Good morning. My name is Cassandra, and I will be your conference operator today. At this time, I would like to welcome everyone to the Royal Caribbean Cruises Ltd. Fourth Quarter Earnings Call. [Operator Instructions] Thank you. At this time, I would like to turn the call over to Brian Rice. You may begin.

Thank you, Cassandra, and good morning, everyone. I'd like to thank you for joining us today for our fourth quarter earnings call. Joining me here in Miami are Richard Fain, our Chairman and Chief Executive Officer; Adam Goldstein, President and CEO of Royal Caribbean International; and Ian Bailey, our Vice President of Investor Relations. During this call, we will be referring to a few slides which we have posted on our investor website, www.rclinvestor.com. Before we get started, I would like to refer you to our notice about forward-looking statements which is on our first slide. During this call, we will be making comments that are forward-looking. These statements do not guarantee future performance and do involve risks and uncertainties. Examples are described in our SEC filings and other disclosures. Additionally, we will be discussing certain financial measures which are non-GAAP as defined, and the reconciliation of these items can be found on our website. Richard will begin with his comments. I will follow with a brief recap of our results, give an update on the booking environment and our forward guidance. Adam will talk about our brands, and then we will open the call for your questions. Richard?

Thank you, Brian, and thanks to all of you for joining us today. I should note that we have some comments about holding this call the morning after the Super Bowl, but I should assure you that we've checked all of our electrical connections, and we're ready to go. As you can see from the release, the late bookings boosted our year-end results. And overall, the WAVE period has started on a nice, solid note. I really do have to apologize to Charles Dickens for stealing his words, but the title, A Tale of Two Continents simply captures our current situation too well to ignore. We're happy with the strong bookings we're seeing in the United States, but we're unhappy about the weakness we're seeing in many of the European Union countries, most notably Spain and the U.K. Even though the economies in the U.S. and in places like Germany and France still aren't very good, or aren't great, it's really the weakness in Southern Europe that is keeping our yields from truly exciting growth. I think, overall, this demonstrates the power of our brands even in a lackluster market. I should also note that last year at this time, the Concordia tragedy caused a significant disruption in our booking patterns, and that complicates our ability to make clear comparisons. We do try and go back further to compare to previous years, but there were complications then too; and the further one goes back, the less comparable the figures become. We are, therefore, necessarily cautious in making comparisons; but overall, we're optimistic about the direction. Of course, it's particularly disappointing to have to take such a large write-down related to Pullmantur. However, it's important to note that the write-down is purely a noncash item, and it will have no ongoing…

Thank you, Richard. I'd like to begin my comments by talking about the noncash impairment charge we took in the fourth quarter. During the quarter, we performed our impairment analysis of Pullmantur's goodwill, deferred tax assets and long-lived assets, and concluded that a noncash impairment charge of approximately $414 million was appropriate. As we have noted in the past, the continued deterioration of the Spanish economy, compounded by the government's austerity measures and the effects of the Costa Concordia incident, have been significant risk factors that could cause an impairment of Pullmantur's goodwill. During the second half of the 2012, the Spanish government introduced another round of austerity measures, further impacting consumer spending. The IMF, which only a year ago was predicting a GDP growth rate for Spain of 1.8% in 2013, recently lowered their forecast to a contraction of 1.5%. And while the WAVE season is off to a promising start in most markets, we have seen a significant deterioration in demand from Spain. All indications suggest the continued challenging operating environment in Spain for an extended period of time. This has resulted in significant changes in our plans and expectations for the brand. Accordingly, we have lowered our forecasted net operating cash flows for Pullmantur, which has negatively impacted our impairment analysis. The net result of this is a total impairment charge of approximately $414 million. Of this amount, approximately $319 million relates to goodwill, and the balance relates to a valuation allowance for Pullmantur's deferred tax assets, a reduction in the value of the trademarks and name and an impairment charge related to 3 aircraft that Pullmantur owns and operates. We have incorporated a rather grim view of the Spanish economy in our forecast and are confident that our projected cash flows are appropriate given the current…

