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It's when all your senses become aware. You are present. In focus. That's traveling to me. It's an urgent need to go and observe this world that we all share. A ray of light. A pair of eyes that tell a story. An instant of perfection. Images printing on your soul. This is authentic beauty. It's all out there and trust me, there's always room for discovery.

Discover more on SilverSea.com Experience the world's best family vacation on board Icon, Star, and the new Legend of the Seas, where ultimate chill meets next-level thrills for every type of vacationer. Whether you're a family looking for boulder bonding and epic experiences for all ages, an adventure seeker chasing the ultimate rush at the largest water park at sea, the sun chaser who wants to splash all day at seven jaw-dropping pools or a flavor craver dashing to dine at over 40 must-have hot spots the icons are everything you've ever loved about every vacation all rolled into one the new Legend of the Seas takes the world's best family vacation to another level featuring the most dining destinations at sea including the mind-blowing new Royal Railway Legend Station plus jaw-dropping new rooms just for families and unrivaled entertainment like America's Got Talent Live on stage and Roald Dahl's Charlie and the Chocolate Factory. Or experience unforgettable seven-night adventures on Icon of the Seas from Miami and on Star of the Seas from Port Canaveral. And starting summer 2027, Hero of the Seas revolutionizes the world's best family vacation with experiences beyond belief. From revved-up new thrills to a record-setting nine pools, and the three-story Ultimate Family Treehouse. Book your IconClass vacation today, including adventures on Legend of the Seas and Hero of the Seas at royalcaribbean.com slash iconclass.

With Celebrity Cruises, you're going to need a bigger bucket list. We can take you to over 300 destinations across seven continents and offer authentic experiences in each one. Feel like a...

