Lindblad Expeditions Holdings Inc (LIND) 2018 Q3 法說會逐字稿

Good morning, and welcome to the Lindblad Expeditions Third Quarter 2018 Financial Results Conference Call. (Operator Instructions) Please note this event is being recorded.

I would now like to turn the conference over to Craig Felenstein, CFO. Please go ahead.

Thank you, operator. Good morning, everyone, and thank you for joining us for Lindblad's Third Quarter 2018 Earnings Call. With me on the call today is Sven Lindblad, our Founder and Chief Executive Officer. Sven will begin with some opening comments, and then I will follow with some details on our third quarter results before we open the call for Q&A. You can find our latest earnings release in the Investor Relations section of our website.

Before we get started, let me remind everyone that the company's comments today may include forward-looking statements. Those expectations are subject to risks and uncertainties that may cause actual results and performance to be materially different from these expectations. The company cannot guarantee the accuracy of any forecast or estimates, and we undertake no obligation to update any such forward-looking statements. If you would like more information on the risks involved in forward-looking statements, please see the company's SEC filings. In addition, our comments may reference non-GAAP financial measures. A reconciliation of the most directly comparable GAAP financial measures and other associated disclosures are contained in the company's earnings release.

And with that out of the way, let me turn the call over to Sven.

Thank you, Craig, and thanks to all of you for joining us on the call today. Lindblad's strong operational momentum and -- continued into the third quarter as the thesis we laid out when we accessed the public markets back in 2015 continues to play out.

The increased capacity we are building is being filled with by growing demand from our core base of experienced guests, while at the same time, we are seeing more and more first time travelers looking for authentic and high-quality expeditions with an operator who has over 50 years of experience exploring the world's most amazing locations.

Reservations throughout 2018 have remained very strong and the third quarter was no exception. Bookings during Q3 were up 16% versus a year ago, and we are seeing broad-based demand across our fleet and the geographies we explore, and this momentum has accelerated quarter after quarter. One of the questions we periodically get from the investor community is how we would fair during a period of economic instability. While there are many factors that would influence that, history has shown that we tend to be more resilient than most, especially those in the more traditional cruise sector. An interesting snapshot of this is during the month of October when the stock market overall has taken a pretty significant hit, Lindblad generated record bookings for the company with October bookings more than doubling versus the same [period] in 2017. Obviously, this is a very specific data point, but I did find the trend interesting nevertheless.

One other metric that highlights the growing demand for expedition travel is our ability to maintain high occupancy rates even as we have expanded inventory. Occupancy during the third quarter across our fleet increased to 92%, a reflection of the accelerating demand we are seeing from both new as well as returning guests and it gives us confidence in the long-term growth prospects for Lindblad as we continue to increase our capacity.

Despite the growth in occupancy, our financial results in the quarter declined versus a year ago. But as we have highlighted throughout this year, a softer third quarter was always expected primarily due to the planned timing of our drydock and positioning days in 2018 versus 2017. Timing for drydocks and positioning is influenced by a variety of factors, however, while timing within a year may change, typically, over the course of the year, our drydock and positioning days remained similar for each vessel.

As we mentioned on our last call, the one destination that did perform slightly below expectations in 2018 was the South Pacific aboard the National Geographic Orion. We arguably had too much inventory for that geography in 1 year. We have rebalanced our inventory in 2019 for this remarkable geography, and we are already at 90% of the expected total 2019 revenue for the Orion.

Craig will discuss our financial results in a moment, but our full year guidance remains unchanged and our enthusiasm continues to grow with regards to the long-term growth opportunity. Our first new build, the National Geographic Quest, completed her first full year of operation in July. Guests have really enjoyed all this innovative U.S. expedition vessel has to offer. And there's been no sign of cannibalization across our existing fleet as evidenced by the 91% occupancy we have generated year-to-date.

We are also seeing significant demand for the Quest sister ship, the National Geographic Venture, which was officially delivered yesterday. And I'm excited to be joining our guests on the inaugural voyage on December 2, in California. The Venture, much like the Quest, combines expedition excellence with a level of comfort new to American flag passenger ships.

