Earnings Call: Q1 2021

Apr 29, 2021

Good morning. My name is Shelby, and I'll be your conference operator today. At this time, I would like to welcome everyone to Royal Caribbean Group's Business Update and First Quarter 2021 Earnings Call. All participants are in a listen only mode. After the speaker presentation, there will be a question and answer I would now like to introduce Chief Financial Officer, Mr. Jason Liberty. Mr. Liberty, the floor is yours. Thank you, Shelby. Good morning, everybody, and thank you for joining us today for our business update and Q1 earnings call. Joining me are Richard Fain, our Chairman and Chief Executive Officer Michael Bailey, President and CEO of Royal Caribbean International And Carola Mangalini, our Vice President of Investor Relations. This is actually Carola's last call with us as she is retiring, And I just want to sincerely thank her, for all of her efforts. And we all really wish her the very best With lots of love. So thank you, Carolla. During this call, we will be referring to a few slides, which have been posted on our investor website, www.rclinvestor.com. Before we get started, I would like to refer you to our notice about forward looking statements, which is on our first slide. During this call, we will be making comments that are forward looking. These statements do not guarantee future performance and do involve risks and uncertainties. Examples are described in our SEC filings and other disclosures. Please note that we do not undertake to update the information in our filing as circumstances change. Also, we will be discussing certain non GAAP financial Which are adjusted as defined and a reconciliation of non GAAP financial non GAAP historical items can be found on our website. Richard will begin the call by providing a strategic overview of the business and update on the latest news from the CDC. I will follow-up with a recap of our Q1 results, and then I will then provide an update on our latest liquidity actions and on the current booking environment. We will then open up the call for your questions. Richard? Thank you, Jason, and Thank you all for joining the call. And thank you, Corolla, for your help and consistent support over the many years of Royal Caribbean. You all know it's been painful to pass the 1 year mark since we suspended sailings in March of 2020. And to keep seeing most of our beautiful ship still sitting in anchor. However, I'd like to comment on some of the dramatic positive developments That we've just mentioned. The big change has been a significant improvement in the extent and the quality of our dialogue with the CDC. As I have said elsewhere, scientific knowledge does not advance well in a vacuum. More and better exchange of information And more and better understanding of other perspective always leads to a better and healthier outcome. The CDC has Recently significantly increased its efforts in this regard and we really appreciate and we would like to for undertaking This important effort. Last night, the CDC issued multiple very constructive clarifications and amplifications of this conditional sale order. We've addressed many of the items that concerned us in the order in a manner that takes into account The recent advances in vaccines and medical science. We believe that this communication really helps us To see a clear and achievable pathway forward to a safe and healthy cruising in the near future. But An important caveat is that this is a very complex area and we only received the letter last night. Furthermore, There are still a great many details to be provided in the future and others that need to be resolved. We need to be cautious about all of those. Nevertheless, we now have high hopes that if these details can be resolved quickly, it could be possible to restart cruising By mid July, I would also emphasize that the restart does not mean that we will immediately go into full operation. While we are hopeful about restarting, that restart will be gradual and deliberate. Furthermore, our business looks long in advance, So it will take some time for the machinery to get back into full swing. But the letter is a very constructive part of this process And it indicates both the value of good communications and indicates the CDC's desire to see cruising reopen in a safe and healthy manner. As I said before, we share a common goal and both the CDC and the cruise industry are determined to do this right. One of our strongest discussion points in these meetings with the CDC has been the data that we've collected from our cruises in Asia and Europe. As mentioned earlier, we have successfully carried over 125,000 passengers with only 21 COVID-nineteen cases, 21. That's a positivity rate of 0.01%. And as we've emphasized, All of this has been experienced without having availability of vaccines. Our goal throughout this pandemic has been to make a cruise ship where we can control the environment safer than Main Street USA. We've already demonstrated our ability to do that, and we are now eager to resume life As so many other businesses are doing. And we are pleased that the CDC letter really does reflect an intention to Treat us similarly to other industries in similar circumstances. In addition to this particularly positive development in the U. S, There are a lot of other activities going on. For example, last month, Odyssey of the Seas, our newest Quantum class ship, Join the Royal Caribbean International fleet. Along with Celebrity Apex and Silversea's Silver Moon, we now have 3 brand new ships, Each with the most amazing technology to ensure safety, security and of course, unbelievable guest experiences. And there has been such demand for our current sailings, for example, from Singapore and Quantum and Seas that we've extended