Norwegian Cruise Line Holdings Ltd (NCLH) — Q1 2025 Transcript

Thank you Donna and good morning everyone. Thanks for joining us for our first quarter 2025 earnings and business update call. I’m joined today by Harry Sommer, President and CEO of Norwegian Cruise Line Holdings, and Mark Kempa, Executive Vice President and Chief Financial Officer. As a reminder, this conference call is being simultaneously webcasted on the company’s investor relations website. We will also make reference to a slide presentation during the call, which can also be found on our website. Both the conference call and presentation will be available for 30 days following the call. Before we begin, I would like to cover a few items. Our press release with the first quarter 2025 results was issued this morning and is available on our website. This call includes forward-looking statements that involve risks and uncertainties that could cause our actual results to differ materially from such statements. These statements should be considered in conjunction with the cautionary statement contained in our earnings release. Our comments may also reference non-GAAP financial measures. A reconciliation to the most directly comparable GAAP financial measure and other associated disclosures is contained in our earnings release and presentation. Unless otherwise noted, all references to 2025 net yield and adjusted net cruise costs excluding fuel for Capacity Day are on a constant currency basis, and comparisons are to the same period in 2024. With that, I’d like to turn the call over to our CEO, Harry Sommer. Harry?

Thank you Sarah and good morning everyone. Welcome to our first quarter 2025 earnings call. Today I’ll begin my comments with highlights from our strong first quarter results, where we essentially met or exceeded guidance across all key metrics. While we are quite pleased with our near term results, we continue to keep our focus firmly on our longer term Charting the Course targets, so I’ll discuss a number of initiatives we are undertaking to deliver long term value to our shareholders through our proven strategy of balancing return on investment, or ROI, with return on experience, or ROX. Some of the more important initiatives include the delivery of our groundbreaking new ship, Norwegian Aqua, the recently announced enhancements for Great Stirrup Cay, and multiple projects underpinning our strategic fleet optimization efforts. I’ll wrap up with an update on booking trends and how we are navigating the current environment before turning the call back over to Mark, who will provide more detailed commentary on our results and discuss our outlook for the second quarter and full year 2025. Starting on Slide 4, I’d like to highlight the strong start to the year. Our first quarter met or exceeded all key expectations we outlined in February. Most importantly, net yields increased 1.2% above our expectations, and coupled with better than expected unit costs drove adjusted EBITDA to $453 million, also above guidance. This brings our trailing 12-month margin to 35.5%, a 280 basis point improvement over last year and well on our way to our long term targets. Lastly, adjusted EPS ended the quarter at $0.07, slightly below guidance driven by a $0.05 FX headwind. Moving to Slide 5, let’s take a look at one of our key initiatives for the quarter, the delivery of Norwegian Aqua, the first ship in Norwegian Cruise Line’s new Prima Plus class. We took delivery of Aqua in March on time and on budget, continuing our track record with Fincantieri that’s now six ships in a row, all delivered as planned thanks to their team and our incredible new build organization. After her delivery, we proudly showcased her in Europe before arriving in Miami just a few weeks ago for her christening by her godfather, Emmy-award winning actor, Eric Stonestreet. Aqua is the first ship shaped by our current management team and it reflects our focus on balancing ROI and ROX. From design to amenities, each decision was made to improve the guest experience while also considering the impact on margin and return. Norwegian Aqua is 10% larger than her sister Prima Class ships and perfectly combines NCL’s one-of-a-kind service and offerings with guest-first experiences that will make new waves at sea. On Aqua, we took the strong foundation of Prima and Diva and elevated it. We redesigned or re-imagined nearly all spaces, everything from the layout and flow to enhancements in our dining venues and entirely new offerings. One standout example is replacing the go-kart racetrack with the Aqua slide coaster. This innovative offering not only adds a thrilling new signature experience, it also takes up less space than the racetrack, freeing up room to increase stateroom capacity and add additional activities and amenities, and the Aqua slide coaster has been a huge hit, already garnering more than 270 million views across our traditional and social media platforms, a powerful early signal that Aqua is generating excitement and buzz. Norwegian Aqua is an example of what this team can accomplish when we stay true to our vision of having our guests vacation better and experience more, keeping our ROI and ROX velocity at the center of our decision making. Guests are happy, and the company is optimizing its financial performance. Turning to Slide 6, I’d like to highlight the exciting new developments at Great Stirrup Cay, our private island in the Bahamas which we announced just a few weeks ago during Norwegian Aqua’s christening. As many of you know, Great Stirrup Cay is already one of our highest-rated ports of call, and we’re about to take the experience to the next level. Later this year, we’ll complete construction on a new pier that will allow us to dock two ships simultaneously and eliminate the need for tendering, which can be particularly challenging during the winter months. With this new infrastructure in place and increased Caribbean capacity in the years ahead, we expect to welcome more than one million guests annually to the island starting in 2026. To support that growth and elevate the overall experience, we’ve announced a series of new enhancements which will open concurrently with the new pier. These include a large resort-style pool and slope bar and cabanas, a welcome center, and a new tram system for easier access across the island. We are also bringing the popular and exclusive adult Vibe Beach Club from several of NCL’s vessels to the island while also adding Horizon Lagoon, a dedicated family zone featuring a splash pad and interactive play area. These additions are thoughtfully designed to drive higher guest satisfaction, providing facilities for new experiences and opportunities for stronger overall customer spend. We’re