Good morning. My name is Shelby, and I'll be your conference operator today. At this time, I would like to welcome everyone to Royal Caribbean Group's Business Update and Fourth Quarter 2021 Earnings Call. The operator provided instructions on how to submit questions during the Q&A portion of today's call. 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 business update and fourth quarter and full year 2021 financial results earnings 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 will be 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'll 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 strategic overview and update on the business. Naftali will follow up with a recap of our fourth quarter and full year results, 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. I'm pleased to be with all of you today in my new role here at Royal Caribbean Group. I'm very fortunate and humbled to take the helm of this incredible organization, which includes our industry-leading brands and the most innovative fleet in the world that is enabled by our incredible people and culture. I'm very much looking forward to building on the company's remarkable legacy and track record in the years ahead. I also want to congratulate and welcome Naftali as our new CFO. Many of you already know Naf, but for those who don't, I'm confident you'll enjoy working with him. Our mission at Royal Caribbean has been and continues to be focused simply and completely on delivering, every day, the very best vacation experience and doing so in a responsible way. It is awe-inspiring to see our team deliver on our mission each and every day. While 2021 was another challenging year for our company and the industry, it also marked our healthy return to sailing. In just a few short months and thanks to the incredible preparedness of our operating team and crew throughout the last 1.5 years, we have brought back more than 85% of our capacity into service and delivered extraordinary vacations and memories to approximately 1.3 million guests. I want to thank the hard-working people of the Royal Caribbean Group, both our crew and our shoreside employees, for their incredible efforts to bring back our fleet in such a short window and such a successful way. I am so proud and grateful for their efforts. I also want to thank our guests, travel partners, destination partners, suppliers, investors and financial partners for their steadfast support. As we navigate through this black swan event, we have focused intently on a successful healthy return to service, as you would expect. At the same time, we have been charting our course to get back to pre-COVID performance levels and beyond soonest. The combination of very strong secular and demographic trends, our leading brands, the most innovative and a growing fleet, our global sourcing footprint, a leading technology platform and the reshaping of our cost structure positions us exceptionally well to accelerate. Let me focus a moment on our healthy return to service. Since we resumed operations, our goal has been to make cruising one of the safest vacations anywhere in the world while providing an exceptional guest experience. We continue to demonstrate that in a very tangible way. As you heard me say, we have carried approximately 1.3 million guests since the restart, with about 2,500 guests testing positive for COVID-19, a positivity rate of 0.19%. This positivity rate is still a small fraction of what it is in society at large, and nearly all cases onboard were asymptomatic or had mild symptoms. Our rigorous health and safety protocols with 100% vaccination rate among our crew and close to 100% vaccination rate among our guests provide a safe environment where we can fulfill our mission of delivering amazing vacations. And our guests are responding by providing record Net Promoter Scores for us, exceeding their expectations. A few weeks ago, the prescriptive CDC conditional sailing order expired, demonstrating the agency's confidence in the overall effectiveness of the health and safety protocols of the cruise industry. Our own protocols continue to go above and beyond anything the framework provided and what consumers will find in any hospitality setting. We continue to engage with the CDC and other public health agencies as we look to adjust our COVID-19 risk mitigation measures in response to the changing nature of the virus. Our healthy return to service plans anticipated twists and turns on our recovery path. We remain nimble in our approach, adjusting to changes in the operating environment with a constant focus on our long-term strategy and success. As everyone is aware, the Omicron variant has impacted most parts of society as well as our operations. Since mid-December, we experienced an increase in the number of people testing positive for COVID onboard our ships. The good news is that in the last several weeks, cases on board our ships have been declining rapidly, and we now have returned to exceptionally low pre-Omicron levels. In fact, over the last seven