Good morning. My name is Tracy and I will be your conference operator today. At this time, I would like to welcome everyone to the Royal Caribbean Cruises Ltd First Quarter Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks there will be a question-and-answer session. (Operator Instructions). Thank you. I'd now like to turn the call over to our host Mr. Brian Rice, Chief Financial Officer. Sir, you may begin your conference.

Thank you, Tracy. Good morning, everyone. I would like to thank you for joining us this morning for our first quarter earnings call. With me here today are Richard Fain, our Chairman and Chief Executive Officer, Adam Goldstein, President and CEO of Royal Caribbean International, Dan Hanrahan, President and CEO of Celebrity and Azamara Cruises, and Greg Johnson, our associate Vice President of Investor Relations. As we have done in the past, we have posted slides on our Investor website, www.rclinvestor.com, which we will be referring to during this call. Before we get into our results and the business overview, I would like to remind you of our forward-looking statement, which you will see on the first slide. During this call, we will be making comments which are forward-looking statements and are subject to change based on the items listed on our website, in disclosures, and our SEC filings. Additionally, we will be discussing certain financial measures, which are non-GAAP as defined by Regulation G and a reconciliation of these items can be found on our website. First, Richard will comment on our recent performance strategic priorities. I will then take you through our financial results, discuss the current booking environment, and provide you with our updated forward guidance. Adam and Dan will follow with more specific comments about their brands. And then we will open the call for your questions. Richard?

Thank you Brian and good morning everyone. We are gratified by the performance of our businesses in the first quarter, but we continue to be extremely frustrated by the direct and the indirect cost relating to fuel. We are particularly pleased by the strong yield and cost performance of the individual brands especially in light of the pressures that we continue to see on consumer spending. Although, I know a lot of people view vacations in cruises as a relatively high discretionary purchase. The evidence shows that the consumers are still taking their vacations that they are attracted to the value of cruising and that they are responding in particular to the quality of our brands. I believe our first quarter performance is further evidence that our product is resistant or be it not immune to economic slow downs. I am pleased that we produce such a healthy yield improvement, but still believe we have very good upside potential as I believe we are still under priced for the value that we deliver. This last week has been very exciting week. First we took delivery in Finland of Independence of the Seas, the third of our remarkably successful Freedom-class Ships. Next I visited Germany, where tour at Celebrity Cruises which will join the celebrity fleet leader this year. And then finally, just this last Tuesday we announced the closing of our joint venture with TUI AG. And we will be forming TUI cruises specifically designed to serve the German cruise market. All of that is taking place against the background of continued focus on three things. Growing our international business, mitigating fuel and other cost pressures and taking advantage of the great momentum we have with our brands in North America. But in the current environment we are facing serious headwinds from two important directions, economic pressures and energy costs. The fact that we’re doing as well or better than we originally expected against the first of these pressures gives me confidence about the future and our ability to improve these returns. Regarding the painful subject of energy costs, I am impressed by the concentration our management team has applied begin offsetting some of these expenses. I expect that the investments we are making in international sourcing and the innovative new vessels will be rewarded with premium pricing improved operating efficiencies and then will deliver very compelling returns. Brian?

Thank you, Richard. As we mentioned in our press release and you will see on the second slide, revenues for the first quarter of 2008 increased to $1.4 billion from $1.2 billion in 2007. Net income for the quarter increased to $75.6 million or $0.35 per share compared to our 10-K guidance of $0.25 to $0.30 per share. For the first quarter of 2007, we reported net income of $8.8 million or $0.4 per share. Despite significant economic pressures, we had the highest first quarter yields in our company’s history, with substantially higher fuel prices; our earnings per share came in better than expectation. On slide 3, you will see that our guidance which will yield to increase in a range around 7%, and we actually generated an increase of 7.1%. You may recall that back in October on our third quarter conference call, we gave preliminary guidance to the Q1 yields to be up in single-digits. Then in January on our fourth quarter call, we updated this guidance to be up in a range around 7%. Our business has been solid and consistent over this recent month and as we have pointed more resilient in many other consumer driven sectors and companies. Our net cruise cost excluding field for APCD came in 1% below last year. We have being feeling personnel related cost pressures and have seen increases in commodity prices and freight chargers, it relate back to fuel. As a result our expenses will increase as the year progresses, but I think our first quarter performances is a great example of our management’s focus on controlling cost and our ability to leverage the investments, we have made in the past. On slide 4, you will see our fuel cost on a per-APCD basis, increased 23.9% versus the same…

