The cruise industry is on the lookout for rough seas ahead when it comes to consumer confidence and travel budgets.
For instance, Norwegian Cruise Line Holdings
“It was actually booking really, really well till about a month or two ago. And then the American consumer seemed to be a little skittish about doing far-from-home travel,” CEO Harry Sommer told CNBC Wednesday.
Norwegian shares declined more than 7% Wednesday following its first-quarter earnings report.
Revenue for the first quarter came in just shy of expectations at $2.13 billion versus estimates of $2.15 billion, according to average estimates compiled by LSEG, and earnings per share were 7 cents adjusted versus a 9 cents expectation.
The company modified its guidance on net yield growth by a percent to a range of 2% to 3% and said its revenues will likely be pressured this year. But Norwegian maintained its guidance on earnings before interest, taxes, depreciation and amortization, or EBITDA, and adjusted earnings per share, projecting cost savings through more favorable foreign currency rates and lower fuel prices.
Despite the pressures, Sommer reiterated the cruise industry’s widely held view that travelers increasingly look to cruises during economic turmoil because of the value of those vacations over land-based holidays.
“But what we’re seeing on the ground, in our bookings and the real-time spending occurring on our ships is that consumers are still prioritizing experiences, planning to spend more on them this year and are seeking value that we are well positioned to offer,” Liberty said.
The company said it’s 86% booked through the end of 2025.
Royal Caribbean raised its full-year guidance and reported results that beat Wall Street expectations. But its shares also fell Wednesday and are off about 6% year to date.
Norwegian shares are off 37% year to date and Carnival Cruise Lines
Norwegian said on-board spending remained steady in April and it’s seen some “return to normalcy.”
“You know, you may have a weak month, a weak quarter, but consumers continue to take vacations,” Sommer said. “It’s sort of one of their God-given rights and they enjoy them. And they come back.”
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