OneSpaWorld (OSW) Q1 2026 Earnings Transcript

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DATE

Wednesday, April 29, 2026 at 8 a.m. ET

CALL PARTICIPANTS

• Executive Chairman & CEO — Leonard Fluxman
• Chief Financial Officer & COO — Stephen M. Lazarus

TAKEAWAYS

• Total Revenue -- $247.6 million, an increase of 13% driven by a 4% rise in revenue days, a 2% increase in average guest spend, and the contribution of $23.1 million from fleet expansion, offset by a $1.2 million decline in destination resorts revenue due to hotel closures.
• Operating Income -- $22.9 million, up 36%.
• Net Income -- $21.3 million, a 40% increase, with net income per diluted share of $0.21.
• Adjusted EBITDA -- $32.2 million, up 21%, and adjusted net income was $28 million, or $0.27 per diluted share.
• Fleet Deployment -- Health and wellness centers operated on 208 ships at quarter end (average ship count of 202), compared to 199 at the end of Q1 2025 (average ship count of 193).
• Cruise Ship Personnel -- 4,585 staff on vessels at quarter end, up from 4,240 at March 31, 2025.
• New Ship Launches -- Health and wellness centers introduced on Norwegian Cruise Line's Luna and Disney Adventure, with six total new ship-builds on track for the year.
• Medi-Spa Services -- Now on 155 ships, up from 148 in Q1 2025; targeted to reach 157 by year-end; introduction of truFlex and acceleration of Niagen Plus NAD IV rollout across 90+ ships.
• Prebooked Revenues -- Grew 17%, with prebooked appointments producing 30% higher guest spend than on-board bookings.
• Key Productivity Metrics -- Company reported increases in revenue per passenger per day, weekly revenue, and revenue per staff per day, including a 6% gain in staff productivity.
• Staff Retention -- Improved to 77%, an increase of 5 percentage points from Q1 2025.
• Cost Structure -- Costs of services rose $20.2 million; costs of products grew $2.5 million; administrative expenses increased by $2 million due largely to $1.9 million in third-party fees from restructuring; salary and payroll taxes declined $2.6 million mainly due to nonrecurrent separation expenses.
• Balance Sheet & Liquidity -- $17.3 million total cash after $5.1 million in dividend payments and $1.3 million term loan repayment; full $50 million revolver available, for total liquidity of $67.3 million; total debt at quarter end was $82.8 million; $37.5 million remains on $75 million share repurchase program.
• Shareholder Returns -- $5.1 million returned through dividend; ongoing capital allocation includes share repurchases and debt reduction.
• AI Initiatives -- Machine learning revenue optimization engine deployed on 190 vessels; AI-driven dynamic price optimization and customer-facing chatbot initiatives in development; AI assistant deployed on 191 vessels, autonomously resolving 94% of tickets with response times in seconds.
• Guidance -- Full-year 2026 expected total revenue of $1.014 billion to $1.034 billion and adjusted EBITDA of $129 million to $139 million (each 9% growth at midpoint); Q2 2026 guidance for $257 million to $262 million total revenue and $32.5 million to $34.5 million adjusted EBITDA (10% growth at midpoint).

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RISKS

• Fluxman said, "We're certainly cognizant of the geopolitical backdrop, which is certainly not improving," noting the potential for cancellations or booking delays by cruise passengers, specifically for North American to Europe itineraries; guidance incorporates the risk of demand softness in Europe for the back half of the year.
• Lazarus highlighted, "we have taken it into account," regarding possible softness in North American to Europe demand and suggested some level of insulation due to servicing about 11% of onboard guests, yet risk remains present.
• Administrative expenses rose by $2 million, primarily from $1.9 million in third-party fees following restructuring, indicating higher ongoing costs related to transitioning services from internal to outsourced provision.

