Royal Caribbean (RCL) Q1 2021 Earnings Call Transcript

Royal Caribbean (RCL 3.55%)
Q1 2021 Earnings Call
Apr 29, 2021, 9:00 a.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Good morning. My name is Shelby, and I'll be your conference operator today. At this time, I would like to welcome everyone to Royal Caribbean Group's business update and first-quarter 2021 earnings call. [Operator instructions] I would now like to introduce chief financial officer, Mr.

Jason Liberty. Mr. Liberty, the floor is yours.

Jason Liberty -- Chief Financial Officer

Thank you, Shelby. Good morning, everybody, and thank you for joining us today for our business update and first-quarter earnings call. Joining me are Richard Fain, our chairman and chief executive officer; Michael Bayley, president and CEO of Royal Caribbean International; and Carola Mengolini, our vice president of investor relations. This is actually Carola's last call with us that she is retiring.

And I just want to sincerely thank her for all of her efforts, and we all really wish her the very best with lots of love. So thank you, Carola. During this call, we will be referring to a few slides, which have been posted on our investor website, www.rclinvestor.com. Before we get started, I would like to refer you to our notice about forward-looking statements, which is on our first slide.

During this call, we will be making comments that are forward-looking. These statements do not guarantee future performance and do involve risks and uncertainties. Examples are described in our SEC filings and other disclosures. Please note that we do not undertake to update the information in our filing as circumstances change.

Also, we will be discussing certain non-GAAP financial measures, which are adjusted as defined, and a reconciliation of non-GAAP financial -- non-GAAP historical items can be found on our website. Richard will begin the call by providing a strategic overview of the business, an update on the latest news from the CDC. I will follow up with a recap of our first-quarter results, and then I will then provide an update on our latest liquidity actions and on the current booking environment. We will then open up the call for your questions.

Richard?

Richard Fain -- Chairman and Chief Executive Officer

Thank you, Jason, and thank you all for joining the call. And thank you, Carola, for your help and consistent support over many years with Royal Caribbean. You all know it's been painful to pass the one-year mark since we suspended sailings in March of 2020 and to keep seeing most of our beautiful ship still sitting in anchor. However, I'd like to comment on some of the dramatic positive elements that we've just mentioned.

The big change has been a significant improvement in the extent and the quality of our dialogue with the CDC. As I have said elsewhere, scientific knowledge does not advance well in the vacuum. More and better exchange of information and more and better understanding of other perspectives always leads to a better and healthier outcome. The CDC has recently significantly increased its efforts in this regard.

And we really appreciate, and we would like for undertaking this important effort. Last night, the CDC issued multiple very constructive clarifications and amplification of its conditional sail order. They've addressed many of the items that concerned us in the order, in a manner that takes into account the recent advances in vaccines and medical science. We believe that this communication really helps us to see a clear and achievable pathway forward to a safe and healthy cruising in the near future.

But an important caveat is that this is a very complex area, and we only received the letter last night. Furthermore, there are still a great many details to be provided in the future and others that need to be resolved. We need to be cautious about all of those. Nevertheless, we now have high hopes that if these details can be resolved quickly, it could be possible to restart cruising by mid-July.

I would also emphasize that the restart does not mean that we will immediately go into full operation. While we are hopeful about restarting, that restart will be gradual and deliberate. Furthermore, our business looks long in advance. So it will take some time for the machinery to get back into full swing.

But the letter is a very constructive part of this process. And it indicates both the value of good communications and indicates the CDC's desire to see cruising reopen in a safe and healthy manner. As I said before, we share a common goal in both the CDC and the cruise industry, are determined to do this right. One of our strongest discussion points in these meetings with the CDC has been the data that we've collected from our cruises in Asia and Europe.

As mentioned earlier, we have successfully carried over 125,000 passengers with only 21 COVID-19 cases, 21. That's a positivity rate of 0.01%. And as we've emphasized, all of this has been experienced without having the availability of vaccines. Our goal throughout this pandemic is then to make a cruise ship where we can control the environment safer than Main Street USA.

We've already demonstrated our ability to do that, and we are now eager to resume life as so many other businesses are doing. And we are pleased that the CDC letter really does reflect an intention to treat us similarly to other industries in similar circumstances. In addition to this particularly positive development in the U.S., there are other activities going on. For example, last month, Odyssey of the Seas, our newest quantum class ship, joined the Royal Caribbean International fleet.

Along the Celebrity Apex and Silversea Silver Moon, we now have three brand-new ships each with the most amazing technology to ensure safety, security and, of course, unbelievable guest experiences. And there has been such demand for our current sailings. For example, from Singapore and Quantum of the Seas that we've extended our season there now through the end of October. And, of course, we've also taken additional steps to strengthen our financial position even further, and you're going to hear more about that from Jason.

Before I describe all the energy we see and feel it in the group, I want to acknowledge once again the dedication and hard work of our people. It's always been our people who have made us successful, and it's been our people that have gotten us through these past 13 months of living with COVID-19. Everyone has suffered during the pandemic, but working for cruise lines is the real test of endurance and trust and agility. Over and over, our people have passed that test.