Good morning. My name is Morgan, and I'll be your conference operator today. At this time, I would like to welcome everyone to the Royal Caribbean Group Third Quarter 2026 Earnings Call. All participants are in a listen-only mode. After the speaker presentation, there will be a question and answer session. To ask a question during this session, you will need to press star then the number one on your telephone. I would now like to introduce Mr. 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 third quarter 2026 earnings call. Joining me here in Miami are Jason Liberty, our Chairman and Chief Executive Officer, Naftali Holtz, EVP and Chief Financial Officer, and Michael Bayley, President and CEO of the Royal Caribbean Brand. Before we get started, I'd 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 third quarter, the current booking environment, and our outlook for 2026. 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 very happy to share the results of another outstanding quarter that exceeded our expectations and drove an increase to full-year guidance as demand for our leading vacation brands continues to accelerate. Before we get into the results and outlook, I want to talk about our recent announced partnership to buy a 50% stake in Sandals & Beaches Resorts. Our strategy is to turn the vacation of a lifetime into a lifetime of vacations. Our mid-70s Net Promoter Scores are a testament to our unwavering commitment to delivering the best vacation experiences responsibly. At the same time, we are building a connected vacation platform that brings guests back more frequently across more occasions and captures a greater share of the growing $2 trillion-plus global vacation market. In recent years, we have strengthened our connected vacation ecosystem by investing in technology, loyalty, and commercial capabilities. Everything starts and ends with the customer. We're building a portfolio that serves more of their needs across more occasions. A guest might choose Royal Caribbean for a multi-generational vacation, Sandals for a romantic getaway, Celebrity for a premium couples Galapagos adventure, and Silversea for an Antarctica Expedition. We have also broadened how guests can vacation with us through Celebrity River Cruises and our growing portfolio of differentiated destinations and experiences. Connecting these opportunities through loyalty, data, and technology, all while obsessing about delivering the best vacation experiences, gives high-value guests more reasons to remain within our family of brands. This, in turn, enables us to deepen engagement increase frequency and expand lifetime value. That brings me to Sandals and Beaches Resorts. The business has two leading and complimentary brands in the fast-growing and high-potential all-inclusive resort segment. Sandals is the leading adult-only all-inclusive resort brand in the Caribbean, and Beaches leads in serving families and multi-generational all-inclusive resort travelers. It is also a strong strategic fit that builds on the strength and growth potential of our cruise businesses. Today, we capture only 20 to 25% of our guests' annual vacation spend. About 30% of our guests have vacations in a Caribbean all-inclusive resort in the last two years. By adding all-inclusive resorts to our ecosystem, we expand our reach to roughly 50% of the vacation wallet. This investment lets us serve guests that are already spending in all-inclusive resorts by also attracting new guests to our ecosystem and building on our Caribbean footprint and North American sourcing, all while reinforcing our core cruise business. Caribbean All Inclusive is an attractive $16 billion market, growing 11% a year, and Sandals & Beaches Resorts is a leading owner-operator with strong brand awareness and financial profile. Financially, our approximately $3 billion investment for a 50% stake at Ten Times Forward EBITDA is expected to be immediately accretive to our earnings while keeping us within our leveraged targets. We are very excited about the value that's going to be brought to our customers, to our shareholders, to our employees, to the communities that we serve with this partnership for Sandals and Beaches. I will elaborate more about this opportunity a bit later, but now let me turn to our results. This morning, we reported third quarter results that exceeded our expectations and resulted in an increase to our full-year guidance. Third quarter revenue grew 9% year-over-year, while earnings came in 4% above our guidance. In the third quarter, we delivered 2.7 million incredible vacations at industry-leading guest satisfaction scores. Capacity increased 8% year-over-year, and net yields were up 0.6%. which was about 60 basis points higher than our guidance. The beat was driven by better than expected closing demand along with strong onboard revenue primarily for Europe and Caribbean products. Cost also came in favorably due to timing and as a result adjusted EPS was 26 cents higher than our guidance. Naftali will elaborate on our results and outlook in a few minutes. Turning to the demand environment, We continue to see accelerated momentum as consumers prioritize our vacations and experiences. Travel remains the number one leisure category where consumers intend to increase spending. Traveling more is a top priority for a third of Americans, and consumers see cruising as a good value due to high quality onboard amenities, pricing that includes meals, accommodations, and entertainment, and the ability to visit multiple destinations in one trip. That confidence is reflected in our booking activity. Since the last earnings call, booking volumes have increased in the mid-teens year over year, and bookings for 2027 sailings up in the high teens demonstrating strong demand as we continue to build a strong base of business for 2027. Our book position for both 2026 and 2027 is ahead of prior year at record rates. We are also seeing our relationship with our guests deepen. This year, close to half of our guests were repeat customers with the balance experiencing our brands for the first time. These new-to-brand guests are becoming loyal repeat cruisers and returning more frequently