Thank you, Brian, and good morning, everyone. As Brian and Richard have both noted, strong late bookings contributed to our exceeding the 2012 expectations we communicated 3 months ago. I would like to thank our men and women, shipboard and shoreside, for their effort and dedication to overcome the many obstacles that 2012 presented. You have heard commentary already from Richard and Brian on various aspects of the annual WAVE period that is currently underway. The Caribbean represents 44% of 2013 capacity, up 1.1 points versus 2012. In general, we are seeing positive performance across short, 7-night and long Caribbean sailings, and we expect to post yields that eclipse last year's record Caribbean yields for the company. There was a lull in Caribbean bookings following Superstorm Sandy, but we have seen notable year-over-year improvement during the first weeks of the WAVE. Europe represents 27% of 2013 capacity, down 3.2 points versus 2012. Against the backdrop of the Arab Spring in 2011 and both the industry and macroeconomic adversity in 2012, we expect a yield increase in 2013 relative to both years. Northern European capacity for the industry and the company are substantially up, and our year-over-year yield expectations are lower in the North than they are for the Eastern and Western Med, where our capacity is down on each sector for the second consecutive year. We are seeing more interest from the U.S. source market for 2013 Europe cruises than we experienced last year. And to this point, we are not hearing much, if any, noise about consumers' inability to find air seats from the U.S. to Europe. Turning to the China market, our 2012 performance with one Voyager class ship and one smaller ship was favorable. This gives us confidence for 2013 when we will have 2 Voyager class…

Thank you, Adam. We'd now like to open the call for your questions. [Operator Instructions] Cassandra, if we could open the call, please?

[Operator Instructions] The first question comes from the line of Felicia Hendrix.

Brian, you talked a little bit about some of the drivers of the cost increases. Just wondering if we could go a little deeper. Regarding the insurance cost increase, you did say that it had gone up. But how much of the increase that you're seeing now is incremental to what you were expecting before? And then I was wondering if you could just discuss the investment spending in more detail that you also highlighted as a driver for the higher costs?

Sure, Felicia. Our interest cost in total are up about $20 million year-over-year, so that's a little more than 0.5 percentage point, about 60 basis points. Most of that...

That's insurance?

That's insurance. Most of that, as I mentioned in my comments, is related to P&I, which is we're just now in the renewal period. We were actually talking to the clubs last week. We had anticipated some increases. We had, I believe, it was about a 10% increase in hull and machinery, which we had anticipated. But the P&I was much larger, and the allocation of the recovery of those costs to the cruise lines was more substantial than we had anticipated. We are in the midst -- I'm going to let Adam talk about some of the marketing investments that we're making, but we also -- both on capital and on the P&L, we're doing a lot of investment in IT right now. We're working a lot with our websites, our core reservation system, our ability to do a much more intuitive presentation to our customers, as well as be able to do a lot more revenue management in a more granular level. And those are benefits that have begun to start coming in, but they will also snowball over the next couple of years. So we've included some benefit this year in our revenue, but I think it's going to be 2014, 2015 that we really hope to get the biggest gains out of that.

Felicia, this is Adam. When we talk about technology investments and marketing investments, we're often talking about essentially 2 sides of the same coin. We clearly want to invest in the new available ways of doing target marketing, of reaching people on a one-to-one basis and engaging with them in conversations that weren't possible even 5 or 10 years ago, to take advantage of the interest that people have in cruising in general and in our brand specifically. Second, the distribution of our industry continues to evolve. It's a very competitive space. And we need to continue to invest in ways of reaching travel agents and motivating them to sell our products first and foremost. And then the third aspect, which will not surprise you based on all of the previous conversations, is we need to invest in our global marketing capabilities. As we begin to be an active marketer in virtually every significant market in the world, whether that's China, Australia, Brazil, the United States, the U.K. or what have you, we find that we need to continue to invest in new marketing capabilities and new systems capabilities to support that.

And also, I guess, Adam, just a follow-up for you, last question. You mentioned -- well, you all, as a whole, mentioned that you could achieve record yields in the Caribbean and in Alaska this year. Just wondering if you all have any insight into the Mediterranean sailing season yet or if it's too early?

