Cruise lines' outsize second-quarter performance – of record-breaking
bookings and higher prices – led two of the world's largest cruise
companies to raise their earnings expectations through the end of the
The move comes as cruise lines progress away from a state of pandemic
recovery and into a chapter defined by strong demand and consumer
"What has been a surprise to us has been our ability to continue to
raise price and demand continuing to come in at higher levels –
significantly higher levels – than we have seen in previous periods,"
Jason Liberty, CEO of Royal Caribbean Group, said during a Q2 earnings
call with investors in late July.
After increasing its earnings expectations by 40% in May, Royal
Caribbean Group increased its full-year earnings guidance by another
33%. The company reported US$459 million in net income.
Norwegian Cruise Line Holdings (NCLH), which reported US$86 million
in net income this quarter, increased its guidance for earnings per
share by 14% from its initial guidance in February.
While also noting higher prices, NCLH CEO Harry Sommer said the
company is enjoying a record 255-day booking window, which is 51 days
longer than 2019's.
NCLH is also 60% to 65% booked for the next 12 months and is noticing
the percentage of customers who sailed in 2023 are rebooking at higher
levels than in 2019.
Carnival Corp., the largest of the cruise companies, reported an
all-time high in total future cruise bookings, consumer deposits and
revenues in its Q2, which ended March 31. The company raised its
expectations for net yields after surpassing 2019 levels but ultimately
reported a net loss of US$407 million for the quarter.
"We are working hard to mitigate four years of inflation, maintain
our industry-leading unit costs, all while reinvesting in advertising
and sales support to build future demand," said Josh Weinstein, Carnival
Occupancy across the three companies has either returned to
traditional load factors or were close to those levels last quarter.
NCLH and Royal reported occupancy at 105%, while Carnival Corp., which
has lagged at 98% load factors for the quarter, expects full-year
occupancy to eclipse 100%.
What are still below prepandemic levels are the Big Three cruise
lines' stock prices. While they have all climbed this year, all three
companies are still trading below prepandemic highs.
Booking at higher prices
Financial analysts said the cruise industry's performance has exceeded their expectations.
Assia Georgieva, a chartered financial analyst and principal at
Infinity Research, independently analyses prices for 30,000 cruise
itineraries every two weeks. Her data shows that consumers are booking
cruises at higher prices than the record levels set in 2019, with both
publicly traded and private cruise companies.
She said the higher prices indicate the shift from spending money on
goods to experiences is still strong and that pent-up demand to travel
has not waned.
"Travel agents should not take a day off, even in August, and try to make money," she said.
Ivan Feinseth, chief investment officer at Tigress Financial
Partners, described the strength of the cruise industry as "on fire."
A possible concern, Feinseth said, is the slight national increase in
household debt in Q2. However, it hasn't appeared to dampen demand so
far, and an element working in the cruise industry's favor is the low
3.5% unemployment rate.
"As long as consumers are flush – and they are, even with the recent
concern with the record level of credit card debt – travel demand is
strong," he said. "They're booking 2024 trips."
At least one analyst expressed concern about occupancy levels, particularly at Carnival Corp.
"The trajectory of recovery is totally back," said Patrick Scholes, a
travel sector analyst for Truist Securities. "Occupancies are not fully
However, he said, the long booking window shows consumers are comfortable booking cruises well in advance, a bright spot.
Boom time for travel advisors
Whether the cruise industry is still in pandemic recovery, or if it
has surpassed it, is up for debate. While Georgieva contends the
transition from recovery ended in May, Cruise Planners CEO Michelle Fee
said cruising put the pandemic behind it long ago.
"The cruise industry recovery for Cruise Planners was in 2022. Once
we turned the year into 2023, we were off to the races," she said. Each
month this year, Cruise Planners has seen a year-over-year increase in
purchases and departures over 2019, which was its best year on record.
She predicts 2024 will be even stronger as booking patterns normalise.
Anthony Hamawy, president of Cruise.com, said that while August is normally a slow booking period as children return to school, that's not the case this year.
"This is our off-season, and it's still busy," he said, noting the
first two weeks of August are on par with the first two weeks of July.
And most new bookings coming in, he said, are for 2024, oftentimes with
nonrefundable fares that are less likely to be cancelled.
Source: Travel Weekly