Royal Caribbean on a roll in Q2

Royal Caribbean Cruises Ltd. said its second quarter was a
financial home run, with net income rising to $369.5 million, a 61% increase
compared to last year.

RCCL increased its guidance for full-year net income by $65
million to a range of between $1.58 billion and $1.6 billion. About half the
increase was due to favorable currency movement and the other half from
stronger business trends.

“We are having an extraordinarily good year in an
extraordinarily strong market,” chairman Richard Fain said in a conference
call with Wall Street analysts.

Revenue for the quarter rose to $2.2 billion from $2.1
billion.

Company officials said they are benefitting from a virtuous
cycle in which stronger bookings lead to higher prices, as inventory levels
continue to decline. RCCL is 95% booked for 2017 at this point in the year and
the booking curve, a measure of the number of days before departure the average
booking is made, has never been longer.

Load factors and average price per day are both higher than
the previous year for the next four quarters, CFO Jason Liberty said.

Fain said RCCL is reaping the benefits of a price integrity
program introduced in 2015 that allowed some cabins to sail empty rather than
at deep last-minute discounts. He said that cost RCCL revenue in 2015 and 2016
but now that it has credibility with consumers, it has helped to raise ticket
prices and secure early bookings.

Liberty said RCCL is also being helped by stronger-than-expected
demand for Europe, both from North Americans and Europeans, and from
better-than-expected earnings from TUI Cruises and Pullmantur, cruise lines
that RCCL partly owns.

“Except for South Korea, everything has ended up in the
‘better than expected’ column,” Liberty said. “And that’s not a
typical year.”

Earlier this year, China restricted trade with South Korea
in retaliation for installation of a U.S.-provided missile defense system. The
restrictions effectively removed South Korean ports from cruises originating in
China, which sapped demand. Prices for cruises in China are down for the second
quarter and year, Liberty said, but would have otherwise been up.