days, we have averaged only a handful of positive guest cases per cruise. With the declining cases, operational challenges are also abating, so while the variant is not done, it appears that the worst is behind us. The timing of Omicron was particularly painful as a typical wave booking period begins in early January. So we do expect it will weigh on our performance in Q1 and, to a lesser extent, in early Q2. With the peak in Omicron now seemingly behind us, we have seen meaningful and sequential improvement in the booking activity week-over-week since the beginning of the year. In fact, in the last week of January, bookings returned to pre-Omicron levels, and we expect demand recovery to accelerate as the variant subsides. With that in mind, we have extended our sales and marketing activities for a delayed and extended wave. While Omicron created some short-term challenges and will likely delay our return to profitability by a few months, our recovery trajectory remains intact. We remain confident that we will have a strong spring and summer season with great demand for cruising, both domestically and internationally. The robust secular trends of experiences over things that has propelled our business in the past few years is now recovering towards pre-COVID levels. We have also seen a change in the mindset of consumers coming out of the pandemic with the desire to travel and reengage with the world being stronger than ever. In fact, U.S. traveler organization research confirms that leisure travel will continue to increase at higher levels than business travel. All of this, coupled with consumer resilience and easing travel restrictions, provides tailwinds for our recovery. After a storied 2020 and 2021, we are eager to move forward in this new year. As people are keen on taking a vacation, we are ready to make their vacation dreams come true in a healthy and safe environment. We expect 2022 will be a strong transitional year as we bring the rest of our fleet into operations and approach historical occupancy levels. We expect a net loss for the first half of 2022 due to the impact of Omicron and a return to profitability in the second half of the year. During 2022, we look forward to welcoming two additional new ships, Wonder of the Seas for Royal Caribbean International and Celebrity Beyond for Celebrity Cruises. These exciting new ships will deliver amazing vacations to our guests and join six other new vessels that have entered our fleet since 2020. This is a key pillar to support our recovery. New hardware is an important driver of quality demand, extraordinary customer experience and exceptional financial performance. And just as important, it improves our sustainability as these are innovative ships that are much more energy efficient. We remain focused on continuing to innovate our product and maintain our strong competitive advantage, setting the foundation for a strong recovery and long-term profitable growth. During the pandemic, we have had a relentless focus on reshaping our cost structure and rigorous capital allocation framework. We expect that the combination of new ships, growing yields and higher profitability will propel our financial performance and support our focus to return to pre-COVID financial metrics and beyond soonest. Corporate stewardship remains another key priority as we continue to progress across environmental, social and governance-focused areas. Climate change and reducing our emissions have been central to our environmental stewardship activities for decades. Last quarter, we announced our comprehensive decarbonization strategy and goals. We realized that the transition to net zero will not be easy, and to achieve our ambitions, we will rely on our culture of innovation as well as strong partnerships with governments, suppliers and shipyards to develop alternative and accessible fuels and technologies. Additionally, in the past few months, we were named an employer of choice by Forbes and Glassdoor. Last week, we earned a 100% score on the Human Rights Campaign Foundation Corporate Equality Index, which rates corporate policies and practices that relate to LGBTQ+ workplace equality. These are recognitions we're proud of and they reflect our commitment to our employees. All of this tells you that our business model is incredibly strong, and we have a track record of growing revenue, earnings and cash flow. Our formula for success is unchanged: recover and grow yields, enhance our margins, profitability and ROIC. To that, we added returning our balance sheet to pre-COVID levels. We have the best brands in each of our segments, the most innovative fleet in the industry, exclusive destination experiences like Perfect Day at CocoCay, a nimble and effective global sourcing footprint, a leading technology platform and most of all, the very best team, both at sea and on land. With that winning formula, I am confident about the recovery, and I'm very excited about the future of Royal Caribbean Group. And with that, I will turn it over to Naftali. Naf?

