Sandals, Royal Caribbean seal 50-50 deal

WESTERN BUREAU:

Royal Caribbean Group and Sandals Resorts have sealed a landmark 50-50 partnership, ending speculation that the global cruise giant would acquire majority ownership of the Jamaica-born resort company.

The agreement, confirmed last night after a day of intense market speculation, will see Royal Caribbean invest approximately US$3 billion for a 50 per cent equity interest in Sandals and Beaches Resorts.

The deal brings together two of the Caribbean's most powerful vacation businesses and gives Sandals additional resources to accelerate expansion, while providing Royal Caribbean with an immediate foothold in the lucrative all-inclusive resort market.

For Sandals Executive Chairman Adam Stewart, however, the partnership carries particular significance, validating a vision his late father, Gordon 'Butch' Stewart, had when he started Sandals in Montego Bay more than four decades ago.

“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.

“This partnership is the natural next step in building on that conviction.”

Stewart said Royal Caribbean's investment will give Sandals the ability to grow faster while preserving the values and identity on which the company was built.

“It gives us the ability to grow faster with a partner that shares our values of exceptional hospitality, long-term investment, and the power of enduring brands,” he said.

“Together, we will introduce more guests to Sandals and Beaches Resorts while creating even more extraordinary experiences for those who have made our resorts part of their lives for decades.”

Royal Caribbean Group Chairman and CEO Jason Liberty sees the transaction from the other side of the equation — bringing a highly recognised all-inclusive resort portfolio into a vacation platform that already stretches across oceans, private destinations and, beginning next year, river cruising.

Royal Caribbean Group operates 71 ships through Royal Caribbean, Celebrity Cruises and Silversea, serving more than 1,000 destinations across all seven continents. It also has a 50 per cent joint venture interest in TUI Cruises.

“For nearly 60 years, we've reimagined what a vacation can be, constantly expanding the ways we inspire our guests to explore, connect and create lifelong memories,” Liberty said.

He described the Sandals partnership as an “important next step” in Royal Caribbean's evolution.

“The Stewart family has created powerful and beloved brands, and we are honoured to build on that legacy,” Liberty said.

“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.”

The companies are targeting a global vacation market they estimate at approximately US$2 trillion, with Royal Caribbean looking beyond its traditional cruise business and Sandals seeking to satisfy growing international demand for its resorts.

Under the partnership, they will explore opportunities to broaden distribution, deepen guest engagement and make it easier for travellers to discover experiences across their respective portfolios.

That could ultimately create considerably greater crossover between Royal Caribbean's cruise passengers and Sandals and Beaches' resort guests.

In an interview with Travel Weekly ahead of the announcement, Liberty indicated that the companies also see potential to connect their loyalty programmes, allowing guests' status with one company eventually to be recognised by the other.

Significantly, the confirmed terms differ from speculation circulating Tuesday that Royal Caribbean would acquire a 51 per cent interest in Sandals.

Instead, the companies have agreed on an equal partnership.

The joint venture will be governed by a board under the shared leadership of Stewart and Liberty, while Stewart will remain executive chairman of Sandals and Beaches Resorts and continue guiding the company's long-term strategic growth.

Existing reservations, loyalty programmes, resort operations and Royal Caribbean's cruise operations will continue as usual.

Royal Caribbean has secured committed debt financing from Morgan Stanley to fund the approximately US$3-billion investment, which represents a forward EBITDA multiple of approximately 10 times.

The transaction is expected to close in early 2027, subject to customary approvals and closing conditions, and Royal Caribbean expects it to be accretive to earnings next year.

For Stewart, the partnership's future growth will not mean abandoning Sandals' Caribbean roots.

“As we continue to grow, we will remain true to what has always defined us: delivering authentic vacations that exceed expectations while creating opportunities for our team members, travel advisor partners and the communities we call home,” he said.

“The future has never been brighter, and I know this moment would make my father incredibly proud.”

janet.silvera@gleanerjm.com

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