Spending money during a period where your business faces massive struggles takes considerable conviction. If you don't do that, however, you remove the catalysts to engineer a turnaround.
Most executives probably know that, but it's not easy to spend billions of dollars when your industry faces a very uncertain near-term economic future.
That's exactly what Royal Caribbean's leadership team has decided to do during the pandemic.
Despite losing $2.8 billion through nine months of 2022 and $5.8 billion in 2020, the cruise line has continued to invest in its future.
That investment comes even as the company does not know exactly when the pandemic, which continues to hobble its operations, will become an unpleasant memory.
"Omicron is having a big short-term impact on everyone, but many observers see this as a major step towards Covid-19 becoming endemic rather than epidemic," Chairman Richard Fain said in a news release.
Hoping for endemic instead of epidemic counts as optimism after the past two or so years that Fain's company and the broader industry have experienced.
It's a small light-at-the-end-of-the-tunnel comment that shows that the Miami company's commitment to investing in its future will pay off for investors.
RCL Goes Southern on Wonder of the Seas
While Royal Caribbean did see its contract to buy the Grand Lucayan resort in Freeport, Bahamas, fall apart, it remains hopeful that it can still make a deal.
But even without that project, the cruise line has continued to make major capital investments. That includes Wonder of the Seas, the fifth ship in the company's massive Oasis-class ship line.
Wonder of the Seas has its inaugural sailing in March 2022. And in addition to all the bells and whistles offered by its sister ships, it will also have a new restaurant concept, the Mason Jar Southern Restaurant & Bar, among its 20-plus onboard dining options.
"Where southern comfort food meets Royal Caribbean's hospitality, the Mason Jar invites guests to share a meal, drinks, and memories in a warm, casual setting," the company said in a news release.
"Every detail serves up southern charm in the new specialty restaurant, and setting the scene is the farmhouse-style and rustic decor, live country music, even a cozy porch decked out with a swing for lounging and a great photo op, and a dedicated bar at the center of it all."
The new eatery will serve up a number of "southern staples and new twists on classics" including savory johnnycakes topped with barbeque pulled pork, fried green tomatoes, authentic southern fried chicken, crab beignets served with lump crab dip, and shrimp and grits. In addition, there will also be dessert options from traditional pies to spiked floats and shakes as well as "a robust collection of more than a dozen American whiskeys and a lineup of southern libations, such as the classic mint julep."
While the new ship is the headline story, adding a new dining concept gives Royal Caribbean's regular customers an added reason to sail on the ship beyond it simply being new. That's important because the pricing for cruises on the company's newest ships tends to be higher than it is for sailing on older vessels.
Wonder of the Seas will have multiple homeports -- Fort Lauderdale, Fla., (March-April); Barcelona and Rome (April-October); and Port Canaveral, Fla., (year-round, starting November).
Royal Caribbean Has Other Investments
Before the pandemic hit, Royal Caribbean had finished the revamp of its Bahamas private Island, Coco Cay.
Those changes turned the island from a beach that passengers reached via tenders (smaller ships that ferry people from cruise ships) to a destination with a water park, upscale beach club, and the largest pool in the Caribbean with a dock so two cruise ships can "park" at the same time. The dock enables passengers to walk from the pier, eliminating the need for tenders.
The company has not stopped developing Coco Cay and has been working on an adults-only area of the private island, although few details have been made public.
Royal Caribbean has also begun work on what it's calling a Beach Club in Nassau. That project could be finished by May 2023, according to Matt Hochberg of the Royal Caribbean Blog (which has no affiliation with Royal Caribbean). He shared details of the project in a recent post:
The proposed project will include the development of Paradise Beach and Colonial Beach to create an arrivals area, family zone, water sports center, food and beverage services, and swimming pool and back of house areas in support of a world-class beach experience.
It is anticipated that with the payment of an entrance fee, the experience will include access to the Royal Beach Club, lunch, and the rental of a beach chair. For an additional fee, guests will be able to purchase alcohol and sodas, a cabana, day bed, clamshell, and participate in watersports and local tours.
This investment could take Nassau, a location for which many frequent cruisers consider not worth getting off the ship, into a desired destination. That could be a major differentiator between Royal Caribbean and rivals Carnival (CCL) - Get Carnival Corporation Report and Norwegian Cruise Line (NCLH) - Get Norwegian Cruise Line Holdings Ltd. Report. All three cruise lines stop at Nassau often because it can accommodate multiple ships, which most other destinations cannot.
In addition to the Nassau investment, Royal Caribbean also has a new class of ship coming, the Icon class.
The first ship in the line, the aptly-named Icon of the Seas, will have its first sailing in fall 2023. Icon will be "the cruise line’s first of three ships to be powered by [liquefied natural gas].
"LNG and the state-of-the-art ship’s additional environmentally friendly applications, such as shore power connection, will boost energy efficiencies and reduce carbon footprint."