Cruise stocks slumped throughout November, primarily due to concerns around the new COVID-19 omicron variant. Investors have been fearful that near-term uncertainty could hamper short-term travel plans, leading to reduced ticket prices and lower profitability.
However, those fears may have been overcooked. Cruise operators continue to deploy new fleets and look forward to operating at full capacity in the spring of 2022, where booking through year-end is higher than 2019 levels. Demand for travel, specifically cruising, is still on pace to make a full recovery next year as pricing is expected to remain strong.
Related ETF and Stocks: Defiance Hotel, Airline, and Cruise ETF (CRUZ), Norwegian Cruise Line Holdings Ltd. (NCLH), Royal Caribbean Cruises Ltd. (RCL), Carnival Corporation & plc (CCL)
Cruise Stocks Bounce Back After Omicron Sell-Off
After sinking to 2021 lows, cruise stocks appear to be bouncing back. A November sell-off was exacerbated by concerns around the highly-publicized omicron variant, which stoked fears across the industry that short-term demand for cruising could be dampened.
However, early signs indicate the new variant may not have as big an impact on cruise demand as previously thought. According to Forbes, investors are growing less fearful about the severity of the variant and the subsequent impact it will have on travel plans.
Cruise bookings rose just weeks after the initial news broke of the omicron variant as wave season rapidly approaches. Wave Season is the approximate three-month period from January 1 to March 31 when cruise lines typically book the largest number of cabins.
Per Seatrade Cruise News, last week’s purchases were up 35% compared to the same week two years prior, highlighting a steady return toward pre-pandemic norms. 2022 Alaska cruises have seen the strongest interest with sales doubling over the same week in 2019, while Europe cruise purchases are up 26% over that same time.
The big three of Norwegian, Carnival and Royal Caribbean all reported jumps in quarterly revenue as sailing slowly resumed, yet pre-pandemic profitability has yet to return.
Norwegian Cruise Line has seen steady growth in bookings since it returned to the seas over the summer and has experienced two major waves of sales. Travel Market Report writes that the company’s Norwegian Prima line broke all previous NCL booking records a few months back and that Black Friday sales were nearly on par with 2019 levels.
Keene Luxury Travel Executive VP Susan Walsh told Travel Market Report that she expects a strong wave season, noting that most cruisers are continuing with their travel plans after news of the omicron variant broke.
Demand for cruises, and travel in general, is still set to be unleased in 2022 as operations ramp up and cruises remain on a path toward profitability.
2022 Bookings, Pricing Remains Strong as Capacity Ramps Up
Carnival and Norwegian are both predicting profitability in 2022, boosted by bookings inching close toward pre pandemic figures, writes Forbes. Morningstar analyst Jaime Katz notes that consumer behavior regarding travel should continue to return to normal over the next year, which will restore positive profits to major cruise operators.
Further, fleet redeployments are “well under way” and should accelerate as consumers return to the seas in 2022. Cruise Industry News reports that global cruise capacity is expected to jump 8.4% in December, reaching…
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