OneSpaWorld Q2 2025 Earnings Call Transcript

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Provided by Quartr
July 30, 2025

Key Takeaways

  • Positive Sentiment: Total revenues rose 7% to $240.7 million in Q2, while net income jumped 27% and adjusted EBITDA climbed 13% year-over-year.
  • Positive Sentiment: The company affirmed its full-year 2025 revenue guidance (up high single digits) and raised its adjusted EBITDA outlook to $117 million–$127 million.
  • Positive Sentiment: OneSpaWorld is piloting AI-driven yield optimization and automation initiatives to boost revenue recommendations and enhance operational efficiency, targeting margin expansion in 2026.
  • Positive Sentiment: The quarter included new and renewed cruise partnerships, adding health and wellness centers on seven ships in H2 and expanding MediSpa offerings to 147 vessels.
  • Positive Sentiment: With $36.2 million in cash, $86.2 million total liquidity, a $75 million share buyback authorization and a quarterly dividend of $4.1 million, the balance sheet supports capital returns and growth investments.
AI Generated. May Contain Errors.
Earnings Conference Call
OneSpaWorld Q2 2025
00:00 / 00:00

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Operator

Good day, and welcome to the OneSpaWorld Second Quarter twenty twenty five earnings call. All participants will be in listen only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by 0. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then 1 on your telephone keypad.

Operator

To withdraw your question, please press star then 2. Please note this event is being recorded. I would now like to hand the call over to Allison Malkin of ICR. Please go ahead.

Allison Malkin
Partner at ICR

Thank you. Good morning, and welcome to One Star World's Second Quarter twenty twenty five Earnings Call and Webcast. Before we begin, I'd like to remind you that certain statements and information made available on today's call and webcast may be deemed to constitute forward looking statements. These forward looking statements reflect our statements and analysis only as of today, and actual results may differ materially from current expectations based on a number of factors affecting our business. Accordingly, you should not place undue reliance on these forward looking statements.

Allison Malkin
Partner at ICR

For a more thorough discussion of the risks and uncertainties associated with the forward looking statements to be made in this conference call and webcast, we refer you to the disclaimer regarding forward looking statements that is included in our second quarter twenty twenty five earnings release, which was furnished to the SEC today on Form eight ks. We do not undertake any obligation to update or alter any forward looking statements, whether as a result of new information, future events or otherwise. In addition, the company may refer to certain adjusted non GAAP metrics on this call. An explanation of these metrics can be found in our earnings release issued earlier this morning. Joining me today are Leonard Fluxman, Executive Chairman and Chief Executive Officer and Steven Lazarus, President, Chief Operating Officer and Chief Financial Officer.

Allison Malkin
Partner at ICR

Leonard will begin with review of our second quarter twenty twenty five performance and provide an update on our key priorities. Then Stephen will provide more details on the financials and guidance. Following our prepared remarks, we will turn the call over to the operator to begin the question and answer portion of the call. I would now like to turn the call over to Lenis.

Leonard Fluxman
Leonard Fluxman
CEO, President & Executive Chairman at OneSpaWorld

Thank you, Alison. Good morning, and welcome to OneSpa World's second quarter twenty twenty five earnings conference call. It's a pleasure to speak to you today to share better than expected second quarter results, which completed a strong first half of the year for our company. Our ongoing strength reflects the efforts of our outstanding team that continues to leverage our powerful global operating platform and our strategic investments to drive innovation, productivity, and profitability across our operations. Highlights of our second quarter were total revenues increased 7% to a record $240,700,000 compared to $224,900,000 in the 2024.

Leonard Fluxman
Leonard Fluxman
CEO, President & Executive Chairman at OneSpaWorld

Income from operations increased 17% to a record $22,100,000 compared to $18,800,000 in the 2024. Net income increased 27% to $19,900,000 compared to $15,800,000 in the 2024, and adjusted EBITDA increased 13% to a record $30,500,000 compared to $27,100,000 in the 2024. At quarter end, we operated health and wellness centers on 200 ships with an average ship count of 101 for the quarter, which compares with a total of 197 ships and an average ship count of one eighty eight at the end of the 2024. Also, at the quarter end, we had 4,365 cruise ship personnel on vessels compared with 4,300 cruise ship personnel on vessels at the end of the 2024. The quarter marked meaningful progress on our key priorities, and I'm gonna share some of those highlights with you.