SUMMARY

The company delivered record financial results, with double-digit growth in revenue and profitability and continued expansion of onboard wellness centers. Management highlighted accelerated deployment of new service innovations, such as medi-spa technologies and intravenous therapies, driving higher-value customer mix aboard a growing fleet. The integration of advanced AI-based price optimization and operational tools was underscored as a strategic priority, with early implementation now reaching most vessels and further expansions planned. Management confirmed the year’s guidance reflects anticipated headwinds from macroeconomic and geopolitical uncertainties, especially in Europe, and incorporates expected demand variability.

• Fluxman said, "Caribbean performance. It's the best for us," confirming the positive impact of increased ship deployment on Caribbean routes and higher revenue from North American passengers.
• Lazarus reported, "We set first quarter records for total revenues and adjusted EBITDA," emphasizing the sustained growth trajectory.
• The company is exploring expansion in the U.S. and Caribbean resort segment, with new leadership hired to drive this business, and initial results indicating a larger opportunity pipeline.
• Productivity gains are attributed to both expanded medi-spa offerings and the introduction of larger, more advanced shipboard facilities, with staff retention initiatives contributing to higher revenue per staff member per day.
• AI deployment in revenue management and guest engagement aims to further scale sales productivity and operational efficiency, with early metrics cited for ticket resolution speed and vessel coverage.
• Destination resorts revenue declined by $1.2 million due to specific hotel closures, but company strategy remains focused on prioritizing cruise ship business and selectively expanding resort partnerships in favorable markets.

INDUSTRY GLOSSARY

• Medi-spa: Specialized onboard facilities offering advanced, technology-driven medical aesthetic and wellness treatments—such as injectables, muscle sculpting, IV therapy, and skin rejuvenation—beyond traditional spa services.
• truFlex: A branded, noninvasive medi-spa service offering muscle sculpting treatments using electrical stimulation technology, introduced as a new innovation within select vessels.

Full Conference Call Transcript

Leonard will begin with a review of our first quarter of 2026 performance and provide an update on our key priorities. Then Stephen will provide more details on the financials and guidance. Following our prepared remarks, we will turn the call over to the operator to begin the question-and-answer portion of the call. I would now like to turn the call over to Leonard.

Leonard Fluxman: Thank you, Allison. Good morning, and welcome to OneSpaWorld's First Quarter 2026 Earnings Conference Call. We began the year with continued strong momentum in the first quarter, reporting better-than-expected top and bottom line results. The period marked our 20th consecutive quarter of record total revenues and adjusted EBITDA, evidencing the strength of our global operations and the disciplined execution of our strategy by our outstanding team. Our highly trained and motivated staff delivered exceptional experiences for our health and wellness center guests, driven by ongoing innovation in our product and service offerings. The long-standing strength reinforces our leading position in the global operations of health and wellness services at sea.

I continue to be very proud of our exceptional team members worldwide for their unwavering commitment and the outstanding performance, which has led to our ongoing strong results. As outlined in our earnings release, based on our first quarter performance and favorable momentum, we currently expect to deliver 10% growth in total revenues and adjusted EBITDA for the second quarter at the midpoint of our guidance ranges, excluding the results of exited and reorganized operations. Turning to the highlights of the quarter. Total revenues increased 13% to $247.6 million. Income from operations increased 36% to $22.9 million. Net income increased 40% to $21.3 million and adjusted EBITDA increased 21% to $32.2 million.

At quarter end, we operated health and wellness centers on 208 ships with an average ship count of 202 for the quarter. This compares to a total of 199 ships and an average ship count of 193 ships at the end of the first quarter of fiscal 2025. Also at quarter end, our cruise ship health and wellness centers were staffed with 4,585 personnel compared with 4,240 personnel on vessels on March 31, 2025. We continue to focus on four key priorities to deliver this growth, delivering meaningful progress on each quarter to -- on each during the quarter. Let me share some of those highlights. First, we captured highly visible new ship growth with current cruise line partners.

During the quarter, we introduced health and wellness centers on two new ship builds, Norwegian Cruise Line's Luna and Disney Adventure, which launched their maiden voyages in March. These launches reinforce our strong positioning alongside leading global cruise operators and our commitment to elevating and differentiating our health and wellness centers to bring innovative and breakthrough technology to our guests. To this end, on NCL's Luna, we introduced [ truFlex, ] the new noninvasive muscle sculpting medi-spa service. As mentioned, we remain on track to introduce health and wellness centers on 6 new ship-builds this year. Second, we continue to expand high-value service and products.

