Good morning. My name is Regina, and I will be your conference operator today. At this time, I would like to welcome everyone to Royal Caribbean Group's Fourth Quarter Full Year 2022 and Business Update Earnings Call. [Operator Instructions] I would now like to introduce Michael McCarthy, Vice President of Investor Relations Mr. McCarthy, the floor is yours.

Good morning, everyone, and thank you for joining us today for our fourth quarter and full year 2022 business update conference call. Joining me here in Miami are Jason Liberty, our Chief Executive Officer; Naftali Holtz, our Chief Financial Officer; and Michael Bayley, President and CEO of Royal Caribbean International. Before we get started, I'd like to note that we're making forward-looking statements during this call. These statements are based on management's current expectations and are subject to risks and uncertainties. A number of factors could cause actual results to differ materially from our current expectations. Please refer to our earnings release issued this morning as well as our filings with the SEC for a description of these factors. We do not undertake to update any forward-looking statements as circumstances change. Also, we will be discussing certain non-GAAP financial measures, which are adjusted as defined, and a reconciliation of all non-GAAP items can be found on our website and in our earnings release available at www.rclinvestor.com. Jason will begin the call by providing a strategic overview and update on the business. Naftali will follow with a recap of our fourth quarter and full year results and an update on our latest actions and on the current booking environment. We will then open the call for your questions. With that, I'm pleased to turn the call over to Jason.

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…

Thank you, Jason, and good morning, everyone. Let me begin by discussing our results for the fourth quarter. As you can see on Slide 10, we reported a net loss of $500 million or loss per share of $1.96 and adjusted net loss of approximately $300 million or per share of $1.12. The results were above our expectations at the high end of our guidance range. Total revenue was $2.6 billion, operating cash flow was $600 million and adjusted EBITDA was $409 million, again, above our expectation and guidance. Fourth quarter outperformance was a result of continued strong demand for our brands vacation experiences, strong close-in bookings at higher prices and continued strength of onboard revenue. Better cost management and favorable timing of expenses across several categories, lower fuel rates, lower customer acquisition cost and lower interest expense also contributed to the financial results. We finished the fourth quarter at 95% load factor with peak December holiday sailings at 110%. Load factors varied by itinerary with the Caribbean averaging 100% in both late season Europe and Australia, which opened in Q4 at just under 90%. Total revenue per passenger cruise day was up 4.5% in constant currency compared to the record fourth quarter of 2019. Net yield was down 7.4% in the fourth quarter compared to 2019, a significant improvement for the 14% decline in Q3 and above our expectation. 2022 closed out as a successful transitional year and we generated $8.8 billion of total revenue, $712 million of adjusted EBITDA and almost $500 million of operating cash flow. I'll now provide an update on our 2023 business. Let's start with capacity. Our overall capacity for 2023 will be about 14% higher than 2019. Nearly 70% of our '23 capacity will sail on North America-based itineraries, about 17% will be…

[Operator Instructions] Our first question comes from the line of Steve Wieczynski with Stifel.

Good morning, and very solid results here. So look, when -- you're back to getting the way you used to guide before COVID, which should tell us that your visibility is as good as it's probably ever been or I should say, back to normal. So my question is like historically, you've turned the year, let's call it, 55% to 60% booked. And I first want to understand maybe kind of where you stand right now in terms of that book position versus historical levels. And then it does seem based on your current strong visibility that if your customer base stays pretty much status quo. It would seem to us that your EBITDA for this year would not just exceed 2019 levels, but I mean, pretty well exceed 2019 levels. I just want to understand if that's fair. And your guidance maybe incorporates some conservatism around maybe consumer trends.

Steve, thank you for your questions. I would first start off and say that on a book position standpoint, we're now an eyelash away from our historical load factors or book position. But we also expect our load factors as we guided to be a little bit lower until we get into the spring, and that's why on the Q1, our load factor. So when you adjust for our expectations on load factors, we're in a very strong book position and at rates that are considerably higher than what we saw in 2019. I think your teams have put together a forecast that we believe is achievable, and it is based off of what we believe is very strong visibility on the revenue side as well as our ability to manage our cost structure. We do expect to exceed handsomely our EBITDA that we generated in 2019. And clearly, we see patterns continuing to accelerate in the way that they are, there's certainly opportunity for us to have a better outcome for the year. But I think we're thoughtful in just how we've always been. We're very thoughtful on how we guide. We're thoughtful on how we're seeing these different products and markets operate. And so, we feel really strongly about 2023. And quite frankly, we feel very strongly when we consider the acceleration towards Trifecta.