Felicia, sorry, it's Adam. I had you on mute there for a second. It's a little bit early, and we have said that because with all the different things that have transpired in Europe over the last 24 months, besides the fact that we're a little less booked there percentage-wise, we're a little bit less confident in how the market will react to the different techniques that we typically use. So we really need a little bit more time, I would say, in 2013 as we approach the summer season to see how it will go.

The next question comes from the line of Robin Farley.

You talked about reducing European itineraries and European passenger sourcing this year, and I think you quantified the itinerary changes. I wonder if you could give a little bit more of that kind of color on the European passenger sourcing, just what you're targeting for the year and how that had changed from maybe what you were targeting a few months ago.

There haven't been, Robin, dramatic changes. But at the margins, we're probably looking for a little bit more business from the United States. Typically, in recent years, when we've been talking about this on these calls, we've had the percentage from the U.S. at or maybe a little bit below 1/4 of our business. We're probably looking for a little bit above 1/4 of our business this year. But again, as I was just saying, we really need to see how the next few months develop. It is nice to know that there does seem to be a fairly robust level of interest from the United States to cruising Europe this summer, a little bit more than we've seen in the past few years at this point in time. And so we have the ability to leverage that to the extent that we need.

And so you're just talking about that 25% and just the percent of your European itineraries that are North American sourced?

Correct.

Okay. And then can you sort of just ballpark what your North American yields -- obviously, given the guidance for the company overall and the weakness or the uncertainty in Europe, what your North American yields would look like, just looking at North American sourced?

Robin, we don't get that granular and it's a mix of itineraries. I think we certainly try to indicate that we're being, I think, the most bullish on U.S. sourced business right now when we compare to other markets. The U.K. -- I'm sorry, go ahead.

And I know you don't normally, I guess I'm just trying to get a sense of whether your guidance leaves room for European-sourced business. For those yields to actually be down this year, is there, would you say, there's enough room in your guidance where that's at some end of the range for...

I think we read a lot about what people expect us to come out with guidance. We try to be as transparent as possible and actually try to offer a little more granularity on what we're seeing right now. Clearly, we're expecting the yields to be down in Spain this year. The U.K., our volumes are off, but our pricing is up a bit. The other markets are actually holding up okay, but we've tried to give some variability. We believe the largest swing factor will be Europe, and we've tried to accommodate that for a little more deterioration or a little more upside within our guidance.

The next question comes from the line of Steve Wieczynski. Steven M. Wieczynski - Stifel, Nicolaus & Co., Inc., Research Division: Brian, I guess if you look at your NCCs, you basically are saying they would be flat if you stripped out the higher insurance costs and the marketing costs. So I'm just -- I mean that seems like a very optimistic, very strong -- or a very strong -- what I'm basically trying to get at here is how are you guys keeping that number flat at this point? Seems a little bit aggressive, I guess, to us.

Well, as I mentioned, about 50 or 60 basis points is going to be insurance, and the other really marketing and IT costs are the 2 areas that we're seeing increases. The brands worked very hard to try to do cost containment. We're perpetually looking for synergies and how we can consolidate some of the back-office operations and improve efficiency. I think it's fair to say we are leveraging the technology to get efficiency as well. And our supply team has done a great job in negotiating and keeping any inflationary pressures in check. So I think we feel good about the guidance we've provided. Steven M. Wieczynski - Stifel, Nicolaus & Co., Inc., Research Division: Okay, got you. And then second question, just maybe how you're thinking about onboard yields for '13 as well.

Steve, this is Adam. Looking back at last year, we had a year of reasonable progress, I would say, with our onboard yields. Overall, some of the areas that were helpful to us were short excursions and beverage. Also, in general, being more present in the Asia Pacific region is good in terms of the spending by those guests. And then the third thing I would mention is that of the revitalization of substantial part of our fleet across brands is creating new revenue -- onboard revenue opportunities. And we were able to take some advantage of them in 2012 and would expect to continue to do so in the 2013. Just as Brian was discussing with costs right now, as it relates to onboard revenue, there's a tremendous effort taking place across all brands to create onboard revenue upside. And I would say we're cautiously optimistic at this point in the year.