Our other new build, the National Geographic Endurance, is on target for delivery in the first quarter of 2020. We released her first year itineraries this month and sales have been off the charts, with an instant reaction to both the ship and destinations that are only uniquely possible because of her PC5 ice-class, the highest ever for a purpose-built passenger vessel.

I recently went to Norway to inspect a mockup cabin and it was a remarkable blend of Scandinavian practicality and sheer elegance. There'll be a host of innovations on Endurance to amplify our expedition heritage, which in no way has been sacrificed as a result of her incredible style and comfort. After all, we named her in honor of Sir Ernest Shackleton, who'd roll over in his grave if that expedition excellence were not the prime driver. As we work to finalize the Venture and the Endurance, we also continue to explore the possibilities with regards to a second new blue-water ship. As usual, we will be sure not to overextend ourselves with regards to capital needs, and we will explore all possibilities from a company and from a guest perspective before signing a new shipbuilding contract.

By marrying additional capacity with a dedicated and growing loyal customer base and decades of experience, we will be able to further build upon our proven track record of delivering unparalleled expeditions to world's most remarkable destinations. When you're inclined to explore the world's ocean, you want that experience to be meaningful in a multitude of fronts, you don't want time wasted, you don't want subpar leadership, you definitely want to go with people who know what they are doing who exude passion for their work, who create a sense of shared purpose. Yes, it's nice to have amenities, good food, a measure of luxury, and we certainly do, however, it is not the primary driver. Authentic expeditions are. We've kept our new builds relatively small as it relates to guest count. The Endurance takes a mere 126 guests. This was the result of deep thought and analysis, captains, expedition leaders, naturalists, guests, service heads were all involved in the calculus.

The conclusion overwhelmingly was that the experience radically deteriorates when you move beyond those numbers, which from our perspective is totally unacceptable. No matter what, no matter which company people travel with on an expedition, it's not going to be inexpensive, it's a big, big decision. On our new Northeast passage voyages in 2020, the price tag per person is an average of $50,000 for 24 days. Yet, our 2 departures sold out in less than a month. That speaks to our heritage and our sole mission to do whatever it takes to provide our guests with an awesome experience.

It's not always easy and periodically things conspire the result in an isolated setback here and there. An example is the voyage we had this quarter departing Tahiti on August 30 on the National Geographic Orion. Three unprecedented storms joined forces ahead of the ship. It was clear that it would be impossible to visit the places our guests expected and the voyage would be incredibly uncomfortable. We decided to abort, chartered a plane from a remote Polynesian island and brought guests back to Papeete, Tahiti's capital, for flights home. We offered cash refunds or a full credit on any future voyage and almost all took the latter.

Yes, we took a small financial hit, but we offered our guests -- what we offered our guests was far more than any obligation would dictate. It was the right thing to do, and I know that when you put your customer -- customers first, you will be rewarded. For over 50 years, this approach has been at the forefront of everything we do. It's more than a business, it's a bond between us as a company and our guests and that is ultimately the secret sauce for our success these past decades and what we expect will be the backbone of our growth in the years ahead.

Now let me turn the call back to Craig.

Thanks, Sven. Lindblad's strategic investments to expand capacity and further develop our sales and marketing infrastructure continues to generate significant returns. While our reported financial results were impacted this past quarter by the planned timing of drydocks in 2018 versus 2017, our year-to-date results are up significantly with revenue up 18% and adjusted EBITDA up 31% through September. Plus reservations for future travel remained very strong as we capitalize on the growing demand for immersive and authentic expedition travel. We already have over 25 million more in bookings for 2019 than we did at the same point a year ago for 2018. Certainly, a significant portion of that is related to the upcoming launch of the Venture, but we are seeing nice growth across virtually our entire fleet and diverse set of itineraries.

Turning to the third quarter. Lindblad delivered revenue of $87.2 million, an increase of 3% versus the third quarter a year ago, as 33% growth at Natural Habitat was partially offset by a 4% decrease at the Lindblad segment. The revenue increase was more than offset by higher costs primarily related to the growth at Natural Habitat and scheduled drydock timing, which resulted in a $6 million or 26% decrease in adjusted EBITDA to $17.1 million.

