Carnival Corp. credits travel advisors for booking new cruisers

Carnival Corp. ended its fiscal Q1 better than expected due to a robust Wave season that drove the company to its highest quarterly booking volume in its history. 

The company beat its own expectations by reporting $382 million in earnings before interest, taxes, depreciation and amortization, and $4.4 billion in revenue (95% of 2019 levels). 

CEO Josh Weinstein credited travel agents with drawing in new-to-cruise customers and said several of the company’s brands saw travel agent bookings exceed 2019 levels.

“I am delighted to say that the trade is showing a fantastic rebound in its recovery with us this past quarter,” said Weinstein. He added the company’s investment in advertising and sales support is also helping to drive sales. 

Capacity in Q1, which ended Feb. 28, reached 91%, according to CFO David Bernstein. That is up from 85% in Q4. 

Looking to the rest of 2023, Carnival Corp. is more than 70% booked for the remainder of the year, he said. 

The higher-than-expected earnings are due primarily from higher ticket revenue and lower-than-expected miscellaneous operating expenses despite high fuel expenses, said Patrick Scholes, a Truist securities analyst in the hospitality sector. 

However, the outlook from Carnival Corp. for the rest of 2023 is more cautious than expected, he said. “While 2Q and full-year guides are lower than Street expectations, we think given macro and general concerns coming out of Covid, the company is likely coming out on the conservative side with this guide,” he said. 

Fewer new ships: A strategy to pay down debt

As it strategizes how to pay down debt accumulated during the pandemic, Weinstein said Carnival Corp. has its smallest order book in decades, which will reduce capital expenditures. 

“If you think about the pipeline over the next four-plus years, it’s the lowest it’s ever been and it will continue to dwindle down,” said Weinstein. “It sets us up incredibly well to be able to generate the cash flow and pay down debt.” 

The company, which owns nine brands, has the Seabourn Pursuit expedition ship due out in September, and four other ships in the pipeline through 2025, including the Carnival Jubilee, Queen Anne from Cunard Line, and two Princess Cruises ships including the Sun Princess. 

There will be no new ships in 2026. When the company resumes ship orders, it will likely plan for one or two new ships a year, but it’s an open question whether that will begin in 2027 or later, Weinstein said.

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