The next question comes from the line of Sharon Zackfia. Sharon Zackfia - William Blair & Company L.L.C., Research Division: I apologize if I missed this, but could you talk about the drivers of the occupancy being down a little bit year-over-year? And then secondarily on onboard spending, just curious if you could kind of prioritize where you are seeing that strength? I know you've made some changes in some of your beverage programs, and I'm curious how that's playing into the onboard spending.

Sharon, it's Adam. Yes, we have made a number of tweaks in different areas. Also, let me start with short excursions. I know you just mentioned beverage, I'll come back to that. But as we become a more global operator with a more diversed guest sourcing, we have found both needs and opportunities to create more to our product for guests from different nationalities with different language capabilities in different parts of the world. I'd like to think we're getting better and better at that across the brands. And we saw opportunities in that area in 2012, and we would expect to see more opportunities in that respect in 2013. So that would be one example. The beverage area has been also relatively productive for us, both in terms of the introductions of a variety of different beverage packages across brands that give more consumer choice to our guests, both before and during the cruise in terms of how they would like to structure their beverage experience. And then, as I was just saying, I think in general, as we get more knowledgeable serving a more diversed group of nationalities across our various brands, we're simply finding new and interesting onboard revenue opportunities. And as we revitalize our ships with more specialty restaurants, different kinds of entertainment, different and better bars and so forth, we are finding areas of improvement. So all of those things together give us some optimism for 2013 and also in the years beyond.

Sharon, I apologize, I don't have a reconciliation of the occupancies for you. I'd say for the year we're down 40 basis points; and we're down, I believe, it was 1.2 percentage points in the fourth quarter. I know we did have an increase in cancellations due to Hurricane Sandy, but I don't know how much that impact was. But if you don't mind, we'll try to get some details. And if you could follow up with Ian, we'll try to help you out after the call. Sharon Zackfia - William Blair & Company L.L.C., Research Division: Sure. Can I just ask one quick follow-up then? I mean, do you expect occupancies to be relatively stable in 2013? Or should we expect more downward pressure on that?

No, I think we're always within 1% or 2%, and our yield management team will make decisions that they believe is going to optimize the overall revenue equation. And sometimes, particularly on our higher-end brands, we may sacrifice load factor in order to drive yields up. But for the most part, we keep our load factors within a very narrow range.

Your next question comes from the line of Assia Georgieva.

Two questions. First of all, I was somewhat surprised that the U.K. is lagging Germany and France in terms of demand. Given that you have a small price advantage at this point but the booked load factors are lagging, do you think you might be able to keep that price advantage as we go through WAVE? Or do you expect that at some point, you'll have to be reducing price to get the load factors up?

Assia, it's Adam. It's hard to compare the difference, either European countries or actually any 2 countries. The U.K. is the #2 market for cruising in the world. For example, in the case of Royal Caribbean International, we are doubling the number of ships we have out of Southampton this summer with the Venture of the Seas joining Independence of the Seas. And clearly, the U.K. is under some stress macroeconomically. So we find that we're having to work pretty hard in the market right at this point, and we're waiting to see how the normal kinds of promotional activity will develop. There's always a heavy level of promotional activity in the U.K. going on, no matter how robust or not robust the market is for 25 years that I can remember. So it's really a question of being how, over the next 2 or 3 months, the market responds to the types of techniques we've used in the past and whether we have to get more aggressive or not. But it's a big cruise market, it's experienced in cruising, there's very well-established distribution. Our products and services are well received in the market, and we would expect to be able to find the customers that we need as we go forward.

Okay. So it will be another couple of months before you have a better view into the summer season out of the U.K.?

Yes.

Okay. And my second question relates again to decrease in net cruise costs. I understand the P&I in the marketing pieces are the drivers. But last year, we already had a pretty significant increase related to deployment initiatives in the international distribution. I actually would have expected that we would get some of that benefit in terms of yields, but wouldn't have the need to raise costs and, in fact, had hoped that maybe costs could be flattish year-over-year. At the same time, marketing spend, obviously, if a 1% increase in costs can help drive yields by 1%, that's a benefit. But again, could you come in a little more detail -- I know you've discussed this already -- but I just wish there had been less of an increase on the cost side, if you will.

