Royal Caribbean raises annual profit forecast on resilient demand, shares surge
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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 9% at $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, human resources and food.
The Celebrity Cruises operator reported second-quarter revenue of $3.5 billion, which beat analysts’ estimates of $3.4 billion, according to data from Refinitiv.
The company forecast third-quarter adjusted profit between $3.38 and $3.48 per share, compared with estimates of $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 6% and 6.2%, respectively.Norwegian Cruise Line is set to report second-quarter results on Aug. 1.
