Following an upward revision to its earnings outlook, Royal Caribbean Cruises decided to raise approximately $3 billion in new borrowings to acquire a 50% stake in Sandals and Beaches Resorts. This increases the likelihood of a transition to an integrated vacation platform.
Royal Caribbean Cruises demonstrated its earning power in its latest quarterly results based on current bookings and pricing, and raised its full-year earnings outlook. Fuel costs remain an uncertainty, but the recovery in margins resulting from the launch of new ships is viewed as an important short-term source of volatility.
The company announced plans to raise approximately $3 billion in new borrowings to acquire a 50% stake in Sandals and Beaches Resorts. This will expand the platform by integrating cruises and all-inclusive resorts.
Revenue through 2029 is expected to reach $24.3 billion and profit $6.4 billion, based on annual revenue growth of 9.1% and an increase of approximately $2 billion in profit from the current $4.4 billion. The potential upside in the share price is estimated at 9%, although it has been suggested that this upside could narrow.
Some analysts are placing greater emphasis on pressure on yields than on new ships, and there are also views that 2029 revenue and profit forecasts may be revised.