Its full steam ahead for the cruise ship industry after Royal Caribbean hiked its full-year profit guidance on Thursday, saying it expects 60% growth from last year following record bookings during the first quarter.
Travelers are paying record ticket prices, according to Royal Caribbean — despite a recent spate of high-sea deaths and missing passengers reports, including a Florida 20-year-old who jumped off a Royal Caribbean cruise this month.
Soaring demand for vacations at sea has given cruise operators ample room to raise ticket prices as the industry looks to close the pricing gap between more expensive land-based holidays and give their profits a lift.
Royal Caribbean, which operates the Celebrity Cruises, now expects annual profits of between $10.70 and $10.90 per share, compared with its earlier forecast of $9.90 to $10.10.
“Our existing fleet along with our new ships continue to perform exceptionally well, highlighted by the market response to the launch of Icon of the Seas,” CEO Jason Liberty said.
Royal Caribbean’s shares — which have spiked 126% in the past year, were up 2% on Thursday morning, to $139.32.
“I remember owning the stock in 2022 and every client was giving me grief about it,” said Peter Ahluwalia, manager at Belinvest Global Equity Fund that holds Royal Caribbean stocks and chief investment officer at Swiss Partners Group. “We’re turning almost 45% return on equity at the moment, which is quite incredible.”
Overall, the industry which was among the hardest hit during the pandemic, is expected to grow to 39.4 million passengers in 2027 from 31.7 million last year, according to Statista.
The surge in demand comes amid major publicity blows from incidents at sea involving passengers who have gone missing, including the Florida man who jumped overboard on April 4 in front of his brother and father after a night of drinking.
Last December, a 41-year-old Royal Caribbean passenger went overboard on a cruise to the Bahamas. That followed an incident last August involving a 64 year-old woman sailing fromSingapore to Malaysia on Royal Caribbean who is presumed to have jumped to her death.
On average, 19 people go overboard on cruise ships every year and of those, only about four are rescued, according to a 2020 study commissioned by the industry trade group Cruise Lines International Association.