Ladies and gentlemen, thank you for standing by. And welcome to the Royal Caribbean Cruises Limited Third Quarter Conference Call. [Operator Instructions] Thank you. I would now like to turn the call over to Jason Liberty, Chief Financial Officer. Please go ahead.

Good morning. And thank you for joining us today for our third quarter earnings call. Joining me here in Miami are Richard Fain, our Chairman and Chief Executive Officer; Adam Goldstein, President and Chief Operating Officer; Michael Bayley, President and CEO of Royal Caribbean International; and Carol Cabezas, our Vice President of Investor Relations. During this call, we will be referring to a few slides which have been posted on our Investor Web site, www.rclinvestor.com. Before we get started, I would like to refer you to our notice about forward-looking statements, which is on our first slide. During this call, we will be making comments that are forward-looking. These statements do not guarantee future performance and do involve risks and uncertainties. Examples are described in our SEC filings and other disclosures. Additionally, we will be discussing certain non-GAAP financial measures which are adjusted as defined, and a reconciliation of these items can be found on our Web site. Richard will begin by providing an overview of the business. I will follow with a recap of our third quarter results, provide an update on the current booking environment and provide our early thoughts on 2017. I will close with guidance for the full year and fourth quarter. We will then open the call up for your questions. Richard?

Thanks, Jason, and good morning, everybody. It's a pleasure to have the opportunity to share more about our business and our progress to the Double-Double, so let me get right there. We are quickly coming to the end of 2016 and will shortly be starting the final year of our Double-Double program. Reaching the Double-Double will be a significant accomplishment to the 65,000 women and men who collectively make Royal Caribbean Cruises successful. However, I do want to emphasize that Double-Double is not an end in an of itself. Rather it represents the completion of another step in our continuous journey of improving shareholder returns. The success of the Double-Double press on three pillars strengthening revenue yields, controlling costs and moderate growth. Our progress on this journey has been steady. Not only has the slope of the curve been very steep but it's been remarkably strong and predictable. As you can see on Slide 2 both earnings and yields have consistently ended up right around the midpoint of the range that we stated at the beginning of each year. This track record comes despite some unexpected impact from things like foreign exchange and fuel. For example, our biggest non-dollar market has been the U.K. but Sterling has fallen 30% over the last two years and that got a significant push from the recent Brexit vote. This year is shaping up to deliver in a similar fashion. Our yield guidance today at 4% or better is about the same as it was at the beginning of the year when we adjusted the deconsolidation of Pullmantur. Earnings per share expectations of $6 to $6.10 are a little better than our original range despite a number of challenges that came our way this year. So the fact that our year is ending above…

Thank you, Richard. I will begin by taking you through our results for the third quarter. Unless I state otherwise, all metrics are on a constant currency basis. We have summarized our third quarter results on Slide 3. For the quarter we generated adjusted net income of $3.20 per share, $0.10 better than the previous guidance. About half of the outperformance was driven by better revenue but the other half of the beat driven by weaker dollar and lower fuel prices. Third quarter net revenue yield was better than expected up 2.9% year-over-year. Strength in close in demand for North American products was a primary driver of the outperformance. Onboard revenue deals for the quarter did not disappoint with yields up 4.8% for the quarter. The growth was mainly driven by beverage packages, an increasing demand for VOOM and Xcelerate, our high-speed Internet offerings for Royal Caribbean International and Celebrity Cruises respectively. Costs were as expected for the quarter with Net Cruise cost excluding fuel down 1.6%. Before I get into discussing booking trends, I would like to discuss deviations between the quarters. Our yield came in slightly better than expected in the third quarter and are expected to be slightly lower than our previous expectations in the fourth quarter. As a result, our yields for the full year are essentially unchanged. We often get asked whether these small aberrations between quarters signify a trend. The answer is no. And I would like to explain why. The reality is that we manage a large and diversified portfolio, brands, markets and products. These complex portfolio obviously has minor deviations especially in a period as short quarter. This year is a good example. Something as simple and insignificant as the delay in the deployment of the Empress of the Seas will drive…

[Operator Instructions] Your first question comes from the line of Jared Shojaian with Wolfe Research.