Our higher-value services, including medi-spa, IV therapy and acupuncture continue to enhance onboard productivity and expand our addressable market. To this end, the quarter saw us deliver breakthrough innovation in our medi-spa services with the continued rollout of next-generation technology, including Thermage, [ Transculpt, ] CoolSculpting, IV therapy and acupuncture LED light therapy. These new technologies generated strong double-digit growth for those treatments in Q1. We will continue to scale these services across additional ships while introducing new offerings in support of travelers' increasing commitment towards longevity and wellness. Based on the success of [ truFlex ] on NCL Luna, we plan additional rollouts.

During the quarter, we accelerated the rollout of Niagen Plus NAD boosting intravenous solution across all 90-plus ships offering IV services following strong initial pilot results. At quarter end, medi-spa services were available on 155 ships, up from 148 ships at the end of the first quarter of 2025. We expect to have medi-spa services on 157 ships by year-end 2026. Third, we focused on enhancing health and wellness center productivity. This is best reflected in the delivery of across-the-board increases in key operating metrics, including revenue per passenger per day, weekly revenue and revenue per staff per day.

Additionally, prebooked revenues grew 17% and remain a driver of sales productivity with these appointments, continuing to generate 30% more guest spend than services booked on board. Finally, staff retention at 77% improved, increasing 5 percentage points from Q1 of 2025, reflecting the strength of our onboarding engagement and retention initiatives. We're proud of our reputation as an employer of choice and strive to create an environment that fosters retention. These and other onboard employee initiatives have contributed to the improved retention. Importantly, experienced staff generates significantly higher revenue per day versus first staff contract. We continue to invest in developing our future onboard leadership and enhancing training programs, which are key drivers of sales productivity and overall onboard performance.

Fourth, we remain -- we maintained our strong and durable balance sheet and generated robust free cash flow. During the quarter, we returned $5.1 million to shareholders through our quarterly dividend and reduced debt by $1.3 million under our term loan facility. Our consistent free cash flow generation continued to support both our capital allocation priorities and investment in future growth. Overall, we remain confident that 2026 will reflect another year for our company as we execute our proven and highly visible growth strategies by our exceptional team.

We believe we are well positioned to further establish our leadership as the preeminent global operator of health and wellness services at sea, delivering value for our cruise line partners, elevated experience for our guests and strong returns for our shareholders. With that, I'll turn the call over to Stephen, who will provide more details on our first quarter results and guidance. Stephen?

Stephen Lazarus: Thank you, Leonard. Good morning, everyone. We had an outstanding start to the year with total revenues and adjusted EBITDA increasing 13% and 21%, respectively, from the 2025 first quarter. We set first quarter records for total revenues and adjusted EBITDA, and our performance included broad-based strength across all key operating and financial metrics, underscoring our unique capabilities in the operations of health and wellness centers at sea and destination resorts on land. In addition, our asset-light business model and ongoing successful growth continue to deliver robust cash flow generation, which we utilized to invest in our future, further strengthen our balance sheet and return value to shareholders.

Of particular note, we continue to accelerate investments by integrating AI technologies into our health and wellness center and shoreside operations intended to drive incremental revenue, cash flow and earnings growth. Let me provide an update on these activities, beginning with revenue enhancement. We continue to refine our machine learning algorithmic engine to improve revenue and utilization, which is progressing well and is now available on 190 vessels. In addition, work continues on the implementation of a true dynamic price optimization model that we will start to introduce with prebooking of services for voyages. We remain confident that adding these AI tools will improve utilization and yields by leveraging advanced recommendations and algorithmic optimization.