Assia, I think we are trying to drive higher revenues. We do believe that the best way to grow our bottom line is through these investments and getting the revenues up. 1%, as you pointed out, on the revenue line means a lot more to us than 1% on the cost side. I think we've done a good job of controlling costs. If you exclude the investments that we're making in IT and marketing and the adjustment for insurance, our costs are basically flat, which I think has taken a lot of hard work by the brands and by our infrastructure team. And we're quite proud of that. But we do believe making these investments is both good for the short-term and the long-term results that we can drive.

Well, the brand, it seems that we already had a higher cost base in 2012, again, because of those 2 types of initiatives that were more of a onetime item or had significant...

Assia, I'm sorry, they're not a onetime item, they continue forward. It will actually be a pleasure to stop talking about deployment and international distribution changes in my script every time. But those are changes that occurred in 2012 from 2011. They do continue forward. I believe I called out early last year, one of the structural changes was the relationship that our Pullmantur brand has within Brazil. We did previously have more of a tour operator sort of structure where we shared revenues and costs, and that changed in 2012. And we have a more broader distribution system. And as a result of that, we got more of revenue and more of the cost. That continues going forward. So we really are looking at apples-to-apples as we compare 2013 to 2012.

Your next question comes from the line of Harry Curtis.

The first question -- sorry to beat a dead horse here, but going back to Europe, if you -- with 50% of your capacity still yet to book, based on the most recent trends in pricing, would your gut tell you with that, that incremental pricing from here through the end of the summer is going to be on the positive side or on the negative side?

When you say, "from here," do you mean from here being the United States?

No, no. No, from this point in time.

I'm sorry. So it's from here on in time?

Correct.

Well, as we've said in a couple of different ways that we need to see how this develops over the next 2 or 3 months. We have a wide array of tactical options available to us in this business, both in our consumer and our trade communications. We have considerably more experience in all of the European countries than we had even a few years ago in terms of how to select and promote the activities that we need to do. So we have a lot of capability, but we're also facing a market environment that's certainly altered over the last 2 or 3 years into something that is a little bit different. I think when we're talking about United States market and the Caribbean and Alaska and the different techniques that we have available there, we're pretty confident when we say what -- when we look at what the different choices are as to how to go forward, what to select and when to put it into the market and what will probably happen. Europe is simply more uncertain at this time. And also because we source most of our customers on our European cruises from Europe, for them, it is closer-to-home, later-in-time booking proposition. So there are several different factors that sort of push towards needing the next few months to see how it will go. But we're optimistic that we can do the things that we need to do to keep the ships full and to be consistent with the pricing -- the earnings guidance and the yield guidance that we've given you today.

Harry, I think I would -- since there have been a number of questions on Europe, and quite rightly because we have highlighted that as an issue, macroeconomically, where we continue to see continued uncertainty there, issues with the banking system and the fiscal crisis that they've been undergoing. So it's a little hard to measure that. I think, overall, we feel that it has stabilized. It's gone -- Spain has been somewhat of an outlier because of the depths of the issues there. But we're not seeing the kind of improvement that we would like to see, but I think, overall, our forecast that we have presented to you here today are based on what we, and frankly most observers, are seeing in terms of the economic activity there. I think the fact that we have held up and continued to show the kinds of yield improvements that we're doing despite that economic situation is really a tribute to the brands and the strength of those brands. But it has been a long period of disappointing economic news in Europe, and that news hasn't ended yet and, obviously, we're hoping it continues to do so.

In that case, why don't we move to something that hopefully is a little clearer to forecast. In the press release, you gave guidance of CapEx through 2016 in aggregate of $4.2 billion. Can you walk us through the breakdown of new ship versus renovation CapEx for your existing fleet?

Harry, if you wouldn't mind, I think it would be best if you could follow up with Ian after the call. He's got the detailed reconciliation and can certainly make sure your model covers the different categories appropriately. I will mention we have guided traditionally that our maintenance CapEx is generally in the neighborhood of around $200 million to $250 million a year. That could be slightly higher in a couple of these years due to some of the IT investments, but we've included that. And the vast majority is obviously the new ships and the revitalizations. But Ian can give you the details of that.