our season there Now through the end of October. And of course, we've also taken additional steps to strengthen our financial position even further, You're going to hear more about that from Jason. Before I describe all the energy we see and feel within the group, I want to acknowledge once again the dedication and hard work of our people. It's always been our people who have made us successful And it's been a lot of people who have gotten us through these past 13 months of living with COVID-nineteen. Everyone has suffered during the pandemic, But working for Cruise Line has been a real test of endurance and trust and agility. Over and over, our people have passed that test. I'd like to also thank our investors and our travel partners who have been the strongest advocates with our guests over these months of uncertainty. We're also grateful for their commitment to work we're always grateful for their commitment to work with us. While a lot of what we're doing right now is We're also focusing on how we can strengthen our position in other areas, including on ESG, environmental, social and governmental responsibility. Of course, this focus isn't new for us. From our partnership with the World Wildlife Fund to support for sustainable destinations to active engagement on diversity and inclusion To aggressive emission reduction, our commitment to progress on the ESG agenda is longstanding. Well, we believe strongly that it's not enough to reflect on what we have been doing. We need to get ready for what's next and plan for how we will meet the challenges in the future. You'll hear more about this initiative in future calls, but I want to take this opportunity to Make you aware of this intensified focus. And with that, I'll turn the microphone back to Jason. Jason? Thank you, Richard. Before I start, like Richard, I want to again thank our teams across the whole enterprise for their dedication and tireless efforts during these unprecedented times. I will now start to discuss our Q1 performance. This morning, we reported an adjusted net loss of $1,100,000,000 or $4.44 per share for the Q1 of 2021. While reporting these type of results continues to be painful, we are excited about the fact that little by little, the flywheel is starting to spin. Furthermore, the latest news by the CDC as it relates to our resumption of service in the U. S. Is quite encouraging. During the Q1 of 2021, we delivered memorable vacations to over 55,000 guests to our Royal Caribbean International, TUI Cruises And hot Hollywood Brands. Moreover, our teams are diligently working on the health protocols and startup activities needed To begin operations on an additional 11 ships this summer. While these activities are extremely encouraging, they also put some additional pressure on our cash burn in the short term. Having said this, we are also very encouraged by our customer deposit balance, which as of today It's approximately $2,000,000,000 compared to the $1,800,000,000 that was shared this morning related to the end of the first quarter. Moreover, the latest balance reflects the reduction in deposits that related to the Azamara brand, which was sold just a few months ago, Demonstrating an even larger improvement versus our December 20 customer deposit balance. This improved balance has been disproportionately driven by new bookings Versus the issuance of more FCCs. At this point, approximately 45% of our customer deposit balance is associated with FCCs Versus about 50% at the time of our last call. Now I will shift my remarks to our liquidity actions during the quarter. As you all know, we pride ourselves on having industry leading brands with a world class and highly innovative fleet and a history of strong financial discipline. These assets and attributes have been instrumental in helping us raise more than $12,300,000,000 in new capital since March of last year. During the Q1 of 2021, we continued our efforts to enhance our liquidity position and manage our maturity profile. To this end, we successfully executed 2 capital raises with cumulative gross proceeds of $3,000,000,000 Connected to this, we amended 2 debt facilities totaling approximately $2,500,000,000 which were due in 2022 And extended the maturities for contacting lenders by 18 months. I will highlight that since we are refinancing guaranteed debt with unsecured and unguaranteed debt, We are starting our journey back to an unencumbered investment grade balance sheet. Altogether, during this quarter, we paid down approximately $800,000,000 of debt related Principal on the amended facilities and the U. K. Commercial paper program that was due in March. Now as it pertains to the cash burn during the quarter, The average monthly cash burn was approximately $300,000,000 which was slightly higher than previously announced range. This was mainly driven by restart expenses, which related to the new health protocols and some crew movements. It is important to note that previously announced rents did not include any expenses that relate The restarting of operations as it assumed a status of prolonged suspension of operations. When excluding the return to service expenses, Our cash burn was in line with the previously announced range. Overall, we closed the Q1 with $5,800,000,000 in available liquidity. As I previously mentioned, we are very encouraged with the latest news, current momentum and the restart of operations around the globe. But the environment remains extremely fluid, and for this reason, we are not providing the cash burn estimate or the related offsets generated by revenue I will highlight that the burn rate for the ships that are kept in layup is expected to be consistent with our previous Now as it pertains to our debt maturity and in addition to the extensions of the 2 2022 facilities that I previously mentioned, We also completed the amendments to our export credit facilities deferring $1,150,000,000 of principal amortization and waiving financial covenants through at least the end of Q3 of 2022. After all these negotiations, our scheduled debt maturities for the remainder of 'twenty one and 'twenty two Our $200,000,000 $2,200,000,000 respectively. I will now update you on our business outlook As I know, this is top of mind for many, and I'll start by providing an update on our summer capacity. Over the last 2 months, we have announced a return to service For 9 ships across 3 global brands and have extended the Singapore season for Quantum of the Seas through the fall. These 176 sailings in the Caribbean, Europe and Asia now represent 19% of our fleet capacity for the summer season. 