Thank you, Jason. Before I begin my remarks, I would like to share how energized I am to take on this Chief Financial Officer role. I will focus my energy on continuing the accelerated recovery and returning our performance metrics to pre-COVID levels as soon as possible while positioning the company for long-term success. I will now turn to discuss our results for the fourth quarter and full year 2021. This morning, we reported an adjusted net loss of $1.2 billion for the fourth quarter and $4.8 billion for the full year. It is important to note that Q4 results were better than our internal expectations, mainly due to continued strong onboard revenue performance and better cost management. The financial results for 2021 reflect the impact from the suspension of sailing in the first half of the year and the tremendous effort to resume cruise operations and accelerate the flywheel in the second half. In the fourth quarter, we continued our return, bringing 12 more ships back into operations, building the load factors and restarting our sales and marketing efforts, all to position the company for a successful 2022. Load factors for the quarter were 65% on core itineraries with month-over-month improvements. We are incredibly pleased with the progress we have made in the fourth quarter. Our total load factors grew from 36% in Q3 to close to 60% in Q4. In addition, the continued strong onboard revenue contributed to a 10% increase in total gross revenue per passenger cruise day compared to the fourth quarter of 2019. Cash flow from our operating ships turned positive in the fourth quarter. Now I would like to discuss capacity and load factor expectations over the coming period. The Omicron variant caused short-term disruptions to the travel industry as well as our operations. As Jason just mentioned, our focus since we restarted operations has been to ensure the health and safety of our guests and crew, matching or exceeding guest vacation experience expectations and bringing the fleet up in a financially prudent way. With that in mind, we made the decision to cancel several sailings in the first quarter. We plan to operate about 7.7 million APCDs in Q1 or approximately 95% of our planned capacity. We expect that operating ships in the first quarter will be cash flow positive. Our capacity will further increase at the end of the quarter, following the delivery of the incredible Wonder of the Seas. Wonder will be introduced to the U.S. market in March before heading to the Mediterranean for the summer season. Due to the impact from Omicron on near-term bookings and cancellations, we expect load factors of approximately 60% on core itineraries in Q1 with month-over-month improvement within the quarter. We also expect to bring the rest of our fleet back to service in time for the lucrative summer season. We expect our load factors to continue to steadily increase month-over-month and approach historical levels in the third quarter. While we offer cruises in the vast majority of our key destinations, we continue to closely monitor both China and Australia. We anticipate Australia to open for cruising for its summer season, our winter time. With respect to China, it remains closed for cruising, and we have redeployed the remaining two ships planned in 2022 to other key markets. We remain optimistic that we can capture long-term growth opportunities in the China market. Shifting to our balance sheet. We ended the year with $3.5 billion in liquidity, excluding the $1 billion issuance we completed in early January. We have ample liquidity to allow us to continue our recovery trajectory. During 2021, we focused on managing and improving our balance sheet. We reestablished access to the unsecured debt markets and successfully refinanced $2.3 billion of secured or guaranteed high coupon debt. Our plan is to continue with these balance sheet improvement efforts throughout 2022. In early January, we issued $1 billion at a 5 3/8% coupon, and we plan to use the proceeds to refinance near-term debt. In addition, we have taken and continue to take numerous actions to reshape our cost structure with a focus on further improving our leading pre-COVID margins. While these actions will improve our cost structure and margin profile, we do anticipate that inflationary pressures and some transitory costs related to our healthy return to service will weigh on this year's earnings. Now I'll provide an update on the demand environment and our 2022 sailings. For the last several quarters, we have seen new bookings improve from one quarter to the next. Bookings in the fourth quarter continued this positive trajectory, culminating in our biggest-ever Black Friday and Cyber Weekend from the U.S. Bookings in the fourth quarter were up more than 75% compared to the third quarter. As we restarted our brand marketing programs in Q4, we generated strong demand to support the book of business for '22 and '23. As the Omicron variant began spreading in December, we experienced slower booking activity and higher near-term cancellations over the holiday period as many guests were testing positive before their cruise. But from the beginning of the year, we have seen meaningful week-over-week improvement in booking activity for both the first and the second half of '22. Second half booking activity has been recovering at a faster pace. In addition to that, we have seen a rapid improvement in cancellations over the same period. Similar to our experience with the Delta variant, as Omicron cases are beginning to decline, booking activity has begun to pick up. In fact in the last week of January, bookings have returned to pre-Omicron levels. The U.K., which is further ahead on the Omicron curve, has been on that improvement trajectory for several weeks. From a cumulative booking standpoint, our book load factors for sailings in the second half of this year remain within historical ranges at higher prices, both with and without the impact of future cruise credits. Load factors in the first half are below historical ranges as expected but are aligned with our anticipated load factors. Our customer deposit balance as of December 31 was $3.2 billion, an improvement of about $400 million over the past quarter despite the quarter-over-quarter increase in cancellations related to Omicron and significant revenue recognition, both of which reduced the customer deposit balance. Our customer deposit balance is only 5% lower than it was at the end of December 2019, with the entire difference driven by the first quarter sailings where we have less capacity. Our customer deposit balance related to bookings for Q2 forward sailings is higher than at the same time in 2019. Approximately 32% of our customer deposit balance is related to future cruise credits. Of the FCCs, approximately 50% have been redeemed thus far. Lastly, turning to the outlook for 2022. Given the progress we have made ramping up operations and everything I said about the booking environment, the costs and the impact of the Omicron variant, we still expect to reach positive EBITDA and operating cash flow in late spring. We expect a net loss for the first half of 2022 and a profit for the second half of the year. With that, I will ask our operator to open the call for a question-and-answer session.

