Cruise lines are anticipating significant pent-up demand for leisure travel in the year ahead, with most operators predicting the COVID-19 delta variant will create only a temporary setback in the broader recovery from a previous shutdown of all cruises out of the US.
Bookings have recovered strongly, driving up ticket prices and setting the cruise industry on course for a record year of revenues in 2022 after being shut down for a year and a half. Recent court rulings have allowed cruise lines to mandate vaccinations for all passengers in order to set sail, which could improve consumers’ attitudes toward leisure travel through the current surge of COVID cases.
Related Stocks: Norwegian Cruise Line Holdings Ltd. (NCLH), Royal Caribbean Group (RCL), Carnival Corporation & plc (CCL)
Cruise Lines See Improved Demand, Higher Ticket Prices
Cruise lines are beginning to set sail after voyages were stalled for over a year and a half amid the COVID-19 pandemic. Demand for leisure travel is significantly higher this year, driving up ticket prices, but cruise operators have yet to return to profitability.
Even as the industry resumes operations in some capacity, cruise lines are still posting significant losses. According to TradeWinds, Norwegian Cruise Line Holdings recently reported Q2 earnings and posted a $718 million loss, slightly worse than a $715 million loss in Q2 2020. This was the sixth-straight quarter Norwegian ended up in the red ink, as it launched its first voyage last week since the industry-wide shutdown began.
Royal Caribbean announced similar results, reporting a net loss of $1.35 billion in Q2, slightly better than the $1.64 billion loss the company posted last year, per CNBC. Royal Caribbean’s revenue was much lower than expected, coming in at $50.9 million in the second quarter, close to only a third of what analysts had forecast.
Royal Caribbean did note, however, that ticket prices are higher than this time two years prior, and that travelers are spending more on their voyages than usual. Forbes reported that Norwegian is implementing similar price hikes, as the company announced its ticket prices are trending well above 2019 levels.
Higher ticket prices are an industry-wide bright spot that appear to have staying power. As CEO of World Travel Holdings Brad Tolkin states current prices are significantly better than 2019, pre Travel Weekly.
MRP has recently highlighted the cruise industry’s outlook, noting that lingering consumer uncertainties could postpone a full recovery further than cruise lines originally anticipated. A preliminary reading of US consumer sentiment for August…
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