Thank you, Brian and good morning everyone. We are quite pleased with the first quarter results particularly the performance of our Caribbean products that rebounded strongly from the difficult first quarter of 2007. The quality of closing Caribbean demand enabled us to complete our first quarter revenue generation in a positive manner. We went into and came out of the wave period in generally good shape for the year and we have maintained our yield guidance that we gave last quarter. While our visibility is naturally more limited to further in to the future we look, currently most of our products for the rest of 2008 are in a favorable pricing position on a year-over-year basis. In Europe, where both we and the industry are growing capacity at nearly 25% on a year-over-year basis, we expect net revenue yields for the extended season to be slightly up. The outlook for Alaska yields is flat to slightly down. Turning to onboard revenue, in the first quarter, our guest spent at or above last year’s historically strong levels with the exception that we experienced lower on-board revenue yields on some of the more globally sourced products we introduced this past winter season. Moving now to our fleet, we began to introduce our third Freedom-class ship Independence of the Seas this week after a successful delivery on April 17th. She will commence revenue service out of South Hampton, UK on May 2nd. We have announced that she will return to South Hampton in 2009 as part of a record 8 Royal Caribbean ships that will be sailing in Europe. Last but not least, earlier last week we revealed a Central Park, the first major feature on the project Genesis ship. The publicity was instantly global giving an indication of things to come as we reveal more elements. The footprint of the ship will enable us to deliver an unprecedented variety of wild experiences that will amaze and please our guests. Dan?

Thank you, Adam. As Brian, Adam and Richard have already mentioned we are pleased with our first quarter results. The combination of a strong Caribbean and some key deployment changes including positioning Celebrity in Australia and New Zealand for the first time have lead us to the strong yields we experienced. We also saw nice increase in on-board revenues during the first quarter. In particular, beverage, shore excursions and spa were strong, telephone and internet usage also contributed to the increase. Looking at the balance of the year, we are coming to Celebrities most exiting time as Alaska and Europe combined represent almost 50% of our sailing days this year. We’ve increased our capacity in both Alaska and Europe and are pleased with the results. Our booking trends are inline with our expectations, volumes are roughly the same as last year and we are seeing rate increases in both markets. Alaska business has seen a slight increase in yields and the extended season has been beneficial. Europe is also slightly up although because of the extended season into the fourth quarter we still have a good bit of our volume to build. Our new Solstice ship due to be delivered in the fourth quarter continues to perform well from a volume and rate standpoint. The decision to build the ship with 85% balcony cabins is delivering the benefit we had planned for during the design of the class. Looking beyond the Alaska and Europe seasons, we are encouraged by South America yields for the fourth quarter. Earlier reports for the first quarter of ‘09 are positive although we are still very early in the selling cycle. We continue to stay focused on managing our costs, across the brand. Just this week we are completing the installation of the diesel engine on Summit. The diesel engine is more efficient and actually enables us to burn less fuel. We will complete this project by the end of the year with the installation on the Infinity. Brian?

Thanks Dan. Tracy, we would now like to open the call for questions.

(Operator Instructions). Your first question comes from the line of Steve Kent with Goldman Sachs.

Hi, good morning. Could you just talk a little bit about how you see the second half of ‘08 net yield reaccelerating? You commented on it little bit and I think at one point you said your - you don’t have that much more to sell. So, I wanted to understand how you reaccelerate into the second half? And then the other income line, could you talk a little bit about what went into that and also the foreign exchange impact?

