MIAMI (Reuters) — Royal Caribbean raised its annual profit forecast this week, banking on resilient demand for its luxury destinations, even as the cruise operator faces pressure from higher fuel costs.
The company also forecast current-quarter profit below estimates, sending its shares down about 3% in afternoon trading. The stock has gained about 53% this year.
Escalating Israel-Iran tensions as well as a trade deal between the U.S. and the European Union have boosted fuel costs and price volatility, keeping cruise operators on edge.
Despite the macroeconomic challenges and tariff uncertainty, Royal Caribbean recorded improved bookings, especially for close-in sailings, as its exclusive cruise deals and limited offers helped pull in travelers.
CEO Jason Liberty told Reuters leisure-and-travel remains the top category where consumers plan to boost spending over the next 12 months, outpacing dining, live-entertainment, shopping, and even self-care.
The company is also enhancing travel options for both luxury cruisers and newcomers with private islands and new itineraries.
“The strong demand we are seeing across our new ships and land-based destinations reinforces that our strategy is working and resonating with today’s traveler,” Liberty said in the statement.
In June, Carnival Corp also lifted its annual profit forecast and said sea-based vacations remained more affordable than land-based options.
Royal Caribbean expects third-quarter costs to rise by about 230 basis points, driven by the delivery timing for its luxury cruise ship “Star of the Seas”, and some shifted expenses from the second quarter.
It expects third-quarter adjusted profit of $5.55 to $5.65 per share, below analysts’ estimates of $5.83, per data compiled by LSEG.
For the year, however, Royal Caribbean forecast adjusted profit per share of $15.41 to $15.55, compared with its prior forecast of $14.55 to $15.55.
It earned $4.38 per share for the second quarter ended June 30, beating estimates of $4.09.
By REUTERS
eporting by Anuja Bharat Mistry in Bengaluru; Editing by Devika Syamnath
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