Royal Caribbean Cruises (NYSE:RCL) raised its full-year earnings outlook after reporting third-quarter results that exceeded its prior guidance, supported by stronger close-in bookings and onboard spending in Europe and the Caribbean.
Adjusted earnings per share for the third quarter reached $6.57, exceeding the midpoint of the company’s guidance by $0.26. Revenue rose 9% from a year earlier as capacity increased 8% and net yields rose 0.6%, about 60 basis points above the company’s expectations.
Full-Year Outlook Raised
The company now expects 2026 adjusted earnings per share of $17.85 to $17.95, representing 14% year-over-year growth. Royal Caribbean expects full-year net yields to increase about 2.1% on a constant-currency basis, capacity to rise 6.6%, and total revenue to grow 9%.
The outlook incorporates expected fuel expense of approximately $1.35 billion for the full year. Holtz said the higher earnings forecast reflects the third-quarter outperformance, partly offset by projected fuel-cost increases and unfavorable currency movements.
For the fourth quarter, Royal Caribbean expects capacity growth of 5% and net-yield growth of 4.2% to 4.7% in constant currency. Adjusted EPS is forecast at $3.48 to $3.58. The company expects fourth-quarter fuel expense of about $379 million, based on current prices, hedging and forecast consumption.
Chairman and Chief Executive Officer Jason Liberty said booking volumes since the last earnings call had increased by the mid-teens year over year, while bookings for 2027 sailings were up in the high teens. The company said its booked position for both 2026 and 2027 is ahead of prior years at record rates.
Royal Caribbean also said close to half of its guests this year were repeat customers, while 40% were loyalty customers. Liberty said the company’s brands have net promoter scores in the mid-70s and that average time between cruises has continued to decline as new guests become repeat travelers.
Sandals and Beaches Investment
A central focus of the call was Royal Caribbean’s recently announced agreement to acquire a 50% stake in Sandals and Beaches Resorts. The company plans to invest approximately $3 billion for its stake, valuing the transaction at 10 times forward EBITDA. Liberty said the investment is expected to be immediately accretive to earnings while keeping Royal Caribbean within its leverage targets.
Sandals and Beaches operates 18 Caribbean all-inclusive resorts and has more than 1,000 acres of undeveloped Caribbean real estate, much of it adjacent to existing properties. The development plan includes three new Beaches resorts and room expansions at current locations, according to Liberty.
Royal Caribbean said the Caribbean all-inclusive market is valued at $16 billion and growing at an annual rate of 11%. About 30% of Royal Caribbean guests have taken a Caribbean all-inclusive vacation during the past two years, management said. The company believes adding the resort brands could expand its share of guests’ vacation spending to roughly 50%, compared with its current estimate of 20% to 25%.
Management expects to account for the investment under the equity method, with results reported on a one-quarter lag. The transaction is expected to close in early 2027, though its contribution to 2027 earnings is expected to be immaterial depending on the closing date. Holtz said Sandals and Beaches has leverage below one time and can self-fund its development plan through cash flow, with no further contributions from Royal Caribbean currently expected beyond the initial purchase price.
Liberty said the companies see several hundred million dollars in potential synergies over time, including revenue management, loyalty connectivity, data, digital engagement, distribution, procurement and supply-chain opportunities. He emphasized that Sandals and Beaches would retain their distinct brand identities and Caribbean character.
2027 Growth Plans
For 2027, Royal Caribbean expects capacity to grow 4.5%, driven by new ships and fewer dry-dock days. The company expects 56% of capacity to be in the Caribbean, 16% in Europe, 11% in Asia Pacific and 5% in Alaska.
The company plans to introduce Hero of the Seas in 2027 on a seven-night Miami itinerary. Icon of the Seas will then move to Galveston, Texas, marking the first Icon-class ship based at that home port. Michael Bayley, president and CEO of the Royal Caribbean brand, said the ship has received a strong response from travel partners and that management expects it to perform well in the Texas market.
Royal Caribbean said it remains on track to achieve its Perfecta program target of a 20% adjusted EPS compound annual growth rate through 2027, based on the current forward fuel-price curve. Liberty said the company has already achieved its return-on-invested-capital target and expects its combination of moderate capacity growth, yield growth and cost discipline to support further margin expansion, cash generation and shareholder returns.
About Royal Caribbean Cruises (NYSE:RCL)
Royal Caribbean Cruises Ltd., doing business as Royal Caribbean Group (NYSE: RCL), is a global cruise company that operates vacation cruises and related travel experiences. Its fleet visits destinations across the Caribbean, Europe, Alaska, Asia, Australia, and other regions, with itineraries that typically include onboard entertainment, dining, accommodations, recreational activities, and shore excursions.
The company’s principal brands include Royal Caribbean International, Celebrity Cruises, and Silversea Cruises.
