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Royal Caribbean Group raised its full-year profit forecast on Thursday, betting on higher ticket prices, onboard spending and resilient demand as travelers seek out cruise vacations this summer, sending its shares higher.
Operators are benefiting from pent-up demand for cruise vacations after years of suppressed demand due to pandemic-era testing requirements and restrictions, with consumers flocking to cruises driven by their value as the cost of travel rises.
Royal Caribbean‘s shares were up about 9per cent at USD 109.61 in premarket trading as it also forecast third-quarter adjusted profit above estimates. “Demand for cruising and our brands is exceptionally strong and we have seen another step change in booking volumes and pricing,” CEO Jason Liberty said.
Royal Caribbean, the world’s second-largest cruise line operator, like peers has also been bumping up its ticket prices over the past year to protect margins from higher costs linked to fuel, labor and food. The Celebrity Cruises operator reported second-quarter revenue of USD 3.5 billion, which beat analysts’ estimates of USD 3.4 billion, according to data from Refinitiv.
The company posted adjusted earnings of USD 1.82 per share, compared with estimates of USD 1.55. Passenger ticket and onboard revenue rose 72per cent and 41per cent year-over-year, respectively. Royal Caribbean expects an annual adjusted profit between USD 6.00 and USD 6.20 per share, compared with its earlier forecast of USD 4.40 to USD 4.80 per share.
The cruise industry is poised for a strong comeback, as projected by Joel Katz, MD of CLIA for Australasia & Asia. This year, global cruise passenger numbers are expected to reach upto 33 million, with an estimated economic impact of USD 155 billion. Investments in cutting-edge ships and technologies are fuelling this resurgence, coupled with sustainability measures and responsible destination stewardship, ensuring significant economic contributions.
The company forecast third-quarter adjusted profit between USD 3.38 and USD 3.48 per share, compared with estimates of USD 2.89. Royal Caribbean’s upbeat current-quarter forecast comes in contrast to peer Carnival that in June forecast third-quarter profit largely below estimates as rising marketing and labor costs offset gains from stronger demand.
Shares of rival operators Carnival and Norwegian Cruise Line Holdings rallied in tandem following Royal Caribbean’s results, gaining about 6per cent and 6.2per cent , respectively.
Norwegian Cruise Line is set to report second-quarter results on Aug 1.
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