Carnival Corporation, a leading cruise operator, anticipates robust bookings for 2025, signaling continued strength in the travel sector despite inflationary pressures. This positive outlook, shared ahead of the peak summer travel season, propelled the company’s stock price by approximately 5% on Friday. The sustained demand for cruise vacations enabled Carnival to surpass fourth-quarter profit and sales expectations.
Carnival’s resilience is attributed to consumers prioritizing experiential spending, even as prices climb. However, the company’s annual profit forecast fell short of analyst estimates due to escalating input costs and increased advertising expenditures. Despite these challenges, adjusted cruise costs, excluding fuel, rose by 7.4% in the fourth quarter compared to 2023, a more favorable outcome than the 8% increase projected in September.
CEO Josh Weinstein expressed optimism about 2025, stating that it is “shaping up to be another banner year,” with yield growth projected to significantly outpace historical rates and exceed unit cost growth. This projection is supported by Carnival’s record-high cumulative advanced booked position for 2025, exceeding 2024 levels in both occupancy and price across all four quarters. This strong booking momentum is particularly noteworthy considering it’s measured on a constant currency basis.
Carnival reported quarterly revenue of $5.94 billion, slightly surpassing analysts’ estimates of $5.93 billion, according to LSEG data. Adjusted profit for the quarter reached 14 cents per share, exceeding the anticipated 8 cents. Despite these positive quarterly results, the company’s projected annual profit of $1.70 per share fell short of the $1.74 estimate.
To enhance its offerings and attract a wider range of travelers, Carnival has been investing in private island destinations, a strategy also adopted by competitors Royal Caribbean and Norwegian Cruise Line Holdings. Operating costs associated with these investments, along with increased maintenance expenses due to extended dry dock periods and higher spending during the wave season, contributed to the lower profit forecast.
Industry analyst Patrick Scholes of Truist Securities noted that cruise lines tend to issue conservative initial guidance due to global uncertainties. He anticipates potential for quarterly earnings to exceed projections and for upward revisions to guidance throughout the year. This cautious optimism reflects the dynamic nature of the travel industry and the potential for unforeseen events to impact performance.
