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Royal Caribbean revenue beats estimates, Marriott posts quarterly loss

Yahoo Finance’s Emily McCormick joins The First Trade with Alexis Christoforous and Brian Sozzi to discuss Marriott and Royal Carribean’s second-quarter earnings report.

Video Transcript

ALEXIS CHRISTOFOROUS: Well, the cruise and hotel industries are still reeling from the pandemic. Royal Caribbean out with earnings this morning and Yahoo Finance's Emily McCormick has been following it. Emily, what can you tell us? Good morning.

EMILY MCCORMICK: Good morning, Alexis. Well, we're looking at Royal Caribbean beating on the top line with second-quarter revenue up $176 million, but that was still down 94% over last year. We also saw the company's second quarter adjusted loss per share of $6.13, wider than estimates for $4.88 a share.

Now, Royal Caribbean had its cruise business virtually frozen for all of the second quarter. Starting on March 13, the company did suspend its global cruise operation and canceled all of its second-quarter sailings. Now, in terms of future bookings, Royal Caribbean said the booked position for next year is, quote, "trending well" and is within historical ranges. And as of June 30, the company had $1.8 billion in customer deposits with $300 million of this corresponding to fourth quarter sailings this year. Now, about 48% of guests booked on canceled sailings have requested cash refunds.

Now, it's not just sailings that have been impacted. The company also noted that new ship building has been disrupted. It's going to result in delivery delays for three of its five-- or two of its five ships that had been originally scheduled for delivery between last month and December of 2021.

Now, with sailings still not underway just yet for Royal Caribbean, the company did estimate that its cash burn will be on average in the range of about $250 million to $290 million per month during a prolonged suspension of operation, so something to watch here with Royal Caribbean. We do see those shares down just under 2% in pre-market trading. Alexis?

ALEXIS CHRISTOFOROUS: Also we're hearing from Marriott this morning, looks like a larger-than-expected loss there in the hotel chain, saying it may take years before their bookings get back to pre-COVID levels, right?

EMILY MCCORMICK: Absolutely, Alexis. And one of the things that Marriott did highlight in its earnings results this morning was that China was actually leading the recovery-- the at least tentative, early recovery that we're seeing in the travel industry. One of the things that they mentioned there is that all of the hotels in that region were open as of early May with occupancy levels up to 60% versus 70% at the same time last year, so a little bit more of a steady rebound that we're seeing there.

At the same time, we are still seeing weakness in the North American and other international segments. To highlight what CEO Arne Sorenson said in a statement, he said, quote, "worldwide revenue per available room has climbed steadily since its low point of down 90% for the month of April to a decline of 70% for the month of July. Worldwide occupancy rates, which bottomed at 11% for the week ended April 11 have improved each week reaching nearly 34% for the week ended August 1. Now currently, 91% of our worldwide hotels are now open, compared to 74% in April. And 96% percent are open today in North America."

Now, we did still see Marriott posting a wider-than-expected loss and a bigger drop in revenue. That was down 72% over last year, so going to take some time to see a rebound but at least starting to see things come off of those April lows. Alexis?