Jason Liberty; President, Chief Executive Officer, Director; Royal Caribbean Cruises Ltd
Good morning. My name is Regina, and I will be your conference operator today. At this time, I would like to welcome everyone to the Royal Caribbean Group fourth-quarter and full-year 2024 earnings conference call. (Operator Instructions)
I would now like to introduce Blake Vanier, Vice President of Investor Relations. Mr. Vanier, the floor is yours.
Good morning, everyone, and thank you for joining us today for our fourth-quarter 2024 earnings call. Joining me here in Miami are Jason Liberty, our Chief Executive Officer; Naftali Holtz, our Chief Financial Officer; and Michael Bayley, President and CEO of the Royal Caribbean Brand.
Before we get started, I would like to note that we will be making forward-looking statements during this call. These statements are based on management's current expectations and are subject to risks and uncertainties. A number of factors could cause actual results to differ materially from our current expectations. Please refer to our earnings release issued this morning, as well as our filings with the SEC, for a description of these factors. We do not undertake to update any forward-looking statements as circumstances change.
Also, we will be discussing certain non-GAAP financial measures, which are adjusted as defined, and a reconciliation of all non-GAAP items can be found on our investor website and in our earnings release. Unless we state otherwise, all metrics are on a constant currency-adjusted basis.
Jason will begin the call by providing a strategic overview and update on the business. Naftali will follow with a recap of our fourth quarter, the current booking environment, and our outlook for 2025. We will then open the call for your questions.
With that, I'm pleased to turn the call over to Jason.
Thank you, Blake, and good morning, everyone. I'm thrilled to discuss our exceptional fourth-quarter and full-year results, our outlook for 2025, and the many exciting things happening at the Royal Caribbean Group.
2024 was an incredible year for us, and the fourth quarter was no exception. We delivered a record 8.6 million memorable vacations at very high customer satisfaction scores, achieved an 11.6% net yield growth, generated more than $5 billion of operating cash flow, and returned the balance sheet to investment grade metrics. We achieved our trifecta of financial goals 18 months ahead of schedule, and at the same time, we expanded capital allocation, all while continuing to invest in the business to support our growth ambitions. We also met our double-digit carbon intensity reduction target a full year ahead of schedule. These strong financial results set the foundation for a very bright future, which is truly just beginning for us.
With our industry-leading global brands, the most innovative fleet and private destinations, and the best people, we remain focused on winning a greater share of the $2 trillion vacation market. Our plan to capitalize on this opportunity continues to be grounded in our proven formula for success: moderate capacity growth, moderate yield growth, and strong cost control. I want to thank the entire Royal Caribbean Group team for their passion, dedication, and commitment that enables us to deliver the best vacation experiences responsibly and to drive exceptional financial results.
Before getting into the details, I would like to take a moment to discuss an exciting new chapter in our mission to deliver the best vacation experiences. Celebrity River Cruises, which we announced this morning, will unlock exciting new opportunities for our guests, our business, and our shareholders. Beginning in 2027, Celebrity River Cruises will provide yet another opportunity for guests to explore even more destinations with our leading brands. We placed an initial order for 10 transformative ships, which will serve as the foundation for this new Edge Class-inspired product.
Our ambitions, however, go far beyond that. We see river cruising as an exciting growth opportunity that aligns with our strategy of turning the vacation of a lifetime into a lifetime of vacations, expanding our ecosystem of vacation offerings, and broadening our reach into adjacent lines of businesses.
River cruising is a sizable and attractive market that has experienced double-digit growth over the last decade, driven by increasing demand from both seasoned cruisers as well as new customers. It is a very fragmented market that presents an exciting opportunity for us to win substantial market share. It delivers attractive APDs that we can capture while deepening customer loyalty within our family of brands.
River cruising is a complimentary, high-margin, high-ROIC business that fits nicely within our portfolio. The smaller scale of river ships and shorter build timelines allow us for faster deployment and return profiles. Celebrity River Cruises is a natural extension of Celebrity's premium ocean offering and appeals to a similar demographic of discerning travelers who value immersive, destination-focused experiences. River cruises spend a disproportionate amount of their time and money on travel, including more spend on all types of cruises.
We have a remarkable opportunity. Approximately half of our guests have either already experienced or intend to take a River Cruise vacation and a majority of guests who would add an additional vacation to take a River Cruise. Furthermore, Celebrity's existing reputation for exceptional hospitality and unparalleled experiences will attract new demand from travelers who are curious about river cruising but who haven't yet taken that leap.
Just as we've set the standard of excellence in ocean cruising, we will continue to innovate and elevate in the river space. The quality and sophistication of our Edge Class ocean ships will bring cutting-edge design, sustainable technologies, and reimagined onboard and shore experiences that raises the bar for river cruising. This is an exciting time for the Celebrity brand as this news follows our recent agreement to order a sixth Edge Class ship set to be delivered to Celebrity Cruises in 2028. Edge 6, also known as Xcel 2, will be the sister ship to Celebrity Xcel, which is gearing up for its inaugural sailing later this year.
So now, let's talk about 2024 results and 2025 outlook. I am proud of what we have accomplished in 2024. We delivered double-digit yield growth and generated $0.5 billion more in revenue than we originally expected. Our strong performance was propelled by the flawless execution of our incredible team, which drove elevated demand across our brands.