Turning to each of the segments. The Lindblad segment generated revenues of $64.5 million, a decrease of 4% or $2.9 million versus the third quarter a year ago. As we have highlighted throughout the year, in 2017, drydocks for the National Geographic Endeavor and the National Geographic Orion were primarily completed during the second quarter. While in 2018, both the Endeavor and Orion were scheduled for drydock during the end of the third quarter and the beginning of Q4. As a result, despite the addition of the National Geographic Quest for a full quarter, available guest nights declined 1% during Q3. The revenue decline this past quarter also reflects a 6% decrease in net yield to $983 per night as higher pricing across most itineraries and an increase in occupancy to 92% was more than offset by changes in itineraries on the National Geographic Orion. Net yield year-to-date is up 3% to $1,037 per night, reflecting the strong occupancies and higher prices across our fleet for the majority of the year.

Please note that as planned, available guest nights will also be down during the fourth quarter, mostly due to drydock timing, but we do expect that occupancies and net yields will expand in Q4. We're also extremely excited to add the National Geographic Venture to our fleet in Q4, actually it was taken on yesterday. The financial impact will be minimal due to the December timing of its launch, but it will certainly be a significant driver of growth for us in 2019.

Turning to the cost side of the business. Lindblad segment operating expenses increased 2%, primarily driven by an 8% increase in cost of tours, partially offset by an 18% decline in G&A expense, mostly attributable to lower stock-based compensation expense due to shares granted under the CEO allocation plan a year ago and also due to the majority of outstanding options being fully expensed at the end of 2017. 2018 also included higher personnel costs to support our ship expansion. Excluding stock-based compensation, depreciation and amortization and reorganization of severance costs, Lindblad segment operating expenses increased 8% versus the third quarter last year due mainly to the costs associated with the additional drydock days as well as a full quarter of operating the National Geographic Quest.

We are also continuing to see an increase in fuel costs due to higher pricing. Fuel costs in the quarter increased 14% versus the prior year and fuel is 3.4% of revenue versus 2.8% in the third quarter of 2017. We do anticipate fuel costs will continue to increase for the remainder of the year and into 2019.

The third quarter of 2018 also included a 4% increase in sales and marketing due to higher advertising spend and increased commissions associated with the increased sales.

Overall, adjusted net cruise cost on a per night basis increased to $722 -- $720 due to the additional drydock days during the third quarter of 2018. During drydocks, we incur operating expenses with no corresponding revenue days, so it significantly negatively impacts costs on a per night basis.

Overall, at the Lindblad segment, the 4% revenue decrease and higher costs related to the timing of drydocks resulted in a $6.6 million decrease in adjusted EBITDA to $14.7 million. Year-to-date, the addition of new capacity has delivered significant operating leverage at the Lindblad segment with revenue growth of 16%, resulting in 29% adjusted EBITDA growth.

At the Natural Habitat segment, revenues during the third quarter grew 33% versus a year ago to $22.7 million due to additional departures and higher pricing. Adjusted EBITDA increased 33% as well to $2.5 million, with the revenue growth partially offset by a 32% increase in operating expense due to higher marketing and personnel costs to drive long-term growth initiatives as well as higher cost of tours for the additional departures.

Total company net income available to common stockholders in the quarter was $5.1 million or $0.11 per diluted share versus $9.3 million or $0.20 a share reported in the third quarter a year ago as the lower operating results and increased DNA related to the launch of the Quest were partially offset by $1.8 million lower stock-based compensation expense.

Turning to our balance sheet. We remain extremely well positioned to invest in future growth opportunities. We ended the quarter with $106 million in unrestricted cash. Free cash flow for the 9 months ended September 30 was a use of $6.3 million, which included $39.1 million spent on the new builds. Factoring an only maintenance CapEx, free cash flow for the 9 months was $32.9 million, an increase of $9.3 million from the same period a year ago.

