Royal Caribbean Cruises has admitted there are too many “variables and uncertainties” surrounding coronavirus to calculate the impact of the crisis on the business this year.
The second largest cruise conglomerate after Carnival Corporation revealed that eight departures out of China had been cancelled up to March 4 with modifications made to other itineraries in the region.
Action is being taken to contain the spread of the virus with the company denying boarding to anyone who has travelled from, to or through mainland China or Hong Kong in the past 15 days.
Mandatory specialised health screenings will be carried out on passengers who have been in contact with people who have been in mainland China or Hong Kong in that period; holders of China or Hong Kong passports and anyone feeling unwell or demonstrating flu-like symptoms.
The precautionary measures also apply to all employees, crew and contractors.
The parent of brands such as Royal Caribbean, Celebrity Cruises and Azamara said: “The company is assessing developments constantly and will update these measures as needed.
“There are still too many variables and uncertainties regarding this outbreak to calculate the impact on the business.
“For example, we expect that an erosion of consumer confidence in China could have an additional impact on load factor and rate until the market normalises.
“If these travel restrictions and concerns over the outbreak continue for an extended period of time, they could have a material impact on the overall financial performance of the company.”
While the peak wave booking period for 2020 has started on a “very robust basis” with strong demand from the US and Europe, coronavirus is expected to “negatively affect” this year’s financial performance.
The company added: “While we expect this to be temporary, the situation is highly fluid and the overall impact cannot reasonably be estimated at this time. Accordingly, our guidance does not include any provision for the impact of the outbreak.”
In guidance for the first three months of 2020, RCC said: “Demand for the core products and onboard experiences is very strong.
“Nevertheless, the unprecedented bushfires in Australia and recent activity in Hong Kong and the Middle East are each having a negative impact in the first quarter.
“Moreover, the first quarter is also being negatively impacted by other structural elements such as the discontinuation of Cuba sailings”.
The caution came as RCC issued annual financial results showing adjusted net profit of $2 billion for last year, up from $1.9 billion in 2018.
Four new ships being introduced this year will be “important contributors to the yield growth and profitability”.
The timing of the new ship deliveries will result in a more significant yield growth in the second half of the year than in the first half.
Chief financial officer Jason Liberty said: “Our yield outlook for 2020 is very encouraging with higher pricing on top of an exceptional 2019 performance.
“It’s clear that the Coronavirus will impact revenue in China in the short term, but we are a long-term business and our plans to continue growing this profitable market remain unchanged.”
The company unveiled plans to further cut its carbon footprint by 25% in five years as part of a ‘20>25’ initiative which is also designed to improve passenger satisfaction while delivering $20 adjusted earnings per share (EPS).
“Our formula for success is simple and our path towards our EPS goal is driven by moderately growing our yields, effectively managing our costs and moderately growing our business,” Liberty said.
“Meanwhile, our emissions target, which is one of our many sustainability initiatives, will further focus our world-class design, engineering and operations teams to meaningfully improve our environmental impact.”
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