We also continued our focus on driving durable margin expansion, resulting in 74% year-over-year adjusted EPS growth. We continue to invest in our future while strengthening the balance sheet, achieving our target of investment grade metrics, and reaching mid-teen ROIC. The year ended on a great note with revenue yields up 7.3% in the fourth quarter, earnings that were $0.20 better than our guidance, and a strong book position for 2025 from both a pricing and volume standpoint.
2024 was another year of remarkable innovation as we ushered in a new era of vacations with the launch of Icon of the Seas, Utopia of the Seas, and Silver Ray, while announcing and advancing several key private destinations that will further differentiate our leading portfolio of brands, including Perfect Day Mexico, Royal Beach Clubs in Paradise Island and Cozumel. We received exceptionally high guest satisfaction scores and attracted a record number of both new and loyal guests.
We continue to invest in our commercial and vacation experiences flywheel. In 2024, we expanded our capabilities across distribution channels to create a digital experience that connects the dots across all aspects of the consumer journey. Guests have been seamlessly planning and booking their dream vacations, reducing the amount of time to book a cruise by half. We launched over 300 new digital capabilities across channels in 2024, improving the overall experience and reducing friction points while increasing spend.
We also infused AI into the guest journey to provide a better, more efficient experience and more personalized service. For example, our new in-app chat saw a 35% increase in guest adoption that led to a 20% reduction in the customer service line on board. With 9 out of 10 guests indicating their intent to repeat, our new Loyalty Status Match program allows our guests to earn loyalty status across all three brands, fostering long-term relationships and rewarding loyal customers across our portfolio.
Turning to this year, momentum continues in 2025 with bookings accelerating since the last earnings call, resulting in the best five booking weeks in the company's history. Bookings have continued to outpace last year across all key products. Our book position is in line with prior years at higher APDs, allowing us to further optimize pricing and yield growth as we continue to build the book of business for 2025. As our bookings for 2025 have ramped up since the last earnings call, our APD premium from last year has widened, underlining our continued focus on optimizing yield growth.
Our commercial apparatus is firing on all cylinders, and all channels are delivering quality demand above 2024 levels. Our direct-to-consumer channels are performing extremely well. We added hundreds of new capabilities across our digital platforms last year as consumers' preference for digital engagement continues to grow. Our travel partners are also delivering meaningfully more bookings than last year at higher rates.
We continue to see particularly healthy demand from North America, where about 80% of our guests will be sourced for this year. Our brand's global appeal and nimble sourcing model allows us to attract the highest yielding guests by positioning our ships in multiple markets around the world. Our brands lead in their respective segments and are very successful at capturing quality demand across sectors and sourcing from new consumer bases.
As we think about seeing more demand for 2025 and beyond, we look to both macro trends and data points for millions of daily interactions with our customers.
We continue to see very positive sentiment from our customers, bolstered by strong labor market, high wages, surplus savings and elevated wealth levels.
At this same time, they continue to prioritize travel experiences.
American households are wealthier than ever with continued wage growth and low unemployment driving strong consumer spending.
We see positive sentiment from our customers in a macro environment that favors experiences over things as leisure and travel spend continues to grow.
Consumers plan to spend more on vacations and take more trips in the coming year.
And our gas over-index in their intent to spend more on leisure travel.
Consumers place significant value on visit to be multiple destinations.
And this is even more important to millennial and Gen Z consumers, something that cruising is uniquely positioned to deliver on crews.
Consideration is high.
The biggest gains among millennials and younger travelers crews remains an attractive value proposition and also leads and guest satisfaction compare to other vacation alternatives.
We are very well-positioned to benefit from these trends with our exceptional and leading portfolio of brands, innovated and differentiated ships, exciting and exclusive destination experiences and leading commercial NAI. driven capabilities.
2025 is shaping up to be another great year with 23% expected earnings growth and accelerated path towards robust cash flow generation.
In 2025, we expect to grow capacity by 5% through the introduction of star of the Seas and celebrity Accel as well as the full year benefit of Utopia disease and silver rate new ships on.
We elevate our vacation experience and draw new customers to our brand, but also provide yield tailwinds and enhance overall profitability.
We expect yields to grow 2.5% to 4.5%, driven by the performance of our entire fleet, new and existing ships, combined with our leading private destinations and strengthening commercial apparatus.
Strong rates and load factors, together with continued focus on margins and strategic capital allocation are expected to drive adjusted earnings per share $14.35 to $14.65, which includes $0.65 of FX and fuel rate headwinds compared to our last earnings call.
Our proven formula for success is working moderate capacity growth, moderate yield growth and strong cost control leads to enhanced margins, profitability and superior financial performance for decades.
The Royal Caribbean group has been redefining what a vacation experience can be.
It's clear that our success has been built on a foundation of differentiation, setting ourselves apart through innovation and excellence, we have led the way and delivering best in class ships that redesign possible.
As we look ahead, we continue to redefine vacations through the ambition expansion of our private destination portfolio.
The exciting entry into new lines of businesses like Celebrity Cruises and the development of industry leading digital and AI capabilities.
We relentlessly pursue an acute understanding of how today's families couples and individuals want to spend their valuable vacation time so that we can continue to develop the expanding ecosystem, vacation experiences that wildly exceeded our expectations.
Our goal is to create seamless personalized journeys across our portfolio of experiences from ship to private island to river cruises and beyond that, Inspire loyalty, deepen relationships and position us as the preferred choice for every kind of vacation.
This is not just the strategy I promise to redefine what travel means for our gas.
It's about meeting them where they are dreaming alongside them in turn vacation of a lifetime into a lifetime of vacations.