The operator provided instructions for the Q&A session. Your first question is from Robin Farley of UBS.

I wanted to ask about your booking comments. I think it was obviously understood and expected that new wave season volumes are lower than historic. But I think it's still positive to see that your historic load in the second half is still above. I think there had been some concern that maybe the historic load would have fallen below, given how slowly the first month of wave is. I guess I wonder if you could give us a little bit of quantification on—do you expect, even with the sort of maybe later start to wave because of the Omicron disruption, do you still expect load factors in the second half, if we move at the rate we're going through the next month, to still be ahead of historic—or within historic ranges?

Robin, I'll start off and, of course, good to talk to you. The first point I would make is while Omicron certainly was impacting our bookings and impacting our cancellations, it really was focused on the first quarter and a little bit of the second quarter. We didn't really see too much of an impact in terms of demand related to June on in the year. Based on the booking activities that we've seen, the back half of the year is going to look like what we had expected it to, and that includes our expectations on a load factor standpoint. We remain confident based on current trends.

Okay, great. And I do have a follow-up, but I should have said congrats, by the way, to you, Naftali, both in your new roles. I should have started with that. Sorry. And then just for the follow-up, it's about FCCs. I also wanted to clarify whether you said 50% was redeemed or 15%. But the real question on FCCs: it seems like a fair amount, because I know people think about what that represents as a kind of percent discount to booked price. But is it fair to say that a lot of your FCCs at this point are not the bonus FCCs that represent a discount but are just dollar amounts where somebody rescheduled their cruise or canceled it and moved to a later date? In other words, what you call FCC does not automatically mean that that represents a discounted FCC? If you could kind of quantify that?

Yes, I think that's right. Most of the FCC applications are what we call our Lift & Shift program, and then the balance are the FCCs where there is a bonus value, such as 25% extra value. That Lift & Shift program in general has been working relatively well. For the most part, our guests want to go on their vacations. They typically want to go around the same time that they were planning on going, and they're lifting and shifting that to periods of time that are in the same zone of when they were planning on vacationing before, just a year later or a quarter later, etc.

And Robin, it's Naftali. Just to answer your question, it is 50%. We're very pleased with that, and we've seen progress in the last quarter, both in redemption as well as just new bookings.

Your next question is from Steve Wieczynski of Stifel.

I'm going to start with a quasi-guidance question. I understand you're not giving guidance for the year. Last quarter, you talked about being earnings positive for the full year. Now you're saying the first half still will be generating losses and the back half of the year going positive. So do you still think it's possible for the full year to wind up being positive even with all the variant headwinds that have occurred so far? And then the second part of that question is, did you guys contemplate or are you still contemplating helping us think about the long-term prospects for this business over the long term, either through long-term guidance or targets or similar?

On the first question, Steve, we are not an organization that gives up based on an event like Omicron. We are taking all efforts to ensure that we maximize our profitability each quarter and each year. Omicron will weigh heavily on the first quarter and a little bit of the beginning of the second quarter. As bookings start to come in, how we can improve on the first quarter and the second quarter will dictate whether we're positive or negative on the earnings side. We're focused on it, but there has certainly been pain. The cancellations of those 50-plus sailings weigh heavily on the first quarter from a profitability standpoint. On the second question, we are certainly looking past COVID. We believe we are past COVID in terms of the overall impact on our business and we're focused on our healthy return to service. This is a great business with great brands and great ships. As we get our load factors up to historical levels and we start getting predictable quarters and patterns, I do believe we will come out and provide long-term programs and metrics related to the overall business. We're going to wait until we're in a more predictable state before providing that long-term guidance.

