Cruising To Profits

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Demand is picking up again for the cruise industry, especially among the over-60 crowd. This demographic typically makes up a third of cruise passengers.

The Cruise Lines International Association (CLIA) expects the number of cruise passengers to reach 31.5 million this year, a 6% uplift on pre-pandemic levels, according to its annual forecast. And on a first-quarter earnings call last month, Josh Weinstein, CEO of Carnival Corporation (CCL), said bookings for the peak 2023 cruise season had been "phenomenal."

Carnival, the world's biggest cruise line operator, operates more than 90 ships, and reported customer deposits of $5.7 billion for the three months ending February 28 - well ahead of its previous first-quarter record of $4.9 billion in 2019. This meant it generated a positive cash flow from operations for the first time in almost three years!

The world's second-biggest cruise line, Royal Caribbean (RCL), also said in February it was seeing "record-breaking" bookings, with all seven of the strongest weeks in the company's history occurring since November 2022. The company, which operates 64 ships, expects its cash profit (EBITDA) in 2023 to exceed 2019 levels of around $3.3 billion, as it raises prices to reflect both higher demand and costs.

The industry expects the growth trend to continue.

More than half of the 71 ships currently on order are the mega-vessels capable of carrying more than 4,500 passengers, compared with just 12% of the active fleet. To fill that expanding capacity, the cruise industry will have to grow faster than other tourism sectors. But keep in mind that ship owners are retiring their older vessels, and the bigger ships are much more profitable in terms of accommodation, food, and service costs per passenger.

These bigger ships contain more family-focused attractions such as zip lines, water parks and more event venues, meaning there's a lot more to do onboard. The days when the experiences were all at port and the cruise ship was just your transport between destinations are long gone.

So, we thought we'd do a comparison of these two cruise companies - CCL and RCL - over this past, very volatile, year. The quick and easy way to do this is to ask Magnifi Personal to run the comparison for us. It's as simple as asking this investing AI to "Compare CCL to RCL." Continue reading "Cruising To Profits"