With this vision, we are poised to lead not just the cruise industry, but the broader world of travel into an exciting new era.
Through it all, we remain committed to our suite of future vision, sustaining the planet, energizing communities and accelerating innovation.
2024 was an exceptional year for our company, marked by many milestones that set the stage for an even brighter future for your continuously LED, what it means to deliver the best vacation experiences are inspiring ships and unparalleled private destination portfolio and globally trusted brands.
All propelled by the best people, Royal Caribbean group is redefining what people have come to expect from a vacation as we embark in 2025, we remain focused on winning an even greater share of the broader vacation market.
And we are just getting started with that.
I will turn it over to Naftali enough.
Naftali Holtz
Thank you, Jason, and good morning, everyone.
I will start would be doing fourth quarter results.
Our teams delivered another exceptional quarter that exceeded our expectations, resulting in adjusted earnings per share of $1.63.
The outperformance compared to our guidance is driven by better revenue across our brands and products and strong cost performance.
Despite the high headwind from stock compensation due to the increase in our share price, we finished Q4 with net yield growth of 7.3% to 100 basis points higher than the midpoint of our guidance.
That was driven by stronger than expected expected APDs from both new chips and like-for-like hardware.
We also saw while both better pricing on ticket as well as better than expected onboard spend.
Net cruise costs, excluding fuel, increased 13.5% in constant currency.
The increase in costs compared to guidance is entirely driven by 300 basis points impact from higher stock-based compensation due to the rise in the stock price.
Adjusted EBITDA was 1.1 billion, 10% year over year growth.
Both an operating cash flow was 1.5 billion.
Now switching to our 2025 outlook, I will start by taking you through capacity and deployment for the year.
With the introduction of Star Accel and a full year of Utopia and silver, a capacity is expected to increase 5.4% year over year.
We have fewer dry dock days this year compared to 2020 for contributing about one percentage points to capacity growth this year.
We also have some of our biggest shifts planned for drydock, and we also have restarted our modernization program that has more days for each drydock.
As a result, we have less drydock days than 24 more days than 2023.
In terms of quarterly cadence, the first quarter has more drydocks than last year, negatively impacting capacity growth by 300 basis points.
The second and third quarter are relatively flat to last year, while the fourth quarter we'll have fewer dry dock days compared to last year.
Finishing capacity growth by 500 basis points.
As a result, ABCD.s are expected to grow around 3% in the first and third quarters, 6% in the second quarter and 10% in the fourth quarter.
New hardware in 2025 represents 4% of total capacity growth compared to 15 mentioned the year is off to a very strong start last quarter.
We said, demand for 2025 is strong with book load factors in line with prior year years and at higher rates along for further pricing and yield growth as 25 bookings continue to ramp up.
And that's exactly what is happening since the last earnings call.
We've continued to build load factors, but also expanding our booked a PD versus the same time last year.
The Caribbean represents 57% of our deployment this year.
And capacity in the region is up 6% over last year.
With the introduction of start of the Seas and celebrity Accel in the second half of the year, we continue to differentiate in the Caribbean market with our incredible ships and private destinations driving very strong performance.
Over 70% of guests on these itineraries, sailing with the Royal Caribbean brand will visit a private destination this year, and that percentage will increase to 90% in 2027.
With the open think of the beach clubs at Paradise Island Data and cause ML and perfect de Mexico, Caribbean bookings have been strong with ICON and Utopia continuing to perform well above expectations.
On top of strong performance of existing hardware.
Europe will account for 15% of capacity and is up 5% versus last year.
European sailings continued to perform very well and both rate and volume basis, Alaska is expected to account for 6% of total capacity.
We have some of the best hardware in the region, including Celebrity Edge to Quantum class ships and silver Nova among others.
Alaska demand has been very strong and continues to surpass our expectations.
Now let me talk about our guidance for 2025.
Our proven formula for success, moderate capacity growth, moderate yield growth and strong cost discipline is expected to drive 23% earnings growth and higher cash flow generation.
This year, we expect the yield growth of 2.5% to 4.5% balance between new and existing hardware.
Our 2025 yield growth outlook is on top of 11.6% growth in 2024.
That was boosted by fourth quarter outperformance and put 40 basis point headwind on this year's growth metric.
Full year.
Net cruise costs, excluding fuel, are expected to be flat to up 1%, as our focus remains to enhance margin as we continue to grow the business.
The cadence of our cost growth varies throughout the year with second and third quarter costs expected to be higher than the first and fourth quarter, driven by timing of drydocks ramp-up of costs related to our acquisition of the cost of my report and other destinations.
We anticipate a fuel expense of 1.17 billion for the year, and we are 60% hedged at below market rates.
Based on current fuel prices, currency exchange rates and interest expense, we expect adjusted earnings per share between $14.35 and $14.65.
I would also note that this range includes $0.65 headwind from foreign exchange and fuel rates since the last year earnings call.
When we shared our preliminary expectations for the year, we also expect 13% growth in adjusted EBITDA and 150 basis points growth in gross EBITDA margin dispositions us accelerate our cash flow generation, which allows us to continue investing in game changing strategic initiatives, maintaining investment grade balance sheet metrics and expanding capital return to shareholders.
We expect to invest 5 billion of capital into our key strategic growth initiatives as well as ensuring our assets are well maintained.