Okay, got you. And then the second question: how do you guys think about changing COVID mandates on board? I assume there are folks out there that still don't want to cruise either because of testing or mask mandates and are waiting for those to be removed or eliminated. What are you watching and what would give you the confidence to start removing some of those mandates? And what do you think that would ultimately do to bookings and demand?

Steve, it's Michael. That's an important consideration in terms of the protocols we have in place and how the customer perceives them. In many ways, the protocols were perceived as a positive during the time of COVID. Destinations and countries are beginning to ease restrictions and we believe we will start moving to a new normal. For example, Brits returning to the U.K. no longer require testing, and other countries like Denmark and Sweden have followed similar paths. We believe we'll see more of this over the coming weeks. With Omicron, the decrease in positivity is significant, both in certain U.S. states and onboard our ships, and we believe we're moving into a much more positive environment. As we get into that environment, we'll work with the CDC and start removing many of the protocols that exist today, making it easier and simpler for our customers. As a point of reference, around 10 million customers visit our Royal Caribbean International website every month, and around 400,000 or so visit our health and safety section. You can see as people's anxiety either raises or decreases, that number changes. We also believe that in the not-too-distant future, the CDC Level 4 advisory will be downgraded to Level 3, which would be another positive step.

And Steve, I'll just add that the health and safety of our guests and crew are our number one priority. We're following the science and our protocols are well beyond what has been asked by the CDC and other authorities. Based on the science and public health guidance, we will make changes to our protocols to help ensure that our guests and crew remain safe at all times.

Your next question is from Andrew Didora of Bank of America.

Your marketing and G&A spend were at record levels in Q4. I understand your marketing spend was higher given the restart, but when we think about the Omicron impact and the delay we've seen here, does that mean these costs will stay elevated in the first half of 2022? Any color on the cadence would be helpful.

Thanks, Andrew. We restarted our brand marketing efforts in Q4, which is why you see the elevated spend, and we've seen very good receptivity that generated strong demand. As Omicron started spreading, we've thought thoughtfully about how we spend on sales and marketing. We're within a typical wave season and will continue to adjust our cadence; eventually we expect to return to a more historical range of spending.

That's a key point. Our behavior in terms of marketing activities and how we market is actually very similar to pre-COVID. That pattern and tempo is what you should be thinking about when modeling. Keep in mind we have more capacity than in 2019, but you should expect us to return to typical behavior.

Okay, got it. And then my follow-up: I appreciate you wanting to wait to give long-term guidance until there's more clarity on revenue, but you likely have more clarity on your cost situation, particularly as ships return to service. There have been some puts and takes: cost reductions, and then general inflation. Can you help us think about where your unit cost ex-fuel could be relative to 2019 as you begin to get back to full utilization of your fleet?

I'll start and Naf can jump in. As you consider transitory costs, which will evaporate, the efforts we've made around cost are aimed at lowering our cost per APCD and gaining more margin over time. Many of the savings are being absorbed by short-term transitory costs and some short-term inflationary elements such as food, which we think we can effectively manage.

To add, we also have six new ships that have joined the fleet since 2019 in addition to the cost focus we've had reshaping our structure. As the fleet comes back and load factors build, we are well positioned to improve margins.

One last follow-up: do you think your longer-term non-fuel unit costs can get back to pre-pandemic levels?

We do.

We do.

Your next question is from Ben Chaiken of Credit Suisse.

You talked about load factors being in line with pre-COVID in the third quarter. Just to pick that apart, did you mean in Q3 you'll reach normal? And then one follow-up.

In Q3.

Okay. Can you help with the thought process or data points making you comfortable in that assumption? Is it simply the pace of bookings? Is there any way to approximate how booked you are currently on a percentage basis for Q3 sailings, for example?

