Is it even possible that companies like Royal Caribbean Cruises RCL can it ever go back to smooth sailing?
Before 2020, the company was posting steadily increasing earnings. Then, of course, it hit that iceberg. It reported a loss of $18.31 per share in 2020, and an even bigger loss of $19.19 per share last year.
This year, analysts expect a much narrower loss of $6.81 per share. The company is expected to be profitable next year.
Revenue has improved in recent quarters, and the company has even beaten earnings estimates in the last two, MarketBeat data shows.
Not only did the reality of the Covid shutdowns destroy business, but you could argue whether the sentiment towards the virus and its spread in relatively close quarters continues to hurt the industry. In the early days of the pandemic, there were headlines about cruise ship passengers being quarantined because of the virus. It’s possible that some potential cruise customers will be intimidated.
However, on the other hand, carnival CCL Shares rose 4.74% in August after the company reported a sharp rise in bookings after it lifted some Covid-era restrictions. Like Royal Caribbean, Carnival has also seen sharp revenue growth in recent quarters.
Balancing security and growth
Yes, it’s tempting these days to make this a political argument, since it’s all about Covid. But for investors in cruise companies, customer safety is absolutely a concern that affects revenue and profit growth. So it’s a matter of health and economics.
But cruise operators know they need to do more to attract customers, as well as make ships more attractive to new customers and simply keep up with 21st century technology.
To that end, Royal Caribbean is forming a partnership with Elon Musk’s private SpaceX to include Starlink satellite broadband on its ships. The cruise line tested the service on its Freedom of the Seas ship, which sails for three or four days out of Miami.
Starlink’s official launch is September 5, although on its Twitter account, Royal Caribbean is not yet providing specifics about pricing to users. In response to questions, Royal Caribbean’s Twitter account has repeatedly tweeted: “We are working on deploying Starlink on Royal Caribbean International, Celebrity Cruises and Silversea Cruises ships, with full installment expected by the end of the quarter first 2023. As we move forward, we will provide more updates and information.”
In a statement announcing the partnership, Royal Caribbean CEO Jason Liberty said: “Our goal as a company is to provide the best vacation experiences for our guests responsibly, and this new offering, which is the largest deployment Starlink’s first public high-speed Internet in the cruise industry to date demonstrates our commitment to this goal. This technology will provide game-changing Internet connectivity on our ships, enhancing the cruise experience for guests and crew alike. It will improve and enable more high-bandwidth activities such as video streaming as well as activities such as video calling.”
Keeping up with customer demand
With travelers expecting the same connectivity they would find on a land holiday, the move isn’t really about adding a luxury, but keeping pace with customer demand. It also means that rival cruise operators will have to add the same level of connectivity.
Technology isn’t the only area where the company, like its industry peers, is continuing to expand.
Royal Caribbean is in the final months of completing a $125 million cruise terminal in Galveston, Texas. The 170,000-square-foot building is slated to open in November. According to Royal Caribbean, the opening “will mark the first time Galveston welcomes the world’s largest cruise ships, starting with the Oasis Class cruise line’s Allure of the Seas.
The terminal will have the latest technology, including mobile check-in and facial recognition. It also features an environmentally sustainable design.
Continued investment and innovation bode well for the future of the industry, especially as Covid fears continue to ease.
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