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Royal Caribbean Chairman & CEO Richard Fain joins Yahoo Finance's Julia La Roche to discuss the future of cruises.
- We are starting this show in Miami for a change the cruise industry. They're looking to kick things into high gear after a painful 2020, the pandemic grounding ships around the world. But Royal Caribbean is hoping for a turnaround with its first sailing already underway. We've got Yahoo Finance's Julia La Roche standing by with the chairman and CEO of Royal Caribbean Richard Julian.
- Well, thank you so much, Akiko. And we are here on board the celebrity edge in Fort Lauderdale at Port Everglades with Royal Caribbean's Chairman and CEO Richard Fain. Richard, 15 months. This is the first revenue cruise to sail out of the US. And I can see the excitement here. What's going through your mind when you walked on this cruise ship? Your first time on a cruise ship in 15 months.
RICHARD FAIN: I mean, it's just so exciting. Words don't begin to cover it. I was really interested. I was sort of emotional moment.
And-- but when I came on board, one of the crew members said to me, you know, I feel at home finally. And I think that's there's such a vibe of such excitement. Everybody's so happy.
And we've waited so long. And this is it. It's hard to imagine. This is it.
- Well, walk us through what it's like coming on here. We are on the celebrity edge. I know you all are not at full capacity. But give our viewers a sense of the numbers, how many folks are on board, what does the vaccination look like for your passengers, as well as your crew.
RICHARD FAIN: Well, we vaccinate all of our crew and all of our ships. We-- we vaccinate. We hope we recommend people take vaccinations, and we really encourage it. But we do accept there are some who don't. Some children who can't get vaccines, et cetera.
But 99% of the people on board the ship are vaccinated. And we're starting slow. First of all, there wasn't much notice.
You know, we normally booked months in advance. And here we only had a few weeks to do the bookings for this ship. So we're starting a little bit slow.
We want to give our crew time to get acclimated. Although I got to say they are so juiced up. That I don't think they're going to need that time.
And so the buildup will be slow. We're in no rush to build it up. We really it's like starting a flywheel. And just started slow, and it grains momentum, and it keeps going.
- Well, it's certainly starting to fly well. And you just mentioned it's an emotional moment going through this painful period for 15 months now. I just have to ask you this. Because we have seen amusement parks open up hotels, people are traveling, and now we're restarting cruising here in the US. Do you think the cruise industry was unfairly singled out here by the CDC?
RICHARD FAIN: Well, I think we always wanted to make sure that we were not only as safe as everything else, we wanted to be safer than being on Main Street in USA. And the development of the vaccines, in particular, and our extensive protocols really allow us to do that. And we also didn't want to do it in a way that made it in any way impaired the experience.
So we ended up with the best of all worlds. It took us a little longer. But we ended up with a safe operation and we end up with an extraordinary experience. So that's what we wanted to do.
And you know, the painful part was for so long, so many people couldn't work. Some [INAUDIBLE] employees, travel advisors, stevedores, people in the islands that we visited. So the-- the economic suffering was pretty serious. And now to be starting up is just I can't tell you how exciting that is.
- We are here in Florida. And when you think of cruising, you certainly think of Florida. I know I certainly do. I do want to ask you about Governor Romney's DeSantis' law that will go into effect on July 1st that bans businesses from asking for proof of vaccination. What are you all going to do? Tell us-- give some clarification on how you're going to navigate that.
RICHARD FAIN: Well, we've-- we've been working with the governor's office. You know, Governor DeSantis has been a strong advocate for the cruise industry. And we appreciate what he's done for trying to help get us back into the operation. And obviously, we will respect the law.
But we think that so many of our guests, 90% of our guests have already told us that they've already been vaccinated or intend to be soon. So we're not-- we're really starting with the base of people who want to be vaccinated.
And there'll be some exceptions. We'll try and talk them into a vaccination. But if not, and they want to come on board, that is their choice.
