Cost Savings and Margin Outlook
Q: Can you elaborate on cost savings and their impact?
A: Management is confident in achieving their cost reduction goals, aiming for $300 million in savings over three years through 2026. They are already ahead of their $100 million goal for this year. They expect to deliver sub-inflationary unit cost growth and see no material headwinds in 2025 other than normal inflation ,. They are focusing on eliminating waste while preserving the guest experience.

Booking Trends and Pricing Power
Q: How are booking trends and pricing power shaping up?
A: Demand is strong across all itineraries, with particular strength in Alaska and Europe for next summer. Pricing for 2025 is robust, with prices "up significantly compared to this time last year for '24" ,. They focus on maximizing yield rather than occupancy, aiming for optimal booked positions to enhance pricing.

Capital Expenditures and Investment Plans
Q: Will new investments impact costs next year?
A: Management does not anticipate any material increase in capital expenditures over the next year or two. Investments in the private island will be made over time in a measured way, with additions in 2025 alongside the pier and more in 2026 and 2027. They have no material investment in Jacksonville or Philadelphia, as these are led by local communities.

Fourth Quarter Yield Guidance and Middle East Impact
Q: How does Middle East exposure affect Q4 guidance?
A: The Middle East Red Sea accounts for a 1 to 2-point impact for the year, disproportionately weighted to Q4, with about 10% of capacity in that region. Despite this, they are guiding to a 5-point yield increase year-over-year for Q4. They see this as part of normal business ebbs and flows.

Onboard Spending Trends
Q: Are there any declines in onboard spending?
A: There are absolutely no decreases in onboard spend; in fact, preselling of onboard services is up considerably. The company benefits from a significant value gap between hotel ADRs and cruise line yields, providing long-term tailwinds.

Below-the-Line Items for 2025
Q: What are expectations for interest, share count, and D&A in 2025?
A: Share count is expected to be around 515–516 million fully diluted shares, similar to this year. Depreciation and amortization runs about 9.5% of gross revenue. Interest expense is expected to improve as they pay down debt, with guidance of about $760 million for this year.

Leverage Targets and Balance Sheet
Q: How are you progressing towards leverage targets?
A: The company has reached their year-end leverage target ahead of schedule and expects to see significant improvements quarter after quarter. They are making progress toward their 2026 target of mid-4s net leverage.

Commissions Leverage and Net Yields
Q: Is commissions leverage sustainable, and what's driving it?
A: The improvement in commissions was due to buying air more effectively, resulting in lower gross revenue and air costs. This enhances net revenue and helps drive demand. They believe there is still room for further improvements in air purchasing.

Occupancy Levels and Yield Maximization
Q: Will occupancy be a tailwind into 2025?
A: The company focuses on maximizing yield rather than occupancy. Their core driver of revenue is the first and second guests in a cabin, not the third guest, who contributes less. Therefore, they prioritize cabin occupancy over passenger occupancy.

Profit Targets and Ambitious Goals
Q: Are the 'Charting the Course' targets overly ambitious?
A: Management believes the targets are ambitious but achievable. They are committed to hitting them by 2026 and view them as driving the company forward to achieve great results.

Loyalty Program Plans
Q: Any updates on loyalty programs across the brand portfolio?
A: Management is aware of the importance of loyalty programs but is not prepared to discuss details at this time.

Cost Impact of Dry-Docks in 2025
Q: Are dry-dock headwinds expected next year?
A: There is no substantial step-up in dry-dock days or capacity next year; thus, no material cost headwinds are anticipated from dry-docks.

Investment in Pier and Private Island
Q: Will investments parallel the opening of the pier in 2025?
A: There will be some parallel investments, but development is a long-term plan with additions in 2025 and beyond. Investments will be made in a measured and disciplined way.

Ancillary Spend Compared to Hotels
Q: How does ancillary spend compare to hotels?
A: The cruise industry benefits from guests being on the ship for the entire duration, allowing for better ancillary revenue opportunities. Fundamental factors make their business more resilient in onboard spend than hotels.

Airfare Costs and Net Yields
Q: Should we expect airfare costs to continue decreasing?
A: The company will continue to improve on airfare costs to the extent possible, aiming for further improvements. They are focused on leveraging better air purchasing to enhance net yields.