Has Royal Caribbean Stock Become A Different Bet?
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Shares of Royal Caribbean (RCL) trade at 18.8 times earnings, compared with 22.8 for the S&P 500. Investors paying that multiple need to understand the underlying business, and Royal Caribbean has shifted its priorities. On the January 2025 call, management promoted Celebrity River Cruises, a river line announced that same morning. Yet by the October 2026 call, the company had turned its attention elsewhere. So what does management emphasize now?
Royal Caribbean Now Talks Up A Resort Stake
Management now emphasizes a recently announced 50% stake in Sandals and Beaches Resorts, an all-inclusive resort business. During the October 27, 2026 call, management placed the deal within an integrated vacation ecosystem where loyalty, technology and data reinforce each other.
The strategy targets a larger share of customer holiday budgets. Management said Royal Caribbean currently captures only 20%-25% of its guests’ annual vacation spend, and that adding all-inclusive resorts expands the company’s reach to roughly 50% of that spending.
That represents a different pitch from January 28, 2025. On that call, management announced Celebrity River Cruises and called the project a natural extension of Celebrity’s premium ocean offering, a new way to sell an existing cruise brand. During the October 2026 call, the river line surfaced as part of the plan for 2027, when management expects to begin operating it. Management no longer emphasizes the river business, but it has not dropped it.
How Big Is The Resort Stake Against Royal Caribbean?
Management is paying approximately $3 billion for the stake, making the investment small next to the company’s overall size. The price tag accounts for about 3.5% of Royal Caribbean’s $85.7 billion market value, and management expects the transaction to add to earnings from the start.
The underlying market is large. Management puts the Caribbean all-inclusive market at $16 billion, with an annual growth rate of 11%. Royal Caribbean’s own revenue grew 9.7% to $19.1 billion over the twelve months ended September 30, 2026.
Management expects to account for the stake as an equity investment, meaning the resort sales would not be added to that revenue line. Its share of the results would be reported a quarter late, and management expects the deal to close in early 2027.
Is The Resort Stake Reassuring For Royal Caribbean Holders?
Based on the figures, the shift reads as more reassuring than concerning, because the cruise business the resort stake sits beside is earning more. Royal Caribbean’s operating margin stood at 27.6% over the twelve months ended September 30, 2026, up from 26.4% a year earlier. Management also said bookings for 2027 sailings made since its last earnings call are up in the high teens, and the river line is still on the 2027 schedule.
The concern is cash and debt. Free cash flow fell to $1.51 billion over those twelve months, down from $2.04 billion a year earlier. Debt net of cash stood at $22.3 billion on September 30, 2026. Management says the resort deal keeps the company within its leverage targets, noting that leverage ended the quarter below three times.
Royal Caribbean is expected to report in January 2027, and its guidance for 2027 will be the number to watch in that release.
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