- Royal Caribbean saw stronger-than-usual demand as Americans take to the seas
- More than half of the cruise operator’s profit growth was due to rising prices
- Its share price was near a record high on Friday and is up 17 percent this year.
Cruise operator Royal Caribbean has the wind in its favor.
The company said this week that growing demand for sea holidays has allowed it to sell tickets at record prices, doubling its profit growth.
It comes just weeks after a 20-year-old man disappeared after jumping overboard from one of his boats between Great Inagua Island and Cuba.
Royal Caribbean Group’s net income for the first quarter was $360 million compared to a loss of $48 million during the same period last year.
“Wow, what a great start to the year,” CEO Jason Liberty said in announcing results this week. “What happened in the last three months was even better than our already high expectations.”
Cruise operator Royal Caribbean said this week that growing demand for vacations at sea has allowed it to sell tickets at record prices. In the photo, passengers disembark from the Royal Caribbean cruise ship Allure of the Seas.
This month, 20-year-old Levion Parker jumped from the deck of a Royal Caribbean cruise ship.
In light of rising ticket sales, Royal Caribbean raised its annual profit forecast for the second time.
“Things continue to accelerate and the thirst or hunger for our brands,” Liberty said during a post-earnings call.
Its success also comes despite the quarter aligning with the “wave season,” the period after the new year that typically sees reduced demand and requires operators to reduce prices to make sales.
In April, the company, which also operates Celebrity Cruises, with slightly more luxurious but smaller ships, saw record bookings “from both a volume and pricing standpoint.”
The operator carried just over 2 million passengers in the first quarter, up almost 14 percent year over year.
Not only that, Liberty noted that customers spend more while on cruises and book cruises even further in advance.
Higher ticket prices have helped protect the company from slightly higher net cruise costs expected this year due to increased drydock days, during which ships will be taken out of the water for maintenance.
Canceled trips to the Red Sea due to the ongoing conflict have also hit profits.
It has also faced slightly higher fuel costs: It spent $304 million over the three months, compared with $302 million during last year’s wave season quarter.
Royal Caribbean’s share price was flirting with an all-time high on Friday, trading at around $140 and up more than 16 percent so far this year.
Levion Parker disappeared after jumping overboard from one of the Royal Caribbean ships between Great Inagua Island and Cuba
The company expects net cruise costs, excluding fuel, to rise about 5.5 percent for the year, up from its previous forecast of about 4 percent.
Royal Caribbean’s share price was flirting with an all-time high on Friday, trading at around $140 and up more than 16 percent this year.
“I remember owning the stock in 2022 and all the clients were giving me grief for it,” Peter Ahluwalia, manager of Belinvest Global Equity Fund and chief investment officer of Swiss Partners Group, told Reuters.
“Right now we’re getting almost a 45 percent return on equity, which is pretty incredible,” he added.