I'd like to also thank our investors and our travel partners who have been the strongest advocates with our guests over these months of uncertainty. We are also grateful of their commitment to work -- we are always grateful for their commitment to work with us. While a lot of what we're doing right now is directed to a healthy return to service, we're also focusing on how we can strengthen our position in other areas, including on ESG, environmental, social, and governmental responsibility. Of course, this focus isn't new for us.

From our partnership with the World Wildlife fund, to support for sustainable destinations, to active engagement on diversity and inclusion, to aggressive emission reduction, our commitment to progress on the ESG agenda is long standing. But we believe strongly, and it's not enough to reflect on what we have been doing, we need to get ready for what's next and plan for how we will meet the challenges in the future. You'll hear more about this initiative in future calls, but I want to take this opportunity to make you aware of this intensified focus. And with that, I'll turn the microphone back to Jason.

Jason?

Jason Liberty -- Chief Financial Officer

Thank you, Richard. Before I start, like Richard, I want to again thank our teams across the whole enterprise for their dedication and tireless efforts during these unprecedented times. I will now start to discuss our first-quarter performance. This morning, we reported an adjusted net loss of $1.1 billion or $4.44 per share for the first quarter of 2021.

While reporting these type of results continues to be painful, we are excited about the fact that little by little, the flywheel is starting to spin. Furthermore, the latest news by the CDC, as it relates to our resumption of service in the U.S., is quite encouraging. During the first quarter of 2021, we delivered memorable vacations to over 55,000 guests through our Royal Caribbean International, TUI cruises, and Hapag-Lloyd brands. Moreover, our teams are diligently working on the health protocols and start-up activities needed to begin operations on an additional 11 ships this summer.

While these activities are extremely encouraging, they also put some additional pressure on our cash burn in the short term. Having said this, we are also very encouraged by our customer deposit balance, which as of today, is approximately $2 billion compared to the $1.8 billion that was shared this morning related to the end of the first quarter. Moreover, the latest balance reflects the reduction in deposits related to the Azamara brand which was sold just a few months ago, demonstrating an even larger improvement versus our December '20 customer deposit balance. This improved balance has been disproportionately driven by new bookings versus the issuance of more FCCs.

At this point, approximately 45% of our customer deposit balance is associated with FCCs versus about 50% at the time of our last call. Now I will shift my remarks to our liquidity actions during the quarter. As you all know, we pride ourselves on having industry-leading brands, with a world-class and highly innovative fleet and a history of strong financial discipline. These assets and attributes have been instrumental in helping us raise more than $12.3 billion in new capital since March of last year.

During the first quarter of 2021, we continued our efforts to enhance our liquidity position and manage our maturity profile. To this end, we successfully executed two capital raises with cumulative gross proceeds of $2 billion. Connected to this, we amended two debt facilities totaling approximately $2.5 billion, which were due in 2022, and extended the maturities for consenting lenders by 18 months. I will highlight that since we are refinancing guaranteed debt with unsecured and unguaranteed debt, we are starting our journey back to an unencumbered investment-grade balance sheet.

Altogether, during this quarter, we paid down approximately $800 million of debt related to principal on the amended facilities and the U.K. commercial paper programs that was due in March. Now as it pertains to the cash burn during the quarter, the average monthly cash burn was approximately $300 million, which was slightly higher than previously announced range. This was mainly driven by restart expenses, which were related to the new health protocols and some crew movements.

It is important to note that previously announced range did not include any expenses related to the restarting of operations as it assumed a status of prolonged suspension of operations. When excluding the return to service expenses, our cash burn was in line with our previously announced range. Overall, we closed the first quarter with $5.8 billion in available liquidity. As I previously mentioned, we are very encouraged with the latest news, current momentum, and the restart of operations around the globe, but the environment remains extremely fluid.

And for this reason, we are not providing a cash burn estimate or the related offsets generated by revenue and new customer deposits that come from returning ships. I will highlight that the burn rate for the ships that are kept in lay-up is expected to be consistent with our previous expectations on a relative basis. Now as it pertains to our debt maturities and in addition to the extensions of the 22 facilities that I previously mentioned, we also completed the amendments to our export credit facilities differing $1.15 billion of principal amortization and waiving financial covenants through at least the end of the third quarter of 2022. After all these negotiations, our scheduled debt maturities for the remainder of '21 and 2022 are $200 million and $2.2 billion, respectively.

I will now update you on our business outlook, as I know this is top of mind for many, and I'll start by providing an update on our summer capacity. Over the last two months, we have announced the returned to service for nine ships across our three global brands and have extended the Singapore season for Quantum of the Seas through the fall. These are 176 sailings in the Caribbean, Europe and Asia now represent 19% of our fleet capacity for the summer season. Six of these ships will sail in Europe, offering Greek Isles and U.K.

and our easter guests from the U.S., the U.K., Israel, and Europe. These guests will have the opportunity to experience our three newest ships, Odyssey of the Seas, Celebrity Apex, and the Silver Moon for the first time ever. In addition, three ships will cater to the U.S. market offering Caribbean itineraries departing from Nassau, St.

