Goodwill

12 Months Ended

Dec. 31, 2021

Goodwill and Intangible Assets Disclosure [Abstract]

Note 4. Goodwill

The impact of COVID-19 on our operating plans and projected cash flows resulted in the completion of interim impairment assessments in respect of certain reporting units as of March 31, 2020 and June 30, 2020, in addition to our annual goodwill impairment assessments performed as of November 30, 2020, and November 30, 2021. Refer to Note 1. General for further information regarding COVID-19 and its impact to the Company.

In respect to the Royal Caribbean International reporting unit, we determined that the fair value of the Royal Caribbean International reporting unit exceeded its carrying value as of March 31, 2020 and June 30, 2020 by approximately 30% and 8%, respectively, resulting in no impairment to the Royal Caribbean International goodwill in those periods. We did not perform an interim impairment evaluation of Royal Caribbean International's goodwill during the quarter ended September 30, 2020 as no triggering events were identified. As of November 30, 2020, we performed our annual goodwill impairment review and determined the fair value of the Royal Caribbean International reporting unit exceeded its carrying value by approximately 14%. We did not perform interim impairment evaluations during the quarters ended March 31, 2021, June 30, 2021, and September 30, 2021 as no triggering events were identified.

In respect to the Silversea Cruises reporting unit, we determined the carrying value of the reporting unit exceeded its fair value as of March 31, 2020. Accordingly, we recognized a goodwill impairment charge of $576.2 million for the quarter ended March 31, 2020. We did not perform interim impairment evaluations of Silversea Cruises' reporting unit during the quarters ended June 30, 2020 and September 30, 2020 as no triggering events were identified. As of November 30, 2020, we performed our annual goodwill impairment review and determined the fair value of the Silversea Cruises reporting unit exceeded its carrying value by approximately 12%. We did not perform interim impairment evaluations during the quarters ended March 31, 2021, June 30, 2021, and September 30, 2021 as no triggering events were identified.

As of November 30, 2021, we performed our annual goodwill impairment reviews and determined no incremental impairment losses existed at the date of this annual assessment. We determined the fair value of the Royal Caribbean International and Silversea Cruises reporting units exceeded their carrying values by approximately 38% and 35%, respectively, at the date of this annual assessment.

The gradual resumption of cruise operations, as further discussed in Note 1. General, and possibility of further delays or suspensions create uncertainty in forecasting operating cash flows. The fair value of the Royal Caribbean International reporting unit as of March 31, 2020 was determined using a probability-weighted discounted cash flow model. For the June 30, 2020 and November 30, 2020 assessments, we used a probability-weighted discounted cash flow model in combination with a market-based valuation approach. For the Silversea reporting unit, a probability-weighted discounted cash flow model in combination with a market-based valuation approach was used for all periods assessed in 2020. As of November 30, 2021, a discounted cash flow model was used in combination with a market-based valuation approach for both reporting units. This requires the use of assumptions that are subject to risk and uncertainties. The principal assumptions used in the discounted cash flow analyses that support our Royal Caribbean International and Silversea Cruises reporting unit impairment assessments consisted of:

•Forecasted net revenues, primarily the timing of returning to normalized operations, occupancy rates from existing and expected ship deliveries, and terminal growth rate; and

•Weighted average cost of capital (i.e., discount rate).

The adverse impact COVID-19 will continue to have on our business, operating results, cash flows and overall financial condition is uncertain and may result in changes to the assumptions used in the impairment tests discussed above, which may result in impairments to these assets in the future.

The carrying value of goodwill attributable to our Royal Caribbean International, Celebrity Cruises and Silversea Cruises reporting units and the changes in such balances during the years ended December 31, 2021 and 2020 were as follows (in thousands):


	Royal Caribbean International		Celebrity Cruises		Silversea Cruises (1)		Total
Balance at December 31, 2019	$	299,226	$	1,632	$	1,084,786	$	1,385,644
Impairment charge	—		—		(576,208)		(576,208)
Transfer of goodwill attributable to the 2019 purchase of photo operations onboard our ships (2)	(2,694)		2,694		—		—
Foreign currency translation adjustment	44		—		—		44
Balance at December 31, 2020	296,576		4,326		508,578		809,480

Foreign currency translation adjustment	(97)		—		—		(97)
Balance at December 31, 2021	$	296,479	$	4,326	$	508,578	$	809,383

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(1)In 2018, we acquired a 66.7% equity stake in Silversea Cruises. Our controlling interest purchase price allocation was final during 2019. In 2020, we acquired the remaining 33.3% minority interest, making Silversea Cruises a wholly owned brand. Refer to Note 1. General for further information.

(2)In 2019, we purchased the photo operations onboard our ships from our former concessionaire. The acquisition was accounted for as a business purchase combination using the purchase method of accounting which requires the use of fair value measurements. The business combination, including purchase transaction and assets acquired, was immaterial to our consolidated financial statements.