We know those numbers very closely, but it's not something we typically guide on. What brings us confidence is Naf's commentary around customer deposits in the back half of the year, especially for Q3 relative to 2019, and the booking activities we've seen. So it's not based on hope; it's based on the patterns we are observing today.

That's helpful. Then one more on onboard spend, which has been particularly strong. Is part of this due to lower occupancy so there's more opportunity to spend without lines? Is it pent-up demand, changes in how people book packages, or other factors? Could you help us think about how you view the strength and its persistence into the back half of '22?

Ben, I wish we knew the exact causes, but we've been delighted and initially surprised by the onboard spend. Lower load factors likely created an environment that helped spending. We've seen strength across nearly every category. Our investment in pre-cruise technology over the past 12 months has increased pre-cruise penetration significantly. We're in a very positive environment. Savings rates were higher and credit card debt was lower in 2020 and 2021, so people are in a good financial position. Net Promoter Scores are at record highs, and many customers are opening their wallets across categories.

To add, when Michael talks about categories, it's two dimensions. Whether it's a guest in an inside stateroom or in the Ultimate Family suite, we're seeing all guests over-index on historical spend. Every revenue area—spa, retail, casino, F&B—has been outperforming significantly. I don't know exactly how much is volume, mix, or consumers with more money, but the trends are very positive. We have continued to invest in our pre-cruise and e-commerce platform, which not only makes it easier to transact but allows us to yield manage and drive margin improvements.

One final point: as a rule of thumb, every $1 of pre-cruise spend drives roughly an incremental $0.50 of onboard spend. That has held true for some time.

Your next question is from Jaime Katz of Morningstar.

I have a couple of bigger picture questions. First, can you unpack any of the supply chain constraints you're seeing? I know in the past you mentioned sourcing different food items from different places—are those issues easing or still problematic? And then can we talk about China a little bit: what does the road to reopening look like, are there hurdles we need to clear, and how has the opportunity set changed now that Genting Hong Kong is in flux?

Our main inflationary impacts are food and fuel. We've also seen some shipping lane costs, but the cost of these items has begun to moderate as we and our suppliers anticipated. It's not back to pre-COVID levels, but it's moving in the right direction, and we have many longer-term fixed contracts on commodities, so we've been patient to update those until trends stabilize.

Jaime, regarding China, it's been a long journey with ups and downs. There's a belief that after the Olympics there may be more positive news from China. We've redeployed capacity out of China, which allowed us to position Wonder of the Seas in the U.S. and Europe, and demand for Wonder has been incredibly strong. There is opportunity with Genting exiting the stage; our Asia teams are planning to leverage those opportunities. Our appetite for China hasn't shifted: we see huge upside and will continue our efforts once the situation becomes more positive.

Your next question is from Stephen Grambling of Goldman Sachs.

Congrats Jason and Naftali on the roles. Maybe following up on the earlier question on long-term earnings potential: as we look back to 2019, can you remind us of some of the big exogenous impacts or factors that may have hit the headline earning number as we contemplate a base to build off of in a normalized environment? Also, any color on new-to-cruise versus core customer booking trends and what cancellations looked like by customer type?

From memory, 2019 did not have many large one-offs. We did have a write-off related to the Grand Bahama Shipyard and some impact from sailings there, but there weren't a lot of one-offs that would materially affect 2019's headline earnings.

A good proxy for new-to-cruise versus loyalty is what we saw when we came out of Delta: loyalty initially led the way and new-to-cruise lagged by about four to six weeks, then evened out to normal levels. Pre-cruise product and short cruises are appealing to new-to-cruise, and Perfect Day at CocoCay has been generating significant demand and premium with new-to-cruise. We expect new-to-cruise to lag initially but return as recoveries progress.

On cancellations, most cancellations were driven by guests or traveling companions testing positive for COVID prior to sailing, which accounted for the vast majority of cancellation activity. Some customers shifted bookings from late December and early January into future periods, but that was the main driver.

One housekeeping question: can you give a little more detail on CapEx split between maintenance and new ships this year and maybe color for next year?