Maarten, and Bermuda. Many of these sailings will call on our amazing private island Perfect Day at Cococay. On top of these, Quantum on the Seas will continue to offer cruises from Singapore for the local market. Now regarding TUI Cruises, our JV, they have announced two additional ships sailing this summer in addition to three vessels that have been operating out of the Canary Island since this past November.

We look forward to announcing the return of additional ships and remain committed to a safe, thoughtful, and financially sensible resumption of cruising across the entire fleet. Now I will provide an update on the odd bookings. When we opened the first set of sailings for Quantum of the Seas in October of 2020, we immediately saw the pent-up demand for cruising in Singapore. Because of this, we hoped and expected that the same would be true in other markets, and these expectations were confirmed when we launched our new deployment.

We have been very pleased with booking levels and pricing for sailings in both Europe and the Caribbean. And as a result, our load factors and revenues are building up nicely. After less than three weeks of sales from most ships, we already have about 30% of our expected revenue booked for June through September sails. We expect to start our initial operations with lower load factors and ramp up gradually over time.

On our last earnings call, I shared that we received 30% more bookings in January when compared to November and December. Despite anemic sales and marketing activities, demand continued to accelerate, and new bookings in March exceeded January and February levels by approximately 80%. In addition to new bookings, guests continue to utilize FCCs and take advantage of the Lift & Shift program. Now overall, the booking activity for the second half of 2021 is in line with our anticipated resumption of cruising.

And pricing on these bookings is higher than 2019, both including and excluding the dilutive impact of future cruise credits. Regarding 2022 sailings, it is still early in the booking window to provide too much detail. But I will share that our book load factors for the first half of 2022 remain within historical ranges. And pricing on booked business is up nicely versus 2019 when including the dilutionary impact of FCCs as well.

While a portion of this improvement is related to our new ships, pricing is also up for the existing fleet. I will close by saying that we are prepared and eager for the flywheel start turning again. We feel very optimistic about our future and are thrilled to see more and more guests around the globe enjoying incredible vacations onboard our ships. With that, I will ask Shelby to open up the call for a question-and-answer session.

Questions & Answers:

Operator

[Operator instructions] Your first question is from Robin Farley of UBS.

Robin Farley -- UBS -- Analyst

Great. Thank you. I have a question about the restart. Obviously, great news.

Just trying to understand, does this -- you can go forward -- ship. And then there's a separate time line for restarting with a ship that allows nonvaccinated passengers out of the U.S. It seems that way, but I just want to kind of get clarification on that? And then just as my follow-up would be on the return to service expenses versus just typical lay up, how much if you -- if we think about per month layup cost per ship, and then what is that with restart costs for maybe that sort of monthly three months, say, heading into restart, what the difference is in lay-up versus lay-up and restart? Thank you.

Jason Liberty -- Chief Financial Officer

So, Robin, on the first question, which I'm sure is an amazing question. I don't think we got most of it. It broke up about 50% of it. So we actually didn't actually hear what you asked.

I'll just comment real quick as it relates to -- on the cost side, and then you can reask the first part of your question. Yes. we really have tuned in our way up costs. And of course, we've kept our ships generally in a warm state.

So that as we restarted our ships, we would be able to do that expeditiously and at a reasonable cost. But as it relates to the return to service as we ramp the ships back up, those costs are still kind of very fluid, which is why we're not guiding on them as we need to take into consideration testing and crude movement and vaccinations and maybe other things that might be part of that equation. That might be different itinerary by itinerary. So we're not yet ready to kind of guide on that.

What I would tell you is we are being very -- we're very focused to make sure that, that as we're spending, that we're being very thoughtful about it. And of course, at the same time, as we're launching these ships, we're also getting the revenues and customer deposits that are associated with that. So I'll just pause there and let you ask the first part of your question, so we can hear it and hopefully give you a thoughtful answer.

Robin Farley -- UBS -- Analyst

Great. Well, hopefully, you can hear me a little bit better. On the first question, I just wanted to understand, obviously, very good news overnight. For the time frame, is it that there will be kind of two different restart time frames that you can today go forward with a fully vaccinated ship out of the U.S., but there will be a separate time frame for ships that have a mix of vaccinated and unvaccinated passengers, is that how to interpret the timing?

Michael Bayley -- President and Chief Executive Officer of Royal Caribbean International

Robin, it's Michael. As Richard commented, we received these modifications in commentary late yesterday evening. And we've gotten close to the CDC to clarify some of the comments and what have you. But fundamentally, yes, you're correct.

There will be really two pathways, one pathway for vaccinated crew and largely vaccinated guests that meet the threshold that they've defined. And that would mean that there wouldn't be a requirement for a simulated voyage, etc., and there would be a different expectation on protocols and planning. So it's a faster route. And then for ships that wouldn't meet that threshold for whatever reason, there would be a different time line and a different set of protocols and requirements.

So fundamentally, there's two pathways. It's not that simple, but that's a way of simplifying.