We are set to deliver star of disease in the third quarter and celebrity Accel in the fourth quarter with both ships having committed financing in place, not ship capital is expected to be 1.6 billion with a significant portion related to our private destination portfolio, including the acquisition of the cost, I report that we announced last year, the beach club in Cosmo and the beach club Nossa that is expected to open in the fourth quarter of this year.
Now I will discuss our first quarter guidance.
In the first quarter, our capacity will be up 3% year over year.
More than 70% of our capacity will be in the Caribbean, 19% in Asia Pacific and the remaining capacity spread across several other itineraries.
Net yields are expected to be up 4.75% to having a quarter percent with growth coming from both new and existing hardware across all products.
First quarter yield growth disproportionately benefit from both the timing of dry docks and new hardware, a full quarter of ICON.
In addition to the total.
Yeah.
And silver rate.
Net cruise costs, excluding fuel, are expected to be up in the range of 1.6% to 2.1% and include 130 basis points impact from increased drydocks compared to the first quarter of 2020.
For Taking all this into account, we expect adjusted earnings per share for the quarter to be $2.43 to $2.53.
Turning to our balance sheet, we ended the quarter with 4.1 billion in liquidity.
Our balance sheet is in a very strong position to support our growth ambitions while expanding capitalization at year end 2020 for our balance sheet was unsecured and leverage was at low three times, consistent with our goal of investment grade credit metrics.
With a strong expected cash flow generation and increase in EBITDA, we expect to finish 2025 with leverage at mid to high two turns.
We continue to manage maturities and find opportunities to reduce cost of capital.
In closing, we remain committed and focused on our mission to deliver the best vacation experiences responsibly.
We work to deliver another year of solid results.
With that, I will ask our operator to open the call for question and answer session.
Operator
(Operator Instructions) Brandt Montour, Barclays.
Brandt Montour
Good morning, everybody, and thanks for taking my question and congratulations on the a strong 2024 results.
And the first question is about yields and your guidance.
You know, just looking at the end 3.5% midpoint of the yield guide.
And I guess now you kind of wanted to think about and 40 basis points of tough comps from the fourth quarter upside.
It's sort of level setting that versus the high single digit per diems that you reported in 24.
Kind of help us think about we're trying to bridge that gap.
And just maybe you could help us think about the puts and takes this year versus last year, what you had last year as a tailwind and the new hardware side where you had this year and how sort of comparison?
Jason Liberty
Okay.
Well, brand, thank you and thanks for the question.
And we hope homes Well, I think if you go to the first point on the strong demand we saw in the fourth quarter, you did on kind of LOBs comparable on for us.
And so we would be guiding north of our oh four or maybe slightly north of Yum.
China.
And that rise happened in close-in demand, which is which is really great on.
We're also coming off of some very incredible comps from last year, we had 11.6% improvement.
So it is a little bit more of a difficult comp.
And because we also recovered our load factors alone time ago.
And so that that potential lift up from a load factors is is on is not is not something that's better an opportunity for us, but it is early and leave on.
And we've seen obviously, incredible booking activity during the last week was our highest booking week ever for Wave.
And so we are we are very encouraged in what we're seeing.
And I think the other thing that we're very encouraged on is that were not only seeing improvement on on on new hardware, but also on like for like, of course, we have some very incredible comps on a time when we launched or home as well as Utopia from as well.
So that our guide of the 2.5 to 4.5 on is based off of where we're booked today and the trends that we're seeing from as as as always on, and I think we feel now you're confident you're guiding.
We are also very encouraged to be able to give a midpoint on our guidance of $14.50 considering all the headwind from FX and fuel that that that um, been around since the last call.
Brandt Montour
Great.
Thanks for that occasion.
And I should also say congratulations on the exciting announcement on entering the river mark.
And my second question is about the river market.
And obviously, you guys have done a lot of research on the existing market and where you think your place can be in that market.
And so we all know there's a ton dominant competitor out there and that qualifies as themselves and luxury, the per diems that they charge our luxury rates, you're celebrity brand in ocean charges rates significantly below that and commensurate with the broader premium ocean market.
So I guess the question is, do you foresee the Celebrity brand sort of sliding in the river market below that luxury and per diem general area?
Because it sounds like, you know, again, use the word elevate used the word cutting-edge.
It doesn't sound like you expect the product sort of DD&A rate.
So maybe you could provide a little more color on that.
Jason Liberty
Sure.
Well, your first, obviously, there's there's great competitors on mid-November, Spaceline like when you don't want to say, but also by getting inventory towards an exceptional job on that space.
It's also very fragmented market as well.
And also, I think it's important when you're comparing with celebrity gets today versus what you might see, we're liking us today.
As an example, it's important to note that of IPO on the celebrity side, it's not it on an all-inclusive product.
So as you start adding in some of the inclusivity that comes with River, we expect on those EPDs to also on elevate.
The other thing when I when I talk about elevating the brand, at least in our point of view, is there's a real credit was incredible opportune entity to ARM, just these beautiful small on ships and through design, improving and culinary and entertainment, state rooms, et cetera, and really bring it up to the level of what you see on Edge, which to us is far superior to anything else that's in that space that we're going to draw really high-quality demand at the end of the day for us.
We have you well over 8 million guests the year, we have a database of 35 million people who are continuing vacationing with us on a great opportunity for us to use that flywheel to generate high-quality demand and of course, with our loyalty program on being able to make sure that people are being incentivized to stay within our ecosystem.
And that's really what this is a balance.
We're trying to meet our customers where they want to be.
On an experience standpoint, there's high trust in our brands.