6 of these ships will sail in Europe, offering Greek dials and U. K. Itineraries to guests from the U. S, the U. K, Israel and Europe. These guests will have the opportunity to experience our 3 newest ships Odyssey of the Seas, Celebrity Apex and the Silver Moon for the first time ever. In addition, 3 ships will cater to the U. S. Market, offering Caribbean itineraries departing from Nassau, St. Maarten and Bermuda. Many of these sailings will call on our amazing private island Perfect Day at Kokub Keng. On top of these, Quantum and the Seas will continue to offer cruises from Singapore for the local market. Now regarding TUI Cruises, our JV, they have announced 2 additional ships sailing this summer In addition to 3 vessels that have been operating out of the Canary Islands since this past November. We look forward to announcing the return of additional ships soonest I remain committed to a safe thoughtful and financially sensible resumption of cruising across the entire fleet. Now I will provide an update on our bookings. When we opened the first set of sailings for Quantum of the Seas in October of 2020, we immediately saw the pent up demand for cruising in Singapore. Because of this, we hoped and expected that the same would be true in other markets and these expectations were confirmed when we launched our new deployment. We have been very pleased with booking levels and pricing for sailings in both Europe and the Caribbean. And as a result, our load factors and revenues are building up nicely. After less than 3 weeks of sales for most ships, we already have about 30% of our expected revenue booked for June through September sailings. We expect to start our initial operations with lower load factors and ramp up gradually over time. On our last earnings call, I shared that we received 30% more bookings in January when compared to November December. Despite anemic sales and marketing activities, Demand continued to accelerate and new bookings in March exceeded January February levels by approximately 80%. In addition to new bookings, guests continue to utilize FCCs and take advantage of the lift and shift program. Now overall, the booking activity for the second half of twenty twenty one is in line with our anticipated resumption of cruising, and pricing on these Regarding 2022 sailings, it is still early in the booking window to provide too much detail, but I will share that our book load factors The first half of twenty twenty two remains within historical ranges, and pricing on book business is up nicely versus 2019, When including the dilutionary impact of FCCs as well. While a portion of this improvement is related to our new ships, Pricing is also up for the existing fleet. I will close by saying that we are prepared and eager for the flywheel to start turning again. We feel very optimistic about our future and are thrilled to see more and more guests around the globe enjoying incredible vacations onboard our ships. With that, I will ask Shelby to open up the call for a question and answer session. We'll pause for just a moment to compile the Q and A roster. Your first question is from Robin Farley of UBS. Great. Thank you. I have a question about the restart. Obviously, great news. Just trying to understand You can go forward ship And then there's a separate timeline for restarting with a shift that allows non vaccinated passengers out of the U. It seems that way, but I just want to kind of get clarification on that. And then just as my follow-up would be, on the return to service expenses Versus just typical layup, how much if you if we think about per month layup cost per ship And then what is that with restart costs for maybe that sort of monthly 3 months, say, heading into restart, What the difference is in layup versus layup and restart? Thank you. So, Robin, on the first question, which I'm sure is an amazing question, I don't think we got most of it. It broke up about 50% of it. So we actually didn't actually hear what you asked. I'll just comment real quick as it relates to on the cost side, and then you can be asked the first part of your question. We really have tuned in our way up costs. And of course, we've kept our ships generally in a warm state, So as we restarted our ships, we would be able to do that expeditiously and at a reasonable cost. But as it relates to the return to service as we ramp the ships back up, those costs are still kind of very fluid, which is why we're not I'm guiding on them as we need to take into consideration testing and crew movements and vaccinations and maybe other things that might be part of that equation That might be different itinerary by itinerary. So we're not yet ready to kind of guide on that. What I would tell you is we are being Very we're very focused to make sure that as we're spending, We're being very thoughtful about it. And of course, at the same time, as we're launching these ships, we're also getting The revenues and customer deposits