Outlooks for the cruiseship sector are growing even more bullish as three operators from across the spectrum show strong hands in the form of advanced bookings.
The world’s third-largest operator, Norwegian Cruise Line Holdings, and expedition specialist Lindblad Expeditions have added robust forecasts to last week’s optimistic picture from Royal Caribbean Cruises, as passengers show more willingness to open their wallets for a holiday at sea.
“To use a nautical phrase, this rising tide is lifting boats throughout the industry,” Norwegian chief executive Frank Del Rio said.
As TradeWinds reported online, the Miami-based owner of 25 cruiseships across three lines reported a better-than-expected second-quarter profit of $198m and lifted its full-year guidance for earnings per share by $0.14 to between $3.93 and $4.03.
Del Rio says the booking environment is as strong as the company has seen in recent history, and passengers have shown ample willingness to spend money once onboard.
“The robust booking environment is benefiting from near-high positive consumer sentiment, especially from our broad North American consumer base,” he said.
Second-half inventory is so locked in, he adds, that the booking momentum is moving into 2018 itineraries. And amid the improving fundamentals, the company has fine-tuned revenue-optimisation strategies and deployed marketing support to avoid price erosion for late-cycle bookings.
Norwegian Cruise Line's earnings snapshot
| Q2 2017 | Q2 2016 | |
| Revenue | $1,344,103,000 | $1,186,835,000 |
| Cruise operating expenses | $752,242,000 | $705,900,000 |
| Operating income | $275,071,000 | $227,018,000 |
| Net income | $198,473,000 | $145,246,000 |
| Adjusted EPS | $1.02 | $0.85 |
At the smaller end of the spectrum, expedition cruiseship owners appear to have shaken off passenger jitters over terrorism incidents and the Zika virus, whose effects lingered longer than for mass-market cruiseship owners because of the expedition sector's longer booking cycle.
Lindblad Expeditions chief executive Sven-Olof Lindblad has told analysts that his company is in a position to deliver substantial earnings growth in the second half of this year and next.
"The clouds of uncertainty that affected 2016 and bled into 2017 have passed, and a more accelerated booking behaviour has returned," he said.
He says the company's reservations for future travel are up 40%. Plus, Lindblad, which partners the National Geographic Society, has stronger bookings for 2018 cruises than similar forward reservations this time last year.
That comes on top of the successful introduction of the 129-berth National Geographic Endeavour II (built 2005) into the Galapagos market and the delivery, albeit delayed, of the newbuilding 100-berth National Geographic Quest (built 2017) from US shipyard Nichols Bros.
"As they are adding capacity, their bookings remain very strong, so that’s a very healthy sign," Sidoti analyst Greg Pendy told TradeWinds. "It shows that there is demand in the market. It validates the strategy of the company.”
Niels-Erik Lund, chairman of Cruise Management International and chief executive of tonnage provider SunStone, says his expedition cruise operator clients are experiencing similar trends.
"Our clients... are doing very well and are very optimistic," he said. "All indications I get from our charterers is that the market is very strong right now."