We're going to deliver the vacation experience that we that that lives up to the marketing on.
That's that's that's out there.
And I think that's why we think this is a great space for us to go into.
As I've said before, in the past, we really focus on ourselves as being an experienced company refers you to deliver those experiences.
And we think the computing platform is obviously on where we where we are really excel.
And we think that there is a great opportunity for us.
Do this as well in the Riverside.
Brandt Montour
Excellent.
Congrats again on the quarter.
Jason Liberty
Thanks, Brent.
Operator
James Hardiman, Citi.
James Hardiman
Good morning and thanks for taking my questions.
I actually want to stay at that hub on that same page with the with the river cruise announcement.
I'm just trying to get a feel for the offering and how it's going to be similar versus different to on the Viking offering.
But I guess first, let's just start.
So 10 ships on you're going to started in 2027.
I'm assuming all 10 ships will be up and running by 2027.
What's the shape of that ramp?
And then as I just think about sort of what the offerings are going to look like our kids are going to be allowed on the ships.
Is it primarily US customers going to Europe?
Jason Liberty
I'm assuming there's going to be a big nightlife component given that's sort of celebrities brand, just trying to put some meat on these bonds while also doing a lot to come on, which I think is going to be great on the round.
The Riverside are more in our plan is to deliver a couple of ships on in 2027 minutes about for the year.
I'd also point out is we are very intent full in our words toward for the front of it was initial quarter was 10 ships on.
And so this is not a hobby for us, and we are going into this from into this space.
I just wanted to point out in Q2 of 2027 when the ships come in is going to be an incredibly exciting year anyways for the company because we're going to have icon for and we're going to have a couple of river ships from and have probably de Mexico launching in 2027.
We're going to have the beach club and cause a mall will have a full year because that's similar launch in 2026.
And so there's a lot of a lot of great things that we're looking forward to in 2027.
one of the things that I would I would say on, but I think it's going to differentiates us is that we have for decades, we have built out a set of brands that are globally sourced, and we source those gas from all over the world.
And our yield management tools, which get more and more sophisticated each and every day allow us to source the highest yielding guest on in the world.
And so that so our sourcing can range from.
Obviously, today, we're about 80% coming from the US, but we have times when we're 60% coming from the U.S.
And so we have and flow based off of those markets.
And so we would expect or you are sourcing would generally be similar to what we're seeing on the ocean side of things.
And so but I think it's important to remember, these are these ships or you're not on I kind of the SI side as Randy had a hold about 180 passengers.
And so our ability to sell and market and on palm attract high-quality demand from Royal brand, our celebrity brand, as well as our Silversea brand, is going to be an incredible on tidal wave on for us to be able to manage on demand for this product.
On the experience side, it will be similar to what you see on celebrity on.
And so there are from time to time, there are kids that that can be on celebrity belief on I said you elevate the aesthetics and the details and design of the ship have more activities on whether that is on the culinary side, whether that is on on the beverage side of things, management, entertainment, whether that's with the state rooms and how you can connect further from the Ship to Shore.
I'm sorry, you were able to kind of get an end to end tend to experience some of the land as well as what could what can happen on the ship.
So we're really excited about it on will be talking more and more about it.
I'm about to you about the design on like we always do.
We like to tease and then build up on what it's going to be.
And I can tell you in the and the and the in four hours since we've announced this on, we're just watching the number of the amount of interest from our travel partners from our guests to get on one of our riverboats as soon as possible.
Exceptional.
And it comes down to, I think, which is what's most important is trust, Omar, just to trust us, and we're going to deliver on this.
James Hardiman
That's great color and love the team from.
I guess secondly, just on the CapEx front, I think you guided 2025 to 5 billion pretty big step up.
I'm assuming we'll need to wait the, you know, on the free cash flow front until the analyst day to get a more sort of unified outlook.
But maybe is there any way to think about sort of CapEx requirements moving forward?
I think we're looking at 3.4 billion new build 1.69 newbuild.
How should we model those going forward?
I'm assuming the newbuild piece goes up with capacity, but then some new build.
And there's a lot of newbuild opportunities for you guys, for sure.
So how do we think about that $5 billion number and how it moves into 26, 27?
Naftali Holtz
Hi, it's not.
So I think if you kind of think about what we have this year and kind of what we laid out in terms of our priorities.
And so you think about the ships that we have to deliver this year, both started the season celebrity Accel compared to what we had last year.
And remember, Icon last year did not actually delivering 24.
We actually delivered in 2023.
So that capital was content and 23.
So you're going to we have the ship layer out in terms of our deliberate and spot we expecting.
And you should expect that to follow that and remind you that we do have committed financing for those new order ships.
And so the 5 billion that I noted and intend to release obviously is a gross basis.
And we have the committed financing related to the deliveries as well as installment payment in terms of non ship capital, we have maintenance capital and kind of the things that we do that to not change materially year over year.
But we did lay out our priorities in terms of fiber destinations and as we ramp up our private destination effort.
And you see what we've announced does are following kind of that cadence.
And this here we have particularly Costa Maia, where we announced last year, the acquisition of Newport dot acquisition actually will close between end of Q4 at the second quarter.
And then we also the acquiring land and then we'll start the construction at some point.
And then this year, we also is also expected to deliver the beach club Nassau at the end of the year.
So obviously, he development capital there as well.
So majority of that capital is going to be there.
We also restarting our modernization program.
So we have one ship this year and then we'll share more details gone going forward.