Hey Steve, it’s Brian. The second half of the year, the yields if you do the math would imply that the yield guidance are stronger in the third and fourth quarter and then what we are saying in second. We are seeing, I think as Adam alluded to and Dan, we are seeing a healthy Caribbean recovery, which is going to impact obviously the fourth quarter more that it would in second quarter. We also have an extension of the season in Europe which is benefiting us. I think Adam and Dane bettered, we have said that Alaska is pretty much flat year-over-year. But I think strength of our European business the Caribbean business really is driving the acceleration of yield to third and fourth quarter. , :

Again Brian, on foreign exchange how did it impact the net yield both the actual and when you think about your guidance?

Steve, the only functional current, the only brand that we have that has a functional currency other than Dollars is Pullmantur, and Pullmantur represents as you know only about 7% of our capacity. We do have the expenses that are sensitive to FX. We have marketing and sales efforts on behalf of Royal Caribbean Celebrity and Azamara that are sensitive. We have our Brilliance leases dominated in Sterling, but we also had benefits on the top line. We don’t break that out because frankly, the way we manage our business, currencies, part of our revenue management and decision making, it is not as easy for us to go in and just say had the dollar been a different level what the increased would have been.

Okay, thank you.

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

Thanks. A couple of questions, one is for the second quarter I guess maybe it would have look like a easier comp versus last year than the second half, and I was wondering if that your guidance of plus 2%, is that what you would have thought would be a quarter ago. I know you didn’t give guidance currently, but just in terms of internal expectations can you gives us a little color on that?

Sure Robin, I think that our revenue guidance both what we’ve stated publicly and even as you breakdown the details internally has remained remarkably consistent over the last three or four months. I think, I would emphasize one of the benefits that we are seeing in the second half of the years, as where Pullmantur comes in with sweet spot during the summer months. Remember, we do report Pullmantur on a two-month flag and we had been doing some ship transfers out of our North American brands into Pullmantur, which is benefiting Pullmantur quite a bit as well. But it’s been remarkably consistent in terms of how the quarter yield performances have been.

And then including the second quarter specifically, what are your expectations for Q2?

I am sorry Robin, could you repeat that?

Sure, I know you talked about your full year guidance being consistent with the last time you commented, but I guess I just wanted to clarify that specifically also for your second quarter expectations that how that changed from a quarter ago?

Actually, I will give you it in a little more detail; I think the second, third and fourth quarters have all remained very consistent with our prior expectations.

Okay great. Thanks. And then also, on the expense front your expense ex-fuel you know with previous guidance of plus one to two now, plus two to three in a I think in the introductory comment you mentioned personnel expenses I wish if you could give just a little bit more color on that because it seems like a big increase that would have come on and the sort of have occurred in the last kind of six to eight weeks as a percentage of your personal cost it seems like it went up significantly maybe can just give us some more color?

Hi Robin it’s Adam, it is one of the elements that we mentioned, I don’t want to make too much of it, we have seen some inflationary pressures which to your point haven’t been sudden but have been developing over the last year, or more as the shipping market has tightened up in terms of Marine Officers license, Marine Officers and what our brands need to do to remain competitive for I call your personal that we want to have on board our ships. But they would also be elements in terms of freight, which is clearly affected by energy costs as well, food, and dairy pricing, fairly elements that are affected by energy pricing as well. So these are what would fall into net cruise costs ex-fuel that are affecting us in different expense line.

Hi Robin it’s Adam, it is one of the elements that we mentioned, I don’t want to make too much of it, we have seen some inflationary pressures which to your point haven’t been sudden but have been developing over the last year, or more as the shipping market has tightened up in terms of Marine Officers license, Marine Officers and what our brands need to do to remain competitive for I call your personal that we want to have on board our ships. But they would also be elements in terms of freight, which is clearly affected by energy costs as well, food, and dairy pricing, fairly elements that are affected by energy pricing as well. So these are what would fall into net cruise costs ex-fuel that are affecting us in different expense line.

Okay, great. And then the last thing, I guess you talked a little bit about some of the elements under income line, but it looks like it was $0.06 a share higher than in the last quarter, and I guess can you give us any color on what kind of volatility we should expect in this line for the reminder of the year?

