Royal Caribbean Group (RCL) Q1 FY26 earnings call: guidance and Q&A

Given Q2/Q3 yield headwinds from Europe, what gives confidence in Q4 yield growth, and would full-year yield guidance have been raised without these headwinds?

Jason Liberty confirmed the 'smiley face' yield trajectory, with Q2/Q3 impacted by Mediterranean/Mexico moderation. Q4 has less Mediterranean product, a strong book position at high rates, and easier comparisons, providing confidence. He stated that the moderation has 'turned the corner,' but limited inventory remains for Q2/Q3, preventing further price increases.

“I think that's exactly the way to think about it. So the year is a little bit of a smiley face in terms of yield, and that's really impacted, as we said, by our commentary on the Mediterranean, and to a lesser extent, the deployment to the West Coast of Mexico.”

asked by Steven Wieczynski · answered by Jason Liberty

Despite geopolitical issues and Caribbean capacity, what are the drivers of durable multi-year growth, and how does the company compare to pre-pandemic?

Jason Liberty highlighted the company's dominant position in the Caribbean with superior assets, Perfect Day, and Royal Beach Club. He noted a significant increase in repeat customers (40% vs. 33% historically) due to effective loyalty programs and technology. He emphasized that cruising is now mainstream, offering a 15%+ discount to land-based vacations, contributing to demand durability.

“The reality of it is we own the Caribbean, especially the Royal brand owns the Caribbean. We have the best assets in the world in the Caribbean. And of course, we have a Perfect Day, and now we have the Royal Beach Club.”

asked by Matthew Boss · answered by Jason Liberty

Could the company provide more detail on the remaining inventory for Q3 Mediterranean bookings, the extent of the impact from recent events, and how this is factored into guidance?

Jason Liberty clarified that despite a record wave period, early Mediterranean bookings were exceptionally strong but moderated due to Middle East activity and a temporary 40%+ spike in airfares (now 15%). He stated that the moderation has 'turned the corner,' but limited inventory remains for Q2/Q3. Naftali Holtz added that it was a moderation from a very strong trajectory, not a dip, and bookings were still good.

“I don't think I would describe we had a record wave period. So I wouldn't describe it as damage. I would probably describe it as the booking trends that we saw for the Mediterranean in the early parts of WAVE and when we gave guidance and even to the point where we -- of course, we put all that into the 10-K, all of our knowledge was just at levels that we had not seen before.”

asked by Brandt Montour · answered by Jason Liberty

Details on the ramp-up of Perfect Day Mexico (late 2027/early 2028) and its long-term structural yield growth opportunity in the Western Caribbean, particularly for the Galveston market.

Michael Bayley confirmed a soft opening for Perfect Day Mexico in Q4 2027, with full opening in 2028. He expects it to 'own the Texas market' due to its size and lower penetration compared to Florida, especially when combined with Icon class ships. Jason Liberty added that it will expand the drivable market catchment area, particularly west of the Mississippi.

“We literally will have the biggest, best, most attractive destination experience for that whole Gulf region. And if you look at the opportunity that exists in Texas, it's a market which is much larger than Florida and its penetration rate is much lower than Florida.”

asked by Lizzie Dove · answered by Michael Bayley

What are the implications of the co-branded credit card, loyalty program changes, and increased repeat guests on net yield growth, such as booking further ahead or increased onboard spend?

Jason Liberty explained that repeat guests tend to sail more often and spend about 25% more than new-to-cruise customers. The loyalty initiatives aim to transition guests from a 'vacation of a lifetime to a lifetime of vacations,' keeping them within the ecosystem. Naftali Holtz added that this strategy enhances customer lifetime value through higher frequency, shorter durations between cruises, increased spend, and lower acquisition costs.

“when we look at our repeat guests, one, they tend to sell on us more often. That's not a surprise. But they also tend to spend about 25% more than new-to-cruise or first to brand.”

asked by Xian Siew Hew Sam · answered by Jason Liberty

How does Royal Caribbean manage new fuel hedges in a high-cost environment, and at what level of capacity growth would net cruise costs excluding fuel (NCCx fuel) become more inflationary (e.g., 2-3% range)?

Naftali Holtz stated they methodically add hedges to manage volatility, with 60% coverage for 2026, less than 50% for 2027, and 25% for 2028. Regarding costs, he emphasized maintaining a spread between yield and cost growth, focusing on efficiency through technology and supply chain improvements without compromising guest experience. Jason Liberty added that continuous capacity growth requires constant scaling of operations.

“we continue to methodically add hedges and make sure that we manage volatility through the course of a longer period of time.”

asked by Andrew Didora · answered by Naftali Holtz

Is the company making itinerary changes due to higher fuel costs? Are the NCCx fuel improvements driven by deferrals or sustained efficiencies?

Naftali Holtz firmly stated that no itinerary changes are being made due to higher fuel costs, as itineraries are a key part of the guest experience. He clarified that cost improvements are from finding sustained, more efficient ways to operate the business, such as investing in energy efficiency and better technology utilization, rather than deferring initiatives.

“When we talk about guest experience, our itineraries are the key part of it. And so the answer is absolutely not. We have great ship experiences. We have amazing destinations, and we want to maintain that quality of the experience.”

asked by Sharon Zackfia · answered by Naftali Holtz