Around our program, but we do see an opportunity around that.
Of that said, if you think about the size of the company and where we are, we delivered $6 billion of EBITDA last year, kind of look at our guidance.
This year, we're going to deliver 13% more of EBITDA.
And we've made significant progress around our balance sheet, reducing our interest expense.
You see it below 1 billion people that into account, you see that we're generating significant amount of cash flow.
And our focus is to continue to spend more margin as we grow the business that will accelerate cash flow and allow us to invest in in our key priorities, maintain about an investment grade balance sheet metrics and also do capital returns.
And so the size of the company and the generation of the cash flow really we feel is allowing us to achieve all those things.
James Hardiman
Mix wasn't big enough.
Operator
Steve Wieczynski, Stifel.
Steve Wieczynski
Hey, guys, good morning.
So So going back to the on the guidance for this year, I'm not going to sit here and harp on the fact that the yield guidance does look a little bit conservative does.
But if we think about the EPS guide, let's let's go over there.
That's actually much better than I think we were expecting given the FX and fuel headwind.
So just wondering if you guys embedded anything in there in terms of buybacks or debt revise or that excludes those potential accretions?
And I guess then another way is that Jason talked about 14 handle comment on probably to us that could have easily been a 15 handle without these headwinds right now.
And is that kind of a fair statement?
Jason Liberty
Yes.
I mean, you have obviously you had the $0.65 of the 1415 that would get to north of $15.
I think I think what may have been a surprise was on where our cost guide on came out for the year.
Our teams have worked exceptionally hard by continuing to leverage scale within our business.
And so somewhere in the past, we do not contemplate from capital returns in down in that guide.
So if we were to repurchase shares and which we have, our strategy has been to do that opportunistically, that allows our that would obviously be a tailwind on the earnings per share side.
Steve Wieczynski
Okay.
Jason Liberty
And then yes, you had asked about it.
We always say that, right, our formula is moderate capacity growth, moderate video growth, strong cost control.
And you can see that does deliver significant performance.
And so whatever is in a normal that paydowns that's already in our capital investments already in.
And then any dividends, of course, that will be announced that's already in than any other things that are not included.
Steve Wieczynski
Okay.
Got you.
And in adjacent go back to the river real quickly.
I mean, obviously Rivers up much different animal versus versus ocean.
And one of those key differences is the fact that the operators and revenue berthing rates to get access to certain ports.
So just they're just wondering of celebrity has already secured the birthing rates are in the process of doing some of those voting rights.
And then maybe is there an opportunity down the road to enter River as well with Silversea to kind of capture you're a little bit more of that higher end customer on churn from?
Jason Liberty
I think I mean, I think, firstly, just to use your your metaphor of an animal on, it is a different animal, but it's still an animal on.
And so we think we're where we have grown to get comfort with the space, understanding how it works, different people to partner with in this space.
Of course, we we didn't just make this announcement Palm without having the orders in place.
We did not meet this announcement without having the birthing in place.
And I also think that you sometimes river inside of Europe, but they're also Rivers around the world.
And we're trying to make sure that we are on being able to provide the experiences that are that our guests are looking for.
I mean, as we build up this on, I'm just kind of engine for river under celebrity arm.
And we'll certainly provide opportunity for our ultra-luxury guests to you to consider a of a river experience under Silversea.
We're going to start off with celebrity.
We're going to see that where we think that there is great scale opportunity.
And then of course, you will will be looking to see if there's other ways to expanded for our other brands as it has.
It has as it sees fit, but we have gone into this very prepared, very buttoned up.
And again, as I said a few minutes ago, this is not a hobby for us from.
So we do plan on to, um, we are taking this extremely seriously and so we want to make sure we can live up to deliver the best vacation experiences in the world.
And making sure we're doing that in a responsible way.
And that's all heavily in the consideration of what we're doing.
Steve Wieczynski
Okay.
Got it.
Thanks, guys.
Appreciate it.
Operator
Matthew Boss, JPMorgan.
Matthew Boss
Thanks and congrats on another great quarter.
Thanks, mac and cheese and meat.
Maybe two-part question on the strong start to 25.
Any specific areas that you're seeing notable acceleration globally?
And how are you optimizing the pricing relative to capacity?
And then maybe just higher level, I guess what inning overall would you say we're in today on your market share opportunity City and the 2 trillion global vacation market?
Jason Liberty
Okay.
Sure.
Thanks, Matt.
I think on on the 2025 side, again, one of the day, I think the interesting trends we've now seen now going into kind of three-year our 3rd year here of we have coming out of out of the incident is that we see really strong demand across all of our products.
And obviously, having incredible assets like Perfect Day and ships like utopian icon in the Caribbean are just dry and drawing a different level of quality demand from for multiple generations and all different mixes of first-time cruisers zone first brand as well as our loyalists.
And so really strong demand, the Caribbean out and continued elevation in Alaska and really across all European products as well as in Southeast Asia and Australia, New Zealand and even in China.
So we're seeing an elevation are more or high demand across all those different products.
And then in terms of markets, we were again, everyone's fighting over the highest where could the highest yielding gas come from my fighting.
I mean, our and our guests are finding for based on our hips, you'll receive still really good demand trends from Europe as well as obviously, the US is exceptionally strong in North America is exceptionally strong.
So there's not there's no area of kind of lumpy of weakness.
There's always a deployment here or there that we would maybe switch up, but that's a heavy heavy on the margin overall, we're seeing really strong, really strong demand across.
