How Royal Caribbean (RCL) Makes Money

Asia/Pacific and North America generate the most cruise itinerary revenue

Royal Caribbean Group (RCL) is a global cruise company founded in 1968. The company operates three worldwide cruise brands: Royal Caribbean International, Celebrity Cruises, and Silversea Cruises. It also owns a 50% joint venture in TUI Cruises GmbH, which operates German cruise brands TUI Cruises and Hapag Lloyd Cruises. All together, Royal Caribbean operated roughly 60 ships that serve 1,000 destinations globally as of Dec. 31, 2020. The company previously operated a fourth cruise brand, Azamara, which it sold in March 2021.

Royal Caribbean's direct competitors include rivals in the cruise industry such as Carnival Corp. (CCL) and Norwegian Cruise Line Holdings Ltd. (NCLH). To some extent, the company also competes against companies outside of the cruise industry but within the broader travel and tourism industry, as customers select how to spend limited vacation time and funds.

Key Takeaways

  • Royal Caribbean operates three global cruise brands, including Royal Caribbean International, Celebrity Cruises, and Silversea Cruises.
  • The company's Asia/Pacific geographic region and North America region represent the largest share of revenue by geography.
  • As of Aug. 4, 2021, the company was operating at about 42% of its capacity after suspending cruise operations in March 2020 due to the COVID-19 pandemic.
  • Royal Caribbean expects to expand to 80% of cruise capacity by the end of 2021.

Royal Caribbean Cruises' Financials

The global cruise industry was heavily impacted by the COVID-19 pandemic, with many companies shutting down operations for months at a time. Royal Caribbean suspended its cruise operations in March 2020 and restarted those operations in phases, although the process has been slow. By Aug. 31, 2021, the company expected to resume sailing or announce intention to resume sailing for 36 of its 60 ships.

Due to this significant disruption to its business, Royal Caribbean has posted substantial losses during the pandemic. For Q2 2021, ended June 30, the company reported a net loss of $1.3 billion, narrower than losses of $1.6 billion for Q2 2020. Total revenues for Q2 2021 were $50.9 million, down sharply from total revenues of $175.6 million for Q2 2020. The $50.9 million revenue was comprised of $22.8 million in passenger ticket revenues and $28.1 million in onboard and other revenues. Both of these figures also fell YOY, with passenger ticket revenue declining more sharply.

Royal Caribbean Cruises' Business Segments

Royal Caribbean's separate cruise brands maintain similar itineraries and have related cost and revenue components, as well as similar economic characteristics, types of consumers, regulatory environments, and other factors. For this reason, the company aggregates these operations into a single reportable segment. Nonetheless, Royal Caribbean provides a breakdown of total revenue according to itinerary across four geographic regions: North America, Asia/Pacific, Europe, and Other Regions (the latter includes South America and Latin America). The company also reports Other Revenues, which includes for all itineraries primarily cancellation fees, vacation protection insurance, tours and fees for operating some port facilities. The company did not provide a breakdown of profits for each of these areas.

North America

Royal Caribbean's North America itineraries include cruise itineraries in the U.S., Canada, Mexico, and the Caribbean. For Q2 2021, Royal Caribbean reported $11.6 million in revenue for its North America cruise itineraries, or about 22.8% of total revenues. This is down about 54.5% YOY compared to North America revenues for Q2 2020. For Q2 2021, North America represented the second-largest geographic region by revenue.


The Asia/Pacific region includes itineraries in Southeast Asia, East Asia, South Asia, and Oceania. These itineraries comprise cruises in Singapore, Thailand, the Philippines, China, Japan, India, Australia, and other nearby countries. Asia/Pacific itineraries generated the most revenue of any geographic region and were also the top overall revenue category for Q2 2021. The company reported $19.3 million in Asia/Pacific revenues for the quarter, about 37.9% of total quarterly revenues. This region also had the smallest YOY revenue decline of any of Royal Caribbean's geographic regions, falling by about 50%.


Royal Caribbean's Europe category includes cruises in the Nordic countries, Germany, France, Italy, Spain, and the U.K. For Q2 2021 it was the second-smallest geographic region by revenue, with $3.8 million or 7.4% of total revenues. Royal Caribbean did not report any revenue for Europe for Q2 2020, illustrating the devastating impact of the pandemic on the cruise business in that region.

Other Regions

Royal Caribbean includes cruises from South and Latin American countries in its Other Regions category. This category reported the smallest share of revenue for Q2 2021 at just $1.9 million for the quarter, or 3.7% of total revenues. It also declined by the largest margin YOY, dropping by 97.4% YOY.

Other Revenues

Besides itinerary revenue, Royal Caribbean also reports a variety of other revenues that it aggregates under its "Other Revenues" category. As mentioned, these include passenger cancellation fees, vacation protection insurance, pre- and post-cruise tours, fees for operating port facilities, and other services that Royal Caribbean performs for affiliates. Other Revenues for Q2 2021 were $14.3 million, or 28.1% of total revenues for the quarter. This category declined by 62.8% YOY, the second-largest rate of decline.

Royal Caribbean's Recent Developments

Royal Caribbean's resumption of normal operations has been slow since the company suspended cruises in March 2020. In its most recent operational update, provided on Aug. 4, 2021, the company announced it was operating 29 ships, or 42% of capacity. It said it planned to operate 36 ships, or more than 60% of capacity, by the end of the month, and 80% of capacity by the end of 2021. Royal Caribbean said it saw "very positive" customer responses to announcements of resumed sailing or intention to resume sailing as a result of pent-up demand for cruising. The company said customer bookings were up sharply.

As it has resumed operations, the company has also unveiled new ships and offerings to entice customers who may otherwise be hesitant due to the pandemic. On Sept. 15, Royal Caribbean announced the world's largest cruise ship, Wonder of the Seas, which will debut in March 2022 with cruises in the U.S. and Europe.

The company also announced in Sept. 2021 a new ship and celebrity partnerships for its Celebrity Cruises brand. The Celebrity Beyond will feature a restaurant featuring Michelin-starred chef Daniel Boulud, interior designs concept by Nate Berkus, and other features. Celebrity Beyond will depart on a maiden voyage in April 2022.

Article Sources
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  1. Royal Caribbean Cruises Ltd. "Form 10-Q for the quarterly period ended June 30, 2021," Page 7. Accessed Oct. 2, 2021.

  2. Royal Caribbean Cruises Ltd. "Form 10-K for the fiscal year ended Dec. 31, 2020," Page 2. Accessed Oct. 2, 2021.

  3. Royal Caribbean Cruises Ltd. "Form 10-Q for the quarterly period ended June 30, 2021," Page 6. Accessed Oct. 2, 2021.

  4. Royal Caribbean Cruises Ltd. "Form 10-Q for the quarterly period ended June 30, 2021," Page 1. Accessed Oct. 2, 2021.

  5. Royal Caribbean Cruises Ltd. "Form 10-K for the fiscal year ended Dec. 31, 2020," Page 16. Accessed Oct. 2, 2021.

  6. Royal Caribbean Cruises Ltd. "Form 10-Q for the quarterly period ended June 30, 2021," Page 9. Accessed Oct. 2, 2021.


  8. Royal Caribbean Cruises Ltd. "WORLD'S NEWEST WONDER SETS COURSE FOR U.S. AND EUROPE." Accessed Oct. 2, 2021.

  9. Royal Caribbean Cruises Ltd. "CELEBRITY CRUISES IS PUTTING IT ALL ON THE TABLE." Accessed Oct. 2, 2021.

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