand is so strong for cruises to the Caribbean right now, that ships are sailing completely full.

Royal Caribbean Group President and CEO, Jason Liberty, highlighted this fact at the opening of the call, "Our North American itineraries are now sailing at over 100% load factors, and we are building on this momentum as we expect to reach load factors in the mid-nineties in Q3 and then return to triple digit load factors globally by year end."

In cruise industry speak, "load factors" refers to how many passengers are onboard as a percentage of capacity.

Royal Caribbean Group Chief Financial Officer, Naftali Holtz, broke down the capacity in the second quarter based on region:

• Overall: 82% load factors, with June just about 90%
• North America: About 100%
  • Caribbean: 103%, with some ships reaching 107%
  • Northeast and West Coast (including Alaska): 90%
• Europe: 75% in June

Why do so many people want to cruise? Mr. Liberty sees strong trends driving it, "The combination of consumers strong propensity to experience and travel, accelerating demographic trends which are pulling in more bucket list and multigenerational travel, a very compelling value proposition and a strong preference for our brand is translating into strengthening demand."

You might be wondering how a ship can sail over 100% capacity, and the answer comes down to how many people are in a stateroom.

A ship has a 100% capacity based on double occupancy, but if you add third or fourth passengers into a cabin, then you get capacity exceeding 100%.

Cruise vs land based vacation

Royal Caribbean has always compared itself to land vacations (and not other cruise lines) as their primary competition. To that point, executives talked about how a cruise compares to a land vacation.

Mr. Liberty talked up the benefits of a cruise, "Cruising has always been an attractive value proposition when compared to land based vacation alternatives, and that is truer today than ever before."

Specifically, he thinks there is a larger than ever gap of value between cruises and land vacations, "There is a very healthy gap, and a larger gap today, than there has been with land based vacations."

"Now that these protocols are falling off, and we're operating and our guests who are incredible advocates of ours, are sharing their experiences and telling them that, you know, cruise is just like what it was pre-Covid that all of that is is kind of manifesting into this opportunity where people look at cruising and say, wow, there's a really good value proposition."

Read more: Royal Caribbean will drop Covid-19 testing for vaccinated cruisers on shorter sailings

Spending trends

If you've noticed higher prices for cruise extras, there's plenty of people who are still buying them.

Mr. Liberty talked about guest spending in his opening remarks, "Overall, we continue to see a financially healthy, highly engaged consumer with a strong hunger to dream and seek experiences. And they are willing to spend more than ever with us to create those memories."

"The 100,000 plus guests that we have on our ship every day, including the 125,000 guests that are currently on our ships today, have been spending at least 30% more on board our ships across all categories when compared to 2019."

"Approximately 60% of our guests book their on board activities before they ever stepped foot on our ships."

What Mr. Liberty is saying is that not only are a lot of people booking cruises, but a majority are booking add-ons before their cruise at a pace never seen before the pandemic. 

It's critical for Royal Caribbean Group's bottom line that passengers buy things in advance, because it tends to translate into more profit than someone who books onboard, "Every dollar a guest spends before the voyage, translates into about $0.70 more on the dollar when they sail with us and double the overall spending compared to other guests."

To exemplify this trend, Royal Caribbean International President and CEO Michael Bayley pointed out the other day someone spent "over $4,000" for a single over the water cabana at Perfect Day at CocoCay.

Read more: Guide to CocoCay Cabanas

"There's just a lot of demand for these experiences, as Jason said. And we've also seen this in Alaska, for example, with the product that we have in Alaska, that people just seem to be more willing to open their wallets and purchase these experiences."

No plans to offer stock

Carnival Cruise Corporation was treated poorly by the stock market when they announced a new round of stock offerings to drum up cash, but Royal Caribbean Group has no such plans.

Mr. Liberty spelled out that things are going well for his company, "Our business is clearly ramping up. We're generating cash flow after OpEx, after CapEx."

"We have been very thoughtful and very methodical about capital raising, balancing liquidity and minimizing dilution, especially relative to others."

"I would note that issuing equity. One is obviously it's a board decision. The bar is at exceptionally high for us to be issuing equity. We don't have any plans to issue equity."

He added that the company has a different focus than cash on hand, "What the board is really focused on is how do we get back to pre-Covid levels as soon as possible. And by that meaning earnings, meaning ROIC and getting our balance sheet back and leverage back to what it was pre-Covid."

Inflation is peaking

Royal Caribbean seeks inflation numbers peaking, which could mean lower costs in the coming months.