Richard Fain -- Chairman and Chief Executive Officer

And I think we need to make clear that -- reemphasize, as Michael just did. There's still a lot of uncertainty about this. And I don't think you should think of these as two completely divergent processes. Obviously, just as there are in other areas in society, you treat people who have been vaccinated different than situations where you don't have vaccinations.

But what is nice about this is that there are, in effect, both are viable pathways under the CDC letter that we got.

Jason Liberty -- Chief Financial Officer

And I think just to add to that, I think the acknowledgment that the vaccines are really transformational is very exceedingly helpful. I mean, it's something we all knew was coming, but it's very positive.

Yes.

Robin Farley -- UBS -- Analyst

OK. Great. Thank you very much.

Jason Liberty -- Chief Financial Officer

Thanks, Robin.

Operator

Your next question is from Steve Wieczynski of Stifel.

Steve Wieczynski -- Stifel Financial Corp -- Analyst

Yes, you guys. Good morning. So my first question is going to be a bunch of CDC questions that hopefully -- I don't know if you're going to be able to answer -- you won't be able to. But it's a three-part question, so prepare yourself for some fun here.

When you look at the mandates that have been laid out. I mean, calling for 98% of crew and 95% of passengers to be vaccinated, do you -- I mean, the first question is, do you think getting to those thresholds will be easy to achieve? The second part of that is going to be the kid component. How are kids accounted for under those percentages? And if I'm reading that right, it seems like getting kids on board might be difficult during the CSO time frame. And then the third part of this is, do you think the CDC's cautionary travel outlook for the Bahamas could cause some panic with your potential customer base?

Michael Bayley -- President and Chief Executive Officer of Royal Caribbean International

Steve, so on the 98%, 95% mandate or guidelines -- and remember, it's a guideline. So there's -- you can meet that threshold, and you don't have to meet that threshold, and there's different pathway. We know from surveys of our customers who've been booking since January, that over 80% of our customers have already told us, they're either vaccinated or will be vaccinated when they cruise. So that's since January.

So there's an overwhelming, certainly for our customer base, people are just saying, I'm getting vaccinated. And as you skew older, the percentage increases quite significantly. Mainly because, of course, when the vaccination started, it started with the older age group first, etc., etc. For the crew, interestingly, every year, we offer -- we don't mandate flu vaccines for our crew members, and we've been doing that for many, many years.

And the crew, typically, the vaccination rates of our crew members for flu is around the mid-90%. They just voluntarily take the vaccine. We surveyed our crew some months ago, and we stay in touch with the crew through surveys and various forms of communication. And in the survey that we sent out, I'm going to say it was at the end of last year or the beginning of this year, we asked our crew members, first of all, have you been vaccinated? Are you getting vaccinated? And will you get vaccinated? And we had over 98% positive response from our crew saying, yes, we're going to get vaccinated.

So I think there's just -- I think it's somewhat a natural event. Crew used to getting vaccinated for flu, and they're certainly willing to get vaccinated for COVID. We do understand for health or religious reasons or belief reasons that some people won't want to, and that's been in place for many years in terms of how we vaccinate for flu. On the kids, I think we obviously take a look at our kid count, kid population, and what have you.

We think this is the next phase. And we know that the vaccination is now eligible for children, 16 and over. We've been told that in the coming weeks and months, that age limit will likely drop to 12, and we're encouraged by that. And then for kids 11 and under, obviously, we carry a lot of kids 11 and under.

But relatively speaking, as a percentage of our total guest count, it's quite a small number. So we're not overly concerned with that. And again, as Richard pointed out, we received these modifications late last night. We really do have to sit, study and discuss with the CDC and understand all of these different nuances.

But we're not discouraged by this in any way.

Steve Wieczynski -- Stifel Financial Corp -- Analyst

OK. Gotcha.

Richard Fain -- Chairman and Chief Executive Officer

And, Steve, just -- I think we ought to make it clear that we've been operating and have announced cruises, some of which are requiring full vaccination and some of which do not. And so I think we consider it constructive that the CDC has looked at this with a dual pathway approach, much as we have taken.

Steve Wieczynski -- Stifel Financial Corp -- Analyst

OK. Gotcha. And then second question, Jason. If the time line is correct here, and you can start North American cruising sometime over the next couple of months.

And from there, you continue to bring ships back online over an extended period of time. The question is, do you feel like your current liquidity position is adequate at this point, meaning you feel comfortable enough with where you guys sit today?

Jason Liberty -- Chief Financial Officer

I think we feel like we are in a very strong liquidity position. And the real focus here is getting the ships back on the water. And of course, as that's occurring at the same time, the customer deposits and revenues and so forth start coming in. So I think we feel very good.

And of course, we're also remaining to be opportunistic and looking at ways to improve our balance sheet and negative carry and so forth. But overall, Steve, I think we feel that we've taken very prudent actions to make sure that we're in a position of strength.

Steve Wieczynski -- Stifel Financial Corp -- Analyst

OK. Great. Thanks, guys. And, Carola, congratulations.

Operator

Your next question comes from Jamie Katz of Morningstar.