Leonard Fluxman
Leonard Fluxman
CEO, President & Executive Chairman at OneSpaWorld

First, we captured highly visible new ship growth with current cruise line partners and added new cruise line partnerships to our fold. We continue to solidify our market leadership during the quarter, renewing our partnership with Windstar Cruises and introducing a new health and wellness center onboard the newly launched Oceana Allura. For the year, we remain on track to introduce health and wellness centers on an additional seven new ship builds commencing voyages in the second half of the year. Second, we continue to expand higher value services and products. These higher value services including MediSpa, IV therapy and acupuncture to name a few, helped to grow sales productivity.

Leonard Fluxman
Leonard Fluxman
CEO, President & Executive Chairman at OneSpaWorld

In the quarter, we continued to introduce these services to more ships and expand offerings with the latest innovations adding to our growth. To this end, we continued to elevate the innovation in our MediSpa services with the expansion of our rollout of next generation technology with Surmaj FLX and CoolSculpting Elite, which offer improved results and reduced treatment time by up to 50%. These new technologies generated over 20% growth for these treatments in Q2 versus last year. In addition, acupuncture remains a sought after service with very strong adoption of LED light therapy as a high conversion add on treatment. At quarter end, MediSpa services were available on 147 ships, up from one forty four ships at the end of twenty twenty four second quarter.

Leonard Fluxman
Leonard Fluxman
CEO, President & Executive Chairman at OneSpaWorld

We continue to expect to have MediSpa offerings on a 151 ships this year. Third, we focused on enhancing health and wellness center productivity. This is best reflected in the delivery of across the board growth in key operating metrics, including revenue per passenger per day, weekly revenue, precruise revenue, and revenue per staff per day driven by one, staff retention, which remains a key contributor to our consistent gains in operating metrics as experienced team members are driving incremental revenue through more effective customer recommendations. We continue to invest in best in class training and have recently redesigned our talent management process to further support productivity and long term growth in our operating metrics. Our enhanced sales training continues to fuel increases in the number of guests using the SPA, service frequency, service spend, and retail and average spend per guest.

Leonard Fluxman
Leonard Fluxman
CEO, President & Executive Chairman at OneSpaWorld

Additionally, prebooking revenue as a percentage of services remained strong at 23%. During this quarter, we introduced prebooking on Azimara Cruises. Fourth, we ended the quarter with a very strong balance sheet, which allowed us to invest in our growth while returning value to shareholders through our quarterly dividend payment. We remain confident in our outlook as we begin the second quarter of the year with our business continuing its favorable momentum at the start of the third quarter. In addition to the introduction of seven new health and wellness centers beginning the voyages through the remainder of 2025, we are also excited by developing initiatives employing emerging AI technologies to enhance our unique global positioning towards delivering increased exceptional experiences for our guests and service to our partners.

Leonard Fluxman
Leonard Fluxman
CEO, President & Executive Chairman at OneSpaWorld

We believe this along with continued discipline with which we execute our asset light business model positions us well to deliver strong results for our stakeholders and shareholders in fiscal twenty twenty five and beyond. As Stephen will share momentarily, we have affirmed our annual revenue guidance and have increased our 2025 adjusted EBITDA guidance. With that, I will turn the call over to Stephen, who will provide more detail on our second quarter results and guidance. Stephen?

Stephen Lazarus
Stephen Lazarus
President, CFO & COO at OneSpaWorld

Thank you, Leonard. Good morning, everyone. We are indeed pleased with our second quarter performance, which saw total revenue increase 7%, adjusted EBITDA rise 13% with continued strong and predictable cash flow generation. We continue to expand our innovation, products and services and leverage our strong operating platform and technology enhancements, which enabled us to deliver revenue growth at increasing rates of profitability. Additionally, our capital efficient asset light business model predictably generates strong free cash flow, fueling the return of 4,100,000 to our shareholders through our quarterly dividend.

