Royal Caribbean raises profit forecast as demand climbs

Bengaluru — Royal Caribbean Group raised its full-year profit forecast on Thursday, betting on higher ticket prices and resilient demand for leisure travel from affluent customers, sending shares surging.

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 its value as the cost of travel rises.

Royal Caribbean’s shares were up 8.1% at $109.01 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, labour and food.

The Celebrity Cruises operator reported second-quarter revenue of $3.5bn which beat analysts’ estimates of $3.4bn, according to data from Refinitiv.

The company expects an adjusted profit between $3.38 and $3.48 per share in the third quarter, compared with estimates of $2.89 per share.

Royal Caribbean expects annual adjusted profit between $6.00 and $6.20 per share, compared with its earlier forecast of $4.40 to $4.80 per share.

The company posted adjusted earnings of $1.82 per share in the second quarter, compared with estimates of $1.55.

Share prices of rival operators Carnival Corp’s share price rose 5.2%  those of and Norwegian Cruise Line Holdings 4.7% after Royal Caribbean’s results. 

Reuters