Norwegian Cruise Line Holdings Ltd said its wealthy travellers would help the US liner ride out an economic downturn after better-than-expected quarterly results lifted its shares 7%.
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The Miami, Florida-based cruise operator said despite mounting concerns over a recession in the United States, it has not seen any pullback from its customer base of wealthy Americans.
Inflation has hit lower-income households, but affluent consumers are rushing back to upscale cruising and splurging on food, spas and other experiences onboard, helping lift the cruise industry out of a near 18-month pandemic-induced lull.
"We are relatively better positioned in the event of an economic downturn," Norwegian chief financial officer Mark Kempa told analysts on a call.
While rival Carnival Corp has taken a hit from offering heavy discounts and cheaper fares to attract passengers, Norwegian, which owns Oceania Cruises and Regent Seven Seas Cruises, has raised prices.
"While Norwegian has taken a more measured approach to building load factors (occupancy) back to historical norms, pricing looks to be holding up better across its fleet than at peers," M Science analyst Michael Erstad said.
Norwegian, which reaffirmed next year's bookings at record 2019 levels, said occupancy in the third quarter rose to about 82% from 65% in the previous quarter.
For the third quarter, Norwegian's revenue rose to $1.62 billion from $153.1 million a year earlier when cruise operations were just resuming after the pandemic hit, beating Refinitiv estimates of $1.58 billion.
The company posted a smaller quarterly adjusted loss of 64 cents per share compared with estimates of a 70-cent loss.
Norwegian also forecast fourth-quarter revenue between $1.4 billion and $1.5 billion, compared to estimates of $1.46 billion, and said its adjusted quarterly EBITDA turned positive for the first time since the start of the pandemic.
Royal Caribbean Sees Strong Bookings For 2023 Amid Surging Fuel Costs
The above news followed news that Royal Caribbean Group has forecast strong bookings for 2023 as it benefits from increased demand for cruising due to the relaxation of on-board COVID-19 protocols, even as fuel costs rake up.
The cruise operator's shares, which reversed course to trade up about 4%, said it would reach historical occupancy levels by late spring of 2023.
"We received twice as many bookings for 2023 sailings in third quarter, as we did in second quarter, resulting in considerably higher booking volumes than during the same period for 2019 sales," chief executive officer Jason Liberty said on a post-earnings call.
Cruise operators, including Royal Caribbean, have relaxed COVID-19 protocols on board after a pandemic-related pause, resulting in an increase in bookings from well-to-do customers, who are feeling a smaller pinch from the effects of decades-high inflation.
"We saw especially after the easing of protocols, a lot of demand, even from Europe to our vacations there," chief financial officer Naftali Holtz told Reuters in an interview, adding that "of all the markets the U.S. consumer is very strong."
However, Royal Caribbean said it was reeling from the impact of higher fuel prices and a stronger U.S. dollar. As a result, it forecast a fourth-quarter loss of $1.30 to $1.50 per share, compared with estimates for a loss of 67 cents, according to IBES data from Refinitiv.
For the third quarter ended 30 September, the company's revenue soared to nearly $3 billion, edging past expectations of $2.97 billion.
On an adjusted basis, the company earned 26 cents per share, compared to analysts' expectations of 19 cents.
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