Turning to the rest of 2018. The Lindblad segment is currently pacing nearly $30 million ahead of the same period a year ago, and we are already at 100% of our full year projected ticket revenues for 2018. While we continue to see increased bookings month on month versus 2017, at this point, the majority of those reservations relate to 2019 and 2020. So we do not anticipate booking any significant additional net revenue for 2018. And we're also at 100% of 2017 full year ticket revenue at the same time a year ago.

Given the current operating environment and sustained positive booking trends, we continue to expect total company tour revenue in 2018 between $308 million and $315 million, 16% to 18% growth versus 2017 and adjusted EBITDA between $54 million and $57 million or 24% to 31% growth versus 2017.

As I mentioned earlier, fourth quarter results for 2018 will be negatively impacted by the planned timing of scheduled drydocks. Additionally, as we highlighted throughout the year, the fourth quarter will also include the majority of the startup costs associated with the launch of the National Geographic Venture in December.

Thank you for your time this morning. And now Sven and I would be happy to answer any questions you may have.

(Operator Instructions) The first question comes from Greg Badishkanian with Citi.

This is actually Spencer Hanus on for Greg. So I just had a couple questions. You called out changes in your itineraries is having an impact on your net yields for the quarter. Can you just give us any additional color on this? And how you kind of anticipate this to -- trend going forward?

Sure. So the major change in itineraries is really related to the National Geographic Orion. Last year, in the third quarter, she was predominantly operating throughout Europe whereas this year, as Sven mentioned in his comments, she was primarily operating throughout the South Pacific. That really had 2 implications. The first was the price point in the South Pacific was not as high as it was year-over-year ago so that certainly had an implication on a net yields. And the second item was that the occupancy because we added so much inventory, the South Pacific was below where it was on the Orion at the same point a year ago. So those 2 things combined really resulted in the lower net yield this year versus a year ago across the company. Interestingly enough, next year when we look out to our third quarter -- early trends in the bookings that we're seeing for the Orion next year in the geographies that she's going to travel next year, we should see a reverse of that effect because we're seeing some really high pricing, we're seeing some really high occupancies. So all trends are pointing in the right direction. It really was just this year pretty much being an anomaly versus last year.

Okay, perfect. That's really helpful. And then in terms of your partnership with National Geographic and obviously, you guys mentioned that you were expanding that. Can you just talk a bit about any additional leverage you can pull to kind of capitalize on that partnership and how this expansion is going to come change things?

Yes. Sven, here. So we are expanding the partnership into Latin America in terms of sales and into Canada. Previous to this latest change, we were only -- our license with National Geographic only applied to the United States, Australia and New Zealand. And so we're adding those geographies, and we are in the process of building or beginning the building of those markets together with National Geographic. And we believe that over time, this will be -- add some significant value to the overall productivity. It will by no means be at the level of the United States, but it will be additive to be clear.

The next question comes from Chris Woronka with Deutsche Bank.

I wanted to ask you as you bring the Venture on, I guess, next month and you've looked at your bookings for that, which sound pretty solid. Is your prior experience that you then kind of -- the other ships in the fleet, you tend to see new customers book into those? Or do you see more new customers booking into the newest hardware?

It -- it's really neither nor. It's a -- the new customers are generally attracted to a geography and sometimes, it winds up with the newer ships and sometimes it winds up on the ships that we've already had. And we don't see a distinct pattern. What we do see with past guests, particularly if a new ship is going into a new geography, there's a particular level of interest to try that out, so to speak. But with new guests, it's not that big a difference between the old and the new.

Okay, that's helpful. And then, just want to ask I know -- I think you've talked about it a little bit before, but now that Royal Caribbean has had Silversea for months, and I totally appreciate it's not the truly comparable product. But do you think there's any overlap you guys can see in your customer base or booking patterns to suggest that they might be running the business differently and potentially approaching some of your core customers?

