James Hardiman : So maybe I’d ask one of the previous questions in a different way. Obviously, there’s a lot of mix affecting per diems over the course of the year. Is there any way to sort of tease out the mix and the inter cabin impact? I guess I’m just trying to figure out if like-for-like per diems are getting better or getting worse, right? Obviously, throughout the rest of the consumer space, investors are bracing for a deceleration in pricing power as we work our way through the year. Obviously, the travel space is at a very different spot given where we’ve been. Maybe any way to think about sort of like-for-like pricing and what that tells us about the consumer?
Josh Weinstein : Sure. So thanks for the question, James. Like-for-like, the pricing is up. So we’re very happy. As David said, I wish I had said, it was a really good line, they’re not undesirable cabins. They’re very desirable up and down, our fleet and our portfolio based on what particular guests are looking for, and they are paying more for it and spending more onboard. And you got to remember — and I’ve been here for a long time and I remember hearing this for the last 20 years, good times and bad, our business model holds up very well. And the reason why it holds up so well in a recession, if one comes, is because we are an incredible value to land. Anywhere from 25% to 50% lower than the land-based equivalent. And so when people are looking to figure out how do I make my dollar go further, we can provide better value for their money for their vacation, which is still incredibly important, even more so now than it used to be in the past that people will not give up.
So we feel very good about our position.
David Bernstein : The only thing I can add to that is I did say in my prepared remarks that we did expect the fourth quarter yields to be up compared to 2019. And that is sort of an indication of the higher pricing that we’re expecting. And by the time we get to fourth quarter, a lot of the mix issues that we were talking about have disappeared.
Josh Weinstein : Pretty much all of them.
David Bernstein : All of them, yes.
James Hardiman : Got it. Makes sense. And then maybe on the cost side. So I think costs were up roughly 6% in the first quarter. Constant currency, 10.5% to 11.5%. The second quarter, it seems like there was some moving around of costs within those numbers. But then 8.5% to 9.5% for the year. So presumably the back half of the year, those numbers are coming down. I guess I’m just trying to think about sort of an exit rate. You said you’re still going to be spending on advertising later in the year. But ultimately, is there an opportunity for net cruise costs to come down in ’24 versus ’23? Or should I think about more of a normalized growth rate as we move beyond sort of the base level of 2023?
David Bernstein : Sure. So to start with, you mentioned the first to the second quarter, and it did go up quite a bit, but there were really two things that drove that. There was — remember, we increased occupancy from the first quarter to the second. You’re talking about a 7 percentage point increase in occupancy. And so I’m very happy. That was a couple of points of the difference. The other was dry dock, which was also worth 2 points because of the number of dry docks between the quarters. So 4 of the 5-point differential is just those two items. And there was also timing of R&M expenses. But as we’ve said many times before, judge us on costs for the full year and not any particular quarter. And we gave you our guidance for the full year, but we’ll work hard as we always do, to do better than that. And that’s a fairly reasonable run rate to think about going forward.
Josh Weinstein : One thing I just want to clarify because we’re still in a little bit of a bizarre comparison structure that we’re operating under this year. So when you talk about this year and then exit rates, you got to remember, we’re talking about 2023 versus 2019, which is a 4-year gap in the comparison. When we talk about what does ’24 look like, which we’re not talking about yet, remember, that’s ’24 versus ’23. So that picture will look very, very different from the environment that we’re describing to give a better sense of how we’re doing versus the last normalized year of the industry, and which was 2019.
Operator: Next question from the line of Fred Wightman with Wolfe Research.
Fred Wightman : I wanted to follow up on the European consumer specifically. I know you sort of talked broadly about the North American consumer. But if we just look at that booking curve, which is trailing North America, I think you guys also made some comments about bookings picking up there recently and then just piece that all together with the cost of fleet coming back into service a little bit sooner. Can you sort of help us bridge the gap for all that and maybe where the European consumer is specifically?
Josh Weinstein : Yes. And it is all good news from our perspective. All of our brands over in the UK and Europe are experiencing strong demand. They’ve continued to outperform expectations on the closer environment that they have been operating under. But as we said, the good news is despite the fact that they’re generating even more close-in demand than normal, they’ve also managed to extend their booking window over this period. So what that tells you is not only are they getting demand for the short term, but they’re also beginning to normalize and think about making their holiday choices well in advance. And so pretty much across the board, we’re really — we are being supported by strong consumer sentiment in Europe for our European brands.
Fred Wightman : Perfect. And then just on the ship pipeline, zero ships for ’26, that’s consistent with what you guys have talked about previously. But I think there was also in the past to comment about expecting one or two ship deliveries annually for several years beyond that. Is that still sort of the cadence and plan?
Josh Weinstein : It will certainly be — that’s certainly the plan, one or two. Whether that starts in 2027 or it starts after 2027 is still a question mark. And so we’re very much focused, if you think about the pipeline over the next 4-plus years, it’s the lowest it’s ever been and it will continue to dwindle down as we get our way through the year.
Operator: Next question from the line of Robin Farley with UBS.
Robin Farley : Just wanted to clarify to your comments on the yield outlook. You talked about Q4 yields would be above 2019 levels, sort of suggesting that Q3 would not be. But I think you said that occupancy will be back to full by Q3. And I think you said elsewhere that per diems in each quarter would be higher than 2019. So it seems like that should get to yield above 2019 levels in Q3. So if you could just clarify that, there’s maybe a piece there I’m not factoring in.
David Bernstein : Yes. Well, we didn’t give guidance for each and every quarter. I was trying to just indicate the fourth quarter for the specific reason that we talked about before in terms of with all of the mix issues we have, I wanted everybody to fully understand that pricing was up on a like-for-like basis. And I’d rather not sit here and give guidance for each quarter. But basically, we said what you had indicated, and we’ll work hard to do better than that.
