- Royal Caribbean reported an occupancy rate of 36.4%, well below an already-low 48.5% predicted by analysts.
- The company's occupancy rate is a measure of the amount of available passenger capacity, or cabins, being utilized and is a key measure of Royal Caribbean's overall business.
- Royal Caribbean expects that 50 of its 61 ships will have returned to service by the end of 2021.
- The company announced that sailings for 2022 are booked within historical ranges and at higher prices than 2019.
|Royal Caribbean Earnings Results|
|Metric||Beat/Miss/Match||Reported Value||Analysts' Prediction|
|Adjusted Earnings Per Share||Miss||-$5.59||-$4.15|
|Occupancy Rate (%)||Miss||36.4||48.5|
Source: Predictions based on analysts' consensus from Visible Alpha
Royal Caribbean (RCL) Financial Results: Analysis
Royal Caribbean Cruises Ltd. (RCL) reported Q3 FY 2021 results that came up short of analyst predictions on several fronts. Net losses widened year over year (YOY) as adjusted losses per share narrowed but not by as much as analysts predicted. The company reported adjusted losses per share of $5.59 relative to $6.29 for the prior-year quarter. Revenue also came in below consensus estimates. Royal Caribbean reported $457.0 million in revenue, a significant improvement relative to -$33.7 million in revenue for Q3 FY 2020 but still lower than a predicted $652.8 million.
Royal Caribbean highlighted in its earnings release its work to restart its vessel operations, although booking progress has been delayed by the spread of the delta variant of COVID-19. The company announced that it anticipates 50 of its 61 ships to have returned to service by the end of 2021, representing nearly 100% of core itineraries. Sailings for 2022 have been booked within historical ranges, indicating that continued recovery may be in store.
RCL Occupancy Rates
Royal Caribbean's occupancy rate, or occupancy percentage, which the company refers to simply as "occupancy," is a measure of the amount of available passenger occupancy in use. The measure of capacity assumes double occupancy per cabin. Because cabins have sometimes historically exceeded that rate, Royal Caribbean's occupancy rates prior to the pandemic tended to range above 100%.
Royal Caribbean's occupancy for Q3 FY 2021 likewise disappointed. The company reported occupancy of 36.4% YOY, while analysts had predicted 48.5% for the quarter. Both represent a sharp decline from 100.0% occupancy for the prior-year quarter.
RCL Outlook and Stock Performance
Royal Caribbean did not provide forward guidance in its earnings release. Shares of Royal Caribbean stock gained about 0.4% immediately following the release. The company's stock has outperformed the broader market in the past year, providing one-year trailing total returns of 58.6% as compared with 40.5% for the S&P 500.
Royal Caribbean Group Ltd. "Royal Caribbean Group Reports Third Quarter 2021 Results and Provides Updates on Its Return to Service." Accessed Oct. 29, 2021.
Visible Alpha. "Visible Alpha." Accessed Oct. 29, 2021.
TradingView. "Price Chart for RCL and S&P 500." Accessed Oct. 29, 2021.