Stephen Lazarus
Stephen Lazarus
President, CFO & COO at OneSpaWorld

We are very excited to be making strides in embracing AI within OneSpa world. We are currently piloting an AI driven initiative focused on increasing revenue by enhancing yield improvement through machine learning powered recommendations and algorithmic optimization. And in parallel, we are advancing a second group initiative centered on efficiency and automation using AI to streamline operations, reduce manual effort, and drive scalable process improvements across the organization. Turning now to a review of the quarter. Total revenue increased 7% to $240,700,000 compared to $224,900,000 for the 2024.

Stephen Lazarus
Stephen Lazarus
President, CFO & COO at OneSpaWorld

The increase in service revenue and product revenues were driven by a 4% increase in average guest spend, which positively impacted revenue by $8,500,000 a 1% increase in revenue days, which positively impacted revenue by $4,500,000 and fleet expansion, which contributed $3,500,000 Contributing to the increased volume and spend was $2,700,000 in increased prebooked revenue at our health and wellness centers including included in our ship count as of 06/30/2025. This was partially offset by a $900,000 decrease in our land based spa business, partially due to the closure of hotels where we had previously operated. Cost of services increased 10,400,000 attributable to the $12,500,000 increase in service revenue and cost of product increased $2,800,000 attributable to the $3,300,000 increase in product revenue versus prior quarter. Salaries and benefits were $8,800,000 compared to $9,200,000 in the 2024. The decrease was primarily due to a $700,000 decrease in incentive based compensation expense versus the 2024.

Stephen Lazarus
Stephen Lazarus
President, CFO & COO at OneSpaWorld

Net income was $19,900,000 or net income per diluted share of $0.19 compared to net income of 15,800,000.0 or net income per diluted share of $0.15 for the 2024. The change was primarily attributable to a $3,300,000 increase in income from operations and a benefit from a $800,000 decrease in net interest expense. The decrease in interest expense was primarily due to lower debt balances and a lower effective interest rate. Adjusted net income was $25,800,000 or adjusted net income per share of $0.25 as compared to adjusted net income of $21,700,000 or adjusted net income per diluted share of $0.20 for the second quarter of prior year. Adjusted EBITDA improved to $30,500,000 compared to adjusted EBITDA of $27,100,000 in the second quarter of last year.

Stephen Lazarus
Stephen Lazarus
President, CFO & COO at OneSpaWorld

Moving on to the balance sheet, we continue to possess a strong balance sheet at quarter end with total cash of $36,200,000 after paying the $4,100,000 in support of our quarterly dividend. In addition, we had full availability on our $50,000,000 revolving loan facility, giving us total liquidity of $86,200,000 as of quarter end. Total debt net of deferred financing costs was $96,200,000 as of quarter end compared to $98,600,000 as of 12/31/2024. Also at quarter end, we had full availability of our $75,000,000 share repurchase authorization. We expect a disciplined execution of our growth initiatives and strong cash flow generation driven by our asset light business model to enable the payment of ongoing quarterly dividends while evaluating opportunities to repurchase our shares under the $75,000,000 authorization and to retire debt.

Stephen Lazarus
Stephen Lazarus
President, CFO & COO at OneSpaWorld

We believe this positions us well to create long term value for our stakeholders. Turning to guidance, as we look ahead, we are excited about our business and continue to expect total revenue for fiscal twenty twenty five to increase in the high single digit range, reflecting our strong first half performance and our positive outlook, as well as the addition of seven new health and wellness centers on cruise ships beginning voyages during the second half of this year. Adjusted EBITDA is now expected to increase by 9% at the midpoint of our guidance as we deliver increased productivity from our enhanced products and services. Our guidance does not assume a significant deterioration in guest spending on board or a slowdown in cruising activity. For the fiscal year 2025, we expect total revenue in the range of $950,000,000 to $970,000,000 and adjusted EBITDA is expected in the range of $117,000,000 to $127,000,000 which represents an increase from our previous range for adjusted EBITDA of $115,000,000 to $125,000,000 For the 2025, we expect total revenue in the range of $255,000,000 to $260,000,000 and adjusted EBITDA is expected in the range of $33 to $35,000,000 With that, Andrea, if you could please open the call to questions.

Operator

We will now begin the question and answer session. To ask a question, you may press star then 1 on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the key. To withdraw your question, please press star then 2. Please limit yourself to one question and one follow-up.

Operator

If you have further questions, you may reenter the question queue. And our first question comes from Steve Wieczynski of Stifel. Please go ahead.

