'This past quarter was really just about us beginning to ramp up our ships': Royal Caribbean CFO on Q2 earnings

Jason Liberty, Royal Caribbean CFO joined Yahoo Finance Live to break down Royal Caribbean's latest earnings report.

Video transcript

SEANA SMITH: Royal Caribbean out with earnings this morning, posting a wider than expected loss. You can see it on your screen right now-- disappointing revenue. The stock off 2.5%, but some good news in the quarter-- 50% increase in bookings compared with last quarter. We want to talk all about this Jason Liberty. He's the CFO of Royal Caribbean.

And, Jason, that 50% in bookings quarter-over-quarter certainly a strong sign here for your company going forward. Just what's your assessment of where things stand today with your business?

JASON LIBERTY: Yeah, sure, great. Well, first, you know, it's really great to be here. And we are really excited because it was only a few months ago that we only had a couple of ships operating. Today, over half our fleet is operating. And by the end of the year, we expect to have over 80% of our fleet operating.

What we clearly see is, you know, this past quarter was really just about us beginning to ramp up our ships. And as we look forward, what we see is really strong demand trends, especially as we get into 2022. Rates are up, our volumes are very competitive to what we saw pre-COVID, and it's just very clear to us that our guests and our customers are looking to get back to enjoy these incredible vacations that our five brands deliver for them each and every day.

So we're really excited and we think that, you know, the waters are more predictable in front of us. And we also think that it's clear that the consumer is ready to travel.

ADAM SHAPIRO: Are you having any trouble recruiting the men and women you need to staff the ships? We keep hearing about the labor shortages, and I know that in some cases, some of the people who do staff those ships are not, perhaps, US citizens. But what does that look like for the cruise line going forward?

JASON LIBERTY: Yeah. One issue we don't have is generating demand for our crew to come back to our ships. You know, I've had the opportunity over the past several weeks and months to be on our ships as our ships are coming back up into service. And there is plenty of demand for our crew to come back. They are elated to be back on, and getting ready, and many cases delivering what they do best, which is delivering these incredible vacation experiences to our guests.

So we really haven't been challenged by that. I mean, there's always been some on the overall logistics side of things getting our crew here, and vaccinated, and so forth. But in terms of our ability to attract the crew, it's been no issue at all.

SEANA SMITH: Give us a look at-- or an inside look at the consumers and the spending trends that you're seeing. I guess compared to 2019 levels, are the travelers on your cruise ships-- are they spending more or less than they were two years ago?

JASON LIBERTY: Yeah, so over the past-- really since the beginning of the year, we've had about 135,000 guests travel with us. This past quarter, we had about 35,000 guests travel on our ships. And one thing that's really clear is that there is strong demand and willingness to spend. In the second quarter, we saw our guests spend almost twice what they typically spend in historical and pre-COVID periods of time.

Some of that is on our incredible islands like CocoCay and Perfect Day, which you're showing here on the screen. And some of that is in the spa, and in our retail shops, and so forth. So what we clearly see is they've been saving, they have money to spend, there is really built-up demand for them to be on our ships and experience our brands and assets, which is what they were used to pre-COVID.

ADAM SHAPIRO: Are they loyal customers returning? Or are they new customers? Are you actually grabbing a whole new set of people who will cruise into the future?

JASON LIBERTY: It's a little bit of a mix. Certainly right out the gate, our loyalty guests who are just so incredible and have stayed with us through this journey are certainly a greater percentage of the mix here in the early days. But what we are seeing is a quick resurgence of the new to cruise coming on for that weekend getaway or just spending four or five days on one of our ships. So the mix is coming back into balance where basically a third of our guests are new to cruise, a third of our guests are loyal, and a third of our guests are first to brand. And when that's kind of in concert, we're able to drive very strong pricing in our model.

SEANA SMITH: Jason, what's your view just on-- we've heard more and more companies beginning to mandate vaccinations for their workers. You're in a business where you're consumer-facing. Many of your employees have face to face interaction with the travelers. What's your view or what's your stance on potentially mandating vaccines here in the short-term?

JASON LIBERTY: Well, the health and safety of our crew and our guests is really a number one priority for us-- has been a number one priority for us. And so we for some time have really mandated that our crew are fully vaccinated on our ships. And so, you know, these ships-- having half of our fleet back up and running are filled with crew members that have been fully vaccinated. We believe the combination of vaccination as well as the protocols that we developed with our Healthy Sale panel have really driven a situation where you're much safer on our ship than you are at land. And we've been proving that as we've been operating and having very, very few COVID cases.

ADAM SHAPIRO: I see the University of Miami helmet behind you, and I'm thinking, it's easy to get to Coral Gables. But I got to ask you-- some of the destinations outside the US, are the governments that are so dependent upon the tourism and the tourists you bring them, are they being cooperative in the reopening? Or are you facing some hurdles there?

JASON LIBERTY: No, exceptionally helpful in this process. You know, we have ships turning in Greece, we have ships turning in the UK. That has all come to be through the leadership of these different governments in making sure that, you know, our crew is vaccinated, we have access to the ports, we have access to the destinations.

So everybody in our ecosystem is very eager for us to return. And we're all working together to make sure, one, that the guest experience is as we would expect it to be, and it's also being done in a healthy and safe way.

SEANA SMITH: Jason, great to speak with you-- Jason Liberty, CFO of Royal Caribbean. We hope to have you back here on Yahoo Finance next quarter.