While most U.S. companies have received guidance or cut guidance this revenue season, Royal Caribbean Cruise (RCL) surprised investors by boosting their profit forecasts.
Cruise operators raised their adjusted EPS adjusted forecast to the $14.55 to $15.55 range, beating analysts' estimates of $14.78 per share.
The company said revenue performance in the first quarter was higher than expected, with currency exchange rates and reduced fuel costs driving earnings expectations for the rest of the time higher.
Royal Caribbean shares initially grew 3% after the results, but then made roughly trade gains. Cruise Line, which reports revenue tomorrow, is also trading lower on Tuesday.
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End: April 30 4:00:02 PM EDT
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A year of travel inventory is tough, but the cruise route may be a highlight for investors.
“Wave season is the best season in our company’s history, putting us in a strong book position for the rest of the year and 2026.” (Wave season refers to when cruise companies offer the best deals for their upcoming cruises.)
The optimistic outlook comes after airline operators such as JetBlue (JBLU), American Airlines (AAL) and Delta (DAL) tell investors that they are preparing for a year of macroeconomic uncertainty. JetBlue is the latest airline, guiding throughout the year in demand and softness of consumer confidence.
Credit card data from Bank of America shows that monthly cruising spending rose 6.4% year-on-year in March, compared with an annual earning of 4.5% in February. Cruise spending rose 15.6% from February, slightly below the average 20% increase in 2015-2019, while total travel spending fell 3.5% year-on-year, airline spending fell 6.6% and hotel spending fell 2.6%.
Jefferies managing director David Katz told Yahoo Finance that the elasticity of cruise spending could be derived from travelers’ value deals, because cruises are inherently cheaper than equivalent land holidays. "Our estimate is that ~1/3 of the RCL's reservations are new cruises," Katz added. ”
Pricing trends in the cruise industry. According to Jefferies, the pricing trend has a slight discount: the Royal Caribbean price rose 0.7% and the carnival 0.2% while the Norwegian cruising line price fell 0.2% compared to last month.
But there is growing concern that slowing travel has hit airlines and will soon affect cruises.
So far, it has not been implemented. Carnival reported revenue for the first quarter last month, which raised its full-year target despite no profit expectations. Although Carnival announced its quarterly results before President Trump revealed the reciprocity tariff plan, which imposed a 10% tariff on goods in most countries, while others were higher.
Read more: What Trump’s tariffs mean to the economy and your wallet
"We set a record for booking," Carnival CEO Joshua Ian Weinstein said on the revenue call. "We have a historic occupation and price trend. We use it to our advantage. We spend the price and we are ready for the rest of the year."
Meanwhile, Royal Caribbean CEO Liberty stressed that the main opportunity for the cruise industry is not to compete with other cruise operators, but to attract travelers who usually choose onshore vacations.
“We’re all focused collectively, and even though I can’t speak for others, how we close that gap to the onshore holidays and how we get the extra rep from the boat to our ship,” Liberty said. “I think it’s the meaning of vision and focus, not to take each other away in the cruise industry.”
Dani Romero is a reporter for Yahoo Finance. Follow her on X @daniromerotv.
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