As it relates to operational efficiency and scalability, we continue to experience early success with our AI assistant, which helps our managers receive and respond immediately to questions. This maritime agent is autonomously resolving 94% of tickets with response times in seconds and has now been deployed on 191 vessels. Our work will continue with upcoming projects that relate to customer-facing chatbots. These will address, for example, guest product and service inquiries and automate certain customer service activities. Finally, automation and streamlining is part of our broad-based efficiency initiative to continue to explore and develop solutions to reduce repetitive work, simplify operations shoreside and improve scalability at our corporate locations.

While early, we continue to be very excited about the work we are doing, which is another example of our commitment to leverage cutting-edge technology to strengthen our market position and deliver value to shareholders. I will now share further details about our first quarter results that we reported earlier this morning. Total revenues increased 13% to $247.6 million compared to $219.6 million for the first quarter of 2025, driven by a 4% increase in revenue days and a 2% increase in average guest spend and by fleet expansion from 2026 new ship-builds, contributing $23.1 million, $5 million and $1.2 million, respectively, to the increase in total revenues, of which $5.4 million was attributable to increased guest prebooked services.

Growth in our maritime total revenues was offset by a $1.2 million decline in destination resorts total revenue, partially due to the closure of hotels where we had previously operated. Cost of services increased $20.2 million, attributable to the $25 million increase in service revenue compared to the first quarter of 2025. Cost of product increased $2.5 million, attributable to the $2.9 million increase in product revenues compared to the first quarter of 2025. Administrative expenses were $6.2 million compared to $4.2 million in the first quarter of 2025.

This increase was primarily due to $1.9 million in third-party fees for certain management and logistics services as a result of our previously announced restructuring, which were previously performed internally by company staff, and as such, the related costs have shifted from salary, benefit and payroll taxes to administrative expenses. Salary, benefit and payroll taxes were $8.4 million compared to $11 million in the first quarter of 2025. The decrease was primarily attributable to the nonrecurrence of $2.5 million in separation-related expenses incurred during the first quarter of 2025 associated with the termination of the company's former Chief Commercial Officer.

The variance also reflects a reduction in internal personnel costs in the first quarter of 2026, resulting from the transition of certain management and logistics services to third-party providers, as I just noted, partially offset by higher merit and incentive-based compensation. Net income was $21.3 million or net income per diluted share of $0.21 as compared to net income of $15.3 million or net income per diluted share of $0.15 for the first quarter of 2025. This increase was primarily attributable to a $6 million improvement in operating income and the nonrecurrence of the aforementioned $2.5 million.

Adjusted net income was $28 million or adjusted net income per diluted share of $0.27 as compared to adjusted net income of $22.6 million or adjusted net income per diluted share of $0.22 for the first quarter of last year. Adjusted EBITDA was $32.2 million compared to adjusted EBITDA of $26.6 million in the first quarter of 2025. 2025 included $1.1 million of nonrecurring cash severance expense. Turning to the balance sheet. We continue to possess a strong balance sheet at quarter end with total cash of $17.3 million after giving effect to paying $5.1 million in quarterly dividends and repaying $1.3 million of our term loan facility.

In addition, we had full availability of our $50 million revolving line facility, giving us total liquidity of $67.3 million as of March 31, 2026. Total debt, net of deferred financing costs, was $82.8 million at quarter end. Also at quarter end, we had $37.5 million remaining on our $75 million share repurchase program adopted in April 2025. We remain focused on disciplined capital allocation, supported by our strong cash flow generation and balance sheet flexibility. We will continue to prioritize investing in the business, returning capital to shareholders through our quarterly dividend, opportunistically repurchasing our common shares and reducing debt while maintaining the flexibility to pursue additional opportunities to enhance shareholder value over time.

As it relates to guidance, for the full year 2026, we now expect total revenue in the range of $1.014 billion to $1.034 billion and adjusted EBITDA in the range of $129 million to $139 million. This represents growth of 9% at the midpoint of the guidance ranges for both metrics. Please keep in mind that fiscal 2025 reported total revenues includes $23 million associated with the reorganization of operations in the United Kingdom and Italy, and the exit of land-based operations in Asia, all previously announced.

