Key Growth Catalysts for the Cruise Industry in 2024

Post-pandemic recovery trends in the cruise industry

Post-pandemic recovery in the cruise industry is marked by resilience and strategic growth. Companies like Norwegian Cruise Line and Carnival Corporation are increasing investments and capacity, while Royal Caribbean's long-term ship orders signal confidence. Demand is also rising, with onboard revenue up nearly 30% since 2019, indicating a robust recovery trajectory.

"They are especially resilient in economic times. In the last great recession before this one in 2008, we were the 1st cruise line to get back to our pre recession yields." --- (NCLH, event transcript, 2024/05/20)

"Through these strategic asset reallocations and the company's commitment to restarting its moderate newbuild growth for its highest returning brands beginning with Carnival Cruise Line, the company will increase Carnival Cruise Line as a percentage of its portfolio from 29 percent as of 2019 to 37 percent in 2028. Financing and Capital Activity "Our second quarter refinancing, repricing and debt prepayment activities are all aligned with our path to investment grade as we continue to manage down debt and interest expense, while reducing the complexity of our capital structure." --- (CCL, press release, 2024/06/25)

"It's kind of a 2-part question. First is some other cruise have been ordering sort of further out than we had seen before the pandemic, some eight or nine years, some 12 years." --- (RCL, earning call, 2024/Q2)

"We wouldn't be making capital investments in an accelerated way if we didn't expect to accelerate growth out of those businesses and that's true of the cruise ships as well." --- (DIS, earning call, 2024/03/16)

"This level of demand reinforces the extra earning potential. These multiple touch points, many of them pre, during, and post cruise, not only help with the cash flow, but they also drive an increase of onboard revenue, as you can see, almost 30% since 2019." --- (NCLH, event transcript, 2024/05/20)

Shifts in consumer preferences and marketing strategies

Shifts in consumer preferences are driving increased spending on travel experiences, with consumers showing a willingness to book further in advance and pay higher prices. Companies are adapting their marketing strategies to better understand and target these evolving consumer segments, enhancing demand metrics across the industry.

"Consumer preference continues to shift towards spend on experiences with particularly prioritizing towards travel." --- (RCL, earning call, 2024/Q2)

"We have a great team looking over the brand, sales and marketing.Every metric that we see continues to improve from website visits and leads to all types of metrics that we look at to measure demand and we're very, very happy with the direction of the brand and that's part of what gave us the confidence to place this order through 2,036." --- (NCLH, event transcript, 2024/04/09)

"But really as we move forward into 2025 and beyond, we got to get the demand to keep that momentum up on the mid-single-digit type of price increases that we want to push for." --- (CCL, earning call, 2024/Q2)

"I mean each of our brands are hyper-focused on understanding the different segments, the consumer of today and the consumer of tomorrow and growing demand." --- (RCL, earning call, 2024/Q2)

"And so if you think of it from that reference, we could be up from there, but I won't give any specific percentages on that, other than the fact that we continue to see a very strong consumer, consumers who are willing to book further out and who are willing to pay higher prices." --- (NCLH, earning call, 2024/Q1)

Technological innovations and sustainability initiatives

Technological innovations and sustainability initiatives are pivotal for the cruise industry in 2024. Companies like Norwegian Cruise Line and Royal Caribbean are committed to enhancing sustainability practices, while Carnival Corporation's recognition for innovation underscores the industry's focus on responsible business practices.

"It has to extend to our customers and our partners by providing with technology and innovation that helps them on their sustainability journey as well." --- (MSFT, event transcript, 2024/08/05)

"Our journey does not stop here. We remain dedicated to advancing towards our sale and sustained targets going forward, maintaining high standards of operational excellence, and creating lasting value for our business and various stakeholders through sustainable practices." --- (NCLH, earning call, 2024/Q2)

"Awards were presented in 11 categories to recognize companies in the global shipping industry that demonstrate innovation and exceptional commitment to sustainability and responsible business practices." --- (CCL, press release, 2024/05/23)

"We will continue to enhance those capabilities in 2024 and beyond. Our sustainability ambitions help support our mission to deliver the best vacation experiences responsibly." --- (RCL, earning call, 2024/Q1)

"This new vision is bolstered by strategic initiatives under four pillars—People Excellence, Guest-centric Product, Long-term Growth Platform and Exceptional Performance." --- (NCLH, press release, 2024/05/20)

Economic factors influencing cruise industry growth

Economic factors driving growth in the cruise industry include rising average ticket prices, which have increased revenues significantly. Additionally, strong demand forecasts and improved net yield expectations signal positive financial health, while regulatory challenges related to climate change may pose risks to future profitability.