as the average time between cruises continues to decrease. Our differentiated brands, net promoter scores in the mid-70s, expanding portfolio, and growing loyalty and technology capabilities gives us more ways to engage with guests and more opportunities to capture a greater share of their vacation spent. Moving to the outlook for the remainder of the year, our capacity in the fourth quarter is up 5% year-over-year and we expect to grow yields 4.2% to 4.7%, which is in line with our prior expectations. As we discussed last quarter, the increase in expected fourth quarter yields reflects a more favorable year-over-year comparison, deployment mix, and timing of dry docks. Full-year net yields is expected to grow approximately 2.1%. Full-year adjusted EPS is now expected to be in the range of $17.85 to $17.95, representing 14% year-over-year growth. Our proven formula of moderate capacity growth, moderate yield growth, and strong cost discipline is driving significant earnings growth, continued margin expansion, and robust cash flow generation. This allows us to invest in high returning and strategic growth opportunities while also returning capital to our shareholders through dividends and share repurchases. 2027 is the final year of our Perfecta program, and the business is performing well ahead of expectations. In fact, at the spot fuel rate when we announced the program, we would exceed our 2027 earnings target by about $1 per share. Despite the significant increase in fuel rates this year, we remain on track to achieve our 20% adjusted earnings per share CAGR target based on the current forward fuel price curve for a $20 handle in 2027. Separately, we have already achieved our ROIC target. As I mentioned on our last call, we have a great partnership with local communities and the government of Mexico where we deliver close to a million vacations a year. While I know there is great interest in our efforts in Manoal, we will share further progress and updates at the appropriate time or as they become available. Stepping back, our goal is straightforward. Keep guests vacationing with us again and again, whatever the occasion and whichever brand fits best. We are pursuing that through an integrated vacation ecosystem in which loyalty, technology, and data reinforce one another to drive repeat travel and grow the long-term value of each guest. Loyalty is the foundation of the platform. StatusMatch carries guests' loyalty status across our brands, while PointsChoice and Royal One let them earn and redeem rewards across the ecosystem. These capabilities are already driving greater cross-brand engagement and repeat travel. In fact, this year, 40% of our guests are loyalty customers. Loyalty share has increased across nearly all tiers over the last few years, with the strongest growth concentrated among entry-level members. This suggests more guests are engaging with the loyalty ecosystem earlier in their journey, expanding the pipeline of future repeat rates and deepening longer-term and many more. That deeper engagement is paying off in spend as well. Since we launched StatusMatch earlier this year, guests who sail across brands have higher APDs than guests who only sail on one brand. Sandals and Beaches Resorts is where we are putting some additional capital as a TSR accelerator to our strategy. It extends our platform into the attractive all-inclusive category with loyalty benefits The roughly 30% category overlap gives us a natural way to introduce Sandals & Beaches to our guests and to welcome their guests into our brands. Over time, that means more vacation occasions, greater frequency, and higher lifetime value for both the Royal Caribbean Group and Sandals & Beaches Resorts. Just as important, this is a business with significant room to grow. The portfolio today has 18 high-quality, all-inclusive resorts on some of the most attractive beachfront sites in the Caribbean. The Stewart family has invested significantly in modernizing their resorts and elevating the guest experience, which is reflected in the quality of the product, guest loyalty, strong pricing, and compelling financial performance. The portfolio also includes more than 1,000 acres of undeveloped Caribbean real estate. much of it adjacent to existing resorts. Together with Sandals & Beach's proven track record, this scarce, hard to replicate land portfolio provides a strong foundation for growth. Funded by the business's own cash flow generation, the development plan includes three new beach resorts and significant room expansions across the existing portfolio with substantial opportunity to further expand the plan over time as we capture more of the attractive and growing all-inclusive resort market. Beyond room and hotel expansion, the same capabilities that power our platform are what will drive value from this partnership. We bring decades of experience in revenue management, digital engagement, distribution, procurement, technology, and data. Together we see tangible opportunities to grow revenue, enhance customer acquisition, and leverage our global scale while preserving the identity, Caribbean character and differentiated guest experiences of Sandals and Beaches. All in, we see several hundred million dollars of synergy opportunities over time and every guest we connect across the two businesses strengthens the broader ecosystem. We look forward to sharing more detail once the transaction closes and we are excited about the value this partnership will create for our shareholders and our customers. In summary, demand remains strong, and we are encouraged by the strength we are seeing for 2027 and beyond. At the same time, we continue to expand the opportunities in front of us. Our investments in new ships and destinations, Celebrity River Cruises, Sandals & Beaches Resorts, loyalty digital and technology, and broadening our vacation platform and creating more ways for our guests to interact and vacation with us. We are executing from a position of strength with a growing base of loyal guests, an expanding portfolio of differentiated vacation experiences, and significant opportunities ahead. With that, I will turn the call over to Naftali. Naft?

