Royal Caribbean has spent nearly 60 years putting people on ships. Sandals has spent more than four decades catering to customers on Caribbean beaches.
For most travelers, those were two separate choices. You either sailed from island to island, or you unpacked once and stayed put at a resort.
Now, Royal Caribbean (RCL) wants guests to stop planning one big trip and start planning a lifetime of them, all inside the same family of brands.
And the cruise giant has found a way to take that idea off the water.
Why loyal guests matter for RCL stock
To understand the deal, let’s start with how Royal Caribbean Group operates today.
The company runs 71 ships across three wholly owned brands: Royal Caribbean, Celebrity Cruises, and Silversea.
It also owns private destinations, including Perfect Day and the Royal Beach Clubs. In 2027, it will enter river cruising with Celebrity River Cruises.
The common thread is repeat business.
Also Read: Royal Caribbean beats Carnival in one major area
On the company’s second-quarter earnings call on July 28, CEO Jason Liberty said spending for repeat guests increases by 20% to 25%. Holders of its new Royal ONE credit card are twice as likely to sail more than once.
While talking about river cruises, Liberty explained why adding new kinds of trips is key. “Now for us to be able to offer them another vacation experience that is typically not a substitute, it’s an additional vacation, we feel very encouraged by that level of demand that we’re seeing.”
In plain terms, a new product doesn’t steal a cruise booking. It adds another trip to the calendar.
RCL stock adds a $3 billion resort bet
On Sept. 23, Royal Caribbean Group confirmed it will buy a 50% stake in Sandals Resorts and Beaches Resorts.
Here is how the deal works:
Price: About $3 billion for half of the business.
Valuation: About 10 times forward EBITDA (earnings before interest, taxes, depreciation, and amortization). Simply put, Royal Caribbean is paying about 10 times the annual operating earnings its stake is expected to generate.
Funding: Committed debt financing from Morgan Stanley.
Timing: Expected to close in early 2027, subject to approvals.
Payoff: Expected to add to earnings next year.
The partnership allows Royal Caribbean to unlock a new revenue stream and enter the $2 trillion global vacation market.
Sandals is the adults-only resort brand. It has beachfront properties in Jamaica, Antigua, Saint Lucia, The Bahamas, Barbados, Grenada, Curaçao, Saint Vincent, and The Grenadines.
Beaches is the family brand, with resorts in Negril, Jamaica, and Turks and Caicos. More are coming to Exuma, Barbados, Runaway Bay, and Saint Vincent and the Grenadines.
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“Our partnership with Sandals and Beaches Resorts is an important next step on that journey,” Liberty said in the statement. “Together, we see tremendous opportunity to expand the reach of Sandals and Beaches Resorts and continue turning the vacation of a lifetime into a lifetime of vacations.”
This deal is also about a founder’s dream.
Gordon “Butch” Stewart founded Sandals. His son, Adam Stewart, now serves as executive chairman of Sandals Resorts and Beaches Resorts.
“My father, Gordon ‘Butch’ Stewart, founded Sandals Resorts with the belief that a company built in the Caribbean could stand on the world stage alongside the most respected names in hospitality. Today is proof of how far that vision can go,” Stewart said.
He sees the partnership as a way to grow faster with a partner that shares his company’s values.
“The future has never been brighter, and I know this moment would make my father incredibly proud,” he added.
Stewart and Liberty will share leadership of the joint venture’s board, and Stewart will keep guiding the resort company’s growth.
Existing reservations, loyalty programs, resort operations, and cruise operations will continue as usual.
Royal Caribbean CEO Jason Liberty aims to diversify the cruise line’s revenue.Bloomberg / Getty Images
What the Sandals and Beaches deal means for RCL stock price
A $3 billion purchase paid for with debt raises a fair question: Can Royal Caribbean afford it?
Its latest results suggest it has room to move. Second-quarter revenue grew 6% from a year earlier. Adjusted earnings per share came in at $4.21, which was $0.33 above the midpoint of its guidance.
Related: Royal Caribbean shares disappointing news on cruise prices
The company ended the quarter with $6.9 billion in liquidity, meaning cash and credit it can draw on. Leverage was below three times.
Management also raised its full-year outlook. It now expects adjusted earnings per share of $17.73 to $17.87, up 14% year over year.
On the same call, Liberty described how the company thinks about spending.
“We continue to believe that we drive tremendous shareholder value with moderate yield growth, strong cost control, and being very discerning about how we invest our capital and how we return capital to shareholders,” he said.
The deal won’t close until early 2027 and still needs approvals. Royal Caribbean is also taking on new debt, which could make investors nervous amid rising interest rates. And this year, the conflict in the Middle East weighed on some European bookings.
Still, the story is easy to follow.
Royal Caribbean’s ships have sailed past Caribbean beaches for decades. Soon, some of those beaches could belong to the same vacation family.
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