Royal Caribbean: Shareholders With Benefits

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.

Onboard Credits for Royal Caribbean Group Shareholders

Royal Caribbean wants to acknowledge its shareholders who also become customers, so if you own 100 shares or more of 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:

1. You are cruising on a reduced rate, such as employee rate, or a friends and family rate.
2. You are an employee or agent of Royal Caribbean, a travel agent or tour operator, cruising at travel agent rates or interline rates.
3. 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. For Silversea Cruises, the form is here.

Please have the following information ready with you:

1. Ship and sailing date
2. Reservation number
3. 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 giving 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!

How much are Royal Caribbean shareholder Onboard Credits?

The Onboard Credit provided to shareholders and stockholders is based primarily on the duration of the voyage.

Onboard credit per stateroom on sailings of:	Benefit
Stateroom on a World Cruise	US $1,000
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:

1. This benefit is only available onboard the Royal Caribbean International or Celebrity Cruises brands
2. 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 and Hapag Lloyd Cruises, they do not offer any OBCs, shareholder benefit, or stockholder benefit on those vessels.

Is it Worth Buying Royal Caribbean Shares for the Shareholder Benefit?

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.

RCL’s net debt level ballooned from around $11.5 billion at the end of 2019 to $20 billion in 2024. While earnings have started to recover, 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 (RCL shares have a beta of 1.4), which far outstrips the value of the OBCs. Unless you really are comfortable with holding volatile shares, in my mind it’s not worth buying the shares just for the OBCs.

How much will 100 RCL shares cost?

Let’s look at the numbers. The box below shows the cost to buy 100 shares of RCL based on the latest closing price:

Data provided by dfin.pro

Based on this investment, a 5% decline in the share prices (whether in one day or over a few days or months), would cost you over $1,000. 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!

Is RCL a good stock to buy?

Royal Caribbean’s revenue and earnings have recovered surprisingly well. 2023 was a great year for them and 2024 is expected to be a record year for earnings. Frankly, this has surprised me as my prior prognosis for the stock had been quite negative due to their high leverage and the juxtaposition of high and rising interest rates. Given Royal’s high debt level, I felt that RCL was not a good stock to buy as an investment.

Despite my negative outlook, RCL’s shares have recovered quite impressively. The only catch now is that when looking at the stock on metrics of EV/EBITDA or EV/EBIT (i.e. taking the full amount of debt in consideration), the company is trading at much higher valuations than it used to before Covid. This does concern me.

If consumer spending continues to remain strong (as their forward bookings indicate), Royal will be able to reduce their debt levels and go back to being in a healthier position. However as we have seen from the results from airlines and hotels, consumer spending on travel is not as strong as it used to be. Therefore while cruises remain a bright spot, the overall travel outlook is not as solid as it was just a year ago.

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. Given the run up in the shares and the high valuation, but offset by solid bookings, I feel the risk-reward here might be balanced.

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 couple of years before they can start paying out a dividend without jeopardizing their balance sheet.

How to buy Royal Caribbean Shares?

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.

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