Thank you, Jason, and good morning, everyone. I will start by reviewing third quarter results. Adjusted earnings per share were $6.57, 26 cents higher than the midpoint of our guidance. Growth in both yields and capacity drove a 9% increase in total revenue for the quarter. Yields for the quarter were 60 basis points above our guidance, driven by stronger close-in demand compared to our expectations in July, particularly in Europe and the Caribbean. Net cruise costs per APCD, excluding fuel, decreased 1.8% year-over-year, approximately 40 basis points better than expected, or 5 cents. Due to timing of costs shifting into the fourth quarter. Adjusted EBITDA was $2.5 billion, margin was 45%, and operating cash flow was $1.6 billion. As Jason noted, booking activity accelerated during the quarter, and our booked position for 26 and 27 is ahead of prior years at record rates. As I discussed last quarter, a more favorable year-over-year comparison, deployment mix, and the timing of dry docks provide an approximately 200 basis point benefit to fourth quarter yields in 2026, following a similar headwind in the third quarter. Capacity is expected to grow 6.6% this year. The Caribbean represents 57% of our capacity and 44% in the fourth quarter. We remain well positioned in the Caribbean, where our ships, destinations, and onboard experiences set us apart, driving positive net yields this year, even with the elevated capacity in the region. Europe will account for 15% of capacity for the year and 10% of capacity in the fourth quarter. Our Europe season has been very successful, even with the geopolitical events this year. Lastly, Alaska is expected to account for 5% of total capacity for the year and immaterial for the fourth quarter. Now, let me talk about our updated guidance for 2026. For the full year, net yields are expected to grow approximately 2.1% in constant currency. The increase in yield guidance is driven by outperformance in the third quarter and expectations for fourth quarter yields that are in line with our July guidance. Together with capacity growth of 6.6%, total revenue is expected to grow 9%. Net cruise costs, excluding fuel, are expected to be approximately flat in constant currency, consistent with our prior guidance. This reflects ongoing efficiency improvements while continuing to invest in the guest experience. We now expect full-year fuel expense of approximately $1.35 billion Fourth quarter consumption is 58% hedged, and we have continued to opportunistically add hedges for future years. Based on current fuel prices, currency exchange rates, and interest expense, we expect full-year adjusted earnings per share to be $17.85 to $17.95. This brings us in line with our initial earnings expectations in January, reflecting the strength of the underlying business, despite the significant fuel and exchange rates headwinds and the impact we experienced during the year from geopolitical events. Our higher earnings outlook also reflects stronger than expected third quarter results, partially offset by higher projected fuel costs and unfavorable currency movements. We expect continued cashflow to grow to support margin expansion, investment in our strategic initiatives Solid Investment Grade Balance Sheet Metrics, and Continued Capital Returns to Shareholders. Now, let me discuss our fourth quarter guidance. In the fourth quarter, capacity is expected to increase 5% year over year, and net yields are expected to grow between 4.2 and 4.7 in constant currency, in line with our July expectations. As we discussed last quarter, Yield growth in the fourth quarter reflects strong demand, a more favorable year-over-year comparison, deployment mix, and the timing of dry docks. Net cruise costs, excluding fuel, are expected to decrease between 0.9% and 1.4% in constant currency. We expect fourth quarter fuel expense of approximately $379 million based on current at-the-pump prices, net of hedging and forecasted consumption of approximately 463,000 metric tons. Taking all of this into account, we expect adjusted earnings per share for the fourth quarter to be between $3.48 and $3.58. Looking ahead to 2027, we expect capacity growth of 4.5% driven by new hardware and fewer dry duct capacity days. 2027 deployment mix will be similar to 2026, with 56% in the Caribbean, 16% in Europe, 11% in Asia Pacific, and 5% in Alaska. We are also very excited to welcome Hero of the Seas to the fleet in 2027, as well as begin operating Celebrity River. With Hero of the Seas launching on the seven-night Miami program, Icon of the Seas will move to Galveston Our first ICON class ship in this home port. We expect yield growth to be weighted towards the second half of the year, as the first quarter faces approximately 200 basis points of structural headwinds, including timing of dry docks. Turning to our balance sheet, we ended the quarter with $7.4 billion in liquidity and leverage below three times, consistent with our goal of solid investment grade metrics. During the quarter, we issued $1.25 billion of approximately 5.5% of senior unsecured notes due 2034, with the proceeds used to repay a portion of our floating rate term loans and debt maturing in 2027. In October, we also entered into a $400 million delayed draw term loan with Expert Development Canada, a new source of capital for us. and increased our revolving credit facility by $50 million to $6.65 billion. We continue to maintain strong access to diverse sources of capital that support our liquidity, strategic growth initiatives and shareholder returns. I want to provide a few additional details on our investment in Sandals and Beaches Resorts. We expect to account for the investment as an unconsolidated equity method investment were results reported on a one-quarter lag. We expect the transaction to close in early 2027 and for the investment to be immediately accretive to our financial metrics and grow over time. The contribution to 2027 earnings will be immaterial and depend on when the transaction closes. As Jason mentioned, the business has significant growth ahead of it, including room expansion, new resorts, and potential acquisitions. With strong cash flow generation and leverage below one times, the company can self-fund the ambitious development plan while leaving room for distributions. At this point, we do not expect to make any more contributions into the joint venture beyond the initial purchase price. The equity income will be included in our financial guidance following the close of the transaction and we expect to provide more detail then. In closing, we remain committed and focused on our mission to deliver the best vacation experiences responsibly as we work to deliver another year of strong results. With that, I will ask our operator to open the call for a question and answer session.

