Royal Caribbean CEO says impact of Middle East conflict akin to ‘stubbing toe’

Royal Caribbean Group expects cruise bookings to recover quickly following disruption caused by the recent Middle East conflict, with demand already showing signs of improvement.

Jason Liberty, CEO of Royal Caribbean Group, described the impact on bookings as short-lived during a trade question-and-answer session aboard the new Legend of the Seas.

Liberty said demand had been affected by geopolitical uncertainty during the conflict but was already improving following the ceasefire between the United States and Iran.

At a subsequent media roundtable, he likened the impact on bookings to “stubbing your toe” before making a swift recovery, according to Connecting Travel.

Liberty said the conflict had affected the wider cruise industry, with higher oil prices and increased airfares contributing to softer demand, particularly among middle-income travellers booking European cruises.

“When they see flights increasing from US$1,400 to US$2,200, the numbers just don’t add up,” he said.

He noted that while airfare increases had delayed some booking decisions, prices had begun to fall again from April and continued to normalise.

“We continue to see strong consumer demand globally. Our customers have been very resilient even through all that noise. Their desire to make memories and take advantage of the value we offer has remained,” said Liberty.

“We saw a slight delay in some of their thinking, so demand much closer in. But eventually, families couldn’t keep just staring at each other, waiting. So, the impact was short-term.”

According to Liberty, the UK proved to be the most sensitive source market for European cruises during the early stages of the conflict, although the decline in bookings remained in the low single-digit percentage range.

He added that the group was well booked for the current summer season and said the recovery had already begun during April.

Despite higher fuel prices during the conflict, Liberty said the company was not considering introducing fuel surcharges for passengers.

“We’re not at the point,” he said. “We’re about 60% hedged on fuel, so we’re able to manage that.”

Looking beyond the recent geopolitical disruption, Liberty expressed confidence that the cruise industry would continue to absorb significant new capacity over the coming years, including vessels entering service for Royal Caribbean Group and competing operators.

During the same session, Liberty also ruled out the prospect of Royal Caribbean International deploying ships in Europe throughout the winter, despite longer shoulder seasons.

He said weather conditions and operational considerations meant year-round European cruising was unlikely.

Michael Bayley, President and CEO, Royal Caribbean International added that customer satisfaction scores fell significantly on sailings affected by poor weather.