confident these upgrades will further differentiate our Caribbean product and enhance our ability to drive incremental yield on itineraries that call on Great Stirrup Cay, but this is just the beginning. As we bring more capacity into the region, we will continue to evaluate opportunities to improve the island experience. I’m excited to see these plans come to life and look forward to welcoming even more guests to the island in the years ahead. In addition to enhancing the real-life experiences on our vessels and island, I want to highlight a major success story that demonstrates our ability to enhance our guest experience digitally with our revamped NCL app. We completed the full rollout across the Norwegian fleet in January, retiring all legacy platforms, and the response has been tremendous. Over 800,000 guests logged in during the quarter. The app does more than provide practical tools like ship maps and folio use, which reduce onboard service lines; it also is proving to be a powerful pre-cruise revenue driver. A growing majority of our guests are logging in before their cruise, using the app to book things like shore excursions and specialty dining in advance. This provides us with consumer insights which we can use to further personalize marketing and also lifts pre-booked onboard spend, which then creates a stickier guest in our customer ecosystem. We’re incredibly excited about the progress we’re making on the digital front and confident this platform will continue to enhance both upsell opportunities and the guest experience going forward. Turning to Slide 7, during the quarter we also made significant progress on our broader fleet management strategy, which centers on three key pillars: bringing new ships online, investing in and modernizing our existing fleet, and thoughtfully repurposing older tonnage. While we already covered Aqua’s delivery, I want to highlight the progress we have made modernizing our existing fleet. This quarter, we completed dry docks for Norwegian Bliss and Norwegian Breakaway, each introducing new guest-focused enhancements. On Breakaway, we debuted the Silver Screen Bistro, the first immersive cinema and dining experience at sea. We also expanded stateroom capacity, including in the Haven, expanded our most popular specialty restaurants, and expanded both premium and free guest experiences on both ships. These investments reflect our commitment to enhancing what matters most to our guests while continuing to focus on financial returns. Finally on the final pillar of our fleet management strategy, which is the thoughtful repurposing of older tonnage, we hit several important milestones during the quarter, signing agreements for two Norwegian Cruise Line vessels, Norwegian Sky and Norwegian Sun, to be chartered to Cordelia Cruises, a premium operator in India beginning in 2026 and 2027 respectively. We also reached agreements for Regent Seven Seas Navigator and Oceania’s Insignia to be chartered to Crescent Seas, a residential cruise line, also beginning in 2026 and 2027. These agreements are a clear reflection of our disciplined long-term approach to fleet optimization. By transitioning these ships into markets outside our core business with established operators in their respective areas, we’re able to unlock value from these assets while remaining focused on delivering a consistent, high-quality experience across the remainder of each fleet in our three brands. Importantly, these transactions allow us to simplify our operations, reduce the average age of our fleet, and drive further efficiencies, all while continuing to receive cash flow from these assets under charter. Our projected capacity CAGR from 2023 to 2028 now moves from 6% to 4% after factoring in the ships exiting the fleet. This is a smart strategic evolution of our fleet that supports our long-term financial and operational goals, and one that positions us well for the years ahead. Moving onto booking trends on Slide 8, advanced ticket sales were up 3%, as shown on Slide 9, while other key indicators such as cancellation rate and cruise next sales and onboard revenue remained steady during the quarter and in the first weeks of April. Looking at the remainder of the year, cruises for Q2 are nearly all sold and well within our final payment and cancellation window, so onboard revenue is the remaining variable, which as I mentioned continues strong. As macroeconomic uncertainty has increased, we have seen some fluctuations on bookings of the remaining Q3 inventory, resulting in a headwind to occupancy where we are prioritizing price over load factor, but this leaves us the potential for upside if conditions improve. By protecting price, this allows us to obtain higher yields on the remaining inventory if conditions improve while also allowing us to protect price in the future. As we look into Q4, recall our Caribbean capacity is up 10% year-over-year and represents 40% of our quarterly deployment. This results in a shorter booking curve, so our booked position for the next 12 months has shifted slightly but continues to be within our optimal range and above historical averages. Looking forward, we expect our strategic expansion of more close-to-home itineraries, especially coupled with our recent Great Stirrup Cay enhancements, to fundamentally improve our demand profile in the mid to long term. As a result, we see potential for pressure on our top line and are modifying our full year net yield growth outlook to be a range of 2% to 3%. This guidance recognizes the reality of the situation as it exists today and also reflects our assumption that the consumer environment stabilizes as the year progresses. While we recognize potential pressures on the top line, we are maintaining our full-year 2025 adjusted EBITDA and adjusted EPS guidance. We believe continued execution of our cost savings initiatives should essentially offset any top line headwinds. As part of our Charting the Course strategy, we have identified initiatives supporting $300 million of cost efficiencies across the organization, and we are using this as an opportunity to accelerate certain initiatives to capture benefits even sooner. This is a company-wide effort fully supported by the entire leadership team. We will continue to monitor the consumer closely, but make no mistake - we are guided by a clear strategy. We remain focused on disciplined pricing and cost control, delivering an exceptional guest experience, all while managing the business for the long term. We are committed to optimizing every dollar of revenue, controlling every dollar of cost, and delivering exceptional financial and guest performance. With that, I turn the call over to Mark to give more thoughts on our financial performance.