Hi good morning. Thanks for taking my question. Can you quantify the EPS and yield impact from the delay in deployment for Empress in the fourth-quarter and was that the only reason why your fourth-quarter yields are a little bit lower than your prior forecast

Sure, Jared. So the impact from the delay in deployment was about $0.06 or $0.07 for the fourth quarter. Outside of that there's small little puts and takes that make up the balance but it's very immaterial.

Okay. Great, thanks. There has been a lot of concerns about the promotional environment, particularly in the Caribbean, can you expand on that and what you're seeing right now? And if you feel the need to be more a little bit more promotional right now because of some of the incremental capacity or how you are thinking about that?

Jared, it's Michael. Yes we're feeling pretty good about Caribbean, some things looking good both on volume and rate with the capacity increase and '16 shaping up pretty well. It looks very typical in terms of what we’re seeing with booking patents and Q4 as we've seen in previous years, so everything is looking quite normal. Obviously promotional activity ebbs and flows. We had Hurricane Mitch blowing through the week before last so we had about a week of a drop in bookings which is inevitable as it moved its way up the East Coast. And I think we did and other certainly try to stimulate the demand by putting in some promotional activity which then the responses was very good. We had a promotion last week which was the second best performing promotion in the brands history.

Okay, great. Thank you.

Your next question comes from the line of David Beckel with Bernstein Research.

Thanks a lot. I was wondering if you could, maybe a little early, but I was wondering if you could talk about net-cruise costs growth for next year. Reminding us of what some of the key puts and takes are when considering modeling cost growth? And as a follow-up to that, what are some of the more significant levers on costs you can pull if yields do come in lighter than expected? Thanks.

Thanks David. We're still going to our planning process for next year but as we've said in the past we need to continue to control our cost like we have over the past several years. I know early on in our Double-Double program we talked more about some of the chunkier thing that we've been doing on the cost side and really over the past year or so, a lot of this is down a little thing that we do to become a more efficient across our business. There are always small levers to pull to try to write yourself, if there is yield or challenges, but there is nothing specific that I would call out?

But I think I would leave at this point with saying that I think we've shown over the past several years’ management's commitment to cost control, and try to become more efficient year-over-year.

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

Good morning. Thanks for taking my question. Jason, thanks for the color that you gave for next year. I wanted to see if we could get a little bit more granular to clarify things because there is three -- from our perspective there is three overarching concerns for the next year right? So the yields -- the risk of continue to yield pressures in China, supply growth in the Caribbean, and then also FXd fuel headwinds for next year. Regarding Asia-Pacific, I think you said that and China -- your booked position in China is ahead in load, so I was wondering for a moment if you could touch upon if you think where yields could come out next year, if you think you could see yield pressure again in China? And then also your confidence level of growing yields in the Caribbean? And then if there's any way, I mean I think a lot of people are doing the math based on where FX and fuel is today to calculate where that might impact next year, so if you could touch upon that as well.

Sure. Well, first half when we kind of think about next year, it’s obviously too early to provide any guidance and any guidance by products. But we do have as we have where we are currently booked, a commentary on Asia-Pac, which really at this point in the year. We have pretty good visibility into the first quarter, it's been encouraging. And hopefully those trends continue on as that product – on books further out here over time. And then when we talk about the Caribbean and but I also include Europe in there, at this point in time in the year a lot of that is driven by the North American consumers, and as I commented in my remarks that we have seen very positive trends in both rate and volume basis for the Caribbean as well as for our European products. And then to answer your question, on the currency side certainly the strength in the dollar relative to the pound has been challenging. If you want to say what is it's kind of been since the last call it's probably you heard us by about $0.12 to $0.15. And so there are always headwinds in our business that we have to focus on and overcome. But that's kind of been the impact since the last time we spoke here in early August.

Okay. And then a follow-up on some puts and takes for next year, because you mentioned that there will be a tailwind from Pullmantur of 250 basis points from yields in the first half. There's also -- do you also get a benefit from the management fee, as well? Could help us understand how the full picture, the full mathematical picture works for Pullmantur?