And then, of course, you're all the all the different technology that we're now utilizing arm versus getting stronger and stronger on what I would describe as Disruptive Tech, whether that is using a I your Gen-i and other things to enhance the guest experience or to just get a read on what we can be recommending to our guests, whether it's on pricing or whether it's on the guest experience.
That's and that really kind of early innings of some of all of this.
And I think that's why I think we will continue to see just kind of out performance in these and the different trends.
It's tough to tell what are what inning we're in a, but I would say that we are generally in the early beginnings of some of the opportunity that's in front of us.
It's great to hear.
Congrats again.
Yes, placements.
Operator
Robin Farley, UBS.
Robin Farley
Thank you very much and good.
Just circle back to your river cruise times on, can we get a sense of your peers mentioned obviously your ambitions are much more than these initial 10 memberships in terms of how quickly you can order more.
Is it fair to say, given the length of time and maintain, if not how long you would need for it?
You can actually waiting launch in 2027 to see what's working, what's not working before new leadership for started 2013 and beyond?
Is that kind of what we think that is the timeframe for additional orders?
And then taking part of the question is, can you give us a rough sense of how the build Converse cost comparison, maybe some of the relationship you had delivered in the last year that is a pretty comparable or less in more than that and then squeezing like a protein that is just purely on the yield you mentioned, obviously it can be more inclusive product if we think that your yield, which, of course, includes the word come at you and I see in a premium to your existing yield, given that the majority of your home fleet right now, the way L-band and this will be celebrating maybe celebrity no plus pacing and all of that kind of a sense of what premium tier existing yield thinking.
Jason Liberty
Sure.
Good morning, Robin.
So I'm a timeframe side.
What I would say is I know you're not going to wait till 2027 to order more on this is our initial order from these new yard probably can produce about four of these year, um, um, we're not going to get into when a cost per per arm should obviously the cost per berth is going to be elevated.
However, these are I mean, relative to a cruise ship or they are a very small amount of money.
And so our ability to scale into the some we could probably be the second largest operator in would be so getting less money than the Accel to ship them we just bought.
So it's a it's not something that has a high barrier of entry unemployment costs, but there is a high barrier in terms of the execution and making sure we can do this in a and a flawless way.
As it relates to on the yield side on, we would expect that this would be a yield tailwind to our business on it.
We do expect that it's going to have at scale a similar, if not better margin profile and better ROIC profile.
And then lastly, I would say that will be a little bit different is usually the riverboats do not operate year-round.
So they'll be you'll be parts of the year where the ship some are laid up on.
Some of that's under the kind of the current models will we'll see just as we found a way to lift the shoulder seasons back in today, we will be will obviously be starting to see how we kind of how we can make them as productive as we can from during the off-season when it's cold.
Thank you very much.
Things from.
Operator
Conor Cunningham, Melius Research.
Conor Cunningham
Hi, everyone.
Thank you.
I'm just trying to understand the into the cost gotten a little bit better and obviously a lot better for the full year.
But can you just give a little bit of a bit of a shape of how the year progresses as I just follow capacity?
And then what is not in yet?
You had a big headwind from from from from from stock-based comp, and I assume that's not an intense.
You're just any thoughts around that?
Thank you.
Jason Liberty
Yes, my Conor.
So yes, the follows me the drydock cadence, right?
And I had spent some time in my prepared remarks walking through the capacity growth bottom of the quarter because that does impact the Yum.
And the costs of cancer as well.
And then remember, we also buy in the customer is going to be an operating for this year.
That's going to close, as I said, towards the end of the first quarter second quarter.
And so you don't have that cost because we do need to operate.
It doesn't have a B cities.
And then as we ramp up some of our private destinations, mainly the Paradise Island and obviously there are some costs kind of towards the end of the year.
And so those are mainly the real impact of the costs get into the year.
And obviously, we will give that guidance is going to end the year progresses for the for the next quarter.
But as I said, the second and third quarter are going to be higher.
And then the fourth quarter is going to be on benefiting from significant capacity growth.
Conor Cunningham
Helpful.
And then started talking about remember again, maybe it's just a higher-level question.
I think that is Viking.
If hiking biking, obviously it goes after the an older demographic.
I think it's a celebrity is younger.
So if you could just talk about the demographic that you're looking at because it just seems like you about fragment and it seems like there's an opportunity with a younger cohort rather than the other one just sorry to belabor the point, but just any thoughts there?
Thank you.
Yes, much of I would expect as many questions on something that is just beginning and plan.
And it will always be a small part of our of our broader business.
But it's a big part of expand, making sure that we match our customers where they went on vacation experience standpoint, the average age of a celebrity guest is in there in the early to mid 50s.
But obviously they have order clientele.
They have younger clientele.
I think I think that I think I personally don't mean to keeping uses again going back to the $2 trillion market space.
So whether it's crews or whether it's crews in the river, I mean, we are a fraction of a fraction of that overall market, which to me is just incredible opportunity for us all to grab grab more and more share of all of this.
I think the other part is, is that I think we feel very confident that this isn't about feel chasing Viking customers or another.
There are another customer.
This is about leveraging this incredible sort of this business that we have some credible flywheel that's incredible leading brands in each one of their segments and making sure that we keep them inside of our ecosystem.
And so we don't think there's like a demand challenge here, and I'm sure there'll be some demographic changes by the real.
The real big difference here is more of where they're being sourced from, and they're being sourced from a highly productive, accelerating flywheel on that that we've built.
