Jason Liberty
Chief Executive Officer at Royal Caribbean Cruises
Thank you, Michael, and good morning, everyone. Before getting started, and on behalf of the entire Royal Caribbean Group organization, 100,000 proud, I want to express how happy we are that our business has returned to normal. In fact, as you saw in the release this morning, our business is accelerating. So, let me get into the detail and start off by talking about the fourth quarter and the full year 2022.
As highlighted on Slide 6, 2022 was a challenging but successful transitional year as we returned our business to full operations and delivered memorable vacations to 6 million guests. As you can see on Slide 7, during the fourth quarter, demand for our brands accelerated. We delivered a record 1.8 million vacations, achieved a 95% load factor, and successfully returned to Australia for the first time in three years. Pricing for our vacation experiences was higher than record 2019 levels when we operated with normalized occupancy and guest satisfaction scores were exceptional. Adjusted EBITDA and adjusted loss per share were above our expectations and at the high end of our guidance. It is incredible to consider that just one year ago, we were in the midst of omicron, we were still returning our ships to service, and we were sailing at load factors below 60%.
Our fourth-quarter results clearly demonstrate that we are back, back to usual occupancy, back to our full addressable market, back to EBITDA and cash flow profitability, back to providing full-year guidance, and most importantly, back to delivering a record number of incredible vacations on the most innovative fleet in the industry. We finished 2022 on a high note and are entering 2023 with the full strength of our operating and commercial platforms. Our strong book position along with the normalization of the booking window, provide the visibility needed for us to resume annual guidance, which is in line with our Trifecta program.
I am incredibly thankful and proud of everyone at the Royal Caribbean Group for executing so well on our mission of delivering the best vacation experiences responsibly and building the foundation for our future growth. There has been a lot of talk about the state of the consumer, so I want to share what we are seeing from daily interactions with consumers who are either booking their dream vacations or who are currently sailing on one of our amazing ships. Overall, we continue to see robust demand from financially healthy, highly engaged consumers that are excited to sail on our brands. Secular tailwinds continue to benefit us as consumer preferences shift from goods to experiences. Entertainment and travel spend remains strong, and the job market continues to show resilience.
Consumer sentiment has improved, and banks have recently reported healthy savings and continued resilience in credit card spending. Our addressable market is larger than in 2019 and continues to grow. Our products appeal to a broad range of vacationers with everything from a short getaway to Perfect Day to a luxury world cruise. Cruising remains an exceptionally attractive value proposition. And as I have said in the past, it is too attractive, and we are working very hard every day to close that gap. Growth in cruise search has outpaced general vacation searches, resulting in double the number of visits to our websites compared to 2019. Our brands are attracting new customers into our vacation ecosystem with fourth-quarter new-to-cruise and new-to-brand mix above 2019 levels.
We are constantly enhancing our commercial capabilities, so we can further capture quality demand. Approximately 60% of our guests book some of their onboard activities in advance of their cruise, representing double-digit growth in precruise purchase penetration when compared to 2019 at significantly higher rates. As we have said before, every dollar a guest spends before the cruise translates into about $0.70 when they sail with us and over double the overall spending when compared to other guests. Our guests are now engaging with us to book onboard activities much earlier than in 2019. So far, guests booked on 2023 sailings purchased onboard experiences an average of more than two months earlier than in 2019. This translates into more revenue, stickier bookings, and happy guests.
Now, I'll provide some insight into the demand environment and what can only be described as a record-breaking Wave season. As you can see on Slide 8, bookings outpaced 2019 levels by a very wide margin throughout the fourth quarter with particularly strong trends during Cyber Weekend. We expected a strong Wave season, but what we are currently experiencing has exceeded all expectations even when considering our capacity growth. As a result and as highlighted on Slide 9, the seven biggest booking weeks in our company's history all occurred since our last earnings call. Our commercial apparatus is full speed ahead, and all channels are delivering quality demand above 2019 levels.
