Hurricane Dorian is estimated to cost Royal Caribbean Cruises $30 million and was the “most disruptive storm in the company’s history”, the cruise line has revealed.
The figure was released in the company’s third quarter 2019 results and full year outlook for 2019, out today, which showed the cruise line’s net income for the third quarter was $883.2 million, with its adjusted net income $896.8 million.
These figures included a “unusual, one-time” negative hit of $27 million in the third quarter – around $30million for the full year – as a result of the itinerary changes, relief efforts and guest compensation related to Hurricane Dorian in September, the most devastating hurricane to hit the Bahamas on record.
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“Hurricane Dorian had an unusual, one-time impact on our financial performance,” a statement form the cruise giant said. “Three main Florida embarkation ports closed on a weekend as a precautionary measure.
“These measures impacted 16 sailings and made this the most disruptive storm in the company’s history. The financial impact was particularly large because the affected ships included our very successful Oasis-class, because we closed Perfect Day at Cococay for 10 days, and because of our extensive relief efforts.
“The combination of guest compensation, the closure of Perfect Day at Cococay and the relief efforts negatively impacted the third quarter by $27 million or $0.13 per share and the full year by approximately $30 million or $0.15 per share.”
But chairman and chief executive Richard Fain said the business continued to exceed expectations despite the impact of the hurricane.
He said: “Our business continues to thrive and exceed our expectations. While Hurricane Dorian had a negative impact, stronger demand for our brands and our key itineraries exceeded our expectations. Excluding the hurricane impact, we are not only able to maintain our yield and earnings guidance, but to raise both slightly as a result of particularly strong performance in the US and China.”
Gross yields for the third quarter were up 6.6% and net yields were up 6.4%.
In the cruise line’s full year outlook for 2019, adjusted earnings are expected to be in the range of $9.50 to $9.55 per share, including a negative impact of around $0.15 per share as a result of Hurricane Dorian. This takes into account fuel prices, interest and currency exchange rates.
Net revenue yields are anticipated to increase by around 8% for the full year. The company’s booking strength has “completely offset” the negative yield impact related to Hurricane Dorian, said the statement.
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Executive vice president and chief financial officer Jason Liberty said: “2019 is shaping up to be another year of solid yield growth and record earnings despite some unusual headwinds. As we enter 2020, we are particularly enthusiastic about the new ship deliveries, the development of new destinations, our fleet modernisation and technology initiatives. These investments will help us deliver even greater vacations while generating higher yields and better returns.”
On a results call today, Liberty added that the failure of Thomas Cook in the UK had only hit the business marginally – he described the impact as “15 basis points” in the third quarter. He did not expect “any forward impact” from the collapse.
The company said it was experiencing strong early bookings for 2020 with rates higher than last year in all four quarters and load factors ahead of the same time last year on a like-for-like basis. It expects “another year of solid yield and earnings growth”.
It added that it had had an “excellent” response in the market to news Celebrity Apex will debut in April, Odyssey of the Seas will be delivered in the autumn, and Silversea Moon and Silversea Origin will arrive in the summer.
It said the company was “particularly excited” with the demand for Perfect Day at Cococay, its private destination in the Bahamas, which has been opening in phases since May this year.
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