We expect roughly $3.1 billion of capital expenditures this year. We are taking two deliveries; we already took Wonder of the Seas and will take Celebrity Beyond. There are also progress payments towards future deliveries, and a significant part of this number is related to newbuilds. We've been disciplined about capital allocation to maintain financial stability while investing in the future.

As a reminder, all the newbuilds, including Wonder and Beyond and the future units, have committed financing to them.

Your next question is from Fred Wightman of Wolfe Research.

Could you summarize the big differences between Omicron and Delta so far, whether that's peak-to-trough booking disruptions, speed of recovery, and how that informs expectations for any future variants?

The big difference between Delta and Omicron was primarily the operational impact. Omicron spread more quickly and caused operational disruptions, but our protocols and crews managed the situation effectively. On bookings, we saw a similar pause and then a similar recovery as with Delta. Omicron had more impact on shorter-term sailings, primarily affecting upcoming cruise periods in Q1.

I would add that Omicron swept through the fleet quickly, but the protocols we developed with the CDC were incredibly effective. Across the fleet, nearly all crew positivity was asymptomatic or extremely mild—about 99%—and operational impact was mostly related to the quarantine period rather than severe illness. That demonstrates the effectiveness of the mitigation measures.

That also builds on the environment where our crew are vaccinated and, if eligible, boosted. We're doing our best to ensure cruising remains one of the safest experiences available.

Could you build out a little more on U.K. booking trends you alluded to? It sounds like they're further along than the U.S. and have continued to improve into pre-Omicron levels—any more detail?

Across markets, behavior is similar: when a market peaks in cases, bookings decline; as cases decline, bookings return. The U.K. led in recovery because it was ahead on the Omicron curve, and we saw booking activity return and accelerate as infection rates dropped. The pattern in the U.K. is similar to what we saw with Delta and what we're seeing now in the U.S.: lower positivity correlates with higher bookings.

Your next question is from Vince Ciepiel of Cleveland Research.

Revenue per cruise day remains up low double digits. Can you help us understand ticket prices on an apples-to-apples basis relative to 2019 based on what you saw in the fourth quarter? Short-term rentals and resorts are pricing 20% to 25% ahead—are your ticket prices that far ahead, or where are they now? And how can you close the gap with land-based alternatives over the next year?

The improvement in revenue shows up in ticket and onboard. Part of the difference is getting to a consistent operating environment, which is key to consistent demand. As we stabilize operations, we expect to see trends similar to other land-based vacation experiences. Over the back half of the year, we expect similar trends on pricing and demand to what some land-based experiences are seeing.

On fuel, your 1Q guide was nearly 40% ahead of 2019 per ton. MGO and IFO are up about 25% to 30%, so is some of the increase attributable to mix, perhaps burning more MGO? Can you remind us your fuel mix expectations for 2022 compared to 2019?

Fuel prices are up from 2019. We hedged a little over half of our fuel at lower market prices in the last couple of months, so we are benefiting from those hedges. In the short term, our mix is skewed more toward MGO, but that should normalize throughout the year.

We have time for one more question. Your final question is from Patrick Scholes of Truist Securities.

In your prepared remarks and press release, you talked about bookings since the beginning of '22 now back to pre-Omicron levels. Could you give a bit more apples-to-apples color? We're in wave season and normally bookings would be well above pre-Omicron by now—how did January compare apples-to-apples versus a comparable 2019 booking pace?

We said 'pre-Omicron levels' meaning pre-Omicron in late 2021. Where we were pre-Omicron, bookings were accelerating each week and month. Then as Omicron rose, bookings declined, particularly impacting Q1 and early Q2. The point of saying bookings returned to pre-Omicron levels was to show the build throughout January despite elevated Omicron cases. Now that we are on the other side of the peak, we've seen bookings rebound and return to the pace we had before Omicron, and we expect to continue regaining momentum through the wave season.

When you say pre-Omicron levels, do you mean pre-Omicron as in October/early November of last year rather than pre-2019 comparability?

The latter—pre-Omicron in late 2021. Remember that during Cyber Monday and Black Friday we saw an accelerated pace and our best weekend there.

Thank you, and thanks to Shelby for assistance with the call today. We appreciate your participation and interest in the company. Michael will be available for any follow-up you might have. 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.