Thank you Harry, and good morning everyone. My commentary today will focus on our first quarter 2025 financial results, our full year outlook, and our financial position. Let me start with our first quarter results on Slide 10. We delivered solid results in the quarter, coming in at or ahead of guidance across all key metrics. As expected, occupancy was 101.5, down year-over-year due to increased drydock days and related repositioning sailings. Despite this, net yield came in ahead of guidance at 1.2%, driven by healthy net per diem growth of 4.3%. These results are indeed impressive as we are comping exceptional 13% growth in net per diem and 16% growth in net yields in the prior year. The 70 basis point outperformance in net yield was largely driven by strong results and close-in bookings in our Fun and Sun itineraries, including the Caribbean, Bahamas, Bermuda, and Hawaii, and strong pre-sold and onboard spend. Turning to costs, growth in adjusted net cruise costs excluding fuel came in lower than expected, increasing 3% to $169. The beat was primarily due to the timing of certain expenses that are now expected to occur in the second quarter. Excluding the $8 impact from dry docks, unit cost growth would have been 1.2%, well below inflation and in line with our commitment to sub-inflationary cost growth. As a result, adjusted EBITDA for the quarter was $453 million, above guidance of $435 million. Adjusted net income came in at $31 million, impacted by $23 million of foreign currency losses compared to $13 million of FX gains that benefited the prior year. As a result, adjusted EPS was $0.07, which had a $0.05 impact from foreign exchange losses. Moving onto the second quarter and full year guidance on Slide 11, I’ll start by noting that today is April 30, so we have strong visibility into the second quarter, particularly as all sailings are now within the cancellation window and there are just 60 days remaining in the period. I’ll start by focusing on the second quarter, where we expect occupancy to come in at approximately 103.2, which is about 2.7% below the prior year. As we discussed last quarter, this is driven in part by a 6% increase in sailings in Asia, Africa, and the Pacific versus the same period in 2024. These longer itineraries typically command higher pricing but have fewer third and fourth guests per cabin, which results in slightly lower occupancy. Additionally, given the challenges in the current environment we have discussed, we are prioritizing price over load factor, in line with our commitment to disciplined revenue management, as we believe this will produce the best long-term results. As a result, net yield for the second quarter is expected to grow approximately 2.5%, driven by healthy net per diem growth of 5.2%. Turning to costs, adjusted net cruise costs excluding fuel is expected to increase 1% in the second quarter. This is primarily due to the timing of certain expenses that shifted from Q1 into Q2, along with additional costs related to the delivery and debut of Norwegian Aqua. As a result, we expect adjusted EBITDA for the second quarter to be approximately $670 million and adjusted EPS to be $0.51. Moving to our full year outlook, we expect occupancy to average 102.5%. This reflects a 3% increase in deployment in Asia, Africa, and Pacific sailings compared to last year during the third quarter, as well as our continued focus on maintaining price over load factor. By prioritizing price, we believe we are setting a stronger foundation, and when demand normalizes, we should be restarting from a place of strength. Moving to net yield, as Harry mentioned, based on what we know today and assuming a stabilization in the current environment as the year progresses, we expect full year net yield growth in the range of 2% to 3%. This assumes that our pricing remains very strong, growing in the range of 4.3% to 5.4% with both metrics coming off record performance in 2024. Should we see pressure on the top line, we believe we can effectively offset this with continued execution and acceleration of our cost savings initiatives, and we are prepared to proactively accelerate additional efficiency measures. As a result, we are improving our full year adjusted net cruise costs excluding fuel guidance to a range of 0% to 1.25% growth. We do not expect our costs to be meaningfully impacted by recently proposed or implemented tariffs. Our global sourcing strategies and diversified procurement practices help insulate us from potential volatility in this regard. Our disciplined approach to cost control anchored in a more efficient operating model and empowered by our transformation office reinforces our ability to protect margins and profitability even in a dynamic environment. We believe this flexibility sets us apart from others. Of course, should the macroeconomic or geopolitical environment shift materially, we will reassess and adjust our guidance as appropriate. That said, we remain confident in our long term strategy, execution, and growth trajectory. Moving on, as a result of balancing challenges in the current environment combined with our robust cost efficiency program, we are maintaining our full year 2025 adjusted EBITDA guidance at $2.72 billion. Our full year adjusted EPS guidance is also unchanged at $2.05 as the reduced share count from our convertible note transaction in early April is offset by FX headwinds of $0.04. Moving to margins on Slide 12, the combination of top line growth and a more efficient cost structure continues to drive meaningful improvement. Trailing 12-month adjusted operational EBITDA margin expanded by nearly 280 basis points to 35.5% in the first quarter compared to the same quarter in 2024. For full year 2025, we continue to expect further expansion, reaching approximately 37%. As I’ve mentioned before, we believe we have a structural advantage. We’ve been building our cost efficiency capability for over 18 months now through our transformation office, and that work is already paying off. The fact that we continue to progress towards our Charting the Course margin target of 39% even in the current consumer environment underscores the strength of our execution and culture, the resilience of our business model, and our ongoing commitment to improving the balance sheet. Turning to Slide 13, I’ll walk you through our pro forma balance sheet and debt maturity profiles. As many of you know, we’ve been active on the capital markets front since quarter end. Most recently, we refinanced the majority of our 2025 exchangeable notes with new 2030 exchangeable notes in a shareholder-accretive transaction that reduced our diluted share count by approximately 15.5 million shares, all without increasing our net leverage. Looking at the rest of our 2025 maturities of approximately $640 million, which consists of ECA-backed loans, capital leases, and other items that we can comfortably cover with our current operating cash flows. Looking ahead to 2026, we have just $1 billion in scheduled maturities, which we also expect to be able to service through organic cash generation. As a reminder, 93% of our debt is fixed rate, so movement in market interest rates will have minimal impact on our overall interest expense. Turning to leverage on Slide 14, I want to reaffirm that reducing leverage remains our top financial priority, as is maintaining a strong liquidity position. Net leverage temporarily increased to 5.7 times in the first quarter, reflecting the delivery of Norwegian Aqua at the end of March. Keep in mind that when we take delivery of a new ship, we also take the related debt onto our balance sheet; however, because our net debt to adjusted EBITDA is calculated on a trailing 12-month basis, that ship has not yet contributed any EBITDA, so our leverage calculation temporarily increases. That said, we continue to expect net leverage to decline steadily over the course of the year, improving to approximately 5.4 times in the second quarter and ending the year at approximately five times. This puts us firmly on track to achieve our 2026 target of reaching the mid-4s. With that, I’ll hand the call back over to Harry.