Steven Wieczynski
Steven Wieczynski
Managing Director at Stifel Financial Corp

Hey, guys. Good morning. So Leonard or Steven, want to dig in a little bit more around some of the strategies that sounds like are going to help you enhance your profitability, which sounds like it's very much AI driven. Look, to us, OneSpileWorld in terms of the story was never really about margin enhancement given the revenue share agreements, but sounds like that now might be changing. So I guess what I'm trying to understand here is just maybe how material this could be over time in terms of improvement, whether that's in flow through or margins, whichever way you wanna to think about it?

Stephen Lazarus
Stephen Lazarus
President, CFO & COO at OneSpaWorld

Yeah, Steve, good morning. Let me take that question because I think it's a really, really state of exciting initiatives that we're working on and throughout the organization, there's tremendous optimism. So we break it down broadly into two categories. On the one hand, there is specific focus on yield improvement and driving revenue on board through AI, machine learning, algorithmic recommendations, and optimization, which we are currently piloting. It is proprietary once for a world intellectual property that has been built, and the initial results are optimistic, and we hope it will help us expand revenue opportunity on board.

Stephen Lazarus
Stephen Lazarus
President, CFO & COO at OneSpaWorld

But in terms of margin, the opportunity primarily lies below the line in efficiency and automation. And that that is where, through a second set of initiatives, we're doing multiple things. We're using Agenic AI cross platform automate automation, for example, email agents, calendar agents, presentation agents, to name a few, which will drive productivity. They will help us scale our operations without having to add people, and we hope will ultimately lead to increased flow through. There's also GenAI enhanced knowledge work and documentation query, some of which is already in place, for example.

Stephen Lazarus
Stephen Lazarus
President, CFO & COO at OneSpaWorld

And so just one quick example. Right? Instead of somebody having to call in and and inquire about what their benefits might be or leave policy might be and having to take somebody's time to answer that, The system now will answer that for you literally in one minute. So it's all really good. It's really exciting.

Stephen Lazarus
Stephen Lazarus
President, CFO & COO at OneSpaWorld

We've added five new employees to this project, people that are focused and specialized on this, a director, a data scientist, a data architect, an AI business analyst, and a software integration engineer. So people that are super smart and we believe will ultimately help us take a really nice step forward overall in this entire arena.

Steven Wieczynski
Steven Wieczynski
Managing Director at Stifel Financial Corp

So will the brunt of this be kind of seen or more out into 2026? Is that kind of the way we should think about it?

Stephen Lazarus
Stephen Lazarus
President, CFO & COO at OneSpaWorld

Yes. That is the way you should think about it. Exactly.

Steven Wieczynski
Steven Wieczynski
Managing Director at Stifel Financial Corp

Okay. And then second question, just want to ask about the revenue guidance for the year in terms of maintaining that. It seems like spend rates, attachment rates, pre booking, I mean, seem to be really strong through it sounds like in terms of your commentary through July. So just trying to understand maybe what kinda keeps you from not raising that range now or at least, you know, even upping the low end of that range. And that's all for me. Thanks, guys.

Stephen Lazarus
Stephen Lazarus
President, CFO & COO at OneSpaWorld

Yes. So we we continue to remain very comfortable around where the consumer is at, demand on board, and how we are progressing from a revenue optimization standpoint. Really, what it comes down to is the introduction of the timing of the new vessels and the majority of those coming out in the fourth quarter and perhaps later in the fourth quarter. So that is all it comes down to, Steve, is just timing of when we expect ships to be coming into service.

Steven Wieczynski
Steven Wieczynski
Managing Director at Stifel Financial Corp

Okay. Fair enough. Thanks, guys. Appreciate it.

Operator

The next question comes from Max Rohanclough of TD Cowen. Please go ahead.

Max Rakhlenko
Managing Director at TD Cowen

Hey, thanks a lot guys and congrats on a really nice second quarter. So my first question is just wanted to dig down a little bit more in terms of what you're seeing in the state of the consumer and the onboard spend. Any changes or leading indicators that you guys normally follow that help inform your review on the state of the consumer and just how that's impacting your outlook for the second half here?