that are associated with that. So I'll just pause there and let you ask the first part of your question so we can hear it And hope we give you a thoughtful answer. Great. Well, hopefully, you can hear me a little bit better. On the first question, I just wanted to understand, obviously, very good news overnight. So the timeframe, is it that there will be kind of 2 different restart timeframes that you can today go forward with ship out of the U. S, but there will be a separate timeframe for ships that have a mix of vaccinated and unvaccinated passengers. Is that how to Hi, Robin. It's Michael. As Richard commented, We received these modifications and commentary late yesterday evening, and we've got some calls to The CDC to clarify some of the comments and what have you. But fundamentally, yes, you're correct. There There'll be really 2 pathways, one pathway for vaccinated crew and largely vaccinated guests that meet the threshold that they've And that would mean that there wouldn't be a requirement for a simulated voyage, etcetera, and there would be a different Expectation on protocols and planning. So it's a faster route. And then for ships That wouldn't have wouldn't meet that threshold for whatever reason, there would be a different timeline and a different set of protocols and requirements. So fundamentally, there's 2 pathways. It's not that simple, but that's a way of simplifying. I think we need to make clear that reemphasize as Michael just did, There's still a lot of uncertainty about this. And I don't think you should think of these as 2 completely divergent Processes. Obviously, just as there are in other areas in society, You treat people who have been vaccinated different than situations where you don't have vaccinations. But what is nice about this is that there are in effect both our viable pathways under the CDC letter that we got. And I think just to add to that, I think The acknowledgment that the vaccines are really transformational is very Exceedingly helpful. I mean, something we all knew was coming, but it's very positive. Yes. Okay, great. Thank you very much. Thanks, Robin. Your next question is from Steve Wieczynski of Stifel. Hey, guys. Good morning. So my first question is going to be a bunch of CDC questions that hopefully, I don't know if you're going to be able to answer You won't be able to, but it's a 3 part question. So prepare yourself for some fun here. When you look at the mandates that have been Laid out, I mean calling for 98% of crew and 95% of passengers to be vaccinated. Do you I mean, the first question is, do you think getting to those thresholds Will be easy to achieve. The second part of that is going to be the kid component. How are kids accounted for under those percentages? And if I'm reading that right, it seems like Getting kids on board might be difficult during the CSO timeframe. And then the third part of this is, do you think the CDC's Cautionary travel outlook for the Bahamas could cause some panic with your potential customer base. Hi, Steve. So on the 98%, 95% mandate Well, guideline, and remember, it's a guideline. So there's you can meet that threshold, and you don't have to meet that threshold, and there's a different pathway. We know from surveys of our customers who've been booking since January That over 80% of our customers have already told us they're either vaccinated or will be vaccinated when they cruise. So that's since January. So There's an overwhelming, certainly for our customer base, people are just saying, I'm getting vaccinated. And as you skew older, the percentage increases quite significantly, mainly because, of course, when the Patients started, it started with the older age group first, etcetera, etcetera. For the crew, interestingly, every year, We offer we don't mandate flu vaccines for our crew members, and we've been doing that for many, many years. And The crew typically, the vaccination rates of our crew members for flu is around the mid-ninety percent. They just voluntarily take the vaccine. We surveyed our crew some months ago, and we stay in touch the crew through surveys and various forms of communication. And in the survey that we sent out, I'm going to say it was at the end of last year or the beginning of this year, We asked our crew members, first of all, have you been vaccinated? Are you getting vaccinated? And will you get vaccinated? And we had over 98% positive response from our crew saying, yes, we're going to get vaccinated. So I think, this just I think it's somewhat a natural event. Crew used to getting vaccinated for flu, and they're certainly willing to get We do understand for health or religious reasons or belief reasons that some people won't want to, and that's been in place For many years in terms of how we vaccinate for flu. On the kids, I think we obviously Take a look at our kid count kid population and what have you. We think this is the next And we know that the vaccinations now for eligible for children 16 and older, We've been told that in the coming weeks months that age limit will likely drop to 12, And we're encouraged by that. And then for kids 11 and under, Obviously, we carry a lot of kids, 11 and under, but relatively speaking, as a percentage of our total guest counts, it's quite a small number. So we're not overly concerned with that. And again, as Richard pointed out, we received These modifications late last night, we really do have to sit study and discuss with the CDC and understand all of These different nuances, but we're not discouraged by this in any way. Okay, got you. Yes. And Stephen, just I think we ought to make it clear We've been operating and have announced cruises, some of which are requiring full vaccination and some of which do not. And so, I think we consider it constructive