For the second quarter of 2026, we are introducing guidance for total revenue in the range of $257 million to $262 million and adjusted EBITDA in the range of $32.5 million to $34.5 million. This represents growth of 10% at the midpoint of the guidance ranges for both metrics. This guidance reflects our confidence in our ability to deliver sustained momentum and the visibility of our growth pipeline while acknowledging the dynamic environment we find ourselves in. With that, we shall open the call for questions. Robert, if you could please take over. Thank you.

Operator: [Operator Instructions] Our first question comes from Randy Konik with Jefferies.

Randal Konik: I guess, first, I just want to get some perspective on the rise in higher-value services that you talked about. I know you've added more medi-spas to more ships over time. But can you give us some perspective on what -- how that penetration has changed, let's say, high value versus low value or traditional services? How that's kind of morphed over the last couple of years? And are there any particular high-value services that the consumer is choosing? And when you look at the penetration today versus maybe where it was a year or 2 ago on a same-store basis, where could we take high-value services from a penetration standpoint as a percent of total services given?

Where do you think that goes from here? And -- because that could provide some nice lift in AUR going forward?

Leonard Fluxman: Yes. Thanks, Randy. I mean, obviously, some good observations there. We continue to innovate and stack new services into medi-spa services, which are having -- are being very well received and the spend continues to improve across specifically the new technologies, which I mentioned like the Luna, the [ truFlex ], some of the Thermage, the FLX and certainly the NAD IVs that we've introduced, all of this is helping to produce better spend in our medi-spas. And as you know, we continue to roll out another 5 or 6 this year, and we will continue to add some of these higher-end services.

So extensively, we've moved away from just offering injectables and fillers to a complete menu of IVs and other aesthetic services, but it still shows that even at the higher price points, some of these new technology-driven services are having a very high impact in terms of demand, and we're very thrilled with it. So we continue to roll out as fast as we can.

Randal Konik: Super helpful. Just one last question. You made a leadership addition in -- for the resort spas, I guess, a couple of months ago. Maybe give us some perspective on that individual and what your plans are long term for that piece of the business?

Leonard Fluxman: Yes. So we added a new person in resorts to drive business development and strategy. And thus far, only 60 days in, we've seen a potential pipeline that she's working on, which is very exciting. Hopefully, we can convert some of these leads that we have in the pipeline, which is much more than we had before. And so the strategy in bringing her on board was now to take a look -- a much harder look and put much more energy and investment behind finding new opportunities within the U.S. and Caribbean, not the Asian market, which we're winding down.

And so we're very excited with the early results and early indications of some of the leads that she's brought to the business. And I think that's going to be a decent driver. We saw resorts certainly perform better in the first quarter versus Q1 of 2025. So yes, all around, very encouraged by the early results since she joined.

Operator: Our next question comes from Steve Wieczynski with Stifel.

Steven Wieczynski: So Leonard, I want to ask about the improvement in productivity, especially around that revenue per staff per day. Wondering if you can give a little bit more detail as to what are some of the things that are actually driving that metric right now? And maybe help us think about how much more upside do you think you can kind of extract from a productivity perspective moving forward?

Leonard Fluxman: Yes. Steve, look, I certainly think some of the newer ships that we introduced last year, plus similar ships in the fleet with these incredible spas, medi-spa facilities, thermal suites, are all helping to drive that additional revenue per passenger per day as well as the average revenue spend from guests. So it seems that all the innovation is taking well, and we pilot these, obviously, to make sure they do. So I think it shows that even at the high end of the range of some of these medi-spa service, acupuncture red-light therapy, we continue to see high demand. So it's a healthy increase, 6% productivity increase.

We're thrilled with that, but I think a large part of it is the bigger spas, larger spas and certainly, our innovation platform continues to drive additional spend.

Steven Wieczynski: Okay. Got you. And then I want to ask about guidance, probably more so for the back half of the year. I guess what we started to see at this point is some softness. And I think the cruise lines would say this -- your cruise partners would say this as well in terms of some softness in that North American to Europe demand and a slight uptick in cancellations, again, from that North American to Europe guest. So wondering if you guys have contemplated any slowdown in that European demand in the back half of the year or in your guidance? Or it's something you're just not overly concerned with at this point?