Jaime Katz -- Morningstar -- Analyst

Hi. Good morning. I'm curious if you have any comments on consideration of the sale of any more of the fleet or whether you feel the fleet is good as is given there have been so many sales across the industry or scrap across the industry recently? And then if you comment on the percentage of workforce that you're getting from India and then how that might constrain the ability to staff the ship sufficiently going forward now that there are some sort of overlaying constraint on it, that would be really helpful? Thanks.

Jason Liberty -- Chief Financial Officer

Yes. Sure, Jaime. Jaime, I'll take the first one and I'll let -- and Michael will do the mix in terms of crew from India. But as it relates to our fleet, even for some of the ships that we've sold, our -- the way that we kind of approach this always is just understanding whether a ship is a good fit for the brand or still a good fit for the brand or if we can invest in that ship to make sure it's a good fit for the brand.

And if not, we look and we're opportunistic about this. But I think we've scrapped some ships. We've sold some ships. We typically sell about a ship a year.

But overall, we feel really good about the fleet. And as you've heard us say in the past, these ships are really always cash flow positive. And so for us to part ways with them, it has to be because it's the right strategic reason for us to do so.

Michael Bayley -- President and Chief Executive Officer of Royal Caribbean International

And, Jamie, on the cruise situation, particularly as it relates to India, yes, I mean, it's just unfortunate what's occurring in India and over the past week or so. There's been multiple travel restrictions placed on Indians traveling through to various countries and what have you. So we did temporarily suspend our crewing activities from India as we understand how this will work out. The beauty, of course, of our crewing model is that almost from the very beginning, we've crewed from literally over 100 countries around the world.

Obviously, some countries like India have significant volume with employees who come from India. But we have large populations that come from many other countries around the world. So we're obviously super sympathetic about what's happening in India because we do have many loyal employees who've been with us for many, many years. And -- but we -- obviously, we're pretty confident this will work out in the coming months.

And we have the ability to crew and change our crewing based upon all of these circumstances. So discouraging what's occurring in India, but our model is very robust. So we're encouraged by the model that we have.

Jaime Katz -- Morningstar -- Analyst

Thank you.

Michael Bayley -- President and Chief Executive Officer of Royal Caribbean International

Thank you.

Operator

Our next question is from Brandt Montour of J.P. Morgan.

Brandt Montour -- J.P. Morgan -- Analyst

Good morning, everyone, and thanks for taking my questions. And obviously, yes, all positive news today. Back on the -- one more on the CDC, if I may. With the CSO still in place, outside -- let's say, outside of what we've talked about so far, the vaccination-specific bogey, what was the biggest change? What were the biggest changes overnight for you? And does this change your best guess for the ultimate capacity you think you'll have sailing at the end of this summer versus, say, what you thought 24 hours ago?

Michael Bayley -- President and Chief Executive Officer of Royal Caribbean International

Hi, Brandt. As Richard commented in his opening statement, what really -- first of all, we've been in very constructive dialogue with the CDC over the past few weeks and beyond the CDC with an intergovernmental agency group that was representing many different departments of the government. And I think that dialogue allowed the industry to talk realistically about many of the elements of the CSO, which is unrealistic or unable to be executed the way we crafted. What we saw last night was very encouraging because it wasn't one or two things.

It was multiple additions and corrections to many of the elements of the existing CSO that really challenging and very, very difficult, particularly as it relates to what's occurring with vaccines. So I think the mood of Royal Caribbean last night and late into the night and then just speaking also to some of our industry colleagues were simply positive, that all of this dialogue that was constructive had resulted in clearly being heard. And so I wouldn't say there's any one thing. There's just many, many things.

But certainly, the vaccines are a major foundational game-changing element of this. Thank you, Brandt.

Brandt Montour -- J.P. Morgan -- Analyst

OK. That's helpful. And just a quick follow-up on sort of how you're thinking about occupancy and load? Jason, you mentioned that sort of bookings and to date for the summer sailings are around sort of maybe 30% of expected revenue. Is that sort of -- just to clarify, that's not of what your total capacity would be on those sailings.

That's just what your target load would be? And then a follow-up -- and then sort of a second part of that would be sort of what do you think the range of that target is for -- vaccination sailings. So reconcile that with what you're doing in Singapore on non-vaccination sailings? And that's it for me.

Jason Liberty -- Chief Financial Officer

Yes. Well, it is -- or the statement was really relating to what we expected it to be. And of course, most of these sailings, we've negotiated where we've had conversations in terms of what those load factors would start off being. And so we've been very kind of thoughtful about what our expectations are going to be, whether we're turning in the Bahamas or whether we're turning in Israel and so forth.

So I think, obviously, we saw a lot of encouraging news here from the CDC, but the sailings in which we've announced are really for sailings that take place outside of the U.S. homeports. But all that -- this is -- as Michael and Richard were saying -- were talking about, this is an evolving story. And as long as we can continue to believe that we can operate a safe manner, making sure our guests have an incredible experience, and we can do that in a -- in a way that is improving our financial position.

Those are the kind of three guiding lights that are guiding our day-to-day decisions.

Brandt Montour -- J.P. Morgan -- Analyst

Excellent. Thanks, everyone.