Leonard Fluxman
Leonard Fluxman
CEO, President & Executive Chairman at OneSpaWorld

So I think the way in which we look at it is through the metric lens, Matt. And that's basically saying, are our operational metrics and financial metrics on board continuing to indicate strength in the consumer, not only in terms of demand, but the actual spend itself. And all of those metrics were positive and remain positive and a lot of the positive spend in the quarter contributed to the over delivery. So we are we're not sitting on our laurels here saying that we have the best consumer, but we have a very, very strong consumer on board through the summer season here into the third quarter, which is a transition quarter, but the quarter's got off to a good good start or ending with a with a sort of a straddle cruise here. But so far, good.

Leonard Fluxman
Leonard Fluxman
CEO, President & Executive Chairman at OneSpaWorld

We have not seen any deterioration for the first six months in consumer spend. So we remain very optimistic about the health of consumer.

Max Rakhlenko
Managing Director at TD Cowen

Okay. That's awesome. And then just on capital allocation, so a two parter. First, how are you thinking about cash deployment on repurchases? And just a framework for us to consider given sort of what we saw in 1Q versus 2Q?

Max Rakhlenko
Managing Director at TD Cowen

And then separately, this is now the fourth quarter since you launched your dividend. So should we assume that it's a growth dividend and we'll see a step up next quarter? Or how are you approaching the dividend from here? Thanks a lot.

Stephen Lazarus
Stephen Lazarus
President, CFO & COO at OneSpaWorld

Capital allocation strategies, Max, have not changed. We remain focused in order of precedent on stock buyback, then dividend and debt repurchase and reiterate that those do not have to be mutually exclusive. We did indeed not buy back any stock in the quarter. Obviously, you're aware of that. We have talked about the stock purchases being opportunistic and buying on weakness. The stock performed really, really well.

Stephen Lazarus
Stephen Lazarus
President, CFO & COO at OneSpaWorld

It dropped off a little bit just in the last day or so, but recognizing obviously we're in a blackout period. So we will remain opportunistic and repurchase shares as we deem appropriate for the organization and perhaps when there's some softness in the stock as it relates to the dividend. Yes, you're correct. We have talked about next quarter would be the anniversary of when it was initiated. And so an increase at that time would be the most opportune timing for us.

Max Rakhlenko
Managing Director at TD Cowen

Great. Thanks a lot, guys. Best regards.

Stephen Lazarus
Stephen Lazarus
President, CFO & COO at OneSpaWorld

Thanks.

Operator

The next question comes from Tanya Anderson of William Blair. Please go ahead.

Tania Anderson
Equity Research Associate at William Blair & Company, L.L.C

Hi. I just wanted to ask a question about the gross margin. It was flat year over year, and I just wanted to know any details on the push and pulls for gross margin for the rest of the year. Thanks.

Stephen Lazarus
Stephen Lazarus
President, CFO & COO at OneSpaWorld

Yes. So gross margin, as you know, because of the variable cost nature of our business on board is something that increases slightly is is something that we feel comfortable about. But as it relates to the current quarter, nothing really of of interest, so to speak. The the slight change was was really due to a mix of of products and services being sold. And then as it relates to the remainder of the year we remain optimistic about consumer spend on board, don't anticipate having to do incremental discounting and or promotions.

Stephen Lazarus
Stephen Lazarus
President, CFO & COO at OneSpaWorld

Having said that though, we don't historically guide specifically on gross margins. We would expect EBITDA margin though to improve a little bit as is reflected in some of the numbers. So we'll see how it plays out, but I think the takeaway should be that we feel good about where things are at and what we anticipate for the remainder of the year.

Operator

The next question comes from Gregory Miller of Truist Securities. Please go ahead.

Gregory Miller
Gregory Miller
Equity Analyst at Truist Securities

Thanks. Good morning. I'd like to first ask about the thermal suites and if you could share some detail on latest trends and spend or behavior. Are you seeing any spend shifts more to the thermal suites of other parts of the wellness operation? Or is thermal suite spend pretty steady?

Gregory Miller
Gregory Miller
Equity Analyst at Truist Securities

And I'm thinking more from a same vessel comparison, not from new vessels or expanded facilities on select ships.

