Imagine waking up to a new, beautiful view every day. Instead of packing and unpacking your bags, all you need to do is wander around the ship and enjoy the various activities! Whether you’re looking for an adventure or a relaxing escape, a cruise can provide it all.
So, are there benefits to owning Royal Caribbean stock? Yes! One benefit of going on a Royal Caribbean cruise – if you are a shareholder – is the ability to avail of onboard credits (OBCs). The value of these credits ranges from $50 to $250, depending primarily on the duration of the cruise.
Royal Caribbean wants to acknowledge its shareholders who also become customers, so if you own 100 shares or more of RCL (NYSE:RCL), then you’re all set to receive some perks through onboard credits! You will receive one OBC per shareholder-occupied stateroom. Onboard credits are a type of currency that can be used onboard Royal’s cruise ships. Guests can use their onboard credits to purchase drinks, souvenirs, spa treatments, book shore excursions, and more. The benefits vary based mainly on the duration of the cruise and its operating currency, so it’s important to pay attention to this. I have discussed this further below.
Exclusions and Important Conditions
There are some important exclusions to keep in mind. You are not eligible to receive these benefits if:
- You are cruising on a reduced rate, such as employee rate, or a friends and family rate.
- You are an employee or agent of Royal Caribbean, a travel agent or tour operator, cruising at travel agent rates or interline rates.
- You are on a chartered or complimentary sailing, or on Galapagos sailings.
It is also important to note that the benefit is not transferrable, so you cannot pass on the benefit to someone else. You must be going on the cruise and the OBC will only be given to you (and the people in your party in your stateroom).
All taxes have to paid out of pocket and your OBC expires when your cruise ends.
How to apply for Onboard Benefits for Royal Caribbean Cruise
The process for the applying for the onboard credits is very straight forward. You simply have to submit RCL’s dedicated electronic application form.
Please have the following information ready with you:
- Ship and sailing date
- Reservation number
- A brokerage statement (less than 90 days old) which shows your ownership of the 100 RCL shares (RCL shares that are traded on the NYSE). Note that the name on the brokerage statement must match the name on the reservation.
When to apply for Onboard Credits for a Royal Caribbean cruise
You must apply for the onboard credits at least 3 weeks prior to your departure. Royal Caribbean suggests “2 to 3 weeks” prior to your sail date, however I recommend to give it some extra time and do it a minimum of 3 weeks prior to sailing. It’s better to be safe than sorry. There’s no point waiting till the end and letting 1 week get in the way of you, a great vacation, and some nice perks!
The Onboard Credit provided to shareholders and stockholders is based primarily on the duration of the voyage.
|Onboard credit per stateroom|
on sailings of:
|14 or more nights||US $250|
|6 to 13 nights||US $100|
|5 nights or less||US $50|
There are a couple of important things to keep in mind about these perks:
- This benefit is only available onboard the Royal Caribbean International or Celebrity Cruises brands
- The actual value of the onboard credit will be determined by the operational currency onboard the vessel that you are sailing. This is determined by the exchange rate used aboard the vessel.
The big drawback with Royal Caribbean is that although they own and operate other cruise brands such as TUI Cruises, Silversea, and Hapag Lloyd Cruises, they do not offer any OBCs, shareholder benefit, or stockholder benefit on those vessels.
In the post-Covid world, I do not think it is worth buying RCL shares simply to claim the shareholder benefits. As you may be aware, the cruise industry was hit very badly during Covid as all voyages were cancelled. In order to pay the bills, all the cruise companies had to borrow huge sums of money from banks and from the financial markets. This meant that the balance sheets of all the cruise lines went from being reasonable to now being in a vary precarious state.
While President Trump was favourably disposed to bail out the cruise lines with cheap financing, the fact that cruise companies pay zero income tax meant that Congress did not want to be seen bailing them out using taxpayers’ funds.
RCL’s net debt level has ballooned from around $11.5 billion at the end of 2019 to $22 billion by the end of 2022. Meanwhile, earnings at the company have yet to recover from the Covid shock are have been consistently negative since 2020. Put the two together – 2x higher debt with a loss-making operation – and you have a recipe for disaster. It will likely take RCL several years or more of running at pre-Covid profitability levels to reduce their debt back to the $11 billion level. This is a very long time!