Yes, I mean there is obviously deconsolidation. There is the benefit and that's respectively kind of included in that estimate of the 250 basis points in the first half of the year. The balance of that for the year is a material as it relates to the management fee. So it's a small contributor, but not something I'll specifically call out in the build-up of the yield.

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

Great. Thanks. I wanted to ask about the Empress because our impression has been that you are maybe not opening up Empress for new sailings because you were hoping for a new Caribbean itinerary to open up before the end of the year. I wanted to ask what your expectation -- is it still that that potentially that could open up before the end of the year or is the idea to keep Empress into Q1 without opening it up for new sailings yet?

So obviously, as we were considering the deployment for Empress because typically as Robin, we deploy a ship or open up the deployment for ship about 12 months to 18 months ahead of time. I think we have seen or we've obviously been in conversations about what the future deployment of that ship could be and that did not resolve itself in the back half of this year and that's really what caused the impact on Empress, because we effectively opened up for deployment in August. I think we continue to look for that ship to potentially have some other deployment, but I don't think we will be holding back our sailings in the future and we'll deal with it as maybe some of that new deployment comes available.

And then just for my follow-up question, there is…?

I just comment Robin and it's already opened for next year at Empress.

So it just ready for existing Caribbean itineraries, right?

Yes, in Q1.

And then for my follow-up question, there have some reports and the current media that China is limiting some tour package travel to Korea for a political reasons and just wondering if you are seeing any kind of impact at all since cruises from China calling Korean ports. Any impact at all of getting this sense that there is going to be some kind of limit or any you have seen so far for Mainland Chinese visitors going to Korea by cruise?

Hi, Robin, it's Michael. No, we have seen no impact whatsoever. We think it's very much related to the type of package that's offered that really is all about encouraging Chinese customers to go to Korea, specifically for shopping trips. And we think it's related to that. So the packages put into the markets that are incredibly low cost and of course they bring the customers over and make the revenue from the retail. So we feel as if that's something is very specifically focused. So we don't – we have not seen anything and we don't believe there'll be any impact to us.

That's very helpful. Thank you.

Your next question comes from the line of Tim Conder with Wells Fargo.

Good morning and congrats to the whole team for an onpoint execution. Just a couple of things, I wanted to revisit the mix shift with the Harmony and the Equinox, Jason, that you called out. Is that going to be yield accretive, given Europe traditionally has higher yields than the Caribbean? Just on that shift for the similar comparisons year-over-year, a little color on that please? And the fuel, you have been fairly aggressive towards the high-end or above the higher end of your 40% to 60% range in hedging, especially you appeared to put on quite a bit when the oil was in the 30s. A little bit more color on where your weighted average hedges are looking into 2017 and 2018? And then if you continue to view as glaring on more aggressively or back off a little bit on that as you lay her out 12, 24, 36 months? Thank you.

So Tim, on the first question as relates to Harmony and Equinox, your first deal – trends or demand for Harmony has been exceptional, and we do expect with Harmony being here next year for to be yield accretive and certainly helps us a lot in the first half of the year. In Equinox mainly was in the Eastern Mediterranean and really kind of in the center of lot of movements we had to make with some of the geopolitical events that were happening. So we do expect the Equinox to be a yield accretive to the corporation next year. On the fuel side on 2017 we’re hedged about 60%. The average hedge rate there is about $508 and in 2018 we're 45% hedged and we're about $452 as the average hedge. And we continue to feel your focus and on having hedge program to minimize the volatility within our P&L. And we also respect that there is typically an inverse relationship between fuel and currency. We also take into consideration the fuel curve and it has flattened out. And so this earlier last year, we did take advantage and put a little bit more hedging on in 2016 and in the outer years, but you should kind of expect us to continue to be pretty consistent to the past of that kind of 40% to 60% side of things and again with the goal of a minimizing volatility within the P&L.

Okay. Great. And what my follow-up would be related to Europe. You said you seen very good bookings so far out of North America, given specifically how it books early for Europe. Any color by region? Is it tilted more towards Northern Europe or the Western Med where everything is consolidated to in the Med? Any additional color or how the Brits are also booking?

