Royal Caribbean Buys 50% of Sandals for $3 Billion

Royal Caribbean has agreed to pay $3 billion for a 50% equity stake in Sandals, the companies announced Wednesday, in a deal that values the Caribbean all-inclusive resort chain at $6 billion.

The transaction is expected to close early next year. The companies said the deal should boost growth for both businesses.

The stake purchase is the clearest signal yet of Royal Caribbean's intent to diversify beyond cruises and become a leader in vacations overall.

Why is Royal Caribbean buying a land-based resort chain?

The cruise operator already runs several private destinations for its cruise passengers. But it has been working to build out its land-based offerings.

Sandals and its Beaches brand give Royal Caribbean immediate scale in a segment where it has lacked presence: all-inclusive resorts. The chain operates more than a dozen properties across the Caribbean.

The deal also arrives at a difficult moment for the cruise company's core business.

• Royal Caribbean's stock is down roughly 25% over the past year.
• The company trimmed its forecasts for revenue growth.
• The cause: softer demand for European sailings.

A $3 billion bet on all-inclusive Caribbean resorts spreads Royal Caribbean's exposure across a second vacation format and a customer base that may not book cruises at all.

What does the deal mean for Sandals?

The $6 billion valuation anchors Sandals among the most valuable hospitality brands in the Caribbean. Royal Caribbean's capital and distribution muscle — tens of millions of cruise passengers a year — could accelerate the resort chain's expansion.

For Royal Caribbean, the stake converts a region it already knows commercially into a year-round, land-based profit engine that does not depend on ship deployments or sailing itineraries.

Who reported the talks first?

The Financial Times and CNBC earlier reported that the companies were in talks.

The transaction is expected to close early next year, giving both companies a full season to integrate planning before the deal's first full year of operation.