Leonard Fluxman: We're certainly cognizant of the geopolitical backdrop, which is certainly not improving. And I'm sure concerns have caused some people perhaps to cancel or hold off until they book versus last year. So I think we're certainly hearing from the cruise lines, and I'm sure you are as well that there have been cancellations, which is understandable. But I don't know. It seems like it can still continue to book through the end of May or June. We'll see. I mean maybe the geopolitical situation changes. But we've thought about this and included it as part of the guidance in the back half.

So it's not that we didn't consider that there could be some potential drop-off in demand, but our guidance includes that.

Stephen Lazarus: Steve, obviously, bear in mind, as you're very well aware, generally, we're servicing about 11% of the guests on board. And so that provides us with a layer of insulation against some of that softness should it occur on the one hand. And then on the other hand, the reality is we've seen over time that no matter what happens in the world, the cruise lines are excellent marketers and they fill their ships to capacity day in and day out. So while we are aware of it and we have taken it into account, I think we'll get through it.

Operator: Our next question comes from Max Rakhlenko with TD Cowen.

Maksim Rakhlenko: Congrats on a really nice quarter. So I just want to touch on first the call-out in seemingly improving prebooking revenues. So what was the unlock in the quarter? And what does it inform you of where it can go over the medium term? And then if you can tie just comments on AI, as I know that, that's something that you're working on for prebooking as well.

Leonard Fluxman: Yes. So prebooking services, as I mentioned, were up 17%. The reason it's kind of flattish at the 22% is fundamentally just because we don't include some of the services in medi-spa, acupuncture in there, which we're starting to consider whether we can include some of that in the prebooking menu. And we probably will move to that as we start to move towards a more dynamic pricing, AI-driven discount dynamic model over time, which Stephen mentioned earlier on. So that's certainly helping drive that additional spend because it's up so much more than it was last year, but it's still flat, which means the rest of the business continues to grow nicely as well.

Stephen Lazarus: And Max, by way of clarification, the AI initiative specifically as it relates to dynamic pricing on prebooking is not yet in play. So anything that you're seeing thus far is not influenced by that.

Maksim Rakhlenko: Right. Yes. That's helpful. And then...

Leonard Fluxman: Go ahead, Max. Sorry.

Maksim Rakhlenko: I was just going to ask, so you guys touched on looking to do seemingly more in wellness and longevity. Obviously, that's a key theme across a number of verticals. So just curious, what do you see as the top opportunities? And I know that we've long discussed potentially getting in some services where a customer starts something on the ship and then they potentially continue using it once their vacation ends. So just curious if you could touch on both of those topics and what we could see ahead.

Leonard Fluxman: We remain very focused on the longevity and health and wellness vertical of our business, which is included right now in medi-spa. I think there are things that we're working on, trying, seeing and testing to see if, in fact, we can layer it in. If and when we do, we'll tell you about it, but there's certainly a lot of things and opportunities that we're looking at with respect to engaging with the passenger on board through seminars, et cetera, on the longevity side and then continuing with certain therapies, supplementation, et cetera, post cruise. I think that's certainly the direction we will go in.

We're just sorting through what the right opportunity is and the right vehicle to do it in. It does not mean we need to do M&A to do that. We can do it through a joint venture or a partnership. So those are the things that we're looking at right now, but we're just not ready to execute or pull the trigger on any one of them that we're considering. But I can tell you it's very exciting.

Operator: Our next question comes from Gregory Miller with Truist Securities.

Gregory Miller: I'd like to ask a couple of questions as it relates to the geographies of where your ships are located this year. And to start off with 1Q, there is a greater concentration with Caribbean routes. And I'm curious how impactful was a higher concentration of Caribbean itineraries to your 1Q performance?

Leonard Fluxman: Yes. So we love Caribbean performance. It's the best for us. North American passengers, definitely the best spenders on a global basis. So concentration, as we've mentioned before, in the Caribbean is not a negative for us. Now how that impacts, obviously, the different cruise line banners is different to us, but we certainly love being in the Caribbean because it gives us the 7-day program model, which is the most effective for us.