Leonard Fluxman
Leonard Fluxman
CEO, President & Executive Chairman at OneSpaWorld

The thermal suites are definitely continuing to be a high demand. I mean, some of the ships have much larger thermal suites. Clearly, the demand for those thermal suites will change geographically. So Alaska will see a very high utilization just because people like to hang out there and sort of watch the topography as they sit there. But it's also a great way for us to get people into the spa, begin to promote some services, and extend their time in the spa.

Leonard Fluxman
Leonard Fluxman
CEO, President & Executive Chairman at OneSpaWorld

So we would love to see thermal suites on some of the banners become a little larger because there's definitely multi use purposes for the thermal suites. We can actually do IV therapy whilst they're relaxing. We can do a number of other things whilst they're getting prepared for a particular service. So I would say the demand is steady, but seasonally you can see a slight shift upwards, particularly with itineraries such as Alaska.

Gregory Miller
Gregory Miller
Equity Analyst at Truist Securities

Thanks. Shifting to another region of the world, you've had a little more time with Arroya, and I'm curious if you could share any commentary on how that banner is starting to trend or any other expectations you have for either Arroya or Mitsui as that comes online in time.

Leonard Fluxman
Leonard Fluxman
CEO, President & Executive Chairman at OneSpaWorld

Yeah. So these are both very early new brands adjusting to market trends and challenges. Arroya, I think, is starting to look at expanding where they're offering the cruises. I think it's been very much UAE focused. I think they're go and the same for Mitsui.

Leonard Fluxman
Leonard Fluxman
CEO, President & Executive Chairman at OneSpaWorld

I think they're gonna go and do more outreach on a global basis and not just specifically within say Japan or The UAE. So load factors are still a little challenging, not quite where they need to be and I think they'll get there. I think once they open the aperture and start selling cruises on a wider basis, I think so too will the load factors improve, but it's early days.

Stephen Lazarus
Stephen Lazarus
President, CFO & COO at OneSpaWorld

Thank you, Leonard. Yeah. You're welcome.

Operator

The next question comes from Assia Giovina of Infinity Research. Please go ahead.

Assia Georgieva
CEO at Infinity Research

Good morning, guys. Congratulations on a great quarter. I had a couple of questions. We're pretty much caught on occupancy post industry restart, but yet we are seeing some increases at select brands. How important is occupancy to your revenue generation?

Assia Georgieva
CEO at Infinity Research

I understand that most of those additional passengers may be kids, so probably less important than, you know, making sure that we're back to a 100% plus levels of occupancy in general for the cabins. I don't know if that makes sense.

Leonard Fluxman
Leonard Fluxman
CEO, President & Executive Chairman at OneSpaWorld

Yeah. So It does make sense. Your your your question is is is accurate. So is your own answer accurate, which means, yes, during during this time of the year, you do get a lot more kids on board, so load factors are higher because the the kids are all in those additional bunks in single cabins. So we we we typically have that every single year during this time of the year when people go on vacation.

Leonard Fluxman
Leonard Fluxman
CEO, President & Executive Chairman at OneSpaWorld

But during the third, fourth quarter, they settle back to their normalized load factors. But, yeah, load factors continue to hold very nicely.

Assia Georgieva
CEO at Infinity Research

Great. And I think I heard you say that this might not be the best cruise passenger ever, but it's a strong passenger, at this point and no deterioration during the first half of the year. Is that correct?

Leonard Fluxman
Leonard Fluxman
CEO, President & Executive Chairman at OneSpaWorld

No. Let me clarify. What I'm saying is we have a good passenger on board. We certainly see across 200 ships. Clearly, that that's a lot of different passengers.

Leonard Fluxman
Leonard Fluxman
CEO, President & Executive Chairman at OneSpaWorld

And on some ships, you know, it's not your best, but they're still good. So you gotta you gotta use your marketing toolkit a lot more and you gotta be a little bit more outward on your offerings. And so, yeah, on certain of the vessels, it's still a very, very good passenger, but there are stronger passengers on some of the ships, but that's normal. So I'm not saying anything other than the fact that there's a very good consumer on board across all the ships.

Assia Georgieva
CEO at Infinity Research

And the more challenging ones, would those be kind of further down market? Is there any sort of a way to summarize where you're seeing the need for more marketing?