That the CDC has, looked at this with a dual pathway approach, much as we have taken. Okay, got you. Thanks for that. And then second question, Jason, if the timeline is correct here and you can start North American cruising sometime over the next couple of months and From there, you continue to bring ships back online over an extended period of time. The question is, do you feel like your current liquidity position is Adequate at this point, meaning you feel comfortable enough with where you guys sit today? I think we feel like we are in a very Strong liquidity position and the real focus here is getting the ships back on the water. And of course, as that's occurring, at the same time, the customer deposits and revenues and so forth start coming in. So I think we feel Very good. And of course, we're also remaining to be opportunistic and looking at ways to improve Our balance sheet and negative carry and so forth. But overall, Steve, I think we feel that we've taken very prudent actions to make sure that we're in a position Sure. Okay, great. Thanks guys and Carola, congratulations. Your next question comes from Jamie Katz of Morningstar. Hi, good morning. I'm curious if you have any comments on consideration of the sale of any more of the Or whether you feel the fleet is good as is, given there have been so many sales across the industry or scrap across the industry Recently. And then, if you'd comment on the percentage of workforce that you're getting from India and then How that might constrain the ability to staff to shift efficiently going forward now that there is some sort of overlaying constraint on it that would be really helpful. Thanks. Yes. Sure, Jay. Jay, I'll take the first one, and then I'll let and Michael will do the mix in terms of crew from India. But as it relates to our fleet, even for some of the ships that we've sold, the way that we kind of approach this always Just understanding whether a ship is a good fit for the brand or still a good fit for the brand or if we can invest in that ship To make sure it's a good fit for the brand. And if not, we look and we're opportunistic about this. But I think we've scrapped some ships, We've sold some ships. We typically sell about a ship a year, but overall, we feel really good about the fleet. And as you've heard us say in the past, these ships are really always cash flow positive. And so for us to part ways with them, it has to be because it's the right strategic reason for us to do so. And Jamie, on the crude situation, particularly as it relates to India, yes, I mean, It's unfortunate what's occurring in India. And over the past week or so, there's been multiple travel restrictions placed On the Indian citizens traveling through or to various countries and what have you. So we did temporarily Suspend our crewing activities from India as we understand how this will work out. The beauty, of course, of our crewing model is that almost from the very beginning, we've accrued from Literally over 100 countries around the world. Obviously, some countries like India have significant volume of employees who come from India, but We have large populations that come from many other countries around the world. So we're obviously Super sympathetic about what's happening in India because we do have many loyal employees who've been with us for many, many years. Obviously, we're pretty confident this will work out in the coming months, and we have the ability to crew and change our crewing Based upon all of these circumstances, so discouraging what's occurring in India, but our model is very robust, so we're encouraged by the model that we have. Thank you. Thank you. Your next question is from Brandt Montour of JPMorgan. Good morning, everyone, and thanks for taking my questions. And obviously, yes, all positive News today. Back on the one more on the CDC, if I may. With the CSO still in place outside, Outside of what we've talked about so far, the vaccination specific bogey, what was the biggest change what were the biggest changes overnight For you, and does this change your best guess for the ultimate capacity you think you'll have sailing At the end of this summer versus, say, what you thought 24 hours ago. Hi, Brent. As Richard commented in his opening statement, what really first of all, we've been in very Constructive dialogue with the CDC over the past few weeks and beyond the CDC with an intergovernmental agency group that was representing Many different departments of the government. And I think that dialogue allowed the industry to talk realistically about Many of the elements of the CSO that were just unrealistic or unable to be executed the way they were crafted, What we saw last night was very encouraging because it wasn't 1 or 2 things. It was multiple Additions and corrections to many of the elements of the existing CSO that were They're really challenging and very, very difficult, particularly as it relates to what's occurring with vaccines. I think the mood of the Royal Caribbean last night and late into the night, and then Just speaking also to some of our industry colleagues, we're simply positive that all of this dialogue That was constructive, had resulted in clearly being heard. And so I wouldn't say there's any one thing, there's just many, many things. But Certainly, the vaccines are the major foundational game changing element of this. Thank you, Greg. Okay. That's helpful. Just a quick follow-up on sort of how you're thinking about occupancy and load. Jason, you mentioned that sort of bookings and to date for the summer sailings are around sort of maybe 30% of expected revenue. Is that that's sort of just to clarify, that's not of what your total capacity would be on those sailings. That's just of what your target Load would be and then