The next question comes from the line of Tim Conder.

First of all, I apologize if I missed this in the early part here. But Celebrity, if you could maybe give us some color on how the brand's tracking with some of the new marketing initiatives there? And I know you mentioned at the investor meeting a couple of months ago that, again, you're absorbing all the capacity and the challenges related to that. But with the new marketing focus and you're further trying to differentiate that brand, give us an update, if you could. And then also, on the booking curve, if you could maybe compare and contrast North America to Europe, where that stands at this point relative to last year?

Sure. Tim, I'll take the first part and Brian will take the second question. With respect to Celebrity, as you know, we've had significant management change there as Michael Bayley has taken over. And he has -- is actually responsible for a lot of the marketing increase that we're talking about here. And we are also at the end of Celebrity's large and rapid capital build-up with the 5 Solstice series ships. And so far, that really seems to resonate. We are looking for -- a lot of the improvement here is, in fact, coming out of the Celebrity brand, and the early indications are very good. Michael would say he's been in the job for 1.5 weeks, and so it's a little early to judge the performance, a little longer than 1.5 weeks. But the early indications are really quite promising, and that's part of what has enabled us to be projecting the kinds of yield improvements we have.

Okay. And maybe this is a derivative of that. Brian, of the marketing spend in total, roughly what's that in basis points or absolute dollars of these 3 major components?

Well, the insurance is about 60 basis points. We didn't break out the marketing or the IT. But they're sharing, I would say, roughly equally in terms of driving the incremental expense. Tim, on your question on the booking curve, I think the U.S. is, for the most part, we would say in line with a year ago. We do have some pockets, some products where people are actually beginning to book a little bit further out, which is obviously helpful. Northern Europe, for the most part, is very consistent with what we were seeing last year, but we have seen contraction in Southern Europe. The Southern European countries are actually booking about a month close to sailing than they had been a year ago.

The next question comes from the line of Richard Carter.

A couple of questions. Sorry to just keep laboring this point on Europe. You sort of confused me. But all right, saying, so, 50% of capacity is still to be booked. You're expecting flat yield in Europe. Is that sort of factored into your guidance? Is that correct? And would it be...

Richard, I'm sorry. We said that we have sold less than 50% of Europe at this point. In aggregate, we're feeling as though we will have yield improvement in Europe this year.

And is that North Europe sort of flattish, just slightly up; Southern Europe, down; and West Europe, up. Is that sort of a fair assessment of...

We haven't been that granular, but we've taken a lot of capacity out of Southern Europe. We've added capacity to Northern Europe.

So that would be probably a fair synopsis of potentially what could happen. And then secondly, on the marketing and technology costs, of these one-off costs, would you expect them to continue to reoccur going forward? And then just on the technology side, you talked about increasing your direct communication. Can you just say where you are relative to that? I mean, is this a new development for you or is it just building up on previous technology? And what sort of changed for you to want to go down this road? And just finally, do we expect that to come through in lower commissions going forward?

Richard, this is Adam. I would say that we are in a phase that's more than a 1-year phase of ramping up investment and marketing and marketing-related technology development. That is a function both of the sort of cycles of technology investment over time, as well as the realities of being an aggressive global marketer in the 21st century and wanting to be very determined, I should say, to have successful globally oriented brands, as well as some very specifically nationalistically oriented brands that want to be preeminent in their respective markets. And so we're in a period right now where we're emphasizing that type of development. And as Brian noted earlier on the call, that means that it's incumbent upon the management team to find efficiencies and look for cost management opportunities in other areas to allow this type of investment to occur, so that we're able to drive yields on the revenue side, which is what the business is most about and what we are determined to achieve. So those are developments that are a focus for us strategically at this time. I wouldn't link the development of distribution costs to these marketing investments. The distribution around the world is in very differential states of evolution, so cruise distribution in the United States and I would say the U.K. is pretty mature. There's a lot of attention towards our products and services. Travel agents often build their economic model around what we and the rest of the industry are doing in cruising; whereas in places like China, it's a brand-new game. There really isn't cruise distribution in the way that we've known in the past in other markets, and we're trying to build that so that we can take advantage of the market's potential. So there's a lot of different factors that will propel distribution compensation independent of what we're doing with marketing and technology investment.