We will manage the process, so that we will make sure that we never go too far with unvaccinated people. And if necessary, we'll close down a cruise.
But we think that's all workable. And today's an example of that. We didn't turn away anybody on the basis that they weren't vaccinated. But we did encourage them to do it.
And frankly, I would encourage all Americans because not only is it a question of being safer, it's also a question of allowing our society to open up.
- You mentioned 90% of folks who intend to take this cruise, or one of your cruises they want to get vaccinated. For the folks that don't want to get vaccinated, what's the experience going to be like for those folks and how will that differ from those who are vaccinated?
RICHARD FAIN: Well, there will be some changes. Most importantly, if you're not vaccinated, then the question becomes we want to test to make sure that if there is an incident we catch it early, that's part of the beauty of a cruise ship because we have a controlled environment. We can test and find that out early.
So people who aren't vaccinated. Obviously, we'll have to have more testing. And there's a cost associated with that, which they will have to absorb.
There are some other minor protocol changes that will be impacting them again if they're not vaccinated. But for most people, it's a great cruise whether you're vaccinated or not. We just hope more.
And our experience is that most people want to be vaccinated. And we're way in the 90 percentile.
- So those folks will have to foot the bill though for those tests if they're not vaccinated. Got it. So last summer, you teamed up with one of your rivals Norwegian for the healthy sail panel. And I want to hear from you the protocols and how you deal with outbreaks.
Because I know just recently on the adventure of the seas, there are two tests that were positive for children. And then a few weeks go, two more on the celebrity Millennium. So how do you deal with cases when they arise? And talk to us about that.
RICHARD FAIN: Well, you know, the healthy sail panel, which was led by Governor Leavitt and Dr. Gottlieb did an amazing job. I actually just met with him this morning. And the passion they showed, they really focused. And these are some of the leading experts in the world on the topic.
And what they helped us to understand what the issues were and how do we deal with them. And actually, when we survey, more people were concerned that somebody else would get sick, and they would be quarantined on a ship than they were some so much worried about getting it themselves.
So a lot of focus was if we have an incident, how do we make sure that that's one or two people and not an outbreak? And the answer is we know how to do that. And with the advice of the healthy sail panel, with advice from the CDC and others, we have a process. And it involves arrangements with the ports, with hospitals, with hotels, with travel transportation companies, so that we can isolate those people, we have amazing contact tracing capabilities.
So actually, what happens is if you had the same thing happen let's take the case on adventure, this was a family of four, two of the children who couldn't get their vaccine, has the disease, children are not as big a vector on it. And so they were isolated. We quickly identified all of their contacts and isolated the contacts, tested everybody, and then the two cases that we had were-- were taken care of taken home. Everybody carried on with their vacation. No mask, no fuss.
So that's really what our objective is. And that's better than you could get in your home community.
- All right. I want to ask you about demand. And specifically, the mix of bookings including beyond just the cruise credits from last year. And you know, when I think of cruising, a lot of the customers are repeat customers.
So I want to hear from you about demand. How are you thinking about attracting new customers on your path to your recovery here?
RICHARD FAIN: So I think when we started, we at the beginning of this pandemic, we thought that the two groups would be mostly affected would be people who are older and felt themselves more vulnerable and first time cruisers. And we were half right.
Turns out the people who are older do tend to be actually do more research, they've been the first to get the vaccine. And so demand amongst those people has been extraordinary.
First timers, there's no question. If they didn't don't know about cruising, and it turns out if you don't know about cruising, you're more-- you're more worried. So it'll take us longer to get them back. But even there, we've been surprised.
In-- in Singapore, for example, and in Germany, we were getting a very high percentage of first time cruisers. And again, it's a question of getting information out of the why it's safe and how great it is.
- Well, it's certainly a milestone in the recovery from COVID-19. Richard Fain Chairman and CEO of Royal Caribbean. I thank you so much for your time.