Royal Caribbean Announces Massive Investment, Eyes Gen Y

Royal Caribbean Cruises Ltd. (NYSE:RCL) subsidiary Royal Caribbean International recently announced that it is making multibillion-dollar investments in two new programs, Perfect Day Island Collection and Royal Amplified, to improve guest experience.

Notably, in a year’s time, shares of Royal Caribbean have rallied 27.3%, outperforming the industry’s growth of 15.7%.

Perfect Day Collection to Focus on Private Islands Across the World

The project focuses on the company’s private island destinations internationally. The first edition of collection will be Royal Caribbean’s private island in the Bahamas, CocoCay, which the company is likely to upgrade spending $200 million.

The upgrades will include a water park that will have two water towers with 13 slides, a 135-foot tall water slide, a wave pool, an obstacle course pool, a freshwater pool, a 1,600-foot zip line, a 450 feet helium balloon ride, two especially designed beaches and a beach club. Most of the facilities will open by spring 2019.

The company will announce additional destinations of this collection in Australia, Asia and the Caribbean at a later date.

Royal Caribbean Cruises Ltd. Revenue (TTM)

Royal Amplified to Focus on Fleet Modernization

The company plans to invest $900 million in this fleet modernization program that will cover 10 ships in a span of four years. The initiative will involve adding new outside decks, pools, Sky Pad — a virtual reality bungee trampoline, waterslides and water parks to Royal ships. It will also add new restaurants, and dinning and nightlife concepts.

Short Caribbean Getaways

In sync with growing demand for quick getaways among millennials, the company will add shorter three- and four-night getaways. Mariner of the Seas will undergo a $90 million modernization and sail 3- and 4-night cruises from Miami, FL.

Massive Capacity Expansion

Given the consistent increase in bookings, the company is increasing its capacity. Notably, the upcoming fleet launches include Symphony of the Seas in April 2018, Quantum Ultra Class Spectrum of the Seas in 2019, second Quantum Ultra Class ship in 2020 and a fifth Oasis Class ship to launch in 2021. Ships from a new class called Icon, will be delivered in 2022 and 2024.

Moves Aimed at Meeting Escalating Demand for Cruise Vacations

We believe that Royal Caribbean’s latest moves are part of the company’s plan to expand its capacity and enhance guest experience over time, thus allowing its global fleet to meet changing demand for cruise vacations across the world. In fact, launching ships is part of the company’s long-term strategy to build state-of-the-art vessels that are expected to help in providing guests with a remarkable vacation experience at an exceptional value.

Zacks Rank and Key Picks

Royal Caribbean has a Zacks Rank #3 (Hold). Some better-ranked stocks in the Zacks Consumer Discretionary sector are Churchill Downs, Incorporated (NASDAQ:CHDN) , Las Vegas Sands Corp. (NYSE:LVS) , and Monarch Casino & Resort (NASDAQ:MCRI) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Churchill Downs, Las Vegas Sands and Monarch Casino & Resort earnings in 2018 are expected to improve 93.5%, 9.8% and 5%, respectively.

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