And Richard, just like to comment on something that was at the end of your question, which I think Adam addressed but I think it's worth emphasizing. Your question was kind of leading towards the extent to which these things would tend to reduce or increase our level of direct business and reduce that which goes to the distribution system. And while technology is evolving and people's use are evolving and in particular, as Adam pointed out, there's huge geographical differences. What we're really doing is trying to find better ways to communicate with our guests and with our travel agents. And the technological investments that we're talking about aren't so much focused on changing the current structure that we have today. The bulk of our business continues to come through travel agents. Travel agents are key to help people understand what cruising is all about. And particularly, as we look at growing the business, the need to do a better job of communicating with people is important, and the travel agent is particularly good at that. So I would not, in terms of your model, think in terms of this making a dramatic difference, these investments make a dramatic difference in the distribution cost in terms of commissions. What it will do is make us and the travel agents more efficient and we think provide a better way to communicate with our guests and our travel agents going forward.

Do you think this will take you above your competitors in terms of what technology they have?

I'm not going to make competitive comments on the call. I think we want to be -- in almost anything we're doing, we try and be the best at what we're doing. And we think that our technological investments, and they're big, will be -- will have a very good return on the investment.

The next question comes from the line of Greg Badishkanian.

Just to focus on net yields a little bit. So beyond the easy compares, when you're looking at the U.S. bookings, still seem like they're very strong from what you talked about. Any color from travel agents or just from your people who are handling direct calls in terms of what's really driving the strength here?

Well, the travel agents are just doing whatever the business is that they're doing. And I think in the United States market, they have a general perception that the U.S. economy is coming along, that people are taking some confidence from the housing market turning into a somewhat more positive direction, that the country didn't fall over the fiscal cliff into the abyss. And the value of cruising is coming through in a good way. In this winter's booking season, we've been, I guess, reasonably fortunate with the weather patterns that have existed so far. Sometimes, it's hard to tell how much influence that has. But last winter, probably, wasn't beneficial to us in the weather respect and this year, probably more so. So there's an overall sense that it's a good time to be booking cruises, that the cruise industry and our company are bringing forward exciting and attractive products and services, both new ships and revitalization of older ships, and that the market's stability is in pretty good shape here. So there's a lot of reasons why the U.S. market would be in a relatively positive stance, and that's consistent with what we hear from the travel agents around the country.

Good. Good to hear. And then my second question is just assuming that trends continue decently and you achieve the upper end of your 2% to 4% net yield guidance, how much of the net yield growth would you expect to come from pricing versus greater utilization in the prior year?

Greg, I think as I indicated to Sharon, we really manage within a narrow range of load factor. Unlike hotels, you don't see a lot of volatility in our yield performance based on the load factors. I think, at this point, we would look at it all to come from pricing leverage, as well as some accretion in onboard spending. [Operator Instructions]

And your last question comes from the line of Andrea Forez [ph].

[indiscernible] for yield guidance particularly because Q1 looks very strong given that it's your toughest comps. Because last year, I think we saw -- excluding the distribution and deployment changes, yields were up 3.5% in Q1, so your guidance implies a 2-year growth rate of around 6%. Whereas your full year yields were just up around 0.5% excluding these deployment changes, so your 2-year run rate for the full year implies just around 3.5% increase. So I was just wondering if it's just this uncertainty around Europe or there's anything else that I might be missing?

Sure. I think part of it is driven by the product mix. In the first quarter, we had very little Europe. We actually reduced capacity in the first quarter within Europe, which did not perform too well last year. And I think as we've indicated, our brands are performing particularly well in the Caribbean. We were up, as I mentioned in my opening comments, mid-single-digits in the fourth quarter, and we're looking at just core strength within the Caribbean. I know the Royal Caribbean brand in particular, with the Oasis class ships, have done very well, and I think that's predominately why we're seeing good performance in the first quarter despite the harder comp. Okay, thank you. And we'd like to thank everyone for joining us today. And as I mentioned before, Ian will be available throughout the day for any follow-ups, and we wish everyone a great day. Thank you.

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