Gregory Miller: Okay. Shifting region -- Stephen, did you want to say something?

Stephen Lazarus: No, go ahead.

Gregory Miller: Okay. Shifting to Europe. I'm curious -- I'm not sure if this has been discussed in prior earnings calls. But when I think about what's going on in the Middle East today and if there are cruise passengers that might shift from, say, an Eastern Med itinerary to a Western Med or Northern Med or Northern Europe, is there any material difference in terms of the quality of earnings from, say, Eastern Mediterranean itineraries versus Western or Northern Europe?

Leonard Fluxman: The short answer is there's no difference to us.

Operator: [Operator Instructions] Our next question comes from Assia Georgieva with Infinity Research.

Assia Georgieva: Congratulations on a fantastic quarter. Just to kind of follow up on that up 17% prebooked. Do you expect that to again be up in Q2 and possibly in Q3? You have Legend of the Seas coming in. So I imagine newer ships may create more excitement. They may attract people who are more experienced and willing to pay the premium for a new ship and therefore kind of help the mix. Do you think that would be part of the plan?

Leonard Fluxman: I'll say, yes, it's definitely the strategy, and we continue to focus through every business quarterly review that we do with our banners on the opportunities within prebooking, improving the journey for the guest as they come on to the site. I think together with the fact that once we develop the AI dynamic component of this, it will also help us from a yield perspective. But our real focus is obviously getting the cruise lines as focused and providing the resources possible to help us with this, but it's improving. So they get it. It's just a question of resource allocation.

Assia Georgieva: So we can expect a continuation of the year-on-year growth in sort of the mid-teens, that would be a reasonable...

Leonard Fluxman: I'm not sure whether it continues at this clip. Obviously, if it stayed at the same kind of double-digit rate that it's improving, certainly over the last 3 quarters, we'd be very, very happy with that.

Assia Georgieva: Okay. I think that's fair enough. And sort of a related question. As you probably know, we track about 40,000 voyages every week. And what we noticed is in week 3, so March 20 or so, a significant price cut for Royal Caribbean International, to some extent, Celebrity for European voyages for Q2. And of course, one concern is that as the quality of passenger comes down, despite this being North American passengers in Europe, that it may impact you somewhat. Have you seen any of that during the month of April? I just wondered if -- and it seems to be very much a Q2 phenomenon. Q3 seems much better.

So I just wondered if you saw any of that.

Leonard Fluxman: Yes. No, we've certainly read the same headlines and sort of the analyst reports on what's going on with Europe second quarter. We have not -- the ships -- a lot of the ships have started to reposition to Alaska and Europe at this point. And the early indications are is that we're certainly using every marketing tool necessary, when necessary. If not necessary, we're not going to discount any more than we need to. And so we're monitoring it very closely, but thus far, we've seen no impact of a lower passenger perhaps not going to Europe.

But then again, as we mentioned, we focus on the best 11% every single week, week in and week out to produce the results that we do. So I think we're going to be fine.

Assia Georgieva: Fair enough. And last question, again, kind of a follow-up to Europe. One of your banners is moving away from the longer 10, 11, 14-night itineraries. And you just mentioned the sweet spot of 7 nights, especially in the Caribbean. Should that help somewhat? Or is Europe a different animal given how port-rich the itineraries are? Or is it still marginally helpful, I wonder?

Leonard Fluxman: Marginally helpful. I mean we think that 7 days is the best sweet spot because over the years and certainly the data suggests that the spend doesn't improve on a longer cruise. It's just the same wallet spread out over more days. So we love 7-day cruising.

Operator: We have reached the end of the question-and-answer session. I'd now like to turn the call back over to Leonard Fluxman for closing comments.

Leonard Fluxman: All right. Thank you again for joining us today. We look forward to speaking with many of you at upcoming investor conferences and when we report our second quarter results in July. Thank you for joining us today.

Operator: This concludes today's conference. You may disconnect your lines at this time, and we thank you for your participation.

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