Q1 2024 Earnings Report Summary

In the first quarter of 2024, the leading public cruise corporations—Carnival Corporation, Royal Caribbean Group (RCG), and Norwegian Cruise Line Holdings (NCLH) — have set a promising tone for the remainder of 2024.  Below, we examine the factors behind their success, including increased profit expectations fueled by a record wave season, ongoing expansion and investments in private destinations, and a significant uptick in “new to cruise” guests in the first quarter of 2024.

These themes are highlighted below in more detail and graphic illustrations.

Full Year Net Yield Guidance Up for All

Full Year 2024 Net Yield Guidance (compared to 2023)

In the first quarter of 2024, Carnival Corp., RCG, and NCLH have significantly revised their net yield guidance upwards, reflecting a more optimistic financial outlook for the year versus 2023.

NCLH anticipates a robust 2024 net yield growth of about 6.5%, surpassing the previous projection of 5.4%, albeit still lower than the revisions from both Carnival Corp. and RCG, who now expect from 9.5% and between 9%-10% growth, respectively. This upward trend in net yields across the board indicates a broader industry shift towards accelerated growth, supported by enhanced consumer demand and strategic pricing.

More specifically, NCLH’s CFO, Mark Kempa, stated that they are raising their full-year guidance – which now exceeds the pre-pandemic growth rate – due to the strength experienced in the first quarter. He cited record bookings, resulting in a continued all-time-high 12-month-forward booked position following a strong wave season. Notably, North American demand for the upcoming summer European season is strong. The guidance implies net yield growth for the remainder of the year. Bottom line is more people are continuing to choose cruise holidays for their vacations and these major brands are the benefactors.

Carnival Corp. attributed its increase to robust booking trends with considerably higher prices and sustained strong demand, all which are contributing an additional $200 million in revenue this quarter. Furthermore, Carnival Corp. anticipates a collective improvement in operational costs excluding fuel by over $50 million, including notable efficiencies in cruise-related expenses. According to CEO Josh Weinstein, these positive trends are not merely a rebound from previous disruptions but are the results of proactive strategies to enhance the appeal of cruise vacations across diverse markets. Carnival Corp. provides for a wide variety of brands across a wide spectrum that clearly is working to increase passenger demand throughout their market range.  

RCG’s CEO Jason Liberty, credited the company’s increase in much the same way, stating, “We’ve seen unprecedented demand this wave season, translating into robust booking rates that exceed our initial forecasts.” He emphasized that this surge is not only a post-pandemic rebound but a strong indicator of sustained consumer confidence and a preference for premium travel experiences. Liberty emphasized the role of pricing strategies in capturing this substantial increase in demand. He pointed out that a 1% change in yields translates to a $120 million impact, illustrating the high stakes of effective yield management. It is now ever so important for the placement of the right cruise vessel in the right itinerary at the right time for the right market! Managing these large fleets to fully grasp the potential revenue opportunities and tamp down on costs to produce strong yields is in many ways an art form.

Continued Expansion and Investment in Private Destinations

One reason operators cited for stronger demand was the strategic expansion and investment in private cruise destinations. These destinations attract guests through the introduction of exclusive and premium experiences, which allow cruise lines to command higher ticket prices due to the added value of unique, secluded stops on their itineraries and produce higher per diems overall. This is on top of the added benefits of port spending and fuel savings.

NCLH discussed the ongoing enhancements at Great Stirrup Cay, one of their highest-rated destinations, where a new pier is under construction. This improvement, set to be completed around mid-2025, aims to increase accessibility and ensure nearly uninterrupted guest visits. Addressing the financial rationale for this project, NCLH stated, “The lack of a pier caused us to miss much more frequently than we would have liked. So, for us, it almost funds on an ROI basis just by us being able to visit there. But of course, once we have the confidence that we can visit there almost 100% of the time, we certainly believe that it will be worth making the investments to continue to improve the guest experience as long as we focus… on the things that get value.” That includes the upland development of the island to deliver unique premium experiences.  Adding value, for NCLH, also comes from new ships. NCLH confirmed orders for eight new ships aimed at expanding their capacity and capabilities, aligning these infrastructure improvements with broader growth initiatives.

David Bernstein, CFO of Carnival Corp., echoed this sentiment and outlined the multifaceted benefits of investing in private destinations. These are not just luxury additions but pivotal to the cruise line’s economic model, enhancing guest satisfaction and spending. The newest destination, Celebration Key, is expected to drive considerable economic advantages. Opening July 2025, with an investment of ~$500 million, Bernstein commented, “We expect ticket revenue uplift from this incredible destination as the guest experience delivers unmatched fun as well as incremental in-port spending”.  Moreover, its proximity will result in significant fuel savings as the port is the closest destination in Carnival Corp.’s seven owned and operated ports in the Caribbean.

Jason Liberty elaborated on this strategy: “Investing in private destinations like the Royal Beach Club in Cozumel is central to our growth strategy. These locales not only enhance the guest experience but also drive higher ticket pricing and in-port spending.” He also noted that RCG is significantly investing in private destinations to compete more aggressively with land-based vacation options, aiming to close the gap in the global vacation market. Naftali Holtz, CFO of RCG, highlighted the strategic impact of capturing even a small fraction of this market, explaining, “A 1% shift is worth 11 Oasis-class ships to us”​​. This statement underscores the massive potential revenue and market share gains from even minimal shifts in consumer preferences toward cruise vacations over traditional land-based options. As the cruise industry continues to expand and mature as a tourism product these subtle shifts could mean millions to each of the brands represented.  The competition for the consumer and the continued development of new market opportunities to compete in the global tourism industry is substantial.

First Quarter Surge in New-to-Cruise Guests Reflects Strategic Success

A final trend highlighting the robust passenger demand is seen in commentary about the significant uptick in “new to cruise” guests, which is a fabulous reflection of the cruise opportunity and provides for longer-term growth and development. 

Jason Liberty highlighted the new-to-cruise in Q1 that grew 16% YOY. Additionally, the demographics are shifting. He confirmed that one in two guests are millennials or younger, this is an improvement of 11% over pre-pandemic levels. He noted that “new hardware has been a great differentiator. Since Icon of the Seas joined the fleet a few months ago, it is already exceeding our lofty expectations in both guest satisfaction and financial performance. We are also excited for the arrival later this year of Utopia of the Seas, a ship that is positioned to be another game changer for our short Caribbean product “.

RCG’s investment in new ships like the Icon of the Seas is successfully attracting millennials and contributing to an increase in ‘new to cruise’ guests. By deploying these vessels to the Caribbean and enhancing experiences at exclusive private islands and beach clubs in Nassau and Cozumel, RCG is effectively boosting its appeal. From our perspective, this is a new segment of North American cruisers combined with Europeans that are being enticed to experience both new cruise vessels and destinations within the Caribbean region.

Carnival Corp. has also seen a notable rise in new cruisers, with a 30% improvement when compared to 2023 Q1. As emphasized by its CEO, Josh Weinstein attributes this to the fact that the value of cruising is greater than land vacations. “It’s not pent-up demand. It is truly casting the wide net, having a great experience and delivering.”

What Does This Mean for Q2 and Beyond?

This significant demand that has translated into revised upward guidance is a massive step forward for the industry, which together has made a concerted push towards attracting new and existing cruisers through valuable experiences and investments in vessels, destination infrastructure, and onboard experiences.  As this is a fairly new breakthrough, we anticipate that consumer demand should continue to be propelled forward as cruise lines further refine their offerings and adapt to the evolving preferences of a broader potential cruise visitor base. 

BA Maritime


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