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Could Royal Caribbean sell more ships? It's not off the table

Feb. 26, 2021
5 min read
Mariner of the Seas
Could Royal Caribbean sell more ships? It's not off the table
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Royal Caribbean Group might not be done selling ships.

The parent company of the world's largest cruise line, Royal Caribbean, as well as Celebrity Cruises and Silversea, is taking an "opportunistic" approach to ship sales as it navigates the unprecedented shutdown of most of its operations worldwide, one of the company's top executives said this week.

The company already has reduced the capacity of its 26-ship Royal Caribbean fleet by selling two older ships in December, and just last month it sold its entire three-ship Azamara brand to a private equity company, Sycamore Partners.

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"This opportunity came our way here with Sycamore [that] gives Azamara an opportunity to grow, and I think ... it'll do quite well under ... this other venture," Royal Caribbean Group CFO Jason Liberty noted this week during a conference call with Wall Street analysts. "Moving into other ship sales and so forth, we remain opportunistic."

Liberty suggested that Royal Caribbean was looking hard at how the company should be positioned when it comes to ship numbers and types when the year-long shutdown to most cruising worldwide finally ends.

"We have really tried to be opportunistic and strategic and look at ... how do we want to prioritize, whether it's how we're investing or how we're supporting on our resource base."

Related: The best credit cards for booking cruises

Royal Caribbean sold one of its oldest ships, Empress of the Seas, in December. (Photo courtesy of Royal Caribbean)

Royal Caribbean Group has had to raise billions of dollars to stay afloat over the past year as most of its ships remained idle. It's losing hundreds of millions of dollars per month. But Liberty suggested that the ship sales the company has done weren't so much about raising cash as about setting up the company's brands for success in a post-coronavirus world.

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"I think we need to remember that, pre-pandemic, all of these ships generated quite a bit of cash flow and so ... for us, typically, the tests on [whether to sell a ship] is a little bit less about the cash that we would receive," he said. "It's more strategic on whether we think this ship, whether in its current state or through some moderate investment, is something that fits our brands."

Related: The ultimate guide to Royal Caribbean

With the sale of two ships in December, Royal Caribbean Group's Royal Caribbean brand now has 24 ships. Its Celebrity brand has 12 ships. The Silversea brand has nine vessels.

That's 45 ships in all at wholly-owned Royal Caribbean brands, down from 50 just a few months ago.

Royal Caribbean Group also owns a 50% stake in two German lines, TUI Cruises and Hapag-Lloyd Cruises, that together own 13 more vessels.

Liberty didn't say which ships the company might be willing to sell in the coming months if the right offer came around. But typically cruise lines only sell their oldest, least-efficient vessels.

The oldest vessels in the fleets of the Royal Caribbean brands include the four Vision Class ships at Royal Caribbean (unveiled between 1996 and 1998) and Silversea's Silver Wind, Silver Cloud and Silver Explorer (all built between 1989 and 1995).

Related: Everything you need to know about Royal Caribbean cabins

The two Royal Caribbean ships the company sold in December -- Empress of the Seas and Majesty of the Seas -- were built in 1990 and 1992. The three Azamara ships the company sold date to 2000 and 2001.

Liberty noted that the Azamara ships were less efficient when it comes to costs on a per passenger basis than the average vessel in the Royal Caribbean fleet due to their small size. The three ships hold just 700 passengers each.

The sale was "[good] on the cost standpoint because, you know, [Azamara's] ships were smaller [and] for spreading of costs were not as efficient," Liberty told the Wall Street analysts on the call.

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Featured image by Michel Verdure
Editorial disclaimer: Opinions expressed here are the author’s alone, not those of any bank, credit card issuer, airline or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.

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Card Rating is based on the opinion of TPG‘s editors and is not influenced by the card issuer.
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The Capital One Venture X card is one of the best all-round travel credit cards ever launched. Not only is it offering a tremendous welcome bonus, but cardholders can earn tons of miles on everyday spending and receive a 10,000-mile anniversary bonus to boot. Its annual fee is $395, but cardholders can count on up to $300 in statement credits toward travel booked through Capital One Travel each year and other valuable benefits like access to Priority Pass lounges and Capital One’s own growing family of airport lounges.

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  • Excellent welcome offer worth 75,000 miles after you spend $4,000 on purchases in the first three months.
  • Up to $300 in annual travel statement credits toward bookings make through Capital One Travel.
  • 10,000 bonus miles (worth $100 toward travel) each account anniversary.

Cons

  • The $395 annual fee might be expensive for some, but this card’s benefits provide much more value than that.
  • If you don’t travel frequently, this might not be the best card for you.
  • Earn 75,000 bonus miles when you spend $4,000 on purchases in the first 3 months from account opening, equal to $750 in travel
  • Receive up to $300 back annually as statement credits for bookings through Capital One Travel, where you'll get Capital One's best prices on thousands of options
  • Get 10,000 bonus miles (equal to $100 towards travel) every year, starting on your first anniversary
  • Earn unlimited 10X miles on hotels and rental cars booked through Capital One Travel and 5X miles on flights booked through Capital One Travel
  • Earn unlimited 2X miles on all other purchases
  • Unlimited complimentary access for you and two guests to 1,400+ lounges, including Capital One Lounges and our Partner Lounge Network
  • Receive up to a $100 credit for Global Entry or TSA PreCheck®
  • Use your Venture X miles to easily cover travel expenses, including flights, hotels, rental cars and more—you can even transfer your miles to your choice of 15+ travel loyalty programs
  • Named editors' choice for "Best New Credit Card of 2021" by The Points Guy
  • Earn 10 miles per dollar when you book on Turo, the world's largest car sharing marketplace, through May 16, 2023