Hi, Tim it’s Michael. Europe is looking quite good for 2017. When we look at our forward bookings obvious Eastern Med capacity is down versus last year and the year before. We’ve been aware of that. So it’s pretty all over Europe. So Northern Europe obvious is doing quite well and also Western Med. European market typically a later booking than the American market. It’s the American market that seems to be doing quite well at the momentum for Europe. And the British market surprisingly is quite robust. We were thinking that we’d see more of an impact. There is a little bit of an impact in onboard spend, but nothing really material.

We’ll see in a few weeks.

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

Hi good morning guys. I want to ask the Double-Double question a little bit differently. One of the questions we get a lot from investors is how are you going to achieve the Double-Double next year without buying back a significant amount of your stock or getting some massive benefit from Pullmantur? Can you help us think about the bridge to get around or get close to the Double-Double range? Meaning if you do a midpoint this year of called $6.05, from a very high level, how do you get up close to that $6.78 or $6.80 number that would be pretty helpful?

Thanks Steve. Obviously, we won’t kind of talk about any guidance for next year. But really you need us to continue to through strong cost control and have modest yield improvement and that gets your most of the way. And then obviously there is some benefit we get from the deconsolidation of Pullmantur, but that’s really a small amount of that pie.

Steve it’s Richard here. And one of the things that we’ve tried to emphasize for the last three or four years is we put in place the Double-Double program with an idea that we want to motivate our team and focus our team on a particular target. But it wasn’t something and we’ve said this before that required heroic efforts. So we do need good cost control. We think we have been showing that. We do need moderate yield improvements. We think we’ve been showing that. And I think as you look to the Double-Double year obviously, it’s a complicated set of all the things that happened in our business, but as we simply look at where we are today with a moderate kind of yield improvements that we’re looking for we don’t think we need to do anything heroic to make the Double-Double and we continue to believe we’ll do it.

And just one more comment, Steve, I think just always appreciating the sensitivities because every 1% change in yield is about $70 million and so by just keeping your cost managed most of that drops to the bottom line and that in itself drives that difference in earnings.

Okay. Great. Second question, and you might kill me for asking this, but, I know we are not even remotely close with 2017 or done with 2017, but have you given any thought to what's beyond 2017 and what is beyond the Double-Double? Looking back, is this something that you -- you have fully embraced it, but is there something that potentially could come once this is over? Meaning another type of program like the Double-Double?

So the beauty of having Steve, I think we’re not looking any further, it’s a reasonable question. It’s in fact something that we ask ourselves all the time and I did actually. I think I included in my comments something that the Double-Double is a step on the journey. We in terms of what comes after Double-Double, I don’t know whether there will be another program of that type or some other type. The Double-Double was really the focus on a particular phase in our history and I think it served that role very well. As we look at 2018, we do have a couple of things that are quite exciting. We do have the force of the Oasis Class ships. But I’d say even more so 2018 will show Edge Class and the Edge Class is a new class of ships, which I think in its own way will be as innovative and as transformation as Oasis has been. We’re very excited about it. We’ll probably be talking more about that early next year. But Celebrity really has been on the roll and I think we’ll see the benefits of that if it continues going away its going we’ll see the benefits of that in 2017 and 2018 and when Edge comes I think people are really going to be blown away. So I’m very excited 2018, but the importance of a program like Double-Double is to focus on a particular goal. And one of the things that’s been successful for us is everybody is focused on achieving the Double-Double in 2017 and so that’s our first one and I will be careful not to delve too much on what comes after.

Okay, great. Thanks for the color. I appreciate it.

Your next question comes from the line of Harry Curtis with Nomura.

Good morning. The first question is, historically when you've headed into wave season and a stronger than normal booked position, do you think you're borrowing from wave, or does that usually lead to stronger incremental pricing because you've just got less inventory to sell?

Hi, Harry. Traditionally as we’d had a stronger book position obviously the need is less. But if you were to do it kind of do it on a capacity adjusted basis, I would say that typically that gives us good tailwinds coming into WAVE as we’re in a stronger position as we need less. So I don’t think necessarily it’s an indicator, but certainly being a stronger position allows you to take advantage of the demand as it comes in.