Robin, I think we have a pretty good handle on our interest income and expense we have pretty good handle along our equity pickups we try to refine those forecast the one thing that is really very difficult to get a hand alone is the hedging and effectiveness. We did have a gain little over $3 million in the first quarter because we had some hedges out there for a type of fuel that we were planning and MGA fuel that we were going to use in the Mediterranean and they changed the type of fuels we need to burn there. So, it became ineffective than we had a $3 million gain below the line rather than up in our fuel line. The accounting rules around hedging continue to evolve and frustrate us and sometimes we do see more volatility there like to.

And in terms of the currency hedging mentioned you try to offset something’s by inter-company loan exchange, is there anything there or that is going to reverse later in the year?

There it should, you know they should work in tandem what happened that was kind of interesting in the first quarter versus the prior year quarters is the dollar did not either weaken or strengthen the across board, its kind of interesting that we saw the Canadian dollar weaken but the Euro strengthened and the Sterling effectively made flat throughout the quarter in its, when they moved in tandem our hedges were or natural hedges were quite well with one another but one you had individual ones moving back and forth that bridge move at noise.

Yeah, Robin, and also add two other things, don’t forget the equity pick up in things like Island cruises. So, although they are below the line as far as we are concerned in that since much operation with anything else we did. And again we also have a fair amount of movement between quarters, that’s always an issue by now, but when we look at the year as a whole we don’t really expect to see a big change year-over-year in terms of what’s happening below the line.

Okay, that’s great. And just a final little clarification, what amount of that was the equity pickup from Island cruises?

Robin, I don’t have the numbers directly in front of me, but as I recall of this $3 million range.

Okay.

Over forecast.

I am sorry, $3 million over forecast, okay. Great, thank you.

Your next question comes from the line of Assia Georgieva with Infinity Research.

Even I had one question on your forecast for on-board spent both Adam and Dan mentioned that it was good in the current quarter even though to me it appears it was flat? And going forward what turns do you expect developing have you seen worsening something as we progressed during Q1 and is that something you are breaking into the numbers?

Assia, could you just repeat just the last part of it, I lost the last part of it?

Whether you are breaking any increase in onboard spend when you are giving us your guidance for the rest of year or are you assuming pretty much flat on-board spend given in the what we saw in Q1?

Well, it varies by brand but overall we are up, our onboard revenue forecast is up slightly over 2007. And I can comment a little bit more specifically about Celebrity, we’ve seen nice on-board spending in beverage sore excursions and spas, I mentioned we are also seeing is people become more mobile, and we are seeing big increases in telephone and internet usage. So we are seeing some organized upsides there. So overall on Celebrity we are up slightly and as a company we see ourselves being up slightly for the year.

If I could just also add one of the thing is we look at this. We are looking at the fairly detailed level, and we are looking at comparable numbers. So, we go to a new antennary some of our new antennary inherently have lower onboard spend because of either where the guest sourcing is or because of what the antennary is felted and so we adjust to that, and we are looking at it just overall, how we think those are doing. And that does mean given our new antennary, the increase is not huge. But we see it as quite healthy particularly given a very good starting point last year.

Okay. So, when you speak about our healthy increase that will be in a comparable basis, say sourcing North American passengers, not sourcing out of South America?

Just to be clear, we said a healthy increase because that would buy a larger increase, we just said the on-board revenues continue to be healthy, and we are making the two comments, one, it was healthy last year and it continues to be healthy and two, when we are making comparisons on a like-for-like basis. We think we are doing even better than last year.

Okay. Thank you, Richard.

Your next question comes from the line of Tim Conder with Wachovia Corporation.

You just clarify again I think it should rapid it up on the onboard, but you are seeing year-over-year increase on a per-guest basis, is it correct?

Yes. That’s correct.

Okay. And can you give us any color as to the recent fuel surcharges that you announced two days ago, the incremental fuel surcharges and may need some alluded some of this in your preliminary comments. But how much of that could impact your yield here in the year. Is that 10 bases point, 20 bases point in 2008?

Tim that is, it’s the $64 million question, it’s very difficult you know our guest say elastic, we did see last year when we passed on the $50 head tax from Alaska, put pressure on our ability to raise our ticket prices. There is kind of bearing opinions in the market place and frankly there is bearing opinions here within our company as to how to much you that we actually get to keep. We’ve not baked in any significant upside as a result of that and again it takes about $50 million just to move that one point.