Thanks Mark. I’ll close today with a few reminders about the long term fundamentals of both our industry and NCLH. Cruising remains a highly compelling sector with significant runway for growth. It still accounts for just 2% of the global vacation market, yet offers a differentiated value proposition, multiple destinations, world-class service, and on-board entertainment all at a better value than comparable land-based vacations. Add in long booking windows, rising consumer awareness, and limited supply growth, and it’s clear this industry is set to outperform. At NCLH, I’m equally optimistic. We have clearly defined brands, a premium guest demographic, and the leading growth profile in the space. Our performance is underpinned by a proven algorithm supported by a transformational cost savings program. This makes our business model sustainable in the long term. We’re also backed by an experienced management team, a disciplined capital allocation strategy, and a firm commitment to strengthening the balance sheet and reducing net leverage. We believe those fundamentals will continue to drive strong shareholder returns. Despite the uncertainty in the macro environment and based on what we know today, we are reiterating our full-year adjusted EBITDA and adjusted EPS guidance, underscoring our ability to perform and execute. We remain committed and on track to deliver all of our 2026 Charting the Course targets - this includes meaningful margin expansion, continued deleveraging, and record ROIC driven by our clear strategy focus and strength of execution. While the current macro environment presents its share of challenges, we remain confident and optimistic about the long term. We are managing the business with discipline, staying focused on what we can control, and maintaining a clear commitment to balancing cost efficiencies with guest experience. I could not be more proud of the dedication of our 41,000 team members, both shoreside and shipboard around the world, who bring our vision to life every day with their unwavering focus on performance and delivering results in all environments. I am confident we are charting the right course. With that, I hand the call back to our Operator.

Great, thanks. Harry, could you elaborate on recent changes in the booked position for 2025 and early ’26, maybe just how this compares to historical levels, and then relative to customer behavior that you’ve seen in April, what exactly have you contemplated in your updated guidance for volumes and pricing over the balance of the year?