Due to Royal’s significantly worsened financial position, the shares have also become significantly more volatile. The shares easily move 5-10% in one day. And while that might not seem like much, it’s important to remember that the shares have but cut in half from the pre-Covid days.
For these reasons, you can easily end up losing more on the shares than you will gain in OBCs.
Let’s look at the numbers: based on the current share price of $97.50 for RCL, and the minimum 100-share ownership requirement, you’re looking at a minimum investment of $9,750.
You can check the latest prices on Yahoo! Finance.
Based on this investment, a 10% decline in the share prices (whether in one day or over a few days or months), would cost you $975. This is significantly more than what you would receive in benefits, so you can easily lose more than what you will gain in credits!
Yes, if the shares go back up, you could gain a lot of money too. But at this point, that’s just pure speculation. Sure you can have a little fun with the shares if they go up, but unless you really know what you are doing, you’re better off just going on that cruise. Plus its more enjoyable to get lucky in the stateroom than pray and hope that maybe you can get lucky in the markets! If you want to make money in the markets, there are better options to consider.
Is RCL a good stock to buy?
Given Royal’s ridiculously high debt level and the difficult position that they’re in, unfortunately for no fault of their own, I do not feel that RCL is a good stock to buy as an investment. One could buy RCL in the hope that they recover, but that would purely be speculation, not investing. Unfortunately, the situation is similar across the industry, with other companies like Carnival and Norwegian also struggling.
Investing means you are taking a calculated bet and you only take that bet when the risk vs reward dynamics are skewed heavily in your favour. At this point, for the reasons I laid out above, I do not feel that rewards heavily outweigh the risks.
Will Royal Caribbean stock recover?
The path to recovery for RCL shares is murky. The company has to pay off a significant amount of debt in order to bring its balance sheet to a healthy level, or at least back to its pre-Covid levels. Based on the expected free cash flow generation of around $2 billion annually, starting in 2025, it will take a long time to pay off the $11 billion of incremental debt that they have taken on since 2020.
While all of this is doable, there may be many more macroeconomic and geopolitical challenges that they company may face during that period. The first few years are the most crucial, as that is when the company is most vulnerable.
If the management can effectively steer the company through the next 3 years without any hiccups – this means generating profits and paying off debt with it – the stock may recover in the years beyond that. But do you want to own the shares during such a volatile period?
You are likely better off investing in opportunities where the odds are in your favour. I would recommend monitoring RCL’s financials over the next few years and if it looks like they’re on track, it would be worth buying for an eventual recovery. But not right now!
Does Royal Caribbean pay dividends?
No, Royal Caribbean does not pay dividends. Royal Caribbean used to pay dividends, however they were suspended due to the unprecedented circumstances related to Covid-19. I do not expect RCL to pay dividends for the foreseeable future as their debt load is simply too high. It may take them another several years before they can start paying out a dividend without jeopardizing their balance sheet.
In order to buy RCL shares, you will need to have a brokerage account that allows you to buy shares. Many brokerages allow you to open an account easily, but there may be a minimum amount of deposit required first.
If you are in the US, you can buy Royal Caribbean shares through brokerages such as M1 Finance, Robinhood, or Vanguard.
If you are in the UK, you can buy Royal Caribbean shares through brokerages such as Fineco, Moneyfarm, Hargreaves Lansdown, Interactive Investors, or eToro. You can learn more about other options on our articles covering the Best Way to Buy US Stocks in the UK and the Best Investment Apps.
Yes, there is. The electronic form is available at this link. You will need to have ready the details of your trip along with a brokerage statement that shows proof of ownership of 100 RCL shares. Please do this at least 3 weeks prior to your departure date.
No, Royal Caribbean shareholders do not receive any discounts for booking a cruise. Instead, shareholders receiving benefits in the form of Onboard Credits. The value of these credits ranges from $50 to $250, depending on the duration of the cruise.
Can I claim Onboard credit multiple times with Royal Caribbean?
Yes, you can request this benefit multiple times! However it can only be claimed once per trip per shareholder. This means that if you book 3 separate trips with Royal, then you can claim this benefit 3 times, once for each trip! All their terms and conditions apply.