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The Royal Caribbean Group on Thursday lifted its full-year profit forecast for a third time and said bookings for the next year were “significantly outpacing” pre-pandemic levels by a wide margin, sending its shares up about 3 per cent.
Cruise operators are reaping the rewards as travellers gravitate to cruise vacations that are cheaper compared to taking a land-based holiday. This has given the companies the ability to hike itinerary prices, especially in North America and Europe, as occupancy levels now approach pre-pandemic levels.
Royal Caribbean said occupancy in the third quarter was higher than that reported in the second quarter.
“As we look into 2024, we have booked over double the amount of pre-cruise revenue compared to this, year with more guests engaging before their cruise and at higher prices,” CEO Jason Liberty said on a post-earnings call.
Royal Caribbean now expects its annual adjusted profit between USD 6.58 and USD 6.63 per share, compared with earlier forecast of USD 6.00 to USD 6.20. “We cannot find anything to pick at in this report, and believe this is much better than expected,” Barclays analyst Brandt Montour said.
On Tuesday, Visa said travel volume outbound from the US to all geographies continued to be strong and inbound travel recovery accelerated through the quarter. The hotel industry, which has largely evaded the effects of elevated levels of inflation so far, continues to struggle with high wage costs in a tight labor market.
However, the company said its full-year earnings per share would take an 18-cent hit from higher fuel prices and a stronger dollar.
The company also said the ongoing military conflict in the Middle East is expected to hit its annual profit by3 cents per share. Royal Caribbean also expects fourth-quarter adjusted profit between USD 1.05 and USD 1.10 per share, compared with expectations of USD 1. Its quarterly total revenue of USD 4.16 billion beat estimates of USD 4.08 billion, while its adjusted profit of USD 3.86 per share also topped expectations, according to LSEG data.
Peer Carnival in September narrowed its annual loss forecast and posted a third-quarter profit, but investors showed deep concerns around steeper fuel costs. Rival Norwegian Cruise Line will be reporting third-quarter results on Nov 1.
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