Royal Caribbean Cruises ((RCL)) has held its Q3 earnings call. Read on for the main highlights of the call.
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Royal Caribbean Cruises’ recent earnings call painted a picture of robust financial health, underscored by significant growth in earnings per share and strategic expansion of exclusive destinations. While the company faced challenges such as adverse weather impacts and increased competition in the Caribbean, the overall sentiment was positive, with the benefits slightly outweighing the hurdles.
Strong Financial Performance
Royal Caribbean reported impressive financial results for the third quarter of 2025, with adjusted earnings per share reaching $5.75, marking an 11% increase compared to the previous year. The company anticipates full-year adjusted earnings per share to be between $15.58 and $15.63, which represents a remarkable 32% growth year-over-year.
Expansion of Exclusive Destinations
The company announced the addition of the Royal Beach Club in Santorini, further expanding its portfolio of exclusive destinations. This move is part of a broader strategy to increase the number of exclusive land-based destinations from two to eight by 2028, enhancing the unique experiences offered to guests.
Record Pre-Cruise Onboard Revenue
Royal Caribbean achieved a record in pre-cruise onboard revenue during the quarter, with nearly 90% of purchases completed through digital channels. This highlights the company’s successful digital engagement strategies and the growing trend of customers planning and purchasing experiences ahead of their cruises.
High Demand and Loyalty
The demand for Royal Caribbean’s offerings remains robust, with bookings for 2026 coming in at higher average per diems than the previous year. The introduction of the Celebrity River was met with exceptional enthusiasm, selling out all initially available deployments almost immediately, reflecting strong customer loyalty and interest.
Investment in Technology and AI
The company is making significant investments in technology and artificial intelligence to enhance customer engagement and drive revenue growth. E-commerce visits and conversion rates have increased by double digits compared to last year, showcasing the effectiveness of these technological advancements.
Adverse Weather Impacts
The fourth quarter outlook has been tempered by adverse weather conditions and the extended closure of Labadee, resulting in a $0.05 impact on earnings. Despite these setbacks, the company remains optimistic about its overall performance.
Challenges with Capacity Growth
Increased capacity in the Caribbean has led to heightened competition and promotional activities, posing challenges in maintaining yield growth. While these challenges are manageable, they require strategic efforts to sustain profitability in the region.
Increased Costs
Although net cruise costs, excluding fuel, are expected to decline slightly, the company faces headwinds from increased EU ETS compliance and investments in new destinations. These factors contribute to the complexity of managing overall cost structures.
Forward-Looking Guidance
Royal Caribbean’s guidance remains optimistic, with a projected 2.4% growth in net yields for the third quarter, driven by strong demand and high guest satisfaction. The company expects a 10% increase in fourth-quarter capacity and yield growth between 2.2% and 2.7%. For the full year, net yield is anticipated to grow between 3.5% and 4%, surpassing initial expectations. Looking ahead to 2026, the company forecasts moderate yield growth and aims for earnings with a $17 handle, supported by a 6% increase in capacity and strategic investments, despite potential cost challenges.
In summary, Royal Caribbean Cruises’ earnings call reflected a generally positive outlook, with strong financial performance and strategic expansions leading the way. While challenges such as adverse weather and increased competition in the Caribbean present obstacles, the company’s forward-looking guidance suggests continued growth and resilience in the face of these challenges.