Thank you. And I just wanted to move quickly to China, because it's been one of the key pillars of the bear thesis and the consensus for next year is that pricing in China is going to be down 10% to 15%. Can you give us your perspective on what demand is going to look like -- demand growth is going to look like in China next year? Do you think that the supply growth is going to be as big as some would have you believe, given that much of the capacity is coming in the back half of next year?

Hi, Harry, it’s Michael. China is very much a developmental market. It’s we believe significant opportunity. We’ve been in the market for several years now. It represents about 9% of our overall capacity in 2017. Interestingly in 2017 for Royal our overall capacity in the China market is flat to slightly down because of the sale of Legend which takes it out of the secondary cities. And also for industry capacity in 2017, it’s actually relatively low growth year in relation to the past years, which is probably a good thing. And certainly in Shanghai which is 60% of the China market approximately the growth in 2017 in Shanghai is less than 10%, which is one of the lowest rates we’ve seen for quite some time. Overall China is accretive to yield and we’ll continue that way. And as Jason commented earlier, our current forward book position if Q1 China is looking good.

That's great. And just a quick follow-up Jason in China. What efficiency measures can you take even if pricing is flat there to improve your profitability?

Hi, Harry. I'm just going to jump in and give some comments on this. I mean we are very much engaged in developing the market. So at the moment we’re investing in China. We’re investing in developing distribution and developing the channel. So at the moment, our focus is developing the market and investing in the market. We believe the opportunity is significant into the future. And we’re not actively pursuing efficiencies from that perspective. We’re looking at investing and developing.

Your next question comes from the line of Greg Badishkanian with Citigroup.

Just a follow-up on the comment that Q1 China is looking good, which is encouraging. How are your negotiations right now with the larger charter companies going for 2017? Any color and when you think those will be completed?

The negotiations are in process. We're feeling quite good about where we are in terms of the major charter is in the wholesalers in the market. Obviously we’ve a long-term relationship with the key charters and we’re encouraged by what we’re seeing for '17 in terms of the dialogue and negotiations that we have with them and we feel quite optimistic about that.

Good. I won't ask you to quantify optimistic, but…

You could ask Greg. We just wanted to…

How about what's driving the strength in the North American passengers going to Europe? Is it just easier comparisons things, maybe people are less concerned about going to Europe, is it less capacity, what do you think is driving that improvement?

Well, I think it's tough to a pinpoint one thing, obviously I think when there is less events that certainly helps bring confidence and confidence of people's travel. But I mean I think as we’ve been saying for some time, we continue to see strength from the North American consumer, and not only do we see that in terms of their current bookings in Q4 and for next year, but also we see it and how they spend each and every day on our shifts. So I don’t know there’s a specific game, but obviously Europe is a incredible destination and there is a lot of demand for it and obviously there were some events last year that that maybe caused on individuals to pause and looks like they’re revisiting that for next year.

Your next question comes from the line of Sharon Zackfia with William Blair.

Hi, good morning. Just a couple of questions on the pound specifically. The more recent devaluation, I'm curious if you're doing anything to help bolster onboard spending? I know you said earlier it has remained pretty resilient, but I didn't know if that took into account the more recent step down? Then separately Jason, can you remind us how much you have left on your share repurchase plan at this point?

Sharon, I’ll just talk a little bit about the pound and how are approaching that within - from the perspective on both spend. We’ve ratcheted to that up or pre-cruise marketing, we’re bundling packages more aggressively than we’ve done in the past and we see a better response pick up rate from the British consumer in terms of the packaging that we put into the market. So I think we see it a little bit, but it’s – I think less than we originally thought we would see in terms of devaluation. And then Sharon on your question on the share repurchase, we did not complete the $500 million share repurchase in the third quarter.

Is there any timing on when the board would discuss another share repurchase program?

The Board is always evaluating things such as share repurchase for capital returned to shareholders and obviously recently the 28% increase in the dividend was one of those actions they thought was good idea to do.

And I would also a pay attention to our free cash flow figures, since obviously that is a key factor in the Board's thought process.

Your next question comes from Assia Georgieva with Infiniti Research.

