Royal Caribbean’s $3 Billion Sandals Deal Needs More Clarity on Control

Royal Caribbean Group has agreed to pay roughly $3 billion for half of Sandals Resorts International, with committed debt financing from Morgan Stanley arranged to fund the investment. The Stewart family would retain the other half. That is a substantial commitment for a business Royal Caribbean would jointly oversee rather than control outright.

I like the customer logic more than the ownership proposition. Selling resort vacations to people who already buy cruises is a credible strategy. A roughly $3 billion investment backed by debt financing deserves a fuller explanation of how decisions will get made.

The companies confirmed the signed agreement on September 23, 2026, valuing Sandals at about $6 billion. Completion is targeted for early 2027, subject to regulatory approvals and other customary closing conditions.

For the parent of Royal Caribbean International, Celebrity Cruises and Silversea, this would extend its business beyond private destinations built around cruise visits and into overnight all-inclusive stays. Sandals and its family-focused Beaches brand operate more than a dozen properties across the Caribbean.

Half the ownership, shared responsibility

Early Financial Times reporting described negotiations for a controlling stake. The signed agreement provides for an equal joint venture, a meaningful difference for investors assessing what Royal Caribbean is buying.

A board jointly led by Royal Caribbean Group Chairman and CEO Jason Liberty and Sandals and Beaches Resorts Executive Chairman Adam Stewart would oversee the business. Stewart would remain executive chairman and retain responsibility for the resort brands’ long-term growth strategy. The board’s size and full composition have not been disclosed.

Keeping Sandals’ leadership in place is sensible. Royal Caribbean is buying into an established resort operator while its own management team is already expanding into new businesses. Celebrity River Cruises is due to enter service in 2027.

William Blair analyst Sharon Zackfia identified distraction from the cruise business as a risk, while judging that the ownership structure and retention of Sandals’ leadership reduced that concern. The firm maintained its outperform rating on Royal Caribbean.

That is a fair argument for continuity. The disclosed details still leave me wanting to know how the equal owners would resolve competing priorities. Retaining experienced management answers one question. Authority over expansion and additional investment deserves attention too.

The earnings case comes with an interest bill

Royal Caribbean puts the valuation at approximately 10 times forward EBITDA and expects the investment to increase earnings in 2027.

Zackfia estimated an EBITDA contribution of $300 million. Borrowing costs would reduce the benefit reaching net earnings. Before any gains from combining the businesses, her analysis suggested an annual earnings-per-share addition of about 45 cents at a 6% interest rate, or 36 cents at 7%.

Those estimates give the deal a financial case beyond the promise of cross-selling vacations. They also make the financing cost tangible. I’d pay close attention to how much of the resorts’ contribution remains after interest.

Royal Caribbean shares fell roughly 6% when the Financial Times first disclosed the negotiations. At that point, the stock was down about a quarter over the preceding year, after the company lowered its revenue-growth forecasts on weaker demand for European sailings.

That is an uncomfortable backdrop for a large investment backed by debt financing, even with a forecast contribution to earnings.

Passenger benefits remain unannounced

Royal Caribbean says about 30% of its customers have taken an all-inclusive Caribbean resort vacation during the past two years. That is the strongest practical argument for the investment. The group would be buying into a type of holiday many of its customers already take.

“Whether we do it on water or land, we want to provide a lifetime of vacations,” Liberty told Travel Weekly.

The partners intend to explore broader distribution and ways to introduce customers to both portfolios. For now, existing bookings, loyalty programs and day-to-day cruise and resort operations will continue unchanged, the companies said. No combined cruise-and-resort packages or reciprocal loyalty benefits have been announced.

“It will create new opportunities for travel advisors to engage clients in conversations about their next vacation,” said Drew Daly, senior vice president and general manager of Dream Vacations.

That opportunity is understandable, although the companies have yet to announce a combined product for advisors to offer.

Cruise passengers should also keep their expectations about beach access in check. Liberty and Stewart told Travel Weekly that selling resort day passes to cruise guests was not the purpose of the investment. Liberty left open the possibility of eventually using some Sandals land for beach clubs, but said resort expansion remained the priority.

Royal Caribbean’s existing land investments include Perfect Day at CocoCay and Royal Beach Club Paradise Island. Overnight resorts would add a different operating commitment.

Expansion will test the partnership

Founded in Jamaica in 1981 by Gordon “Butch” Stewart, Sandals operates adults-only resorts across the Caribbean. Beaches serves families in Jamaica and Turks and Caicos.

The agreement follows years of sale discussions. Reuters reported in 2017 that Sandals was considering strategic alternatives, including a sale. According to the Financial Times, a later effort linked to the founder’s estate planning stalled during the pandemic. His death in 2021 was followed by family disputes and litigation over estate trusts, and bankers were retained for another sale process in 2025.

Royal Caribbean has expanded through acquisitions before. It bought a majority interest in Silversea for about $1 billion in 2018 and subsequently acquired the remaining shares. This agreement would leave the Stewart family with an equal ownership position.

The resort business already has substantial development commitments. Beaches has outlined a $1 billion Caribbean expansion program, while Sandals is undertaking a $200 million renovation of three Jamaican resorts. Adam Stewart said the partnership would allow growth to accelerate. The partners also see opportunities beyond the Caribbean, although they have not identified locations.

Those ambitions make the decision-making arrangements worth explaining before closing. The customer overlap makes this an understandable business to buy into. I’d still want a clearer account of how the equal partners will approve expansion, commit additional capital and resolve disagreements.

Royal Caribbean has lined up debt financing to buy a roughly $3 billion seat at that table.