Well, I think in this day and age, obviously, with the web and such, I think a lot of people who are interested in the possibility of expedition travel probably do a lot of research and look around at our sales look at Silversea, look at various others, and that's kind of inevitable. I really -- pretty much of the firm believes that the category as a whole is going to get a lift because there is more attention being paid to it. So while it was very much a niche segment of the traveling public, I believe, that's becoming less and less so. And in fact, all statistics suggest that it's the fastest growing segment of the tourism industry. Not in absolute numbers, but related to itself or percentage growth as it relates to the niche itself. So people develop an interest and then what they immediately do is they start generally doing research. And when it comes to doing that research, in many instances, I believe, it will work in our favor because I think what people are looking for above all else is an authentic experience, a high-quality experience, in many instances, perceived at the time to be a trip of a lifetime, turns out that's not usually the case because people get kind of addicted in many ways and then they come back for more. But -- and they want to make sure that they are going to get the best value out of the experience, and that includes how their time is used, they value experience very, very highly, they value reputation very, very highly. And of course, the relationship that we have with National Geographic is also particularly helpful in that regard because it combines 2 very, very established entities, National Geographic and ourselves, the combination of which lends an enormous amount of credibility to the notion of taking an expedition. So I think your question was really focused on the effect of competition. In many instances, in the past, I think that the competition has grown markets and then those who are committed to doing the best possible job benefit the most out of that competition.

Yes, that's very helpful. Very good answer. And then just finally from me, as we think about 2019, is there anything we should be thinking about in terms of itinerary changes or additional drydock days? Is there anything to kind of call out there that wouldn't be obvious yet?

Well, every year -- and of course, that's planned a couple of years in advance, there are some itinerary changes. Primarily, our new areas of it that we have established have potential interest like, for example, the Russian Far East and Northern Alaska on the Orion next year, which is -- which was done in part to offset what clearly was somewhat more inventory than was ideal for the South Pacific in 2018. So we did basically, as we reduced the inventory by more than half in the South Pacific and then moved north into the Russian Far East and Alaska, and that's an example of a change of itinerary, which has resulted -- which has produced very, very, very good results. As I said earlier, the Orion for 2019 is 90% of what the entire occupancy was for 2018, very early in the game. So that -- so we're always changing itineraries or deciding to explore new geography. The South Pacific, for example, even though we were somewhat overextended this year, we did put a very strong footprint in a geography, put a lot of effort behind that. And I think with the rebalanced inventory, that will become a very, very important geography for us over time because it's a very underutilized geography generally speaking and of huge, huge interest. But as far as drydocks go, there's nothing appreciable -- no appreciable difference in drydocks next year.

Yes. And the one thing I will follow up that with -- the 2 big changes for next year certainly are the Venture launching of the end of December -- or sorry, the beginning of December for us this year, shall certainly have a significant amount of revenue days in 2019, which you didn't have this year, so that will certainly be a big positive. The one, I would say, slightly negative from a day perspective is because of where some of our vessels are operating the number of transit days next year is a little bit higher than it was in this year in 2018. So we'll give some more clarity on that when we give our guidance on our next call for our year-end earnings results. But overall, as Sven mentioned, there's nothing too dramatically different next year then there is in this year.

The next question comes from George Kelly with Imperial Capital.

Couple questions just to start on the current booking environment. Sven, you mentioned that October was really strong and I have may have missed if you gave a reasoning for it. How -- what did October look like? And where there any kind of promotions or special programs you were selling in that month?

Yes. So it's really a -- it was a combination of what has been accelerated future growth organically, if you will, with our existing inventory, combined with launching or announcing the National Geographic Endurance's new programs, which really have just been flying off the shelf, so to speak. So people are responding incredibly well to that ship. And as I alluded to, for example, the 2 Northeast passage voyages, never done in our history, totally new, 24 days each. They completely sold out in the month of October. So it was a combination of newness, which was very, very dramatic and a sort of regular tendency of improved results on the fleet more broadly. So the combination of those things was explosive in October, and I would -- and I would expect that they will continue.