Jason Liberty -- Chief Financial Officer

Yes. Thanks, Brandt.

Operator

Our next question is from Stephen Grambling of Goldman Sachs.

Stephen Grambling -- Goldman Sachs -- Analyst

I guess, turning to ship growth and capacity increases. I guess, what is a reasonable range of net capacity growth as we look over the next couple of years? And I guess, have any of the dispositions effectively been pull forward of future retirements? So we should expect maybe less going forward?

Jason Liberty -- Chief Financial Officer

Well, I mean, I think first, overall, industrywide, as I've commented on the last call, the growth rate, which was probably around 6%, it's probably going to be around 4%. So you're going to see less growth there. I think for us, our planned capacity growth is -- I mean, it's kind of laid out as it relates to the ships that are coming online. Again, I wouldn't focus too much on the retirement story.

Because for us, we continue to just be thoughtful and be opportunistic about the opportunity to sell ships if that opportunity arises. But for the most part, I think we feel the fleet that we have today and the new ships that are coming online in that cadence is how we would expect our business to grow. And there might be some retirements. I wouldn't say it's an accelerated retirement program based on what we've done.

I would just say we plan to kind of operate our business and manage our fleet and invest in our fleet and how we've done it on a pre-COVID basis.

Stephen Grambling -- Goldman Sachs -- Analyst

And perhaps a related follow-up. Some of your peers have cited basically cost improvements and efficiency improvements from the mix of new ships and/or changes in the cost structure. Can you give us any color on how you see either the mix of new ships impacting net yields and net cruise costs or any big buckets of opportunity for permanent changes in how you operate?

Jason Liberty -- Chief Financial Officer

Yes. Well, I think we've also talked about this, and we talked about it quite a bit on the last call, so obviously, as the new capacity comes on, they are more efficient, especially on a fuel standpoint, and they also generate a much higher yield profile because of the inventory mix and the onboard revenue opportunities that come along with our new capacity. But during this time, we have looked at our cost structure. We have taken action on our cost structure to ensure that as we come out of this, I think I used the term in our wedding week.

And so we've identified and we've implemented, and we are implementing several cost actions in order to improve our margins. And then also, I would just add, at the same time, we want to make sure that the guest experience is protected. The employee experience is protected. And so a lot of this comes through with automation and us just coordinating better enterprisewide to make better margin decisions.

Stephen Grambling -- Goldman Sachs -- Analyst

Just one quick follow-up on that. I guess, between the vaccine-only type cruises and then those that are more open, are you seeing any differences in the cost structure between those two as we think about this kind of dual approach potentially from CDC?

Michael Bayley -- President and Chief Executive Officer of Royal Caribbean International

Stephen, it's Michael. Yes. I mean, there is a different cost profile. But again, we need a little bit of time to work our way through this.

But there's more protocols with non-vaccines than with vaccine, and there's more testing requirements and what have you. So there will be slightly more cost, but we really do need to work our way through that. And I think there's a lot of averaging of scale. So the great news is that our teams are now sitting down, and we're looking at all of this and trying to understand it and plan.

So I think we'll have more clarity in the coming days and weeks.

Stephen Grambling -- Goldman Sachs -- Analyst

Great. Thanks so much.

Michael Bayley -- President and Chief Executive Officer of Royal Caribbean International

Thank you.

Jason Liberty -- Chief Financial Officer

Thanks.

Operator

Your next question is from Paul Golding of Macquarie.

Paul Golding -- Macquarie Group -- Analyst

Thanks so much for the question. I was wondering, I saw that for 2021, you cited a 75% new booking rate as opposed to 25% FCCs. And I guess I was wondering if there was some impact -- I don't know if you've given a '22 mix number. But is there something structural there in the near to medium-term around marketing, you're able to maybe take some savings there as demand seems to be strong despite low levels of marketing? And then my second question is around Caribbean Homeport versus U.S.

Homeport. I was wondering if there was anything structural about if for whatever reason you decided this season wasn't the one for a robust U.S. Homeport setup. Are there savings? Or are there structural costs that outpace what the U.S.

Homeport itinerary mix would look like?

Jason Liberty -- Chief Financial Officer

Yes. So on the first one, as it relates to the bookings that are coming in, the profile of new bookings versus the application of FCCs is really kind of a broader commentary around the bookings that we've been taking on. So 2022, we see a very similar profile where the -- around that percentage is also for new bookings versus the application. Again, it's really early days, I think, to try to kind of pace that, those types of stats will result in some type of sales and marketing savings.

Time will tell. What's clear to us is there's really strong demand and really some activity on the marketing side is able to generate that demand, which is, I think, very encouraging for us overall. And then I think on the cost side, as it relates to turning in different ports around the world, there's always different port fees. Vaccinations, testing, and so forth can all kind of play in the mix of it.

But I think for the most part, it's not really a cost differential. I think it's more about our ability to get our passengers to those locations and turn at those locations and then deliver world-class vacation experiences.

