Skift Take

Carnival seems to be sailing on high demand, but rising costs are proving to be rough waters for the company.

Carnival’s CEO said Monday that the cruise operator would not return to China in the next three years despite the country reopening to international travel. 

“There is no assumption in these numbers that we returned to China,” said the CEO, Josh Weinstein.

 “The fact is we’re going to be on the sidelines for a few years because our assets are right where we want them to be,” he said. “We can always relook at that. Obviously, our assets are mobile, and we’ll do that, but we feel really good.”

Before the pandemic, China contributed 1 million guests to the company’s customer base and was important to its Costa cruise line brand. The cruise company moved its Costa brand ships into its Carnival Cruise Line brand, said Weinstein.

Here’s what else you need to know about Carnival’s second-quarter results:

Consumer spending is strong: Spending on Carnival ships was strong in the second quarter. Onboard revenue was “ once again off the charts,” said Weinstein. For the next 12 months, over one-third of onboard revenues have been booked in advance. Norwegian Cruise and Royal Caribbean Cruise have also reported strong onboard spending in recent quarterly calls.

Shares slide: Shares fell 10 percent as executives pointed to rising labor and fuel costs, despite strong demand and higher consumer spending, reported Reuters. Revenue for the second quarter was a record $4.9 billion. However, that strong revenue total was partially offset by $13 million in higher fuel costs, said Carnival Chief Financial Officer and Chief Accounting Officer David Bernstein. Net loss amounted to $407 million, an improvement from a $1.8 billion net loss last year. 

Impact of the war in Ukraine: Carnival doesn’t expect St. Petersburg will be back on its itinerary in 2024 due to the Ukraine War. Last year, outgoing Norwegian Cruise CEO and President Frank Del Rio said the loss of St.Petersburg is costing the cruise industry millions of dollars in revenue.

Occupancy and bookings: Occupancy stood at 98 percent in the second quarter, up from 69 percent for the same period last year. Look ahead, Carnival expects occupancy to be at least 100 percent for the full year 2023.

Booking volumes in the second quarter were 17 percent higher than they were in 2019.  The Europe and North America segments both saw double-digit growth in their booking volume. Carnival did not disclose total bookings.

Weinstein said 2023 and 2024 are both shaping up to be solid years for Carnival. “With over 90 percent of this year on the books, 2023 is now essentially behind us, and we are strategically building a strong base of revenue for 2024,” he said.  


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Tags: carnival, carnival corp., china, earnings

Photo credit: Photo Credit: Stephanie Klepacki on Unsplash Stephanie Klepacki / Unsplash

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