Thank you.

We will now begin the question and answer session. If you would like to ask a question, please press star, then the number one, on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star one again. Your first question comes from Matthew Boss with JP Morgan. Your line is open.

Thanks and congrats on another nice quarter. Thanks, Matt. So Jason, as you approach the end of your perfecta plan, underlying earnings growth, as you cited, is pacing to exceed the 20% earnings growth CAGR if you exclude the impact from the additional fuel. So as we think multi-year, do you see any moderation in the way you're thinking about multi-year prospects for cruise and any change in confidence around larger picture market share opportunities in that $2 trillion plus total vacation markets?

Well, thanks for the question. I'll start off with the short answer, which is no, I do not. What we see is obviously, you know, whether it's our business or in the general cruise space, we are a sliver of this growing $2 trillion plus travel space. And quite frankly, that space is predicted to expand at a faster rate than we're going to grow and the cruise industry is going to grow. So I see a really strong high quality demand for the vacation experiences that our different brands are delivering. They are the leaders in their segments. They're doing that through this incredible innovation on the ships that we build, the vacation experiences that we're delivering on those ships by our incredible crew. and of course the destinations which we continue to bring on online here which is elevating guest satisfaction. Collectively those things drive a NPS score in the low to mid 70s. So trust is high, expectations are that we're going to deliver the best vacation experience and doing that in a responsible way and that's resulting in us getting more reps. You combine that with adding river and you're adding all-inclusive resorts further deepens our relationship with our customers, and we're getting more and more reps, which we're clearly showing in the numbers. So we're very excited, obviously, about the performance this year. We're very encouraged by all the signals we're getting for next year and beyond. And Matt, that's a long way of me saying we feel really confident in the future, and With the trust that we've built, as well as the technology platforms, whether it's with AI or digital, and the connectivity we're bringing across our brands, we feel very confident that we're going to get a greater share of our guests and our customers' vacation wallet. And that vacation wallet, we take that very seriously to make sure we're delivering high-quality vacations and they're getting high value for that. But also, you know, that share is typically coming because we're able to curate and identify these high-value customers. It's resulting in a higher margin and higher lifetime value for that customer.

Great, Collar. Congrats again. Thank you.

Your next question comes from Steve Wisinski with Stiefel. Your line is open.

Hey, guys. Good morning, and congratulations on the strong results here. Thanks, Steve. Jason, I want to ask another question about 2027. As we think about getting to your $20 handle next year, I would assume you're not ready to give exact yield and cost guidance for 2027, but I would assume it's going to fall under your company tagline of moderate capacity and yield growth and disciplined cost control. Having said that, I would assume getting to that $20 plus in earnings next year does not include any type of help from Things like sandals, buybacks, debt refis, and I would also assume that if oil prices stay status quo, that's probably embedded in there as well. Just want to make sure that as we think about next year, some of the potential upside to that $20 number. And then if I can ask a second question as well, Jason, as we think about the thousand acres of undeveloped land that Sandals has, Can you just help us think about, you know, maybe what some of the potential development opportunities could be there over time as well? Thanks, guys.

Sure. So I think first of your first point, Steve, one, we don't know exactly when the Sandals transaction is going to close. You know, our expectations will be into this year, early next year, but we don't know exactly when it's going to close. And it's also going to be on a quarter lag. So to answer your first question, whether it is sandals, whether it is share buybacks, debt refinancing, et cetera, that is stuff that is not in consideration to our statement around next year. And as Naft said in his comments, as we close at that point in time, we'll know the timing of that. We'll know what the forecast is based off of the lag. and at that point we will update guidance. But regardless, we expect the impact for next year to be immaterial to our business. So I, you know, you have another.

Hey Steve, just on the second question on the land. So the purchase price that we paid and we've agreed to includes that 1,000 acres. This is beachfront key locations. We're very excited about continuing to have the company develop that. They have a very, very strong track record of development and enhancements and growing their existing footprint. These lands are actually adjacent to existing properties so these are just building on the current infrastructure they have and they'll just be room expansions in existing locations and they have and there's also a couple of opportunities to do greenfield development in really attractive locations and markets. Today they have 18 resorts and three of them are being built. So lots of room to grow, expand the Keys,