Okay.

I think, we would probably recognize more the benefit in ’09 and would see in ’08 simply because of the percentage of our inventory as already booked.

Okay. But again Brian, is the key there is the guest very elastic, and we don’t know how much of this effectively going to stick right?

Right. And frankly the only way we will ever know is hopefully someday fuel prices begin to come down and we’ll take our fuel supplements down and see how much the rate increase we can hold on to.

Yeah, actually it’s interesting, I think it was last first quarter we got the question why we didn’t, why we were hedging so much and in the second quarter we got why didn’t hedge more. We are remarkably consistent, we tried to remain 40 to 60% hedged, looking out in the 12-month window and we were certainly within that now. We are not viewing our hedging and speculation, we are not betting as the market is different. We have a fairly methodical approach where the hedge committee that is constantly looking for those instruments out there, that will qualify for hedge accounting given our needs, and we are right about where we’ve always been plus or minus a few percentage points. But I wouldn’t read anything that we changed the way we approach it.

Okay. And then will the longer term prospective here, just refreshes on your commitment either contractually or you’re thought process, I guess is to the number of ships over the next several years that you may move into the new TUI JV.

Okay. You would think given Richard again the time and then the state of the first lot and you may see another ship or two transfer before you start to get some new builds coming on stream?

I think it is possible, I think it depends on where frankly where we going to get the best return whether it’s their existing deployment or specifically in the German market.

Okay, great. Thank you, gentlemen.

Your next question comes from the line of Hakan Ipekci with Merrill Lynch.

Thank you. Two questions, first of all has there been any changes in your booking window during the quarter or any changes in your cancellations rates from the passengers?

Hakan, it’s Brian. No, we’ve really had seen very remarkably consistent booking windows, I will point out we didn’t chose slide on this particular call because frankly we just had so many other items to talk about. But, the close and bookings continue to perform very strongly. The graph that we have shown in the past with the premiums that we’re getting within the 90 day window continue, but we have not seen any shift in the booking term and the cancellation rates and had stayed remarkably consistent. One of the things I tried to mention in my script before we talked about the first quarter of ’09, we continue to dissect this data and look for concerns that are out on horizon that maybe coming up. And at this point in time, we are very pleased with the reservations that we were getting everyday.

Okay. And with respect to your, I mean obviously there is a lot of capacity that’s going there but is availability and pricing of every list is been an issue for bookings and as there were some things that you can do, perhaps done?

Hakan, don’t think that we source an off lot of our business in your up as well. So, you know there that we have seen some increase in air tickets where we are still seeing very, very strong interest in our US and our domestic guest to go to Europe, and we’re first seeing a lot of guests out of Europe, so the combination has continued to work well for us and as you heard I said earlier that you know our premium products in Alaskan and in Europe are doing pretty well. So, we haven’t been trouble by that at this point.

Hakan, if I can add on this, it’s Adam, there is a strong desire by Americans to see Europe. So whether you want to see it by land or by cruise you or going to have to secure air to get there. The advantage there we continue to have is a vacation choice is how much of your overall European vacation you can secure in dollars, by buying a cruise, as opposed to buying all the different components for yourself on the European Continent. And so at any level of air price we still think we will be relative beneficiaries of the type of vacation we are and the way the people can insulate themselves, relatively speaking against the weak dollar and strong Euro relationship.

I see. Okay, and finally have you disclose it what price would you take down to reduce the fuel supplement?

No, we haven’t given any specific guidance in that, I can tell you that if the current levels were not fully recovering the type of human cruises that we have seen from January about seven now?

Okay. Thank you.

Your next question comes from the line of Scott Barry with Credit Suisse.

I know the reason really any transparency into your tour business, but each of the last couple of quarter your on-board and other expenses has grown dramatically faster than you on-board and other revenues. Could you comment on what’s driving that and then I have a follow? Thanks.