Okay. Got you. And then second question would be around the transitory costs. And I would assume that most of these costs are kind of hitting your -- the other operating and SG&A lines. But look, I would assume by the time we get to the third quarter, maybe fourth quarter, the majority of those headwinds should be gone. And by the time we get to '24, all those costs should be gone. I just want to make sure that I'm kind of thinking about that the right way.

Hey, Steve. Yes, that's exactly right. And you can see that we made progress every quarter, and we expect that to dissipate as we progress throughout the year.

Yes. And I just want to add because I know it was in our remarks, but we're a little bit of a different organization than we were in 2019. We have a full year of Perfect Day now. We have things like Galveston. We've also shed some businesses like Azamara as an example. And so, I think when you step back and you see that our costs are basically up mid-single digits versus 2019, and 210 basis points of that are the structural and some transitory, you kind of get into like a 3% or so cost of increase versus '19. What it shows is that what we were saying during the pandemic about us getting into our wedding weight has really helped us absorb a very high inflationary environment that we've all experienced during 2019, and that is really the result of incredible effort by our brands and our shared service areas who really put the time and the work in while not impacting the guest experience.

Your next question comes from the line of Robin Farley with UBS.

Just wanted to get a little bit more of a split in your yield guidance between the occupancy and the revenue per day piece of it because thinking about the occupancy issues sort of going to cure itself, and I guess, we would think about that price increase as something that would carry forward into 2024, unless you think that some of that pricing -- that there's a trade-off to get back to full occupancy. So just trying to think about how much of the yield increase that you're guiding to, really when the occupancy is back, implies a price -- a greater yield increase for going forward?

Yes. So Robin, so first, for the full year, obviously, many moving pieces as we are again comparing a three-year benchmark. And as Jason said, just a minute ago, we were obviously different. So we are good at some ships, some brands. We added Galveston. We have direct contribution now from Perfect Day at CocoCay. All of it is slightly negative to yield, but overall, obviously, very, very important to us. The majority of the benefit that you see on the yield side is from new hardware. We also put that hardware on the best itineraries. They have more onboard revenue opportunities. And the rest, the like-for-like, that is up despite the fact that, as you mentioned, the load factors are much lower than what we had in '19. For Q1, if we adjust for the load factor, the difference -- yield would have been around mid-single digits. So it's obviously more impact for Q1.

Okay. Great. That's helpful. Thanks. And then maybe just sort of follow-up to that is one of your Trifecta goals is that sort of EBITDA per berth that you've given us a long-term goal. Is there any kind of ballpark EBITDA per berth that you might give sort of a range for '23? Just thinking about, obviously, the -- a lot of the EBITDA versus '19 would clearly be above given the 14% capacity growth. So if we just think about the passenger billing on per berth basis, just kind of wondering how recovered you may be in '23 versus '19?

Yes. And so, Robin, just -- we've -- obviously, we’ve moved now to start to guide back to what we were doing in 2019 to make sure we create comparability. We clearly believe that our EBITDA is going to be up and our EBITDA per berth is on its way getting back to those record levels, which is really just being impacted by fuel prices. But that's really where we're very focused because we believe one of our paths to getting to ROIC in the teens is obviously focusing on improving our margins across all of our brands. And so, that's how we've guided for 2023 and the focus is very heavy on -- internally on us improving those margins.

Your next question comes from the line of Vince Ciepiel with Cleveland Research Company.

Helpful commentary there with the onboard bookings in advance and especially strong results during 4Q despite you continuing to close that occupancy gap versus 2019. So curious how you're thinking about that on board for passenger cruise day throughout the course of this year as you fill out the interior shift, I imagine there's maybe a little bit of a mix headwind there. But can these onboard less remain elevated? And secondarily to that, the ticket component, how would you expect that to evolve through the course of this year?