Mr. Liberty pointed to a few indicators that tell him, "inflation levels are peaking and that we would start seeing some relief in the coming months."

The company has two primary categories that are most affected by inflation: food and fuel.

"There are some initial positive signs with respect to inflation trends and our food basket. Our more recent month over month FNB (food and beverage) inflation indicator has increased at the slowest pace thus far in 2022."

Mr. Liberty also alluded to conversations with suppliers that things are getting better.

Very soon, fully vaccinated guests won't have to bother with a Covid test on cruises less than six nights.

Included in Royal Caribbean Group's second quarter financial results was a mention of a policy change related to Covid-19 testing.

Starting Aug. 8, testing will be required for unvaccinated guests on all voyages and for vaccinated guests only on voyages that are six nights or longer. 

Up until now, all guests were required to get a Covid-19 test completed prior to their cruise, regardless of vaccination status.

The change in policy is a result of the the CDC ending its Covid-19 Program for Cruise Ships.

No further details on the policy change were part of the press release, but we should expect more information in the coming days.

A major change in policy

Covid-19 testing has been a cornerstone of Royal Caribbean's health protocols since cruises restarted in 2021.

Up until now, vaccinated guests had to get either a PCR or rapid antigen test up to 2 days before sailing. Unvaccinated children had to get a PCR test only up to 3 days before sailing.

Virgin Voyages was the first cruise line in the United States to drop testing. Norwegian Cruise Line has also eliminated testing for vaccinated travelers for all cruises sailing from any port except in the U.S., Canada, or Piraeus, Greece.

Eliminating testing for vaccinated passengers removes a major obstacle to pre-cruise stress, as many cruisers were concerned they weren't sure they would actually be able to sail until just a couple days before their cruise.

Mr. Liberty said the change is a move to be more like other forms of leisure travel, such as theme parks, casinos, or air travel. 

"We are continuing to adapt our protocols to align more closely with how the rest of society and other travel and leisure businesses are operating."

"This means that we're transitioning to the point where everyone will be able to vacation with us while always working with our destination partners to meet their regulations."

Testing expected to drop for longer sailings soon

If you'd like to see Covid testing drop also for longer sailings, it sounds like Royal Caribbean has a plan for it.

Speaking to investors during an earnings call on Thursday, Mr. Liberty said, "We also anticipate in the not too distant future that pre-embarkation testing for longer duration voyages will be reduced."

He later elaborated on changing testing requirements for longer sailings, "We're starting off here by doing the five days or less, and we're going to look at that."

"I think our our expectation here, call it in the next 45 days or so. And, of course, following local requirements, which will somewhat dictate in some of our destinations what those testing requirements will be, that the majority of the testing requirements will will be lifted, especially around the majority of our of our deployment."

Less testing should translate into more bookings

As soon as Royal Caribbean Group announced the change, the company expects bookings to spike as a result.

Royal Caribbean International President and CEO Michael Bayley spoke about the reaction in the marketplace to dropping testing for short cruises, "this kind of change I think will be seen very positively."

"We've got some distributors who have been anxiously awaiting changes as long as along with many of our customers."

"One of the calculations that we have is about 40% of all of the folks that are sitting on the byline. So people who've been waiting for the protocols to change."

"I think this easement and this change is going to be viewed very positively. So we're expecting to see an increase in bookings literally starting today."

Unvaccinated passengers too?

Depending on how much you want to dissect Mr. Liberty's words, it sounds like the company is looking to someday allow unvaccinated passengers of all ages onboard.

When Mr. Liberty said, "This means that we're transitioning to the point where everyone will be able to vacation with us while always working with our destination partners to meet their regulations," it sounds like it could point to allowing unvaccinated cruisers onboard.

Up until now, only unvaccinated guests under the age of 12 have been allowed on Royal Caribbean ships.

Time will tell.

Reader reactions

As soon as news came out of the change, many cruisers shared their thoughts on the policy shift.

Certainly anyone with a short cruise booked was happy to see the change. Cinthya Rod wrote on the Royal Caribbean Blog Facebook page, "Great news! For our next cruise will be awesome."

Beth Coddington likes where the policy is headed, "That's a step in the right direction."

A number of cruisers questioned the logic of picking 6 nights instead of 7 nights.

Mark Middleton wrote, "What’s the difference, for testing purposes, between a six and seven night sailing? Many are seven nights so would be easier for that!"