Thank you, Matthew, and good morning. There are three questions here, and I’ll address them in reverse order, as that works best for me. Regarding customer behavior, we observed some fluctuation in early April, particularly concerning our Q3 European itineraries, likely due to hesitancy among Americans regarding long-haul trips in the current environment. However, I’m happy to report a return to normal; for instance, this week's booking and pricing metrics are on par with what we experienced towards the end of March. The brief period of weakness we faced was short-lived, and we're pleased about that. We are not expecting any miraculous turnaround in the latter half of the year; the challenges with Q3 Europe may persist, but we are prioritizing price over occupancy. We believe that as demand normalizes, we will be in a strong position. Our implied guidance indicates we have the highest year-over-year price increases among the major cruise lines, which is a positive sign for the latter half of the year. The implied guidance, around 4.5% at the midpoint, is promising and suggests a good yield as well, again the highest among our competitors for this period, which is encouraging. Looking ahead to 2026, historically speaking, we are ahead of where we were in 2017, 2018, and 2019, and at higher prices than last year, which aligns with our objectives, leaving us optimistic. I believe some nuances might have been missed in our previous comments, especially regarding Q3 Europe, which is a unique situation. The changes in our booking curve reflect our increased Caribbean itineraries for Q4, with deployment about 10 points higher than last year. These shorter, close-to-home itineraries, which include three, four, and seven-day options, naturally book closer in time, which is typical consumer behavior. Therefore, despite a slight decrease in our forward-booked position over the last 12 months, I wouldn't classify it as softness; we remain in an optimal booked position, considering the different dynamic with our Caribbean offerings. Additionally, in 2026, we are adjusting our deployment to rely less on Europe compared to 2025, and we are increasing the number of shorter seven-day itineraries rather than longer ones. This approach shortens the booking curve, providing a longer window for securing bookings, and it also lowers the price point. We're also enhancing our pre- and post-hotel stay programs, which should improve margins without increasing capacity. This year featured fewer hotel stays due to our emphasis on longer itineraries. All these factors combined make me very optimistic about our current standing and future outlook.

That’s great, great color, Harry. Maybe Mark, just to follow up, on historical lead indicators, have you seen any notable change with recent onboard spending, and then just on the cost side, if you could walk through flexibility with the cost structure, your ability to maintain EBITDA forecasts for this year, and just your confidence on the ’26 bottom line targets.

Great, good morning Matt. Listen, I think from an onboard revenue standpoint, we have continued to see very strong trends, both in Q1 and where we are month-to-date in April. It seems like once guests are on the ship, they’re very happy to spend and they continue to spend at solid levels, so we’re very, very pleased with that. In terms of the flexibility on the cost structure, I want to remind everybody, first and foremost we’ve always said that we’re not cutting costs just to cut. We have been taking a very targeted approach, an approach where we will not sacrifice the guest experience or the brand equity, and in fact since we started our program roughly 18 months ago, in most or all areas, our guest satisfaction scores have actually increased. We are focused on removing waste and gaining more efficiency out of the system, and we’ve been doing this for 18 months now, leveraging our transformation office. We’ve been gaining that muscle, building that muscle, and it’s really starting to pay off. As we’re seeing some potential pressures in the top line, we’re flexing that muscle. We’re simply doing things a little bit quicker than we had initially planned. We’re accelerating certain things in our supply chain system, we’re leveraging better commercial negotiations, we’re leveraging technologies, and in many cases we’ve actually increased the product on board the ships. All in all, we continue on our path. We’ve always said this was a $300 million-plus program, and we’re very firm on that target. We’re not going to stop at 300; it’s 300-plus. In terms of your question on our overall 2026 targets, we feel very confident in our 2026 targets. We’ve said we have the ability to flex if there’s pressures on the top line, we’re flexing on the bottom line for any near-term softness, and as we continue to gain and improve our margins, we firmly believe that we’re on a solid track to meet our 2026 targets.

If I could just add on for a second to Mark’s comments, which I think he did a fantastic job, I think the single biggest metric we can use to gauge guest satisfaction is the percentage of guests that book their next cruise either while they’re on the ship or the immediate aftermath of when they came in. I can report that across the NCLH level, we are at a record future booked position. If you look at the number of guests that cruised with us, for example in 2024, and how many of them have a cruise for ’25, or the guests that have already cruised with us in the first four months of ’25 and how many of them have a cruise on the books for ’26, those are all at record levels. I think perhaps more important than a specific guest satisfaction score or some other metric one may contemplate for guest satisfaction, that’s where the rubber hits the road, and if we can continue with those record numbers, it gives us absolutely the signals that we are focused on the right things. Mark made a very important comment that I just want to emphasize. This is not cutting for the sake of cutting, and this is not cutting the important things. I think Mark referenced the fact that we’re actually spending more money in certain areas, things like meats, proteins, fish, the things that really make a difference to our guests. We’ve actually increased our spend year-over-year in order to improve the quality. Despite that, there are so many efficiencies in the other areas - I mean, our favorite things are things like fuel, where I don’t think the guest cares how much we buy fuel for, as long as the ship gets them from Point A to Point B, which we’re very successful at doing - massive savings there, and in other areas like that.

All great to hear. Best of luck.

Thank you.

Thank you Matt.

Good morning, everyone. Harry or Mark, could you provide a breakdown of the brands? I'm curious about the bookings for the Norwegian brand compared to the luxury brands. I'm trying to understand your comments on booking fluctuations, which seem different from what we've heard from other companies. Is this variability more related to your luxury brands or the Norwegian brand? Additionally, could you explain the recent promotional efforts for the Oceania brand concerning the last 25 sailings and whether this relates to the European challenges you mentioned, Harry? Thank you, I realize that might be a bit unclear.