Yes. The one thing I'll follow up on is when you look at 2019, we've already booked $20 million more in future reservations for '19 than we did at the same point a year ago for 2018. We're also, at this point, have double the amount of inventory in 2 -- or double the amount of bookings for 2020 than we had at the same point for 2019, 2 years ago. So all in all, it's looking very strong for a forward-looking perspective.

That's outstanding. And then second question, so Quest now in its -- I guess, sort of entering its second year, have you seen -- what have you learned? What does the -- that booking trend, has it slowed down at all? How does that look as it ages a little bit?

No. We haven't seen any slowdown in Quest bookings year-on-year. When you look at the trends for 2019 versus where it was in the same place for 2018, the trends are very similar in terms of the amount of forward bookings that we've taken. And we continue to see bookings well in advance of future travel, which is great to see obviously because as we added Venture, we're seeing more and more inventory in some of the geographies that overlap. We're seeing really nice sustained booking strength in both of the new vessels as well as frankly, the older inventory as well.

Okay, great. And then 2 last questions from me, both modeling related. Can you quantify the drydock and the Venture costs for the startup costs in Q4? And then secondly, how much new build CapEx is there remaining in the fourth quarter and in 2019?

Sure. I'll give you a few details on each of those things. So when you look at the fourth quarter, there's a couple of factors. The first is that you mentioned the Venture launch. The Venture launch will probably be about $2 million of higher costs this year versus a year ago, all in, on a net basis when you look at the fourth quarter of 2018 versus fourth quarter of 2017, so that certainly a headwind, and we've talked about that throughout the year and that was certainly included when we gave our guidance at the start of the year. The drydock implications, we do expect there to be a decline in available guest nights somewhere in the high single-digit range, although a lot of that is in shoulder season inventory. So it shouldn't have as dramatically financial impact as we saw necessarily in Q3 with the Orion and where she was operating. So that's the 2 implications for 2018. When you look to 2019, when you look at the available guest nights for next year, we certainly anticipate the growth in available guest nights for next year -- we're not yet ready to guide to it, but it will be somewhere in the high single or low double digits at this point, and we'll give you more clarity, like I said, on our February or March earnings call.

Okay. And then just on the -- how much Venture CapEx is in Q4? And then will there be any major Endurance CapEx in 2019?

Yes, so the majority of the venture CapEx has already taken place. So that you will see the final payments made in -- that took place in October, so it'll be several millions of dollars in the fourth quarter. In 2019 -- and frankly, at the end of 2018, there's one other factor that we really haven't finalized yet, and that is the effect of whether we -- when we sign a contract for a new blue-water 2 vessel. Obviously, that will impact CapEx because it will put down payment on that vessel when the time comes. So if that happens at the end of Q4, that will be in '18. If it happens in early '19, it will be in 2019. The one thing I will say is with the payments of Venture and Quest having been completed, if we do make that payment in the fourth quarter of 2018, there should not be any significant new build CapEx in 2019. What you would see only throughout 2019 is any payments related to getting the Endurance ready for her 2020 launch, but the payments for the build of the Endurance -- the final payment is not due until delivery which will be in the first quarter of 2020. So I would not expect a significant amount of growth CapEx in 2019.

The next question comes from Greg Pendy with Sidoti.

Just wanted to ask on Natural Habitat, can you give us a bit of color on what's been driving that growth? And also, how we should be thinking about it in terms of FX into 4Q and then also maybe into 2019?

Sure. The big drivers for Natural Habitat is Ben Bressler and his team have done a fantastic job of adding itineraries in places where they're attracting more and more guests. They're seeing really nice growth across some of the staples that they've done. Historically, such as the polar bear inventory that they've had, they've been able to expand that due to additional guests, which has been fantastic. They also have been able to increase guests in other areas like their African Safaris as well as across Asia. So they're seeing nice growth across all of those geographies. And what they're doing is they're just attracting more and more customers, and they've done a really phenomenal job on that front. We do expect that growth to continue into 2019. We're not going to give color, specific color in terms of how much they're going to grow next year, but given their booking trends have a very high similarity to ours in terms they book well in advance. They have also had a very strong booking year in 2018. And assuming those trends continue, they're set up for some really nice growth in 2019 as well.