Scott, the tour business is mainly coming from Pullmantur and we also have what we call sub charters, we have three aircraft within Pullmantur in that is sub charters own. In the first quarter we did charter more of the excess air capacities that we had for Pullmantur than we had it prior year.

That’s driving the increase in cost there relative to the revenue growth?

That impacts both the cost, the cost those are embedded in non-deck cruise cost and the revenue is up in the under revenue line.

European may be a better way to ask you is Pullmantur the margins there or they are stable improving or they deteriorating?

They are getting better.

Okay. And then Richard, would you be like to comment on the trade press reports such year negotiating to by one of NCLs vessels for European brand?

No, we are not.

Okay, thanks. You are not negotiating or..?

We are not negotiating.

Okay, thanks.

Your next question comes from the line of Steven Wieczynski with Stifel Nicolaus.

This kind of ………

Operator I believe we lost stayed there.

Yes, his line did disconnect. Okay. Your next question comes from the line of David Leibowitz with Burnham.

Capacity under movement to vessels, first the agreement with TUI, TUI still owns Hapag-Lloyd and Hapag-Lloyd owns one upscale vessel, is that part of the joint venture in anyway?

No, it’s not.

And is there anything to preclude TUI from expanding further into the upper scale market for the German or European tourist?

You mean with Hapag-Lloyd.

Exactly.

No, there is no restriction on Hapag-Lloyd continuing to do with TUI or expanding. What we are creating is different market segment. And now that they have restricted, nor could be rationale which is been, which has a presence in Germany, there is no restrictions on it operating again as they separate fundamentally different kind of operation.

Okay. And in terms of the joint venture where no one’s originally announced our record had been a statement made that you would be adding two new builds hopefully in 2010-2011, from March you said today one gets the impression that might not be in the cards anymore? Well I getting like, what you stated wrong and I apologized that trying to miss quote you.

Yeah, no David certainly we didn’t intend to imply anything like that I think the earlier releases had indicated that we were hoping for new buildings starting in 2011-2012, sort of things and that is not changed.

Okay. Now Pullmantur has two very old vessels one dating back to 1965, usually how much more use for it can you get out of vessels of that age.

Well, interesting, and it is interesting and of course especially if you are addressing the question to us who have prior to their sales and very effective in using the most modern capacity. But in fact as we've often said there is nothing technically that’s changed that much in terms of ships ability to operate more and more efficiency of ships. And as it happens some of Pullmantur older ships are extremely attractive in their respective markets. And so the other thing that we have been I think fairly consistent of saying is that we believe one size does not fit all and within Pullmantur, those old ships are certainly physically capable of continuing to operate well. And the results continue to be quite good and they are doing better this year than last year. And I think its interesting to watch out and we hope to continue to build on that presence. One of the point I’ll take the opportunity to mention we often talked about our hard work, we are very proud of our hard work. But the thing that is always differentiated our brand is the service levels that men and women on board produce and on the tour there is no exception for that.

Now your venture in France, there has not been a lot of publicity about it. Can you give us an update? You think it would be up to our expectations exceeding our expectations, do we need more critical mash by adding more vessels etcetera?

Well, its just starting, as in fact it hasn’t even started yet it’s due to start next month. And its really very small so, it would be a mistake to read too much into that but we think that some market that is hungry for a domestic brand and that will do well. That is an older ship but by the time we are finishing the conversion work which is going on literally as we speak. For the passenger point of view it will be A: a modern ship and B: probably more importantly to them it will be a French ship. And so, we think that will do well but it is too early to speak more specific.

And is there any timeline we should be looking at as a matter to be adding capacity?

Not at this point, you shouldn’t be looking for a timeline David.

Okay. And sticking with Azamara, one of your payment…?

We are going to have to.

All my apologies, okay I’ll get back in queue.

Sorry, but we have quite a few of them.

Not a problem.

Your next question comes from Bob Simonson with William Blair.

Good morning. If you have an estimate of this year’s sourcing of all of your capacity. How much would be from the US versus all other markets? And how would they compare with last year?

David, it was, I am sorry Bob it was $60 million percent of the revenue was sourced from outside of North America last year. We haven’t disclosed any numbers beyond that other than the fact that we expect the non-North-American to continue to grow both this year and at the years to come. The vast majority of our capacity that is coming on line over the next few years, the net growth will virtually all becoming in outside in North America.