Thank you for the question. I’ll address your points in reverse order. All three brands are displaying similar booking patterns, with some challenges in Q3 Europe, which may stem from a larger percentage of Oceania and Regent itineraries compared to NCL, but this is limited to that. We’re pleased with the winter itineraries, and even the winter exotic itineraries are performing very well in regions like Asia, Africa, South America, and Australia. The world cruise on the luxury brand for 2026 is also seeing strong bookings, so there’s no weakness in luxury compared to NCL. They are all performing well, with just one common challenge. Referring to the Oceania promotion, we conduct promotions regularly, and this one is not significantly different in terms of structure and discounting. We maintain strict pricing standards. As I've mentioned, we are projecting a high 4% to nearly 5% price increase year-over-year for the latter half of the year, which we consider excellent. Oceania and Regent contribute positively to this. So, this seems to be more about marketing presentation rather than a real difference in discounting, and I hope that clarifies things. While we don’t provide detailed guidance by brand, I wouldn’t say we’re observing any significant differences among the three brands.

Thank you for that, Harry. For my second question, you mentioned that onboard trends are still strong, which likely indicates that close-in demand has also been robust, as Mark pointed out. Regarding your updated yield guidance, is the change in yield guidance since February primarily due to the challenges you've highlighted about third-quarter bookings, or do you believe there's been a shift in onboard or close-in demand? Additionally, Harry, you mentioned the term choppiness, but it seems that was related to just one week. Should we interpret this as an isolated incident, or is there more to consider?

I believe there are two main points to address. Firstly, the recent period of instability lasted more like two to three weeks rather than just one week, especially considering that April has four weeks. The last week of April showed improvement, so I would say we experienced about three weeks of fluctuations, although we did start to notice some recovery last week and even more this week. It's important to acknowledge that predicting the future is challenging. While not wanting to delve into politics, the uncertainty surrounding tariffs and other factors complicates our outlook. Although tariffs do not directly affect us, they can influence consumer sentiment, making it difficult to forecast what will happen in the next 30, 60, or 90 days. Therefore, I don't want to assume that every day will be as positive as this week has been. To clarify further, there is a distinction between bookings and revenue. We've faced two to three weeks of difficult bookings, but I want to emphasize that we have managed to maintain our price increases, around 4.6% to 4.7% year-over-year in the latter half of this year, which is impressive given last year's record price increases. We believe our pricing is very competitive. Although it's possible to boost bookings by lowering prices, our focus remains on maintaining price integrity. If we encounter a couple of slower weeks for bookings, we will prioritize keeping our prices stable to position ourselves for future success. We've even noticed some competitors resorting to dollar deposits, which I won't go into detail about, but it highlights our commitment to our pricing strategy.

Hey Steve, then in terms of on-board revenue as we think about it going ahead, look - based on what we’re seeing in our trading patterns today, on-board revenue remains strong. We expect and we continue to believe it’s going to remain strong. As I said, once the passengers are on board, they continue to spend money, so as we look forward, we’re not anticipating any significant reductions in on-board spend. Obviously it’s always a variable, but we have not seen any sort of indicators on that front of any sort of weakening in the onboard side.

Okay, great. Thanks Harry, thanks Mark. Really appreciate it.

Great, thank you. I just wanted to understand kind of what’s on your books going forward - you mentioned preserving price and the booking volume being in line. Can you tell us a bit about what price on the books is on a year-over-year basis, and I ask because looking at the advanced ticket sales being up high 2%, maybe rounding to 3%, but your capacity for the year is up 5%, it’s up 8% in the second half, so just trying to think about what price looks like on a year-over-year basis, what you actually have on your book. I understand you’re guiding it to be up quite a bit, but just kind of wondering what you have already. Thank you.

Good morning, Robin, and thank you for the question. First, when you consider that our ATS is up 3% to 4% and capacity is up 5%, it's important to note that as we transition to more localized itineraries in Q4 and into 2026, this will affect our ATS. We all recognize that a shorter booking window tends to lead to closer in bookings, so that’s not unexpected. Looking ahead, the key consideration is our load and pricing today. We have been very clear that our pricing is increasing. Our load factor is consistent with historical levels, and as Harry mentioned, we are observing some fluctuations as we finalize our Q3 European destinations. Overall, we remain within our ideal booking curve; however, we are experiencing slight volatility in completing the Q3 European bookings. Overall conditions appear healthy. While there is some uncertainty, as Harry noted, we've seen a rise in activity over the past week to week and a half, which is quite encouraging for us.

Thank you for the clarification. As a follow-up, you mentioned having more Caribbean bookings in the second half, which are made closer to the departure date, suggesting that your volume visibility for that time may be lower. Although there's still time before the fall Caribbean season, historically this period tends to show softness compared to the peak European summer. I'm curious about what you're observing regarding consumer bookings for that timeframe and that product. Thank you.

