Cruise Industry Sees Strong Demand Ahead of Busy Summer Season
As the summer travel season approaches, Carnival Corp, a leading cruise operator, is forecasting a surge in bookings for 2025. Despite rising prices, consumers are willing to splurge on experiences, driving up demand for cruise vacations. This optimism sent the company’s shares soaring by about 5% on Friday.
Resilient Demand Drives Profit and Sales
Carnival’s strong performance was reflected in its better-than-expected profit and sales for the fourth quarter. However, the company’s annual profit forecast fell short of estimates due to increasing input costs and advertising expenses. Adjusted cruise costs, excluding fuel, rose 7.4% from 2023, but were lower than projected.
CEO Expects Banner Year Ahead
According to CEO Josh Weinstein, “2025 is shaping up to be another banner year, with yield growth expected to far outpace historical growth rates and again exceed unit cost growth.” The company’s cumulative advanced booked position for next year is at an all-time high for occupancy and price, surpassing 2024 in all four quarters of 2025.
Strong Revenue and Profit Performance
Carnival reported quarterly revenue of $5.94 billion, exceeding analysts’ estimates of $5.93 billion. The company’s adjusted profit for the quarter was 14 cents per share, above estimates of 8 cents. While the company’s annual profit forecast of $1.70 per share fell short of estimates, analysts remain optimistic about the industry’s prospects.
Investing in Private-Island Destinations
Carnival, along with its peers Royal Caribbean and Norwegian Cruise Line Holdings, is investing in private-island destinations to attract younger travelers and boost returns. However, operating costs associated with these investments, maintenance costs, and expenses from the deal-heavy wave season are weighing on the profit forecast.
Analysts Expect Quarterly Earnings Beats
According to Patrick Scholes, analyst with Truist Securities, “Cruise lines have historically started the year on the conservative side with their guides given the various global uncertainties.” He expects to see opportunities for quarterly earnings beats and raises, driven by strong demand and the industry’s resilience.
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