Is it possible that the business will become less seasonal? I think when you acquired it, it was heavily seasonal towards the polar bear tours? Are they broadening the itineraries maybe to other regions?

Yes, they've been able to do that and that's why you see the second half overall is very strong now as opposed to just the fourth quarter. They will continue to look for ways to drive growth in first and second quarter. But I would say, it's still going to be skewed for the foreseeable future to the back half of the year and certainly the fourth quarter.

(Operator Instructions) The next question comes from Barry Haimes with Sage Asset Management.

So my first question, you may have answered this one, but was going to be capacity increase, '19 versus '18. So would that be at the high single-digit to low double-digit available room nights? Is that the right way to think about it?

That's correct. There's still a few itineraries on a few certain vessels that we're still finalizing for the fourth quarter of 2019. So I'm not quite ready to give a finalized number yet, but that is correct. That should be the expectation for next year.

Okay. And then I think you said your bookings are up about $20 million versus same time last year. So when you say your revenues are a little over $300 million, I think. So that would imply the bookings actually are up a little bit less than the available room nights for '19. Is -- am I missing something in that translation?

No. When you -- on a percentage basis, it's up more than that. Again, you have to remember, bookings is where we are at a point in time, right? So where we were at the same point a year ago versus where we are today for that same period. So when you look at -- when I look at bookings, for example, for 2019, the percentage growth that we're seeing for next year is very similar right now to the percentage growth that we saw in 2018. For bookings in advance, well, we have more dollars available. So the max dollars has increased dramatically. So what I would say when you are looking at the bookings for 2019, we're actually -- with the max revenue is up significantly, but the percentage growth of the bookings thus far is higher than the max revenue availability.

Got it. Okay. That's helpful. And then just my last question is when you guys are going through the thought process around new builds, is there an IRR or a hurdle rate? What sort of minimum financial threshold that you guys think about to greenlight one of these large ships?

Yes. Traditionally, and when I say traditionally, we've launched the Quest, we're building -- the Venture was just delivered yesterday and the Endurance is being delivered in January of 2020. But traditionally, when we build these vessels, we're looking for close to around 20% return on invested capital. It's typically a little bit less than that on a polar vessel because of some of the steel requirements of the vessel because of where it operates, a little bit higher than that on some of our coastal vessel here in the United States. So when we're building a vessel, we're looking to attract somebody to build a vessel, the anticipation would be that the return would be around that 20% number. We'd like to ensure that we're going to have a payback on these vessels of somewhere in that 6-year time frame, 6- to 7-year time frame, especially given that a lot of these vessels to be frank, can operate for 25, 30 years. So the return tends to be very high, but that's kind of the hurdle rate we're looking for.

(Operator Instructions) The next question comes from [Daniel Comley] with Lion Fund.

Just real quick, touching on your National Geographic relationship. Is there any insight you guys can give me onto how much that let you guys side step travel from season their costs?

You said side step? Just to clarify, you broke up a little bit. You said, side step travel agencies, is that what you said?

Yes, travel agencies. I know a lot of -- you guys rely on travel agencies less because of that relationship than most mass market cruise companies. So is there any way you can give some insight into how much does that side step...

Yes. Sure. So when you look at the breakdown of where we get our guests from, it's been relatively consistent over the last several years. So we typically get close to 40% of our guests come directly to us from all the marketing channels and referrals that we have out there in the marketplace. We do another 25% or 26% from National Geographic. So the folks who come to us through that organization, we do another 25% to 27% or so from third-party travel agents, again, that's been relatively consistent through the last several years. And the remaining percentage comes from affinity groups and folks of that nature. So that's kind of the breakdown, we haven't seen a real big shift in that over the last several years, and we'd expect that ratio to continue pretty strongly moving forward.

Okay. Seeing no further questions in the queue, this concludes our question-and-answer session. I would like to turn the conference back over to Craig Felenstein for any closing remarks.

Thank you, everybody, for joining us today. We're happy to answer any follow-up questions, so please give us a call here in New York and thanks, again for joining us.

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