a follow and then sort of a second part of that would be sort of what do you think the range of that target is For I mean, they're vaccination sailings, so reconcile that with what you're doing in Singapore on non vaccination sailings, and that's it for me. Yes. Well, it is or the statement was really relating to what we expected it to be. And of course, Most of these sailings, we've negotiated or we've had conversations in terms of what those load factors would start off being. And so We've been very kind of thoughtful about what our expectations are going to be, whether we're turning in the Bahamas or whether we're turning in Israel and so forth. So I think, obviously, we saw a lot of encouraging news here from the CDC, but the sailings in which we've announced Are really for sailings that take place outside of U. S. Homeports. But all that, this is as Michael and Richard were talking about, this is a Evolving story. And as long as we can continue to believe that we can operate In a safe manner, making sure our guests have an incredible experience and we can do that in a way that is Improving our financial position, that's those are the kind of 3 guiding lights that are guiding our day to day decisions. Excellent. Thanks, everyone. Thanks, Ron. Your next question is from Stephen Grambling of Goldman Sachs. I guess turning to Ship growth and capacity increases, I guess, what is a reasonable range of net capacity growth as we look over the next couple of years? And I guess, have any of the dispositions effectively been pull forward of future retirement, so we should expect maybe less going forward? Well, I mean, I think first, overall industry wide, as I commented on the last call, The growth rate, which is probably was probably around 6%, is probably going to be around 4%. So you're going to see less growth there. I think for us, our planned capacity growth is, I mean, it's kind of laid out as it relates to the ships that are coming online. Again, I wouldn't focus too much On the retirement story, because for us, we continue to just be thoughtful and be opportunistic about The opportunity to sell ships if that opportunity arises. But for the most part, I think we feel the fleet That we have today and the new ships that are coming online in that cadence is how we would expect our business to grow and there might be some retirements. I wouldn't say that accelerated retirement program based off of what we've done. I would just say we plan to kind of operate our business And manage our fleet and invest in our fleet and how we've done it on a pre COVID basis. And perhaps a related follow-up, some of your peers have cited basically cost improvements and efficiency improvements from the mix of new ships And or changes in the cost structure, can you give us any color on how you see the even the mix of new ships affecting net yields and net cruise costs or any Big buckets of opportunity for permanent changes in how you operate? Yes. Well, I think we've also talked about this and talked about, I think, quite a bit on the last call is so obviously, as the new capacity comes on, they are more efficient, especially on a fuel standpoint, And they also generate a much higher yield profile because of the inventory mix and the onboard revenue opportunities that come along with our new capacity. But during this time, we have looked at our cost structure. We have taken action on our cost structure To ensure that as we come out of this, I think I use the term in our wedding wait, and so we've identified and we've implemented and we are implementing several Cost actions in order to improve our margins. And then also, I would just add, at the same time, we want to make sure that the guest Experience is protected. The employee experience is protected. And so a lot of this comes through with automation and us just coordinating better enterprise wide To make better margin decisions. Just one quick follow-up on that. I guess between the vaccine only type cruises and Those that are more open, are you seeing any differences in the cost structure between those 2 as we think about this kind of dual approach Hi, Stephen. It's Michael. Yes, I mean, there is a different cost profile. But again, we need a little bit of time to work our way through this. There's more protocols with non vaccine than with vaccine, and there's more testing requirements And what have you. So there is there will be slightly more cost, but we really do need to work our way through that. And I think There's a lot of averaging of scale. So the great news is, our teams are now sitting down, and we're looking at all of this and trying to Standard and planned. So I think we'll have more clarity in the coming days weeks. Great. Thanks so much. Thank you. Your next question is from Paul Golding of Macquarie. Thanks so much for the question. I was wondering, I saw that for 2021, you cited a 75% new booking rate as 25% FCCs. And I guess I was wondering if there was something I don't know if you've given a 22% mix number, but Is there something structural there in the near to medium term around marketing? You're able to maybe take some savings there as demand seems to be Strong despite low levels of marketing. And then my second question is around Caribbean Homeport versus U. S. Homeport, I was wondering if there was anything structural about, if for whatever reason, you decided This season wasn't the one for a robust U. S. Homeport setup. Are there Savings or are there structural costs that outpace what a U. S. Homeport itinerary mix would look like? Thanks. Yes. So on the first one, As it relates to the bookings that are coming in, the profile of new bookings versus the application of FCCs It's really kind of a broader commentary around the bookings that we've been taking on. So 