This is Michael. If you remember, when we first started coming out of the pandemic, and we saw this really strong robust onboard spend, we wondered how long it would last for. And we had different theories about that. It's just continued to strengthen. And I think all of the investments we made during the pandemic with [Hybris] and our pre-cruise software and our capabilities with the web, really has changed this needle. And we just continue to see incredible strength with the onboard spend and the number continues to improve. So the pre-cruise penetration is now above 60%. We've now got 25% of activity occurring on our app, which is something new over the past couple of months. We've made multiple changes to the software and our capabilities to communicate with the customer pre-cruise and on cruise. And the response has been extremely positive. So we see a great deal of strength. We're very pleased with the performance, and we think it's going to continue all the way through this year and into '24.

Yes. I just want to just add on a few things. Obviously, as we add more third and fourths, that can weigh a little bit on the average APD on the onboard side. But I think what's important to point out is that the strength in onboard and the spending, as Michael mentioned, one is obviously the consumer or our addressable consumer is healthy, is sitting on a lot of savings, is searching for experiences and creating memories with their friends and family. But our ability to get the consumer to book earlier is really the main force behind why we're seeing an increase in onboard activity. So a healthy consumer certainly helps. Their desires and interests certainly help. But also allowing them to effectively get at least a day back of their vacation by being -- allowing them to plan what they want to do on the ship as well as shore excursions is certainly creating a great tailwind for us. And on the ticket side, we expect our ticket yields to continue and APDs to increase. There's a little bit of always that how we package and how we do things can lead a little bit more into ticket or a little bit more on to onboard depending on how it is with the brand. And also one of the -- I think the other drivers on the ticket and onboard side is just whether it's through e-commerce and other things. We're taking more and more friction out of the acquisition experience or how the customer shops. And that's also allowing them to get the vacation of choice that they're looking for and on the platform or the channel of choice that they choose to go through.

That's helpful. And maybe taking a step back, a bigger picture question. If you look at the order book for industry supply growth, looks like kind of this 4% to 5% range in '23 and '24, but then falls off in '25 and '26. So can you remind us the time line around new ship builds? Is that decel in '25 into '26 pretty set? And your take on what decelerating industry supply growth might mean for the broader pricing picture.

Well, it's -- I certainly don't know the plans of our competitors on a new building standpoint. As we had kind of noted in our release, how we expect our business to grow next year by about 10%, then about 5% and then about 6%, respectively. And I think the first thing to point out is, that's not just one brand in one market, in one destination. So this really reflects our three wholly owned brands and how they're going to grow in their different segments and also for these ships to be in different parts of the world. If you look at the order book, you do see, as you get into '27 and '28, a lighter order book. We believe that Royal Caribbean that the addressable market is underpenetrated, especially in all the different markets that we operate. We are -- we work very hard to create global brands that attract guests from all over the world, and of course, to build the revenue management systems to effectively harvest that quality demand. And we think that apparatus more than supports our expected supply growth over the coming years.

Vince, it's Michael. I just have to add one little comment here talking about new ships coming online. Obviously, we opened up to sail Icon of the Seas a few months ago, and that ship literally has been the best-selling product in the history of our business and has been absolutely outstanding in terms of the demand and the pricing that we're generating for the product. And in fact, it's really driving a great '24. I mean we don't -- we never talk about '24 at the beginning of '23, obviously, but '24 is looking very healthy. And a big driver of that is Icon. We've had some remarkable stats coming out of Icon. Just one little nugget that gets me very excited is it's only one category of room, but the ultimate family townhouse that we sell on Icon, which is a 3-story experience in our new Surfside venue for younger families is already 55% sold for 2024 at an average price of $75,000 a week. So you can just get a feel of the kind of demand that's being generated by these new products. And obviously, we're very excited with what we're seeing with Icon. And that new class, which Jason mentioned is the first time Royal Caribbean International has had a new class of ship in nine years, and we are delighted with the performance so far.

We'll save you a cabin, Vince, don't worry.

Going to start saving for that. Appreciate the color.

Your next question comes from the line of Brandt Montour with Barclays.

First off, congratulations on this really important milestone. So my first question is on WAVE season. By all accounts -- in your account this morning, WAVE season is going really well. Volumes seem to be pretty consistent week-over-week, month-over-month. Jason, or anyone, if you could just expand a little bit more on the behavior you're seeing within the bookings? Any differentiation between brands or any pricing sensitivity sort of forming at either at the lower end, which are lower -- with your older fleet ships or at the higher-end suites and things that were pricing much better last going into this year?

