- Royal Caribbean reported an occupancy rate of 59.3%, falling short of analysts' expectations.
- The occupancy rate is a measure of the amount of available passenger capacity, or cabins, being utilized.
- The omicron variant led to service disruptions and cancelled cruises during the fourth quarter.
|Royal Caribbean Earnings Results|
|Metric||Beat/Miss/Match||Reported Value||Analysts' Prediction|
Source: Predictions based on analysts' consensus from Visible Alpha
Royal Caribbean (RCL) Financial Results: Analysis
Royal Caribbean Cruises Ltd. (RCL) reported Q4 FY 2021 earnings that missed analyst expectations. The company posted a bigger adjusted loss per share than expected. It marked the eighth straight quarter of adjusted losses per share. Revenue for the quarter fell below analyst estimates but was up nearly 29-fold as it rebounded off of the previous year's pandemic-depressed lows. Royal Caribbean's occupancy rate came in below expectations.
The company's shares were down nearly 2% in pre-market trading. Over the past year, Royal Caribbean's shares have provided a total return of 14.3%, below the S&P 500's total return of 16.9%.
RCL Occupancy Rate
Royal Caribbean's occupancy rate, at 59.3% for the fourth quarter, is a significant improvement from the year-ago quarter's 42.9% and the third quarter's 36.4%. The occupancy rate, which the company refers to simply as "occupancy," is a key metric gauging the amount of available passenger capacity being utilized. It is calculated by dividing passenger cruise days by the available passenger capacity, as measured by available passenger cruise days (APCD). Passenger cruise days is a metric calculated by taking the number of passengers carried during the measurement period and multiplying that by the number of days of the passengers' respective cruises. The measure of capacity assumes double occupancy per cabin, which is why occupancy rates greater than 100% are possible—sometimes cabins are occupied by more than two passengers.
While the higher occupancy rate is a sign that the company is recovering from the pandemic shock that essentially brought the cruise line industry to a halt, the recovery is far from over, as the company's occupancy rate is still well below levels reached prior to the pandemic.
During the quarter, Royal Caribbean said that the omicron variant of the coronavirus created short-term operational challenges, leading to service disruptions and some cancelled cruises. It has also had an adverse impact on bookings for the first half of 2022. The company added that, because of the challenges created by omicron, its return to profitability would likely be delayed by a few months. But omicron is not expected to have a longer-term impact on demand for cruising.
Royal Caribbean said that 12 of its ships returned to service during the fourth quarter. By the end of 2021, 85% of its capacity had returned to service. The company expects 53 of its 62 ships to be brought back into service by the end of the first quarter of FY 2022. It plans to bring the rest of its fleet back into operations in 2022.
Royal Caribbean's next earnings report (for Q1 FY 2022) is expected to be released on April 27, 2022.
Royal Caribbean Cruises Ltd. "Royal Caribbean Group Reports on 2021 Results, Provides Business Update." Accessed Feb. 4, 2022.
Visible Alpha. "Financial Data." Accessed Feb. 4, 2022.
TradingView. "Price Chart: RCL and S&P 500." Accessed Feb. 4, 2022.
Royal Caribbean Cruises Ltd. "Form 10-K for the Fiscal Year Ended Dec. 31, 2020," Pages 53 & 54. Accessed Feb. 4, 2022.
Yahoo! Finance. "Earnings Calendar: RCL." Accessed Feb. 4, 2022.