2022, we see a very similar profile where The event around that percentage is also for new bookings versus the application. Again, it's really early days, I think, to try to kind of pace Those type of stats will result in some type of sales and marketing savings. Time will tell. What's clear to us is There's really strong demand and really some activity on the marketing side is able to generate That demand which is very encouraging for us overall. And then I think on the cost side as it relates To turning in different ports around the world, there's always different port fees, Vaccinations, testing and so forth can all kind of play in the mix of it. But I think for the most part, it's not really A cost differential, I think it's more about our ability to get our passengers to those locations, Turn at those locations and then deliver world classification experiences. Great. Thanks so much. Hey, Paul, just one comment on sales and marketing. We've always internally based on what was going to happen with WAVE in 'twenty one, understanding we wouldn't really Obviously, you have a wave as we historically used to having a wave. And normally, wave starts Sometime into the 2nd or so week of January and then runs through February peaking and then dropping off in March. And we certainly didn't get a wave this year. But then in March of this year, we had A really strong March. And so we looked at the volume of bookings that came in, in March of this year, And we compared it with WAVE in 'nineteen, which was our last real WAVE period. And our bookings in March of this year equaled our peak wave month in 'nineteen. So that was, I mean, that was quite an amazing number. So we kind of we started to see WAVE coming In March instead of January, and certainly the volume was impressive. But the point of this is that Ironically, our marketing and sales investment during that month was way, way below what we invested in 'nineteen. So I mean, it's an interesting fact that we had so much demand with very little investment, Which I think speaks to what we're seeing and believe is occurring in the market with pent up demand. I mean, we know that We've been told that the savings rates in the U. S. With U. S. Consumers increased by $2,500,000,000,000 the credit card debt is down by 100,000,000,000 and our surveys tell us that the consumer is increasingly optimistic about the future, that the worst is behind them, that they are going to Go on a vacation. And so I think that one statistic for March, we interpret as Incredibly positive and speaks about what we think is going to be an amazing pent up demand that's going to be unleashed, particularly for 'twenty two. Thanks for the color. That was my point or my question around that is that it seems like the consumer is seeking out the And so I wondered if there was some medium term efficiency there. But I appreciate the color on the volumes on the booking volumes. Thanks so much. Thank you, Paul. Your next question is from Greg Badishkanian of Wolfe Research. Hey, guys. It's actually Fred Wightman on for Greg. I just wanted to follow-up on Michael's comments just now on the bookings in March. Totally get that it's sequentially stronger than January, February, and the 2019 commentary was super helpful. Have you seen a change in the SKU about where those bookings are taking place as far as 'twenty one versus 'twenty two, more recently just given some of the improving dialogues with the CDC and What do you think that means for the prospects of a potential July restart here domestically? Well, over the past few weeks, we've introduced multiple Products, home porting outside of the U. S. And the Caribbean, which we've spoken about, And the demand for those products has been quite robust. I mean, we're quite pleased with the demand that we've seen for those products. Certainly, we see things moving into 'twenty two, which is natural. We're heading into June, and June traditionally is the month where bookings tend to That will skew more towards the next year rather than the current year, and then that's certainly holding true from what we're seeing. Yes. And I think just to add a couple of comments to it. As we commented a little bit earlier, obviously, the booking activity is skewing a little bit older, And what you would expect because of the vaccination comments in terms of the percentage of our guests that say they either have been vaccinated or they plan on getting vaccinated. 20 22, especially out of the North American markets, the U. K. Markets and so forth, look actually pretty similar to what you would see In a typical year, while the 2021 bookings obviously have more recently have gravitated to the sailings that we have You announced out of the Bahamas and Israel and so forth. So it's I think it's very clear, As Michael said, people are thinking that the worst is behind. There's a lot of these different Statistics as it relates to credit card debts and savings And people's propensity to get back out there and vacation. And I think 2022 so far looks like it's behaving like we saw pre COVID. That's helpful. And the release sort of teases the prospect of a return to Alaska this year. I'm wondering if you could just touch on the mechanics for that, how realistic that might And then what the next steps or clarifications that you might need to hear to make that happen would be? Yes. So that's a slightly complex one, specifically with respect to Alaska Because of course, Canada has put in place a stop until throughout the season. And so in order to restart the Alaska season, we would either need a waiver from the Passenger Vessel Services Act Or Canada would have to allow at least technical stops. And We're working on both and others are working on both, but we can't be certain where that will end