and we of course as you know are very focused on making sure that you know consistent with our core business those are developed of course to get satisfaction scores but also uh accretive financial results yeah and and i just i think it's important to be clear um because i know there's been lots of questions that we've gotten about you know are we gonna show up at sandals saint vincent with you know a cruise ship and and tender people into That beautiful resort. The answer to that is no. Sandals needs to be sandals. Beaches needs to be beaches. And there is this massive land bank. And of course, we will collectively be re-evaluating on how we grow this business and also where there might be adjacencies or opportunities pre, post, et cetera, with our other cruise brands. but we're trying, you know, these are additional vacations our guests are taking and we want to make sure they're taking that additional vacation with us. And I think, you know, we are very keen and ultimately as I made in my comment, you know, we think that, and not just we think this, but also our partner in this, you know, feels very confident that, you know, what we have been able to build with technology, with AI, the connected loyalty, are obviously our huge supply chain footprint, et cetera, that there's an opportunity for us to just bring greater scale and synergy to the business, which will not only help elevate the current performance, but it's also going to provide a lot of tailwinds to grow this business. And as Naft said, the growth of this business is self-contained because this business generates a tremendous amount of cashflow, including the opportunities for dividends And so we're very excited about this. And the last thing I'll say is this land, when you see it, it's, I mean, yes, it's adjacent. There are other greenfield opportunities on other parcels of land that are inside this land bank. But this is not stuff that you can just go buy off the shelf. This has been curated brilliantly by the Stewart family.

Your next question comes from Trey Bowers with Wells Fargo. Your line is open.

Hey guys, thanks for the question. I was just going to ask about the 27 commentary where you guys mentioned being up high teens for next year. It's a little bit different language than you guys sometimes use when discussing the book position. I mean it's obviously a really impressive number. I just want to make sure I understand what that represents in terms of is it year over year or is it quarter over quarter and in terms of the pricing dynamics underlying that are those up again next year. Thanks so much.

Yeah, I would read that we're just trying to give you a measurement on how we've seen demand elevate for future periods. And of course, we're booked. Our book position is at a higher place and at higher rates. And I think, of course, we're always, and you've heard me say this before in the past, we're looking to optimize always our revenue performance. We have, I think, leading world-class tools that are helping us determine what our best book position and best rate should be at any given point, which I think is why we're seeing the level of performance that we've now seen for several years come out of this. But I would take the commentary as customers are willing to pay us more in the future and today than they did yesterday. And I think that is because, and of course, we're also Getting more reps out of our existing customers because our brands, our crew, are delivering the very best vacation experiences, which are clearly seen in Net Promoter scores, which create huge advocacy for us that are in the low to mid 70s.

Your next question comes from Ben Chagen with Mizuho. Your line is open.

Hey, good morning, and thanks for taking my question. There was an interesting comment in the release this morning, Jason. It says 30% of rural Caribbean guests take all-inclusive vacations, and a similar percentage of Sandals Beaches guests also cruise. Maybe in broad strokes, what is the penetration of that today, meaning 30% take all-inclusive, but how many or what percentage are Sandals versus elsewhere, and then vice versa for the percentage of Sandals that are showing up at Royal in broad strokes? Thanks.

Hey, it's Naft. You know, it's a good portion, but there's definitely room to grow. And we see that in the results. And when we say they take, you know, a Sandals guest takes a cruise, they definitely cruise on some of our competitors. And as Jason said before, right, we are very much focused on loyalty. We see our loyalty continuing to grow. We see repeat rates are growing. And so we definitely feel that there is a significant opportunity to capture that and keep them in our ecosystem. That's really our strategy. That's our goal.

Yeah. And then I always like to put things in a simple format, which is like like today, if a if a world Caribbean customer goes on a competitive cruise brand, I think that's a fail. We offer, I think, the very best vacation experiences in the key segments. We go to well over a thousand different destinations. and so having connected loyalty and delivering these incredible experiences should keep our customer inside of our ecosystem. Today, that customer might exit our ecosystem to go into River, but into the future, as we get into next year, if a customer is not traveling on Celebrity River across our ecosystem, that's a fail. And then you take that one step further with all-inclusive People go to a lot of different all-inclusive resorts for many different reasons. But we feel very confident in the level of experience that Sandals and Beaches is producing that when our customers go into all-inclusive resorts in the Caribbean, they should be going to Sandals and Beaches. And collectively, we want to keep that customer in our ecosystem, as I said, because we get better margin. and we ensure that customer gets the vacation experience that they really desire to go and then we get the repeat rate out of that as well.

Yeah, just one other thing to note, similar to what we've seen in River, where the occasion was an incremental, not a substitution. The same trend we saw, we see here as well with All Inclusive. And so the occasion is different, maybe the way you travel or the guest is traveling or the occasion itself. And so that incrementality is really encouraging to us and we're very excited about making sure that, you know, that comes to us.