So 69% of, only 31% of the beds last year were filled by Americans?

31% of our revenue was source from outside of North America

Well, outside.

39% within.

Okay.

And that does 69% will continue to decline.

Okay.

On this we grow our business in Europe and else where in the world.

And then, is this too simple but you are fuel costs your dollar fuel cost in the first quarter were up, roughly 35% your capacity was up 9. Is that correct to say that your capacity adjusted fuel cost were up 24, just subtracting one from the other?

Yes.

That’s okay. Thank you very much.

Your next question comes from the line of Amir Markowitz with JP Morgan.

Hi, good morning. Just a little quick question about your non-fuel expenses, it looks like those expenses they are currently are increasing going forward you know as far as your guidance goes. Just wondering if there is any sort of increases in marketing that you seeing in order to kind of fill the ships going forward?

Amir, we’re actually we’ve raised our non-fuel net cruise cost from the range of 1% to 2% to a range to 2% to 3% mid point moved to 100 basis points. But most of the increases were seeing really our fuel related, its in commodity pricing, its in freight charges it has moved in our crew, around the world, the airlines are coming out of fuels surcharges as well. Those are the cost pressures that we have seeing we actually have been very consistent with our marketing we are not going to start cutting back on marketing, because that’s what the strategic investment that we continuously referred to. We have been able to find some efficiency in our G&A, and then I think our management team you know it’s indicated by the first quarter where we actually saw our non-fuel net cruise costs come down 1%. Despite all these pressures that is been out there I think is remarkably focused on dedicating as much as this expense if they can. Then what we tried to do is to give you our best thinking at this point of time base number we seeing company with the commodity in particular.

Okay. Thank you.

Your next question comes from the line of Felicia Hendrix with Lehman Brothers.

Good morning guys. If I can return to this second quarter yield guidance I know the comparisons in the first quarter year-over-year, I was better more favorable in our second quarter benefit quarter the still kind of easy count, and I am just wondering if you kind of explain why we were seeing this huge drop off in the change and in that yield guidance versus the actual results in the first quarter?

The results in the first quarter were very strong with 7.1% but remember the comp last year was certainly we were down in the range around 4.2%. So that was a very easy comparable. I think the annual number is more appropriate with being up around 4%. Again I think the product mix that you are seeing in the second quarter you have a lot of repositioning cruises Adam alluded to some of the new products that are out in the market place while those products are doing quiet well versus our expectations, they are not going to be seller performance but you are going to drive up the corporate yields in near term. I think most of the health that were seeing the recovery in the Caribbean and certainly the extension of the European season in Fourth Quarter, which really helping drive the back off the year.

Okay.

Felicia, if I could just add, I think a couple of the questions have indicated a sort of a question by this - a sort of change with the second half. We are assuming economy is getting better something along those lines. And just to relish Brian’s comment, I think it’s important -- I actually have always impressed how accurate they are in protecting yields year, I guess from quarter-to-quarter there is a certain amount of random and it also becomes intermittent so we started – it’s fairly dramatic change it's not a change in trend. It’s just to replying it to some fairly specific things within the context of one quarter, a couple of small changes make a difference but overall for the year, we are not seeing any difference sort of style in the first quarter, second quarter was the room?

Okay

Felicia, I maybe just add, I think Robin has the same line of questioning and it really is a remarkable for Q1, Q2, Q3, Q4, our forecast relays have not moved since beginning of the year. This is not a result in any ships that were seeing; we have seen a very consistent and fairly predictable pattern throughout rain season.

Okay, alright. Thanks.

Your next question comes from the line of [Hennas Mariely] with Dundee Securities.

I was just questioning on the net yields of the guidance again on the Q2, did you feel surcharge of any thing to do with that like the offset in the fuel charge that was announced that built into the yields?