Greg Crouch added, "Seeing as most Royal Caribbean cruises are 7 nights it's not an enormous difference for most of us. Test the unvaccinated and not boosted by all means."

Kelly Lene-Tarman shared her thoughts, "Instead of complaining about it only being 6 nights or less, or why not unvaccinated, etc., let's look at the positive in this. They are are doing this in small steps to see how it goes and if all works well, everyone will be welcome to cruise again!"

Royal Caribbean Group reported its second quarter 2022 earnings on Thursday.

While the company still had a net loss of half a billion dollars, operating cash flow and EBITDA were positive for the quarter.

Royal Caribbean Group saw this quarter as "meaningfully ahead" of their projections, due to accelerating and strong close-in demand, further improvement in onboard revenue and better cost performance. 

Royal Caribbean Group President and CEO Jason Liberty saw two important takeaways from the fiscal disclosure, "We reached two important milestones in our recovery this quarter – returning our entire global fleet back to operations and delivering positive operating cash flow and EBITDA."

He also sees strong demand for cruises, "Consumers' propensity to travel and cruise remains strong. We continue to see a robust and accelerating demand environment for cruising and on-board spend. Cruising remains a very attractive value proposition for vacationers, and today we have an opportunity to further close the value gap to other land-based vacation offerings."

The second quarter loss of $0.5 billion is better than the $1.3 billion loss in the second quarter of 2021.

Second quarter by the numbers

Load factors (meaning how full were the cruise ships) in the second quarter were 82% overall. June sailings reached almost 90%, with Caribbean itineraries averaging over 100%.

Based on the continued strength in consumer demand, the company expects load factors will average approximately 95% in the third quarter and increase to triple digits by year-end.

Total revenues per passenger cruise day were at record levels and up 4% as reported and 5% in constant currency versus the second quarter of 2019.

Booking volumes received in the second quarter for the back half of 2022 sailings remained significantly higher than booking volumes received in the second quarter of 2019 for the back half of 2019.

The second half of 2022 is booked below historical ranges but at higher prices than 2019, with and without future cruise credits (FCCs).

For 2023, all quarters are currently booked within historical ranges at record pricing.

For the third quarter of 2022 and based on current currency exchange rates, fuel rates and interest rates, the company expects to generate approximately $2.9 billion - $3.0 billion in Total Revenues.

In terms of reducing costs, Royal Caribbean Group gave credit to the delivery of new, more efficient ships and past sales of less efficient ships, as well as actions taken to improve operating costs and margins that continue to materialize as operations ramp up.

Changing Covid protocols

Mr. Liberty mentioned an upcoming change in Royal Caribbean's Covid-19 protocols based on the CDC announcement  it would end its Covid-19 program for cruise ships.

As part of their earnings statement, Mr. Liberty said, "Last week, the CDC ended its COVID-19 Program for Cruise Ships. Based on this change, we are continuing to adapt our protocols to align more closely with how the rest of society and other travel and leisure businesses are operating.

This means that we're transitioning to the point where everyone will be able to vacation with us while always working with our destination partners to meet their regulations. Starting Aug. 8, testing will be required for unvaccinated guests on all voyages and for vaccinated guests only on voyages that are six nights or longer. "

A look at bookings

Second quarter 2022 bookings averaged 30% above 2019 booking volumes for 2019 sailings in the corresponding period in the second quarter with even greater strength in July. 

An interesting trend is that guests are still booking their cruises much closer to their sail date compared previous years. 

In addition, cancellation activity has now returned to pre-Covid levels.

Second half 2022 sailings are booked at higher prices than 2019, both including and excluding FCCs.

Europe has seen sluggish results due to Covid and the Russia-Ukraine war. Europe makes up about a third of the overall capacity.

As of June 30, 2022, the Group's customer deposit balance was $4.2 billion, a record high for the company. This represents an increase of about $600 million over the previous quarter despite the significant quarter-over-quarter increase in revenue recognition. 

Approximately 20% of the customer deposit balance as of the end of the second quarter is related to FCCs. Approximately 60% of the FCC balance accumulated since the start of the pandemic has been redeemed. 

Silversea's new ship comes with two years of no payments

Earlier this month, Silversea purchased the Crystal Endeavor for $275 million, but won't make any payments on it for two years.

The transaction is fully financed through a 15-year unsecured term loan, guaranteed by the German export credit agency, Euler Hermes, and has no amortization payments in the first two years.

Silver Endeavour is scheduled to begin service winter 2022, spending its inaugural season in Antarctica starting November 2022.