Good morning. This is Assia. I had a couple of related questions, first of all Jason, you mentioned Empress was about $0.06 to $0.07 to Q4. Is that about a 1% yield detriment in the quarter?

It's fairly over 100 basis points for the quarter, so with that that would be at about 7%. And then also the other some rounding as well in terms of what the implied deal for the fourth quarter.

Okay. Thank you. And given that even for Q1 2017 the ship was opened up relatively late compared to what you have traditionally done. Should we expect a similar detriment for Q1?

Assia, it’s Michael. No I think we opened up earlier we’ve got marketing behind it. So I think we really were holding it late in '16 and hoping for some - for the itinerary change but we’re in a better position for 2017.

Okay. That make sense. Thank you, Michael. And lastly without having to quantify anything on Q1 because I know you'd rather not do that, we are facing pretty tough comps and I think the industry in general had done very well. Do expect that on a sequential basis Q1 might be little bit more of a challenged than Q4? Just very qualitatively?

I think that there are several factors obviously Q1 on the yield side will have a positive impact from just a deconsolidation of Pullmantur. But also the strength that we’ve seen for Harmony and Ovation have been quite strong and Harmony will obviously be in the Caribbean and Ovation will be in Australia, and demand from both of those markets and for those products have been exceptional. So I wouldn’t necessarily say that it is obviously a tough comp because Q1 was strong. But there were some good tailwinds going into the first quarter.

Your next question comes from the line of James Hardiman with Wedbush Securities.

Good morning and thank you for taking my call. The commentary on 2017 load factors was pretty consistent with what you said coming out of the second quarter. I want to focus on the last few months in both the Caribbean and Europe. I think in the Caribbean a lot of investors have been spooked as of late, as we look at some of them pricing analysis that is out there. Obviously in the past it's always difficult to know how many rooms are being booked at a given price. But maybe you have seen some of that in houses or at least some of those advertised prices. Maybe help us connect the dots there? Is it the same as normal that it's not a whole lot of rooms being booked at those rates? What are your thoughts there? Then on Europe, it sounds like over the past few months, bookings and pricing has strengthened as we get further and further away from the terrorist activity, but just distill the last three months here rapidly?

Well, I think as you’re going from early August to today, people began to transition and focus on their vacations for 2017. I think some of - as Michael commented, there were some tactical activity that you probably saw on the market and that was driven around Hurricane Matthew and you know probably the best example where you would have seen that. But we’ve actually seen very good booking trends, forward looking for the Caribbean and for Europe, a lot of that at this point in the year is driven by the North American consumer because they book further out and - but as Michael said, we’re also seeing positive trends happening for Europe.

That's very helpful. And then I guess just once and for all with respect to this Double-Double, the EPS target is technically $6.78 but I think you mentioned maybe off-line that you're going to need to get to $7 for the ROIC target to still be in play. Which number - as we get closer to 2017 that $0.22 difference becomes pretty material. How should we think about earnings power for next year implied in the Double-Double?

At this point we’re not going to get into providing guidance for next year and I think for us, we’re focused on hitting both targets, the earnings target as well as the ROIC target and we’ll address specifically what we think that earnings range will be in late January, early February when we provide guidance for next year, but a good try.

Your next question comes from the line of Dan McKenzie with Buckingham Research.

Good morning. Thanks guys. On the 1.6 million new to cruise, how does that compare to last year? I am trying to get a sense of the implied growth rate here and also how that rate might be trending, that's first. Second, I'm curious what's driving that and what percent of the North American revenue we're talking about here?

Hi Dan, it’s Michael. $1.6 million new to cruise, that’s for globally and that's hallmark is obviously is disproportionate in terms of new emerging markets, for example China. In the United States, which of course is significant percentage of our overall business, approximately 50% and we’ve had a very productive year, this year we need to cruise and in fact over time it’s being slightly on the decline. This year, we've turned that around and we’ve seen a really positive increase in new to cruise and of course that’s a very much part of our focus is. New to cruise not only in merging new and developing markets, but also in established markets like the U.S. so we quite encouraged by what we’re seeing. And part of that the campaign that we launched at the beginning of the year and also Celebrity's campaign, both of those campaigns have components that are very much attractive to new to cruise and when you do the research on how our positioning and how we’re communicating, resonates with new to cruise, it’s very positive. So we’re beginning to see that coming through in our bookings.