Michael Bayley -- President and Chief Executive Officer of Royal Caribbean International

Paul, just one comment on sales and marketing. We're always internally facing what was going to happen with wave in '21, understanding we wouldn't really obviously have a wave as we historically used to having a wave. And normally, wave starts sometime into the second or so week of January and then runs through February peaking and then dropping off in March. And we certainly didn't get a wave this year.

But then in March of this year, we had a really strong March. And so we looked at the volume of bookings that came in, in March of this year and we compared it with wave in '19, which was our last real wave period. And our bookings in March of this year equaled peak wave months in '19. So that was -- I mean, that was quite an amazing number.

So we kind of -- we started to see wave coming in March instead of January. And certainly, the volume was impressive. But the point of this is that ironically, our marketing and sales investment during that month was way, way below what we invested in '19. So, I mean, it's an interesting fact that we had so much demand with very little investment, which I think speaks to what we're seeing and believe is occurring in the market with pent-up demand.

I mean we know that we've been told savings rate in the U.S. with U.S. consumers increased by $2.5 trillion. The credit card debt is down by $100 billion.

And our surveys tell us that the consumer is increasingly optimistic about the future that the worst is behind them that they are going to go on a vacation. And so I think that one statistic for March, we interpret as incredibly positive and speaks about what we think is going to be one amazing pent-up demand that's going to be -- is going to be unleashed, particularly for '22.

Paul Golding -- Macquarie Group -- Analyst

Thanks for the color. That was my point or my question around that is that it seems like the consumer is seeking out the experience. And so I wondered if there was some medium-term efficiency there, but I appreciate the color on the volumes -- on the booking volumes. Thanks so much.

Michael Bayley -- President and Chief Executive Officer of Royal Caribbean International

Thank you.

Jason Liberty -- Chief Financial Officer

Thanks, Paul.

Operator

Your next question is from Greg Badishkanian of Wolfe Research.

Fred Wightman -- Wolfe Research -- Analyst

Hey, guys. It's actually Fred Wightman on for Greg. I just wanted to follow-up on Michael's comments just now on the bookings in March. Totally get that it's sequentially stronger than January, February, and the 2019 commentary was super helpful.

Have you seen a change in the SKU about where those bookings are taking place as far as '21 versus '22 more recently, just given some of the improving dialogues with the CDC? And what do you think that means for the prospects of a potential July restart here domestically?

Michael Bayley -- President and Chief Executive Officer of Royal Caribbean International

Well, over the past few weeks, we've introduced multiple products, homeporting outside of the U.S. and the Caribbean, which we've spoken about. And the demand for those products has been quite robust. I mean, we're quite pleased with the demand that we've seen for those products.

Certainly, we see things moving into '22 which is natural. We're heading into June, and June traditionally is the month where bookings tend to heavily skew more toward the next year rather than the current year. And then that's certainly holding true from what we're seeing.

Jason Liberty -- Chief Financial Officer

Yes. And I think just to add a couple of comments to it. As we commented a little bit earlier, obviously, the booking activity is skewing a little bit older. And what you would expect because of the vaccination comments in terms of the percentage of our guests that say they've either have been vaccinated or they plan on getting vaccinated.

But 2022, especially out of the North American markets, the U.K. markets, and so forth, look actually pretty similar to what you would see in a typical year. While the 2021 bookings, obviously, more recently have gravitated to the sailings that we have announced out of the Bahamas and Israel and so forth. So I think it's very clear, as Michael said, people are thinking that the worst is behind.

There's a lot of these different statistics as it relates to credit card debt and savings and people's propensity to get back out there and vacation. And I think 2022 so far, looks like it's behaving like we saw pre-COVID.

Fred Wightman -- Wolfe Research -- Analyst

That's helpful. And the release sort of teases the prospect of a return to Alaska this year. I'm wondering if you could just touch on the mechanics for that, how realistic that might be, and then what the next steps or clarifications that you might need to hear to make that happen would be?

Richard Fain -- Chairman and Chief Executive Officer

Yes. So that's a slightly complex one. Specifically with respect to Alaska, because, of course, Canada has put in place a stop until throughout the season. And so in order to restart the Alaskan season, we would either need a waiver from the passenger vessel services at or Canada would have to allow at least technical stops.

And we're working on both and others are working on both, but we can't be certain where that will end up. But I think given the momentum, there's reason for some hope, but I think we're -- that's a sufficiently complex and confusing situation, but I don't think we're going to put odds on it one way or the other. I also think we need to be just a little bit careful when we're talking about reading into these bookings. There are still a lot of issues that have yet to be resolved with respect to the CDC and this order.

The bookings that have taken place and have been in a period of high uncertainty. Are these cruises going to be sailing? Will they go where they want? What will be the protocol? So there's a lot of uncertainty. And while we try and read a lot into it, and the one thing that I think we are feeling comfortable about is that there is a lot of pent-up demand. There's too many fluid factors, I think, to read too much into some of the specifics of what is this particular meaning for, particularly '22.

I think it's all terribly encouraging for '23 and it's very encouraging for '22. But the specifics of each of these is going to be difficult to read into until things calm down, and there's much more certainty about where it's leading to. But as to Alaska, I feel, specifically, while we're optimistic and we're working to make that happen, there are these other factors. We do think that we'll be in time for the Alaskan season.