Thanks, Brandt. First, I mean -- and it's -- I don't say this lightly, so it's wonderful to say, but we're really seeing these very strong WAVE trends across all of our brands. And you see an elevated amount of demand coming from North America. And we have been very happy to see over the past two or three weeks, that elevated demand now move into Europe as well. We have been very happily surprised by how strong we're seeing the consumer plan their vacation travel and to see that our booking window is now within a couple of weeks of what it has normally been. And that includes a lot of acceleration for short close-in products, especially as we've increased more of our 3, 4 and 5 night products is really encouraging overall. So I wish I could say it's different -- well, actually, I don't wish I could say, I should say that it's different from the family to ultra-luxury or to expedition. But we're really seeing this across all of our brands really strong. And we've seen markets like, for example, like Northern Europe now begin to move into a much stronger place. I also just add is demand, as you probably have seen in other travel products for North Americans to go to Europe has been exceptionally strong. And so, we're now seeing that take over here in the cruise space.

And just to add -- go ahead, Michael.

Sorry. Sorry, just to add one comment on the demand from North America. We've also seen strong demand coming out of the Latin American markets for the European product, which has surprised us, but obviously, we're taking advantage of that. But it's pretty much across the board that we're seeing the strength in the consumer and it's across so many of our markets, which is really healthy to see.

That's great. And just a follow-up on both of those comments. It sounds like U.S. into Europe and the UK that you called out are where you're most excited, even if it's the Europe end market. In terms of the consumer that you sell to and that European consumer that you sell to that might not be as good as a consumer right now for you, are they accelerating to sort of against their own comparables?

Yes, they are. And I think the other thing that has been -- that we've seen through the course of this WAVE is our ability to raise prices at the same time. So the demand is that strong and we're able to raise price across these different products and really not seeing a pullback from the consumer as we continue to do so. And that is really a reflection of what we've seen since our last earnings call, or really since the announcement of the protocol being dropped just acceleration and the propensity to cruise across all three categories of new-to-cruise, first-to- brand, first-to-cruise has returned. And in many cases, it's better than what we saw pre-COVID.

Your next question comes from the line of Benjamin Chaiken with Credit Suite.

Maybe I missed it, but the guide implies some net yield growth for the year, clearly. Is this simply occupancy improving? Or is the revenue per passenger cruise day also expected to improve? And I guess I asked that in the context of what sounds like better pricing in the last few weeks and months.

Ben, it's Naf. So it's both. And you can see the acceleration in the business. Obviously, with the normalizing of the occupancy levels and the continued strength of pricing.

Got you. That's really helpful. And then on CocoCay, are you still seeing the same or similar pricing premiums to the CocoCay itineraries as you did in 2019? And then longer term, should we assume that you make further build-outs in other locations that are similar to CocoCay? And if so, how do you think about that opportunity while also bringing down [Hideaway Beach]?

Hi, Ben, it's Michael. I think the answer to those questions is yes and yes. I mean we ironically opened CocoCay in 2019, and it is just a huge success. Now, of course, it's really doing an amazing job. And the demand for that product is exceptionally high. We have a significant increase in our overall capacity that we bring into CocoCay. I think for this year '23, we'll be bringing 2.5 million to 3 million guests to CocoCay. And the demand not only is there from a volume perspective, but the rate is there. And that rate has been going up again in a very healthy way. And it's the same with the spend for the products and experiences on Perfect Day. We've seen a great demand and a lot of resilience as the prices go up. So it's a hit and it's very successful. We are opening Hideaway Beach on the fourth quarter of this year in preparation for Icon of the Seas. It will be arriving also towards the end of the fourth quarter. And of course, that Hideaway Beach will allow us to bring an additional 3,000 people to Perfect Day. So our capacity will be approximately 13,000 people a day. And yes, we have an appetite for other such ventures. And as soon as we're ready to make any announcements, we will. But clearly, from our perspective, we think this is a really -- it's a wonderful part of the product experience, and our guests clearly demand this type of experience that we can now give them. So our intention is to continue to grow this piece of the experience for our guests.

So let me just add one other thing, which is the financial returns associated with CocoCay and the like are exceptionally high and are significantly above our targeted returns. So this should be accretive to profitability and obviously to EBITDA and those are the type of investments that we obviously want to continue to make.

Got you. And just one quick follow-up. Is the -- those numbers are on Hideaway Beach, 3,000 a day. Is that incremental to the 2.5 million to 3 million at CocoCay? Or is 2.5…

Yes.

