The cruise industry is experiencing a resurgence, with stocks of major players like Royal Caribbean Group (RCL), Carnival Corp (CCL), and Norwegian Cruise Line Holdings Ltd (NCLH) riding a wave of optimism. Analysts at JPMorgan, led by Matthew R. Boss, believe these companies are set for a strong 2025, driven by robust demand and their ability to maintain pricing power.
Boss, after attending the Endless Summer Forum in Miami, observed “zero signs of softening” in key demand indicators. This includes everything from booking trends to onboard spending, with both Royal Caribbean and Norwegian Cruise Line confirming the industry’s strong footing. With nearly half of 2025’s capacity already booked, cruises are being booked earlier than usual, extending into 2027.
Royal Caribbean is leading the charge, with CFO Naftali Holtz stating, “We’re in a very good spot.” He highlighted the fact that 70% of passengers make pre-cruise purchases, leading to a significant boost in onboard spending. The company is also relying on long-term growth drivers, such as the introduction of new ships like “Utopia of the Seas” and “Star of the Seas.”
Carnival is poised to benefit from the continued surge in demand, especially in Europe and Alaska, which will likely boost their third-quarter earnings. The company remains optimistic about maintaining its pricing power, which is still about 25% lower than land-based alternatives, making it a strong selling point for budget-conscious travelers.
While Norwegian Cruise Line remains neutral in JPMorgan’s outlook, management is “very confident” in their ability to hit a $300 million cost savings target. This will be achieved through initiatives such as optimizing fuel use and streamlining menus, all while ensuring passenger satisfaction.
As Royal Caribbean, Carnival, and Norwegian Cruise Line navigate the post-pandemic recovery, each is demonstrating unique strengths. Royal Caribbean’s focus on new ship launches and immersive experiences, Carnival’s strong booking trends and cost-efficiency strategies, and Norwegian’s premium offerings all contribute to their position to capitalize on increasing consumer demand.
The cruise industry, with its appeal across multiple generations and rising demand, is taking a larger share of the $1.9 trillion global vacation market. However, challenges such as inflation and rising operational costs could impact profitability. Investors will need to carefully consider these factors as they determine which cruise line is best positioned to capitalize on the industry’s recovery and gain market share.