And we're obviously hopeful that we'll be able to solve the issue with Canada in either -- in one of these two ways.

Fred Wightman -- Wolfe Research -- Analyst

Understood. Thank you.

Michael Bayley -- President and Chief Executive Officer of Royal Caribbean International

Thank you.

Operator

Our next question is from Patrick Scholes of Truist Securities.

Patrick Scholes -- Truist Securities -- Analyst

Great. Good morning. Question, it appears that the next step that the CDC is looking for is to complete Phase 2A. In your opinion, what's a realistic time line at this moment in which you think you could complete Phase 2A?

Michael Bayley -- President and Chief Executive Officer of Royal Caribbean International

Hi, Patrick. I can't give you like a week or how many weeks and days. I think again, as we understood and interpret what we received last night, if you're planning on a highly vaccinated cruise, there will be no requirement for a simulated voyage. And the previous 30-day notification and process for simulation and then the subsequent 60-day for notification in the process for your first actual revenue sailing has effectively been removed.

And so highly vaccinated crews can literally -- as soon as you have your port plan ready and everything lined up, you can submit your request to cruise, and they will try the best to get your response within five days. So you can see that the time line and the process has improved quite significantly. So I think there's the process of crewing the ship, obviously, and then the vaccination process. So I think the target that's been stated and that we've all been working toward is in mid-July.

And I think that after what we received last night is looking very realistic. But again, to Richard's point, we still got a lot to clarify. But I think this commitment to mid-July is looking very realistic based upon what we saw last time.

Patrick Scholes -- Truist Securities -- Analyst

OK. Very good. Thank you.

Michael Bayley -- President and Chief Executive Officer of Royal Caribbean International

Thank you. All right. Sorry. We have time -- yes.

Final question, yes. That'd be great.

Operator

Your final question is from Vince Ciepiel of Cleveland Research.

Vince Ciepiel -- Cleveland Research -- Analyst

Hi. Thanks for taking my question. Curious if there are some factors we should keep in mind that would make 2022 yield, maybe not as comparable to 2019? Just in light of pricing being ahead, it sounds good. You had mentioned that new capacity should maybe be a bit of a tailwind, but are there any offsets from a mix perspective? Or the itineraries that you might be running in '22 versus '19 or even getting back to those peak 107%, 180% occupancy levels that might impact the comparability of the 2022 yields to 2019 yield?

Jason Liberty -- Chief Financial Officer

Vince, I think it's really too early to kind of tell. I mean, structurally, the additional capacity, us, obviously getting rid of some of our older tonnage a negative is the sale of Azamara, which is a higher-yielding brand versus the average. But for the most part, I think it really kind of depends on how the business builds going into next year. As Michael said, really, as we start getting here into the early part of the summer, is really when 2022 really begins to build up.

But there's not necessarily something structurally as a rig to the fleet or our deployment that's going to make a significant change in 2022.

Vince Ciepiel -- Cleveland Research -- Analyst

Got it. And as a follow-up, Richard mentioned the uncertainty and fluidity of the situation. And I think when you look at your deposits, they've been stable for a number of quarters at $1.8 billion, but still ways away from that $3.4 billion, they were at one point. So curious what you think it takes for those to rebuild, it seems like that's a key part of helping to delever a bit as well.

And if there's a path for that, kind of in the second half of this year as confidence, hopefully, returns and the booking curve lengthens a bit?

Jason Liberty -- Chief Financial Officer

Yes. I mean, I think -- first of all, it's been stable now for several quarters. It's now building. And it's building because we're able to provide clarity on ships and deployments that are coming back up into service.

And so I think the consumer is gaining confidence. But I think they're looking for us for clarity on exactly which ships are going to be coming up and when so that they can plan and count on their vacation experience. And I think as, obviously, a lot of this is beginning to -- in terms of some of the barriers are beginning to evaporate, that confidence is building, and hopefully soon, we move back to those levels on a customer deposit standpoint.

Vince Ciepiel -- Cleveland Research -- Analyst

Thanks.

Jason Liberty -- Chief Financial Officer

Thanks, Vince. Thank you for your assistance today, Shelby, with the call. And we thank you all for your participation and interest in the company. Carola will be available all day today for any follow-up questions you might have.

And as always, we wish everybody a great day, and please stay healthy.

Operator

[Operator signoff]

Duration: 58 minutes

Call participants:

Jason Liberty -- Chief Financial Officer

Richard Fain -- Chairman and Chief Executive Officer

Robin Farley -- UBS -- Analyst

Michael Bayley -- President and Chief Executive Officer of Royal Caribbean International

Steve Wieczynski -- Stifel Financial Corp -- Analyst

Jaime Katz -- Morningstar -- Analyst

Brandt Montour -- J.P. Morgan -- Analyst

Stephen Grambling -- Goldman Sachs -- Analyst

Paul Golding -- Macquarie Group -- Analyst

Fred Wightman -- Wolfe Research -- Analyst

Patrick Scholes -- Truist Securities -- Analyst

Vince Ciepiel -- Cleveland Research -- Analyst

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