Yes?

Yes, yes. That's incremental.

Your next question will come from the line of James Hardiman with Citi.

And congrats on a great quarter and some really important benchmarks here. I wanted to dig in a little bit on Europe and Asia. Obviously, a year ago, WAVE season, there was -- it was obviously marred by the Russia-Ukraine conflict. Being such a global brand, you guys do what you do, you adjust. And it sounds like both in terms of the destination markets as well as sourcing customers, things are getting better. I guess my question is on Europe, is there still a lingering impact of that conflict in your business that, who knows what's going to happen with that conflict, but that could ultimately be a positive for next year? And then sort of similar question with China. I'm assuming there's not much of a benefit yet from sort of the zero COVID policy going away there. But is there any way to sort of quantify or even anecdotally speak to what sort of a drag that is on your business that could potentially open up for you next year?

So I'll just -- I'll start on the Europe one, and Michael can then take China. First off, I think the consumer -- the impact on the Ukraine, Russia, I think, comes to us in two ways. One of which is a little bit of a deployment impact, and we're not able to go more east into the Baltics because of the very unfortunate conflict that continues on. And then obviously, there's some impact in the European consumer because of energy prices. That, I think, is the impact that hopefully will evaporate over time. But their propensity to cruise, their desire to go on a vacation experience is high. The value proposition for the cruise, as I noted in my remarks, that gap is still very significant. That's too significant as we look to try to close that. But I think that's really where you see the effect. The consumers' desire to go -- or European consumers go to the Nordics, desire to go to the Western Med, Eastern Med, which is really kind of fully open to them to experience is that demand is there. I just think that they continue to probably be a little bit more pinched, certainly more pinched than the North American consumer because of the increase in energy prices and how that's impacted their economy. And with that, I'll let Michael comment on China.

Yes, on China, there's -- obviously, the environment's improved significantly from what we've being told by our China team. So things have started to normalize, and they seem to have got over that very difficult period. There's currently two impediments to the China cruise market opening up. One of them is there's still a ban technically on cruising and group travel in China. And also, there's a requirement from the Japanese that Chinese tourists have to test and potentially could be quarantined. We understand that both of these conditions will drop away at some point during this first half. That's what we've been led to believe, and we believe that that's going to happen. As soon as those two conditions change, then obviously, the market will reopen and we're thinking that it will be late '23, and we're kind of thinking that '24 probably, realistically, the China market will be back. But obviously, that's based upon how we understand and see the situation currently.

Yes, I was just going to -- and clearly, China was a very high-yielding, highly profitable market for us. And as that market comes back online, we're very optimistic about how that can either further propel the opportunity for us. And I would just comment in the context of Trifecta, we didn't contemplate China in that consideration as it has not turned itself back on.

And it's also not obviously included in our -- this year results as well.

Got it. All really helpful. And then by way of follow-up here. I mean, you've talked a couple of times, I think, about closing that gap to land-based vacations. I thought the commentary about cruise search outpacing general vacation searching seemed relevant. Maybe speak to that. Do you think that gap has gotten as big as it's going to get and maybe you close that gap this year? Obviously, you have much more insight into your own business than into land-based vacation but maybe sort of updated thoughts there.

Yes, I don't know -- I don't think we're going to close that gap in 2023. I'm encouraged by the ability now for us to increase our pricing even more, which I think will give us the opportunity to close that gap. I'm excited about what we're seeing in the onboard side, which also helps us close that gap. But that gap, which used to be 20% is now in the 30% zone relative to pre-COVID, which was around the 20% mark. But we do think that, that's -- there's a lot of runway for us, and that just I think through great execution, just broader awareness of our brands and the cruise complex that we see now as being appreciated more and more by our guests helps us lead to getting the pricing and which helps us lead that to that -- closing that gap. What we're not interested in is the gap closing just because their pricing could potentially go down. Like we want to elevate ourselves up to that level, and we think that's definitely something that's in our capabilities to do so.

Your next question comes from the line of Daniel Politzer with Wells Fargo.

Congrats on a nice quarter. So first, I wanted to just touch on the cost. It sounds like you're going to exit 2023 more in line with your historical levels. As you get to 2024, and I know it's still early days, are there any kind of onetime items that we should be thinking about that could impact your algorithm, that kind of 1% to 2% cost increase and whether it's China relaunching or land-based destinations or any technology initiatives?