And of course, we're adding more and more things like enterprise loyalty, reciprocity and so forth that really incentivizes our guests and recognizes our guest stay inside of our from our ecosystem.
And that and I'll be in the days, but we're really trying to achieve and that results in what better lifetime value of the customer we get more reps are out of it, and we did guests that are for happy and supported because they trust us.
Appreciate it.
Thank you.
Operator
Ben Chaiken, Mizuho.
Ben Chaiken
Hey, good morning.
The private destination Nassau is opening in December.
How do you think about pricing access to that opportunity?
I ask because the beach club comes with a lot of benefits Beach to drink that are all inclusive, if I'm not mistaken, which is different than perfect day in and kind of related to that.
Is there any way to think about the for us quantify the volume of passengers annually that touch Nassau today and have one quick follow-up.
Thanks.
Jason Liberty
Hi, Ben, and thank you for asking that question, though, is kind of feeling lonely on this call.
So it's Michael.
Yes, we have a pricing strategy laid out will be launching the product into the market opening for sale in April.
So we'll be able to talk about our pricing and about the two months' time.
It's an all inclusive package and we have quite a lot of volume going international total just for the Royal branded way exceeds the capacity of the beach club.
Our expectation is in the first full year of the operation of the beach club will have approximately 1 million guests going into the Beechcraft for the experience, and we'll talk about the pricing later on, but I can't really comment on it with any detailed during this call.
Ben Chaiken
Understood.
And then obviously, recognizing it opens late in the year, the 29 enough caliber in our own to this, but in the 25 net cruise costs include any thing for NASA toward highlighting?
And then also on a net cruise cost basis, how is it similar or maybe just talk anecdotally how similar or different from Coke?
Okay.
On the surface, obviously smaller, so presumably less headcount.
But just any reason this would be more or less efficient than cocoa and coffee that Thanks.
Jason Liberty
I mean, the big difference really will be volume.
I think this later on for 25 K. will be hosting 3.5 million gas.
So we get all of those scale economies that come with the operation.
Financial of the volume will be around 1,000,001 million EUR in H1 is fully operational.
So on honestly, there's less scale opportunities, but it's still very efficient operation.
So it's margins will be pretty attractive.
It's a going to be a very profitable business is also I mean, one of the major elements of the beach club is coax is its proximity to our ships.
And it's a product offering that we think is really needed in Nestle.
So it's going to be a great guest experiences, also incredibly complementary with Coke, okay?
Because we'll have a lot of short product that goes to perfect day on one day in the next day, it will be in the beach club.
So it's like the greatest weekend in the history of cruising exciting, I think you had.
Yes, just to add that in terms operation, it's still a very accretive investment to and expect this to be materially different.
And then as we go to the cost of towards the end of the year, obviously, as a brand is ready to open up the private destinations, there are some opening and kind of ramp-up costs they're going to touch on towards the end of the year.
And obviously, we'll be fully in the base in 2025, 2026.
Sorry.
Operator
Vince Ciepiel, Cleveland Research.
Vince Ciepiel
Thanks so much on.
I want to circle back on loyalty when you could comment on relating to share wallet that repeat booking behavior crossover between brands.
I know that I think it was maybe in the second quarter this year, there was some changes with the program to be more income usage across brands.
Just kind of curious if there's anything quantifiable and the response that we've seen in the last roughly year now.
Jason Liberty
Yes.
Well, I think we want to be generally muted in terms of how successful it is.
But I will tell you it has been grossly successful in terms of the reciprocity program on one for our guests recognize and you believe or not, they're not as many as you would think they recognize that oil, celebrity and oversee.
We're in the same house.
And so I think just building that broader awareness.
And of course, we have guessed that for kids and grid.
And when they're not, there might be looking to travel and celebrity or Silversea or maybe it's for kids and their adult and maybe older children are on celebrity and they're not.
And but they're not with their children.
They want to go on Silversea or whatever it might be.
So bringing that awareness is one thing now that there's reciprocity, um, then it makes a lot stickier for them to stay inside of our ecosystem because of all the benefits that they get coming with that.
So I wouldn't I mean, I think we have been incredibly surprised at how quickly some of our guests have taken to that, that program.
And I think it's one of many reasons why from our flywheel continues to get faster and faster, and we're getting significantly more repeat guests on than we had planned for.
Vince Ciepiel
Thanks.
And then thinking about kind of expansion to perfect de Mexico.
I think Western Caribbean is maybe 30, 35% of the story in the Caribbean today.
I'll comment on where you think that can go over time is perfect Mexico ramps and then but it was really helpful commenting on staff and guests.
Cocoa 1.5 eventually with the beach club, NASA, the number of passengers you think perfect de Mexico could eventually support.
Jason Liberty
Hi, it's Michael again.
I mean, obviously, we're thinking big and we've got some big ships coming.
We've got icon class coming online pretty much whenever you know, we've got Galveston, Texas and the opportunity regionally from Texas.
We think that the ultimately the volume that we will take to perfect de Mexico will far exceed what we're taking into a coke.
Vince Ciepiel
Okay.
Thanks.
Operator
And now I'll turn the conference back over to Naftali hold CFO for any closing remarks.
We thank you all for your participation and interest in the Company.
Naftali Holtz
Lake will be available for any follow ups.
Wish you all a great day.
Operator
Ladies and gentlemen, this concludes today's conference call and thank you all for joining.
You may now disconnect.