Leonard Fluxman
Leonard Fluxman
CEO, President & Executive Chairman at OneSpaWorld

I think that, you know, it depends on the itinerary, geography. It also depends on the age of the ship or the facilities, etcetera. So all of those typically are challenges. You know, your best passengers go into the ships, and other ships are slightly more discounted, so they go on those. So I think, you know, it's a plethora of opportunity for a guest to pick where they wanna be and, you know, how much they wanna pay for their trip.

Leonard Fluxman
Leonard Fluxman
CEO, President & Executive Chairman at OneSpaWorld

So I don't think this is anything different to what we've seen historically. And it falls in line with, you know, new ships come out, they go into the best itineraries, best passengers, obviously. So, you know, it's it's a it's it's a domino effect where we see best ships coming out and they price the highest, but that's normal. Nothing changes.

Assia Georgieva
CEO at Infinity Research

Great. And can I ask a second question with regard to AI? So I understand it's a below the line help, if you will, on the cost side. And with some of the EBITDA margin expansion for the back half of the year related to these efforts? Or it's too soon to see that?

Assia Georgieva
CEO at Infinity Research

And as part of that Yeah. Yeah. Okay. Thank you.

Leonard Fluxman
Leonard Fluxman
CEO, President & Executive Chairman at OneSpaWorld

No. No. AI will not impact either the revenue opportunities that Steven spoke about or cost efficiencies that clarified as well, we expect that to probably have or start having some kind of an impact that we can measure beginning, I would say, almost the second quarter of next year once we fully rolled out a couple of other initiatives. So we're really in a testing phase right now.

Assia Georgieva
CEO at Infinity Research

Alright. Okay. This makes sense. Is there any logic to try to apply AI tools to the precruise to expanding the precruise portion of the business, or is that more not an issue, but working with the cruise lines in terms of embedding the precruise booking opportunity within their own precruise engines.

Leonard Fluxman
Leonard Fluxman
CEO, President & Executive Chairman at OneSpaWorld

Look. I think there's always opportunity to improve precruise whether we utilize AI or we can get the cruise lines to focus more resources on it. It's a work in progress, I would say, right now. I think there's real opportunity on some of the banners where we're not perhaps quite up to the 23%. So I think our teams are working closely with them.

Leonard Fluxman
Leonard Fluxman
CEO, President & Executive Chairman at OneSpaWorld

To the extent we can get them to incorporate new thinking around AI, obviously, we'd love to do that, but the adoption rate's pretty slow. So we go to the meetings on a quarterly basis, we show them where the opportunity is, and we follow through and see if some of them adopt and some of them don't. So it's one of the number one items. I think they're focused on it, not only in terms of other prepaid opportunities on board, but for us, it's super important to continue to try and get that metric a little higher over time.

Assia Georgieva
CEO at Infinity Research

Sure. Yeah. And last question, could you remind us what sort of a multiple you get for every dollar spent on precruise? I think for the industry, it's generally two and a half times more spend if they book precruise.

Leonard Fluxman
Leonard Fluxman
CEO, President & Executive Chairman at OneSpaWorld

Users generally the the precruise passenger generally spends about 30% more than somebody who doesn't prebook.

Assia Georgieva
CEO at Infinity Research

Great. Great. Thank you so much, Leonard, and thank you, Steven.

Operator

This concludes our question and answer session. I'd like to turn the call over to Leonard Fluxman for any closing remarks.

Leonard Fluxman
Leonard Fluxman
CEO, President & Executive Chairman at OneSpaWorld

Great. Thank you, Andrea. Thanks again for joining us today all. We look forward to speaking with many of you at our upcoming investor meetings and when we report our third quarter results in October. Thanks for joining today. Bye bye.

Operator

The conference has now concluded. Thank you for attending today's presentation, and you may now disconnect.

Executives
    • Leonard Fluxman
      Leonard Fluxman
      CEO, President & Executive Chairman
    • Stephen Lazarus
      Stephen Lazarus
      President, CFO & COO
Analysts
    • Allison Malkin
      Partner at ICR
    • Steven Wieczynski
      Managing Director at Stifel Financial Corp
    • Max Rakhlenko
      Managing Director at TD Cowen
    • Tania Anderson
      Equity Research Associate at William Blair & Company, L.L.C
    • Gregory Miller
      Equity Analyst at Truist Securities
    • Assia Georgieva
      CEO at Infinity Research
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