Yes, I think you're right that we have less visibility in that product. However, what we've observed in the industry, especially with the Fun and Sun itineraries, is that they continue to perform well. This has been evident in both the fourth quarter of last year and more recently in the first quarter. Close-to-home cruising is thriving, and we believe it will sustain this momentum moving forward. We’re seeing a lot of new cruisers entering the market, and these itineraries are well-suited to cater to them. It seems that Americans are feeling more comfortable staying closer to home, especially considering the current macroeconomic climate, which is causing some slight volatility as we approach the third-quarter European destinations. Nevertheless, all signs indicate that fourth quarter and closer-to-home itineraries are on the rise, and we anticipate continued success in that area.

Yes, we also have a little bit of a tailwind with the announcements we made on our enhancements to Great Stirrup Cay, which go live in mid-November. You’re right, Robin - sometimes Q4 Caribbean isn’t as strong as we hope, but we think that this gives us a unique tailwind for this year.

Hi, good morning. Thanks for taking my questions. Switching gears a little bit, all the pricing commentary is helpful, but how do you think about the ROI of the investments you’re making in Great Stirrup Cay? Are these investments you believe are marketable and can drive price, and I guess related, should we expect more marketing of the island over the next 12, 18 months? I guess I ask that in a question of customers who historically have not always reached the island on a regular basis, so curious how you balance that dynamic. Thanks.

Again, to answer your second question first, we absolutely are going to market Great Stirrup Cay more, not only in the next 12 to 18 months, but in the next 12 to 18 days as we’ve now made the announcements and we believe we have a much more competitive product, both because there are more things to do and also with the pier. As you mentioned, we’re going to have close to 100% success rate of actually visiting there, so we’re very excited about that and we are eager to get the word out, and so we will. In terms of ROI, listen - we have long-term ROI goals, we’ve talked about them in terms of our Charting the Course, and clearly the investments in GSC have to meet or exceed that threshold or we wouldn’t have made it, and we believe they will. We absolutely believe it makes it more marketable, we absolutely believe that it can drive price on the cruise and actually also drive onboard spend, so to speak, or spend on the island. I’ll remind you that with these improvements, we’ve talked in the past that we’ll go from about 400,000 guests visiting her each year, which I believe was what we did last year, to over a million guests visiting her next year, and it will only grow from there, which considering we move somewhere between 2.5 to 3 million guests a year, it’s a sizeable percentage of our overall guest count that will visit GSC.

Got it, that’s helpful. Then one broader ’26 question, if I may, as you mentioned, Harry, there’s greater Alaska and Africa and Asia capacity, which lowers occupancy this year in 2Q, 3Q, and there’s a mechanical headwind to yields. As you think about the greater mix of Caribbean and Fun and Sun next year, is that a yield tailwind under the context that occupancy is higher, or do those Fun and Sun itineraries have a lower relative price, thus netting out the yield benefit one would get otherwise from greater occupancy? Curious how you think about those two opposing forces, if that makes sense. Thanks.

We believe that when you consider both factors together, it will result in a yield advantage, and we're optimistic about that. Furthermore, not only is it a yield advantage, but it will also lead to lower operating costs. The logistics of providing food for a 3,000-passenger ship to destinations like South Africa, Argentina, or Asia creates significant cost efficiencies, offering both a modest yield advantage and a substantial reduction in costs.

Hi, good morning. Thanks for taking my question. I wanted to connect the dots on maybe a couple of comments that have been made so far. I think in the prepared remarks, there was some reference to the idea that 2025 guidance assumes that whatever choppiness you’ve seen stabilizes as the year progresses. I guess my question is stabilizes from what, right - we’ve talked about the idea that—and I think everybody can appreciate that the uncertainty around Liberation Day, that was maximum uncertainty and fear, but that things have gotten better since then. I guess do we still need trends to improve from here, and I can also appreciate that it’s difficult to extrapolate the last week into the rest of the year, but if the current run rate is sustained, is that enough to get to your numbers for the year, or do you need continued improvement from the most recent data that you’ve seen?

Really good question. It’s something we think about a lot, as you might imagine. Listen, I think I mentioned in the response to a previous question that this current week that we’re in looks like it’s going to about match the last week of March, which actually is a tailwind because this time of year is usually a little bit slower than the last week of March, the last week of March still being within wave and this period being more traditionally slower summer period, so we’re actually a bit encouraged by that. But James, I would never extrapolate from one week of bookings to the rest of the year - that’s a little bit of wishful thinking. That being said, if the current pace and pricing continues, we absolutely will hit our guidance for the year. I don’t think we would have suggested our guidance for the year if we didn’t believe that it was achievable. I think our concern, as we talked about before, is it is difficult to tell whether the current conditions are going to continue or not. I’ll leave it at that.

That's very helpful. As we look towards 2026, many participants on this call are more concentrated on that year, which is understandable. I'm curious about the potential takeaways regarding adjustments for 2026. Perhaps we haven't gathered enough information to make any changes at all. However, considering what you see for 2025—higher prices, lower occupancy, slightly lower yields but reduced costs—should we approach 2026 with a similar perspective, or is it still too early to draw any significant conclusions about 2026 compared to a few months ago?

