Royal Caribbean has raised its annual profit forecast, capitalizing on robust demand for its luxury cruise destinations despite rising fuel costs. The 'Wonder of the Seas,' the world’s largest cruise ship, was recently spotted docked at a port in Malaga, Spain, on April 30, 2022.

The company anticipates current-quarter profit to fall short of estimates, causing a 7% drop in its shares during early trading. However, the stock has surged by 53% this year, reflecting strong market confidence.

Rising tensions between Israel and Iran, coupled with a new U.S.-EU trade deal, have driven up fuel costs and price volatility, challenging cruise operators. Nevertheless, Royal Caribbean has seen improved booking trends, especially for last-minute sailings, thanks to exclusive deals and limited offers attracting travelers.

CEO Jason Liberty highlighted the success of their strategy, stating, “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.” The company is enhancing travel options with private islands and new itineraries for both seasoned and new cruisers.

Looking ahead, Royal Caribbean expects a 230 basis point cost increase in the third quarter, driven by the delivery of the luxury cruise ship 'Star of the Seas' and shifted expenses. The projected third-quarter adjusted earnings per share are $5.55 to $5.65, below the analyst consensus of $5.83.

For the full year, the company now forecasts adjusted profit per share between $15.41 and $15.55, up from the previous range of $14.55 to $15.55. In the second quarter ending June 30, it reported earnings of $4.38 per share, surpassing expectations of $4.09.

Competitor Carnival Corp also raised its annual profit forecast in June, citing high margins and the affordability of sea-based vacations compared to land options.

Reporting by Anuja Bharat Mistry in Bengaluru; Editing by Devika Syamnath. © Copyright Thomson Reuters 2025.

By Reuters