Well the fuel surcharge the $5 we came now with back in November applied to new selling on February 1st, obviously, we were more booked in the second quarter then we moved in 3rd, 4th and the extra $3 that we’ve just added within the last week. We wouldn’t expect much benefit from that. But again the fuel surcharge we are talking $3, $5 changes on rather new set -- retire than that and there is a lot of velocity within their bookings. So we wouldn’t attribute a lot of that to any consequence here, again you know the business since remained remarkably consistent really over the last 4 to 5 months.

Okay, thanks.

Operator, we have time for one more question please.

Okay. Your last question comes from the line of [Joe Anova with South Block].

Hi guys. I think hearing recently through the gratifying that some travel agents haven’t seen what promotional activity in the cruise business, can you comment on that?

Joe, you know, it’s remarkable, we love to read all the different reports that are coming out talking about our pricing and what’s happening. There is promotions are part of what is continuously going on with all brands and this business is very surgical and the way we do our revenue management. Its very hard in the market place when you consider, we have 1500 voyages out there from sourcing gas globally from selling in to 25th different categories on many of our ships and there is a lot of different noise that you are going to see out there. I would reiterate that on a macro basis and even that of product level and brand level our business continuous to be very consistent and we saw throughout the way period and continue to see it right now.

Okay. And then can you talk about just generally speaking to what extent do you think you will be able to rise prices in the European region that you know in the next few quarters or next years that is as we continued to see more massive deployment of vessels from the Caribbean to that region and also given that I think historically the region has somewhat resistant price increases and increase lines and these are in general?

Our comment really is that not withstanding the numbers 25% year over year increase both for our company and for the industry in Europe and even taking into account some of the other things that have been mentioned by higher air pricing, but have you our outlook for yield is up on a year-over-year basis, what that tells us is two things, there remains a healthy appetite by the American consumer to go over and see Europe on our cruise ships of our different brand, and it is also is reflective of the growth of outsourcing of European customers many of whom would like to cruise close to home just as we see another regions of the world. So, we really feel that the combination of those two effects goes well and even last year was a healthy capacity increase over the year before so, to go up by almost 25% again is significant growth and to combine that with upward yield performance is the healthy indicator for what might happen in the future years.

Right, I understood. But at this time, where I think most of your competitors are also looking to go their presence in Europe I mean -- I guess to what extent you think you will be able to sustain that net yield, improvement you know, year-over-year over the next 3 to 5 years?

I think all we can say especially looking at the European holiday market place is that there is enormous vacation activity taking place out of all the countries but especially the larger economies. We are just catching on to the benefits of cruise vacation. We see it very strongly in the UK, and we also see it now out of the other strong – out of the other large markets so as well. Germany market growth has been exceptional Italy and Spain market growth have both then very strong. And, we believe that France is capable of producing those types of – that type of growth overtime as well. And, there is no indication that American appetite see here a full decline in the near future if anything it will grow, so we can’t project at this point specific year-over-year yield performance we can only say that the fundamentals looking-forward seems quite favorable to us.

Got it, okay. And my last question just a quick follow up to the cancellation re-question, is this different then the industry conversion rate that you see after customers put there deposit down on bookings?

Yes, generally when we are ask questions about cancellation rates we assume that people are asking about folks who actually deposit on their cruise, there are actually three things that we monitor quite carefully, we monitor the percentage of the people who are calling us did actually make a reservation, we monitor the percentage of the people who make a reservation they make a deposit then we also monitor the size of the people who may deposit that actually sale. I can tell you we all three of those numbers have helped are remarkably consistent even after 9/11 when we talk about the cancellation rates we do see that when people put money down on their cruise again even after 9/11, we saw remarkable Brazilians in the percentage of the guests that actually went forward stuck with their Cruise vacation plans.

Okay. Great, well I think that during that time it was probably more favorable to travel on to seas rather than by air so maybe that was fairly different situation then it is now?

Well, I think you are the key here is that the numbers are not changing are seeing remarkable consistency and we watched every single day.

Okay, great. Thank you.

Okay. With that we thank you very much for joining us today. As always, we appreciated it. And Greg will be available through out the day for any follow ups you may have. And wish everyone a great day. Thank you.

This concludes today’s Royal Caribbean Cruises Ltd First Quarter Earnings Call. You may now disconnect.