Ben Chacon

Ben Chacon asked for specific opportunities driving sub-inflationary costs in 2026, whether higher Caribbean exposure is a net cost benefit, and the mechanical translation between occupancy growth (200-250 basis points) and net cruise cost. He also inquired if there are abnormal depreciation and amortization (DNA) impacts for 2026 due to island investments, given higher capacity growth.

Answer

Harry Sommer (President and CEO) explained that cost savings come from a deliberate, methodical process across the business, with Caribbean capacity being a cost tailwind due to closer-to-home sailing benefits. He noted that increased occupancy from third/fourth guests (children/teens) has very little marginal cost, improving overall unit cost. Mark Kempa (EVP and CFO) stated that DNA should remain consistent as a percentage of revenue, as Great Stirrup Cay investments are modest and depreciated over a long period, with 7% capacity growth from two new ships being the primary factor for DNA.

Ben Chacon asked for specific opportunities driving sub-inflationary costs in 2026, whether higher Caribbean exposure is a net benefit to costs, and for a rule of thumb on the translation between occupancy growth (around 200-250 basis points) and net cruise cost. He also inquired about any abnormal DNA (depreciation and amortization) impacts in 2026 due to island investments and higher capacity growth.

Answer

Harry Sommer (President and CEO) explained that cost savings result from a deliberate, methodical approach across the entire business, not a single large item. He confirmed that sailing closer to home (Caribbean) is a tailwind to costs due to better scale and unit cost. He stated that increased occupancy from third and fourth guests has very little marginal cost, thus improving overall unit cost. Mark Kempa (EVP and CFO) clarified that DNA should remain consistent as a percentage of revenue, with GSC investments having modest depreciation over a long period, but noted 7% capacity growth from two new ships in 2026.