Your next question comes from Meredith Jensen with HSBC. Your line is open.

Thanks. Good morning. I was hoping you might speak a little bit more about opportunities outside the Caribbean. Further out, I think there's going to be unique for our Ciala. Rhapsody will be in Europe year-round and also thinking about, you know, while early days, the terminal in Japan. You know, what this kind of says about what you're seeing, not only in Europe for year round and winter opportunities, but, you know, in Asia and what you're thinking about potential returns there as well. Thank you.

Yeah, well, I mean, as you know, 46% of our business is not in the Caribbean. And, you know, obviously we listen very closely to what our customers are looking to do, their vacation experiences. as well as the build out of other markets like Southeast Asia and Australia, New Zealand and Japan and China. As we kind of think about that Asia-Pac corridor, we see a lot of opportunities to enhance the vacation offering as well as generate high quality demand. Similar as we see in Europe, which is to me a vacation playground for our guests, we see high demand, Alaska, et cetera. All of our different segments continue to grow. All of our markets continue to grow. And our products continue to grow. And they're always competing on where is the most optimal place for our fleet to be. And you're seeing us very, I would say on an aggressive basis, build out. We have well over 100 different destination projects in some form or fashion going on. and we're building that out so that it's not just about going to a location, it's about making sure that the vacation experience when they go to that location has them walking away with a great experience, memories and stories.

Meredith, it's Michael. Just to add to Jason's point, in two weeks we have the groundbreaking ceremony for the Royal Beach Club in Laleppa and already that product is very attractive in the Australian market. We've got Four ships operating out of Australia in 28, 3 and 27. And if you look at our deployment for 27, 28, you'll see that we have moved more capacity into Asia Pacific.

Your next question comes from Robin Farley with UBS. Your line is open.

Great, thank you for taking the question. Kind of a two-part question, if I could, on sandals. You talked about the benefit and the synergies. Do you see opportunity or interest in land-based outside of the Caribbean? There's, you know, all-inclusive resorts in other parts of the world, so is this something that rural might be looking into elsewhere? And then also any You made a reference to hundreds of millions in synergies. Is that mostly coming from increasing the reps on the revenue side or would some of that be expense? I don't know if you have any thoughts about going from 50% to higher ownership of sandals if there are provisions for that in the agreement. Thanks.

Okay. Well, the last one, we're focused on this great partnership we have with the Stewart family. So I won't get into future ownership outside to say that. I think we're very happy to be able to partner with an incredible operator and who's led this business for a very long time. So we're very excited about that. The answer to outside the Caribbean, the answer is yes. But we also sit on a lot of land around the world, which we don't talk a lot about. But yes, the answer is we think the Sandals brand, we've tested this, the Beaches brand have great legs to it around the world. We are focused, I would say, Today on really growing the footprint inside the Caribbean. And we think that is certainly, well, that's all kind of within our full control.

And I think we're very excited about that.

As it relates to the timing, synergies come in over time. and I think this will come in many, many different ways. It will certainly come on the revenue side, whether it's yield management, whether it's the connectivity of our loyalty systems, whether it's what we've built around data. We sit on a mountain range of high quality, consolidated, well-tuned data with great analytical layers and capabilities that are on top of that. And then on the cost side, it's a very well-run business. And so the cost side here is about how do we bring scale into things like purchasing as an example, while also balancing the importance of the communities that support the business. So it's just like the Sandoz team, we're very community focused. We're about enhancing benefits for all. But there's going to be opportunities for us to do things at a different level.

Your next question comes from Brant Montour with Barclays. Your line is open.

Good morning, everybody. Thanks for taking my question. So, you know, the commentary on 2027 sounds really good. And yet the story of maybe the cruise industry mid-year 26 seems to be just Thank you for joining us. or if that's, you know, maybe the signs of a consumer that's on their sort of their last leg in their sort of spending with what the economy is doing or any sort of thoughts around those dynamics. Thank you. Sure.