Dan, this is Richard, and I’ll just add a comment because we often get questions about trends of things that have changed, and it’s clear the questions are gear to is the world changing, is this the trend in the exogenous variables affecting us. But as Michael pointed out, we actually worked to change trends. So there are periods of time, where we for example as both Royal - as Michael said, both Royal and Celebrity made a conscious decision this year that there was a stronger opportunity, a good opportunity with first time cruisers. And so they actually focus more of their marketing, focus more on their message and they actually worked to build that. So when you look at a trend, it’s not just is the world changing, but to some extend it's also what we are doing to shift our customer base and then that some time messes up nice trend lines when you trying to extrapolate from external behavior.

Very good. That's very helpful. Thank you. A second question here, wondering how big the impact to net yield is from the new revenue management technology implemented a while back. And I'm wondering what inning we are in with respect to its implementation. And for some perspective when airlines put in new revenue management they tend to go slow. And I'm curious how you would characterize where we are with respect to that to Royal?

Thanks for the question Dan. I think it's one of those things that's impossible to quantify and we putting new yield management systems several years ago and everyday that goes by the yield management systems get stronger because the information from the past and how we read information of what’s happening in local markets and so forth gets better and better. So it’s truly a tailwind to quantify is next to impossible to do but it really I think one of the greatest benefit that gives is the ability to manage demand globally and that allows us to seek the highest yield for every cabin that's available from anyone of the world and that's obviously great on a revenue management standpoint, it’s also great to be able to taking advance of that diversification.

Your next question comes from the line of Stuart Gordon with Berenberg.

Good afternoon. Couple of questions. The first one is on the return of invested capital, does the Pullmantur change make any difference to the returns you make? And secondly in China, could you talk about how next year the changing proportion of capacity? Is it moving from pure charter to a more direct distribution? Thanks.

So, on the ROIC side, on the invested capital side there really is no difference, because as I said in my remarks, we still own those assets. But surely as we've been talking about for years Pullmantur was a turnaround opportunity and this allows us to some of those turnaround issues as well as get paid for the ships and services. So it's definitely accretive to ROIC. But it’s on the earnings side, not necessarily on the invested capital side. I’ll let Michael to take the China question.

Yes, on the evolution of distribution that something obviously that we’ve been focused on for a quite some time and journey that we’re taking. I think what we’re seeing is the beginnings of the development of distribution in terms of starting to narrow and look very much like the North American distribution model in terms of our focus very much is engaged in opening all channels to market and optimizing each channel that includes our wholesalers charter model, which we believe has done exceptionally well up to this point, and we’ll going to continue working with our charters, but we’re also developing direct, we’re also developing retail next cruise and that’s very much what we’ve been engaged in ever some time. So I think that’s the journey that we’re taking and over time we’ll see the mix balance out in a very similar way to the - of the markets, more developed markets.

Thank you. I apologize for final alarm here.

We have time for one more question.

Certainly. Your final question comes from the line of Ben Chaiken with Credit Suisse.

Hello. Following up on Europe and the North American consumer, what are you doing this year to encourage those customers to return? Is there any education process or promotions? If so, when did that start and is that with the travel agents or the customers directly?

Yes, I don’t think it’s a necessary education, I just think it’s - there’s been less events that turned off to consumers last year and as I said before is allowing them to revisit the opportunity to go to beautiful and great destination in Europe. I think that’s probably more what it is versus anything specifically we’re doing in terms of education.

Got it. Can you remind us what the overall net yield decline was in Europe for 2016 and where you're going to lap next year?

We haven't given that number, but it is down year-over-year.

Okay. Are you going to quantify some of this positive trends that you're referring to with the American consumer coming into Europe?

Well, I mean the only I could quantify is that we’re having both rate and volumes next year relative to same time last year.

Thank you for assistance Victoria with the call today. And we thank you all for your participation and interest in the company. Carol will be available for any follow-up questions you might have and we all wish you a great day. Take care.

Again, thank you for your participation. This concludes today's call. You may now disconnect.