up. But I think given the momentum, there's reason for some hope, But I think we're that's a sufficiently complex and confusing situation that, I don't think we're going to put odds on it one way or the other. I also think we need to be just a little bit careful when we're talking about reading into these bookings. There are still a lot of issues that have yet to be resolved with respect to the CDC in this order. The bookings that have taken place have been in a period of high uncertainty. Are these cruises going to be sailing? Will they go where they want? What will be the protocol? So there's a lot of uncertainty. And while we try and read a lot into it, And the one thing that I think we are feeling comfortable about is that there is a lot of pent up demand. There's too many Fluid factors, I think, to read too much into some of the specifics of what does this particularly mean for Particularly in 'twenty two, I think it's all terribly encouraging for 'twenty three, and it's very encouraging for 'twenty two. But the specifics of each of these is going to be difficult to read into until Things calm down, and there's much more certainty about where it's leading to. But as to Alaska, specifically, while we're optimistic and we're working to make that happen, there are these other factors. We do think that we'll be in time for the Alaskan season, and we're obviously hopeful That we'll be able to solve the issue with Canada In either in one of these two ways. Understood. Thank you. Thank you. Your next Question is from Patrick Scholes of Truist Securities. Great. Good morning. Question, It appears that the next step that the CDC is looking for is to complete Phase 2a. In your opinion, what's a realistic timeline at this moment in which you think you could complete Phase 2a? Hi, Patrick. I can't give you like weeks or How many weeks and days? I think, again, as we understood and interpret what we received last night, If you're planning on a highly vaccinated cruise, there will be no requirement for a simulated voyage And the previous 30 day notification and process for simulation and then the subsequent 60 day for Notification in the process for your first actual revenue sailing has effectively And so highly vaccinated crews can literally, As soon as you have your port plan ready and everything lined up, you can submit your request To Cruise, and they will try their best to get you a response within 5 days. So you can see that the timeline and The process has improved quite significantly. So I think there's the process of crewing the ship, Obviously, and then the vaccination process. So, I think the target that's It's been stated and that we've all been working towards is a mid July. And I think that After what we received last night, it's looking very realistic. But again, to Rich's, we still got a lot to clarify. But I think this commitment to mid July is looking very realistic based upon what we saw last night. Okay, very good. Thank you. Thank you. All right. Final? Shelby, we have time yes, final question, yes, that would be great. Your final question is from Vince Stifel of Cleveland Research. Hi, thanks for taking my question. I'm curious if there are some factors we should keep in mind that would make 2022 yield maybe not as comparable to 2019. Just in light of pricing being ahead, it sounds good. You had mentioned that new capacity should maybe It'll be a bit of a tailwind, but are there any offsets from a mix perspective or the itineraries that you might be running in 22 versus 2019 or even getting back to those peak 107 percent, 108 percent occupancy levels That might impact the comparability of the 2022 yields to 2019 yield. Hey, Vince. I think it's really too early to kind of tell. I mean, structurally, the additional capacity, I'm just getting rid of some of our older tonnage. A negative is the sale of Azamara, which is a Higher yielding brand versus the average. But for the most part, I think it really kind of depends on Yes, how the business builds going into next year. As Michael said, really as we start getting here into the early part of the summer is really when 2022 really begins To build up, but there's not necessarily something structurally as it relates To the fleet or our deployment, that's going to make a significant change on 2022. Got it. And as a follow-up, Richard mentioned the uncertainty and fluidity of the situation. And I think when you look at your deposits, they've been stable for a number of quarters at $1,800,000,000 Still a ways away from that 3.4 they were at one point. So curious what you think it takes For those to rebuild, it seems like that's a key part of helping to delever a bit as well. And if there's a path for that kind of in the second half of this year as Confidence, hopefully returns and the booking curve lengthens a bit. Yes. I mean, I think, first of all, it's been stable now for Several quarters, it's now building. And it's building because we're able to provide clarity On ships and deployments that are coming back up into service. And so I think the consumer is gaining confidence, But I think you're looking for us for clarity on exactly which ships are going to be coming up and when so that they can Planning count on their vacation experience. And I think as obviously a lot of this is beginning to in terms of some of the barriers are beginning to evaporate, That confidence is building and hopefully soon we move back to those levels on a customer deposit standpoint. Thanks, Vince. Thank you all for your assistance today, Shelby, with the call. And we thank you all for your participation and interest And the company, crawler will be available all day today for any follow-up questions you might have. And As always, we wish everybody a great day, and please stay healthy.