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RCL Stock Pitch
RCL Stock Pitch
Business Overview:
Royal Caribbean Group operates four global cruise brands including Royal Caribbean
International, Celebrity Cruises, Silversea Cruises, and Azamara. As of Dec. 31, 2020, Royal
Caribbean Group operated a fleet of 61 ships reaching over 1000 destinations. The most recent
delay adopted by Royal Caribbean Group and competitors places the restart date for sailing on
April 30, 2021.
Catalysts:
• Widespread sailing resumes as early as June 2021 without delaying the start date
• Continued rise of bond yields would support rotation out of Tech into Consumer
Discretionary
• Pent up consumer demand for travel set to expand in late 2021 and early 2022
Competitive Advantage:
With a restructuring aimed at lowering costs and increasing margins, Royal Caribbean will be
able to operate as a price maker in the cruising oligopoly. Their wide margins come from
operating and fuel efficiencies, as well as upgrades to technology. Ultimately, in the event of
sustained sailing halts or loss of demand, Royal Caribbean group has sufficient cash and
equivalents to withstand a zero-sale cash burn for a 16-month period.
Risks:
• Delays of vaccine distribution could lead to lag time on initial forecast of company’s
recovery and sailing timeline
• CDC could continue to be ambiguous in regard to their post-COVID cruising
requirements to meet health and safety guidelines