Well, I think first off, Brent, I, you know, I think if we just look back over time here, I mean, you look back at the past three or four years, I think it's pretty, there's been many, I think almost every quarter we've talked about being somewhat surprised to the upside on close in demand. and I think that's the reality of the consumer and it's also a reality of the products that we're offering. So we've made shifts to where we have more weekend getaways, where we have just shorter itineraries and also the incredible shifts that we bring online are just attracting more people into that space. And the shorter products tend to be a closer in booking kind of product. So some of it's product. The second is half of our guests are millennial and younger. And so weekend getaways, they take more trips. They basically spend as much as they would on a short trip as they would on a six or seven night type itinerary. And we have more of those guests in the mix. I think the other thing that I would just you know it just to kind of you know give you the the another I think important data point is you know onboard spend has been much stronger than we thought it was going to be not that we didn't think it was not people weren't going to pay more than they did yesterday but they're paying even more than we had anticipated um and so I understand there's a lot of noise there's been a lot of noise on the market this year There's a lot of geopolitical stuff. But I look at our business, our initial guide for this year had a midpoint of 1790. And we expect to have a midpoint on our guidance here of 1790. And I think that really talks to the resilience of the business, the resilience of the consumer, and how they value effectively the vacation experience that we deliver. which is not only resulting in them paying more but also them coming back for more.

Your next question comes from Connor Cunningham with Mellius Research. Your line is open.

Hey, everyone. Good stuff today. Just I wanted to talk a little bit about the spread to land base for a second. You have Disney, you know, out there raising prices for park passes. Hilton this morning is talking about rev bar growing three to four. I think it would set up a pretty healthy environment for you all. But on the flip side, you have a competitor that's talking about a decel into 1Q just based on some deployment mixes. I just think it would be super helpful if you could just talk high level, like any obvious moving parts to net yields next year. I mean, as deployments kind of shift around a smidge here, just any thoughts that would be helpful. Thank you.

Yeah. Well, I think first, we tend to, I think, lag a little bit to land-based. I don't think, I mean, our yields over the past several years have grown 35%, still behind where land-based had elevated to. And so when we see land rise, that's typically a good sign. But we tend to lag a little bit behind that. It's not a point of view on yield for next year. It's just I'm just saying what has kind of historically occurred. And so that's positive signs that the consumer is willing to spend more on travel. And because of the value differential, that tends to be great tailwinds for us. You know, I run my cruise line and not others. So I'm not going to really comment there outside to say that, you know, I think You know, us and others have seen different trends. And we're focused, when we think about our competitive set, on vacation experiences, land-based vacation. That's what our customers are not really trading us for other cruise lines. They're looking for, are they doing other vacation experiences that are typically on land?

Your next question comes from Vince Siepel with Cleveland Research. Your line is open.

Hi, thanks for taking my question. You mentioned ICON going to Galveston. I was wondering if you could just talk about how you think that ship is being received in that market and maybe just thoughts on the Western Caribbean in general over the next couple years. I know it's somewhat tied to development in Mexico, but when you think about coming up with deployment and itineraries, how are you thinking for planning around that, which is somewhat up in the air?

Hey Vince, it's Michael. I think ICON is going to be received exceptionally well. It's the best product entering into Texas from the cruise industry in the history of time. So it's an exciting product. We've already got a lot of great response from our travel partners and we think it's going to be a huge success. And of course it sets the Table really for the future as it relates to those itineraries, particularly when we work our way through everything with Mahawal and Cozumel. So we're very optimistic about how ICON is going to perform. As Jason mentioned earlier, these ships are generating net promoter scores in the 80s. And you can tell that if we're filling these ships with 7,600 people with a load factor of 133%, And people are rating it in the 80s. It means that they're having an exceptional time and they're happy to pay a good price for that experience. So we're pretty switched on for ICON.

Your next question comes from David Katz with Jefferies. Your line is open.

Good morning. Thanks for taking my question. I just want to clarify some of the earlier commentary around sandals, right? You know, Naft referenced it as, you know, immaterial as we stand today. My sense is that that is a, you know, comment that's before and they're synergies and we can't really have an intelligent conversation about synergies until such time as it closes, right? Is that the right way to characterize that?

I wouldn't care because this obviously depends on the timing. We expect this to be closing early in 2027. We're hoping to keep that date. We're working very hard, but it really depends on the timing. Then the synergies, of course, will come over time. Not everything will come day one. There's a lot of work to do, but we're very excited about what this means to our customers, to their customers, as well as to the financial results.

That concludes our Q&A session. I will now turn the conference back over to Naftali Holtz, CFO, for any closing remarks.

We thank you all for your participation and interest in the company. Blake will be available for any follow-ups. We wish you all a great day.

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect and have a wonderful rest of your day.