Yes, I think it's a bit early to make definitive statements. We are encouraged by our booked position, which is significantly better than historical averages when comparing 2026 to prior strong years like 2017, 2018, and 2019. We started and ended April with a strong position, showing little movement in our lead throughout the month. While it’s challenging to draw conclusions for the full year based on just a few weeks of booking patterns, we have enough confidence to affirm that our goals for 2026 are realistic and achievable, as Mark noted earlier in the call.

Hi everyone, thank you. I know you've discussed bookings extensively, but when a soft patch occurs, how does your inventory management speed change? You mention being at the optimal booked position, but does a situation like this prompt you to reassess that and consider how you distribute inventory? I'd appreciate any insights on how that might shift. Thank you.

To the question, Conor, I hate to get too granular on these calls, so I’ll try to keep this at a high level, although it’s certainly a granular question. Listen - clearly over this last three-week period, we did look at our revenue management techniques. I meet regularly with our heads of revenue management across the three brands to discuss at a high level what we did or what we should do, and clearly we’ve made a few changes. But this pricing integrity, you know, it’s not just a cliché. We are super focused, especially for the further out periods - Q4, Q1, summer of ’26 to maintain price integrity, so while yes, we did do a little bit of close-in discounting for Q3 around this problem areas of Europe, we are super passionate about keeping price integrity because, as Mark mentioned in his prepared comments, that provides us with a solid foundation for growth as things start to return back to normal.

Conor, keep in mind we have a lot of tools in our arsenal that we go to before we really hit price. With our bundling packages, it’s all about value and what we’re giving the customer, so we tend to flex those in and out, which is a normal course part of our business. Certain pricing promotions, they tend to happen in very small pockets, very isolated need sailings.

I’ll also point out, and I don’t think anyone asked this question along the way so I’ll volunteer an answer, we are not cutting our marketing spend; in fact, we are increasing our marketing spend, and the guide that we provided of the zero to 1.25% year-over-year NTC cost increase assumes a higher marketing budget than we would have normally done in our base case, as Mark mentioned, as one of our levers in order to increase demand and keep pricing at the levels that we’d like to see.

Good morning everybody, and thanks for taking my question. You covered a lot of ground so far this morning. I’m wondering, Harry, if you could double-click on Europe, which you do keep coming back to that, we kind of can get the messaging that Europe is where you’re seeing the most acute challenge. Why do you think there’s American hesitation to go to Europe this summer, when you’re not seeing any hesitation for Americans to go elsewhere around the world? Is it just a supply and demand issue in Europe particularly, but maybe you can touch on a little bit more about the American hesitation.

It’s a really good question, and I wish I had a better answer for you, Brandt. I don’t want to pontificate or make things up. All I can tell you is what we’re seeing. I don’t know what to say. I don’t, Mark, if you have any color on that, either?

Look Brandt, as we’ve said, it’s about rounding out the European product. We have a very good base of business there on the books. We have good load factors there, but it’s about rounding out those last few percentage points of load. Best we can see is that consumers going on those little bit of a longer haul trips are possibly a little more hesitant at this stage, and we’re not seeing that in other markets, but we are seeing that in the rounding out of European itineraries. It’s coming from the North American customers, so that’s the best we can see. I think it’s just generally related to the larger macroeconomic uncertainty that’s out there.

Okay, that’s helpful. Maybe there's a supply issue there. My second question is a follow-up on that.

Brandt, I would hesitate. I don’t believe it’s a supply issue. I think those are two different things, supply issue versus maybe some consumer hesitancy. I want to make that very clear before you go onto your next question.

Appreciate that, Mark. The follow-on would just be Europe into 2026, which is quite a long time for Americans to book summer 2026, but that’s not the case for your luxury brands. Those customers tend to be older, book further in advance, and choose more expensive itineraries. You would expect to see them starting to book for 2026 during this core season. The question is whether you are observing any hesitancy among Americans to travel to Europe for the summer of 2026, or if it’s simply too early, or if people are willing to book for 2026 now because they are not concerned about the current macroeconomic situation, given that it is far enough out to proceed with bookings.

I can provide three responses. The short answer is no, we are not encountering any issues with Europe ’26. The medium answer is that the first week of April was not strong anywhere, but aside from that week and the following one, we have returned to our usual booking patterns for next year, which we are pleased with, and our booked position remains strong, consistent with the rest of ’26. So, no, we are not facing any challenges there. With that, I want to thank everyone for joining us today. I just want to reiterate that we’re super focused on our long term strategy. We are not going to do anything that will eat into all the progress we’re making on things like our new ships, our on-board products, our deployment patterns, our investment in GSC, our improvements to our brand. All these things are alive and well and have tremendous tailwinds for the future. We’re very excited about Q4, Q1, all of ’26, and we look forward to welcoming you all to the Allura when she inaugurates later this year and to continuing our dialogue. Thank you all very much.