Royal Caribbean CEO Jason Liberty says despite economic uncertainty, his company has wind in its sails

Hello and welcome to Modern CEO! I’m Stephanie Mehta, CEO and chief content officer of Mansueto Ventures. Each week this newsletter explores inclusive approaches to leadership drawn from conversations with executives and entrepreneurs, and from the pages of Inc. and Fast Company. If you received this newsletter from a friend, you can sign up to get it yourself every Monday morning.

CEOs and other business leaders are scrambling to understand how customers might respond to financial uncertainty brought on by tariffs and other factors roiling the markets. Early signs are not great: the University of Michigan Consumer Sentiment Index in April fell for the fourth straight month, and the Conference Board’s April Expectations Index, which measures short-term outlook each month, dropped to its lowest level since October 2011.

In the travel industry, some executives are bracing for a hard landing: Southwest Airlines, American Airlines, and Alaska Air recently withdrew 2025 earnings guidance, while United Airlines took the unusual step of offering two sets of profit guidance, depending on whether or not the U.S. enters a recession.

A shipshape outlook

So, what to make of cruise company Royal Caribbean Group’s rosy forecast? In late April, the company reported better-than-expected first quarter earnings and increased the midpoint of its full-year guidance for adjusted earnings by 3.8 %. (Rival Carnival Corp. also beat earnings expectations and boosted guidance, but Norwegian Cruise Line Holdings missed its numbers and signaled softening demand.) In 2024, Royal Caribbean Group reported net income of $2.9 billion on revenue of $16.5 billion.

CEO Jason Liberty says his cautiously optimistic outlook validates the consumer’s appetite for experiences. “They treasure vacations, and they’re going to lean more [into experiences] than into buying stuff,” he says.

Indeed, consumer discretionary spending on experiences, which fell dramatically during the pandemic, has reached an all-time high, according to McKinsey & Co., while spending on “things,” which ticked up during lockdown, is down again. (Not surprisingly, the pandemic was a low point for the travel industry; Royal Caribbean voluntarily suspended cruise operations and reported a loss of $5.8 billion in 2020.)

Experiences aren’t recession-proof, of course, and they’re not immune to tariff impacts. The United States Tour Operators Association, a travel trade organization, says its research arm predicts that higher import taxes will result in price inflation and declines in tourist sentiment, particularly among international travelers to the U.S.

Royal Caribbean’s own data, fielded in April, found that 7 out of 10 consumers intend to spend the same or more on leisure travel in the coming 12 months, and that 9 out of 10 consumers are looking for value when making vacation plans.

Steady as she goes

Liberty is quick to point out that “value” is different from “low-budget.” Rather, he says, travelers may value the convenience of being able to access dining and entertainment in the same place, or they may appreciate being able to see multiple destinations in one trip. And Royal Caribbean, which operates cruises under the Royal Caribbean, Celebrity, and Silversea brands, is adding more experiences to its portfolio. In December, the company will open its first Royal Beach Club, an all-inclusive property in the Bahamas that its passengers can access via an island day pass that’s part of a plan to grow from two to seven private destinations by 2027.

Liberty says Royal Caribbean doesn’t compare itself to other cruise companies; the company aspires to measure up to travel destinations known for their dining, amenities, and activities. “If you look at our Oasis Class ships or Perfect Day”—a private island with a water park and a zipline, multiple pools, and separate section for adults—”you may ask: ‘why did they go there?’ We went there to take share from Orlando,” he says. Some ships have added Broadway shows and enhanced gaming activities to compete with Las Vegas, Liberty adds. And while a cruise isn’t exactly for the budget-conscious consumer—travelers pay $576 per person for a three-night getaway on Royal Caribbean’s Utopia of the Seas, with fares climbing to $6,350 per person for a 12-day trip around the Iberian Peninsula and Mediterranean on Silversea’s Silver Dawn—Liberty notes that Royal Caribbean travel is about 20% cheaper than comparable land-based experiences.

If water slides, gaming rooms, and cabarets seem like a lot to fit on a ship, keep in mind that Royal Caribbean’s Oasis Class ships, for example, are more than 1,000 feet long and can accommodate 5,600 guests. “These are floating cities,” Liberty says. “Everything that can happen in the city happens on a ship. Everything you have to plan for on a city, whether it’s power, whether it’s sanitation, whether medical—and then all the experiences that take place—we’ve got to be able to do that.”

What’s your experience?

Is your company in the experience business? Are you seeing any softness in consumer demand as a result of bearish sentiment? Or are you, like Royal Caribbean’s Liberty, cautiously optimistic? Send your thoughts to me at stephaniemehta@mansueto.com. I’d like to share your examples in a future newsletter.

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