Good morning, Dan. So as we said, our formula is moderate capacity growth, moderate yield growth, strong cost control and obviously, you have several linked pieces here in the first quarter and throughout the year. But this is kind of where we're marching towards. So our expectation is to get back to that formula.

Got it. And then I guess for my follow-up on TUI. Can you just talk a little bit more about the ramp there? I know that there's a big European piece, and it sounds like things are moving along. But how should we think about that contribution ramping over the course of 2023 given that it was a big piece of that adjusted EBITDA in 2019?

Yes. So they continue -- we're very happy with TUI, and their performance has been a very successful cruise brand. Their recovery is well underway. They have been positive operating cash flow and EBITDA for several quarters now. They're very strong occupancy levels and pricing. So we continue -- we expect this to continue to recover towards 2019 levels and beyond.

Yes. The only I would add is for TUI cruises, a -- cruise is just similar to all of us. They still have some negative carry to burn off as well. And I think there are a few years from being at a place where they're contributing at the same level to us as they were in '19. But that's -- I think it's a very short duration as they have been really effectively managing the business. They've really been outpacing, I think, just a broader cruise world and getting their business back up and running and profitable and generating positive cash flow. But like all of us, they have some negative carry they're going to have to burn off.

Your next question will come from the line of Patrick Scholes with Truist Securities.

First is actually just a modeling clarification question. On your percentage guidances to grow off of versus '19 for the net yields and the various cruise costs, are those apples-to-apples based numbers? Basically the reported numbers that you had in -- back in 2019, are those the numbers we should be growing off of? Or is there any adjustments in there that might make those percentages different than -- okay, all apples-to-apples?

No adjustments. Those are apples-to-apples and obviously, we gave you the color of all the moving pieces.

Okay. And then a different question here. With the increase in direct business, do you see that disproportionately going to any types of destinations such as Caribbean or perhaps higher-end Alaska or Mediterranean any differentiation between those?

Well, clearly, on direct business, the shorter the product, the higher the percentage, and that's just more because the consumer is comfortable and understands the complexity of -- or the lack of complexity on the short product. The further typically, the consumer goes or the higher end that it goes typically requires, they're more comfortable going to our travel partners. We have really tried hard to be just kind of a channel of choice. And of course, the consumer has become a little bit more digitally minded through COVID because they were buying a lot of stuff online as we all know. And as they now shift to experiences, they're comfortable in different channels. And some of those digital platforms are through us and some of those digital platforms where our travel partners. But that's typically how you would see it as the shorter and closer higher.

No, that I understand. But as far as any changes since pre-COVID, have you seen a greater acceleration in sort of direct booking to higher end or perhaps a greater acceleration to...

It's really across the board. On the consumer at all different levels have gotten more comfortable using digital commerce to make their purchases. And that's kind of -- that is whether you want to look at Royal or Celebrity or Silversea or TUI or Hapag, that's what we have been consistently seeing.

Thank you for the color. I am all set.

Okay. Operator, we have time for one more question.

Our final question will come from the line of Fred Wightman with Wolfe Research.

I just want to make sure I understood the equity investment line commentary. Are you guys saying to just take a haircut to what you guys did in '19, but it will be relatively similar from a seasonality perspective? Or were you trying to say something else?

No. I think if you go through the guidance and our expectations of what we provided, our expectation is obviously, it's going to be lower than 2019 because what Jason mentioned is the negative carry. So they continue to recover.

Okay. And then there was a comment that 4Q new to cruise was above pre-COVID levels. Just curious, when you look at what you have on the books for '23, does that percentage continue to improve? And could you give us a sense for order of magnitude?

Yes. Well, and just our general commentary on WAVE. What's driving that strength is new-to-cruise and new-to-brand. And so, that mix is not only similar, but it's better than what we saw take place in the fourth quarter. So we feel that propensity to cruise -- and by the way, I think one thing that's important on the new-to-cruise stat, especially relative to '19 is because we don't have China in the mix of our business. Pretty much every Chinese consumer back in '19 was a new-to-cruise consumer. So that really talks about the strength of the North American and European consumer and their interest to go on a cruise for the first time or to go on to one of our brands for the first time.

We thank you all for your participation and interest in the company. Michael will be available for any follow-ups. I wish you all a great day.

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.