RCL's Winning Strategy

Royal Caribbean Cruises (RCL) has navigated the post-pandemic landscape with remarkable success.

Shares for the cruise leader have surged by 65% YoY and stand nearly 50% above pre-COVID levels, distinguishing RCL as the only major cruise line to emerge stronger than before.

For reference, Carnival (CCL) and Norwegian Cruise Line Holdings (NCLH) remain significantly below their pre-pandemic valuations, with CCL down 60%.

Does LikeFolio data support this divergence?

Yes.

Royal Caribbean's outperformance can be attributed in part to its strategic financial management during the pandemic. Unlike its competitors, RCL issued the least amount of equity, allowing it to better manage its cash position without heavily diluting shareholder value.

But RCL is also making its customer's happier than ever.

Royal Caribbean consumer happiness levels and web traffic growth continue to best peers in the industry.

A consumer macro shift in favor of cruises and experiences has helped to drive demand across the board.

In 2024, cruise bookings and pricing reached record highs as consumers sought unique, high-value experiences.

RCL is capitalizing on this trend by offering shorter cruises to attract customers with limited vacation time.

RCL’s focus on appealing to younger travelers, who often prefer shorter trips, has paid off. Over half of RCL’s guests are millennials or younger, with 42% planning to take shorter vacations within the next year.

To meet growing demand, RCL has expanded its capacity with new ships, including the "Icon of the Seas," the world's largest cruise ship, and the "Utopia," the second largest.

Bottom Line: RCL’s strategy of listening to consumers and offering all-inclusive, flexible options has resonated well. Web visits remain high even after the seasonal peak booking period, supporting a positive outlook for the company.

Andy talked about this today in detail on the Schwab Network.