Our direct-to-consumer channels continue to perform exceptionally well as a combination of consumer preference for digital engagement and our enhanced capabilities is supporting record-level bookings. We are also encouraged that our strong base of loyal travel partners continues to recover and supporting our brands with bookings above 2019 levels. As always the case, trends vary by region. We are seeing particularly strong booking trends for North American-based sailings, which account for nearly 70% of our capacity this year. From a cumulative standpoint, these itineraries are now booked at the same load factor as they were in 2019 and at higher prices. Our 2023 European sailings are booked within historical ranges at better rates with recent bookings outpacing 2019 levels. We expect almost 80% of our guests to come from North America as we continue to see particularly healthy demand from that region. Our global brand's appeal and nimble sourcing models allow us to continuously shift sourcing to the highest-yielding guests.
I will now comment on our outlook for 2023. In 2023, we expect to deliver amazing vacation experiences to over 8 million guests at record yields as we deploy our best-in-class fleet across the best global itineraries. The ramp-up of our load factors in 2022, coupled with a higher and improving pricing environment, is positioning us to fully recover our yields beyond 2019 levels in the first quarter, which is another important milestone, and then ramp up further to record levels as we return to historical load factors in late spring. Our strong yield growth outlook is driven by the performance of our new hardware, strong demand for our core products, and continued growth from onboard revenue areas.
This year, we expect to increase capacity by approximately 14%, compared to 2019, with eight new ships already introduced since 2019 and three more set to be delivered this year. Each of our wholly owned brands will welcome a new vessel in 2023. Silversea will welcome Silver Nova, the first of the Evolution class. Celebrity Cruises, will welcome the fourth Edge series ship, Celebrity Ascent and Royal Caribbean International will take delivery of Icon of the Seas, marking the first new ship class for the brand in nine years, which is sure to set a new standard for vacation experiences. In addition to our incredible new vessels, we plan to launch Hideaway Beach in the fourth quarter of 2023, an adult-only neighborhood, making Perfect Day at CocoCay more perfect and increasing capacity in the island to 13,000 visitors daily. Our journey to deepen the relationship with the customer will continue with 2023. We will further enhance our commerce capabilities to optimize our distribution channels, build a deeper connection with guests and lower customer acquisition costs.
We will also further enhance our e-commerce and precruise capabilities and focus on increasing our guest repeat rate and spend. We will continue to excel in the core and drive business excellence in order to increase yields and capture efficiencies across our platform. Our teams have been working hard for over two years to reshape our cost structure and abate what would have otherwise been at least a 25% increase in nonfuel cost per APCD when compared to 2019. Net cruise costs, excluding fuel, is expected to grow 4.75% to 5.75% versus 2019.
That's versus a three-year benchmark that includes a period of significant global inflation. Our cost outlook for the year includes approximately 210 basis points from lingering transitional costs such as crew movement and additional structural costs such as full-year operations of Perfect Day at CocoCay and our new Galveston terminal. Our teams have been committed to controlling costs and enhancing profitability while focusing on delivering the best guest experience. We continue to expect the business to accelerate and allow us to deliver record yield and adjusted EBITDA in 2023.
Our proven formula for success remains unchanged: Moderate capacity growth, moderate yield growth, and strong cost controls leads to enhanced margins, profitability, and superior financial performance. Our ESG ambitions help inform our strategic and financial decisions on a daily basis, ensuring that we always act responsibly while achieving our long-term profitability goals. In 2023, we will continue active efforts toward our target of reducing carbon intensity by double digits by 2025. We also expect to deliver on significant milestones in our decarbonization pathway, including the advanced technologies on our new ships, while also investing in retrofitting our existing fleet with a mission of reducing technology and programs.
We will utilize tools to expand supplier diversity and improve our ability to build an exclusive network of suppliers. We will further focus on improving diversity, equity inclusion, and ensure our employees are physically and mentally healthy. To wrap up, 2023 sets the foundation for our Trifecta program. Our people are committed to our mission of delivering the best vacations responsibly and doing so while achieving our Trifecta goals.
In 2023, we will be hard at work executing on our strategic pillars, focusing on deepening customer relationships, delivering the best hardware and destinations, and excelling in the core. The future of the Royal Caribbean Group is bright. I am confident in our growth trajectory and our ability to deliver on our near-term and long-term goals, as well as to reach new financial records.
And with that, I will turn it over to Naf. Naf?