"Revenues - Resorts and vacations Higher resorts and vacations revenue was primarily due to increases of 3% from higher average ticket prices for cruise line sailings, 1% from an increase in average daily hotel room rates and 1% from additional passenger cruise days." --- (DIS, sec filing, 2024/Q1)

"Net Yields represent Adjusted Gross Margin per APCD. We utilize Adjusted Gross Margin and Net Yields to manage our business on a day-to-day basis as we believe that they are the most relevant measures of our pricing performance because they reflect the cruise revenues earned by us net of our most significant variable costs, which are commissions, transportation and other expenses, and onboard and other expenses." --- (RCL, sec filing, 2024/Q1)

"to a 10% greenhouse gas intensity reduction from 2019 baseline levels2. Based on current strong demand and an improved outlook for the year, the Company is increasing its full year 2024 guidance, raising expectations for Net Yield growth from 6.4% to 7.2%, increasing Adjusted EBITDA from $2.25 billion to $2.30 billion and upping its Adjusted EPS from $1.32 to $1.42." --- (NCLH, press release, 2024/05/20)

"We believe the increasing global focus on climate change, including the reduction of greenhouse gas emissions and new and evolving regulatory requirements, is reasonably likely to have a material negative impact on our future financial results." --- (CCL, sec filing, 2024/Q2)

"Revenues - Resorts and vacations Higher resorts and vacations revenue was attributable to increases of 4% from higher average ticket prices for cruise line sailings, 1% from increased occupied hotel room nights and 1% from higher average daily hotel room rates." --- (DIS, sec filing, 2024/Q2)

Expansion of cruise routes and destinations

Cruise lines are significantly expanding their routes and destinations in 2024. Royal Caribbean will offer itineraries from Northern Europe to the Canary Islands, while Norwegian Cruise Line is increasing sailings to Bermuda and Great Stirrup Cay. Additionally, Princess Cruises plans a record-setting world cruise visiting 52 ports across 28 countries.

"With itineraries covering stunning destinations from Northern Europe to the Canary Islands, the premium cruise line's state-of-the-art ship will cruise from Southampton from May through October in 2024." --- (RCL, press release, 2024/05/15)

"The increase in the current period compared to the prior-year period was due to higher spend on new attractions and cruise ship fleet expansion." --- (DIS, sec filing, 2024/Q2)

"We're increasing our sailing to exciting destinations, such as Bermuda and Great Stirrup Cay, where we plan to complete construction of our two-ship pier towards the end of next year." --- (NCLH, earning call, 2024/Q2)

"2026 World Cruise Sails to the Most Destinations EVER Visited by 'The Love Boat' Line SANTA CLARITA, Calif., May 2, 2024 /PRNewswire/ -- Princess Cruises today announced its 2026 World Cruise - a 114-day voyage aboard Coral Princess - will visit 52 ports in 28 countries, across six continents, the most destinations ever reached on a Princess World Cruise." --- (CCL, press release, 2024/05/02)

"Lastly, following the award-winning Explorer Class ships, Regent Seven Seas Cruises is scheduled to take delivery of two 77,000-gross-ton ships, each with a capacity of 850 guests, in 2026 and 2029." --- (NCLH, press release, 2024/04/08)

Strategic partnerships enhancing cruise offerings

Strategic partnerships are pivotal for enhancing cruise offerings in 2024. Norwegian Cruise Line's initiatives, including newbuilds and infrastructure improvements, alongside Holland America Line's collaboration with Audible for a co-branded book club, exemplify how these alliances are set to enrich guest experiences and drive growth.

"Our new 'Vacation Better. Experience More.' vision not only captures our commitment to offer our guests unforgettable vacation experiences, but focuses our over approximately 40,000 team members to deliver on that commitment through the several strategic initiatives that comprise our ‘Charting the Course’ strategy, said Harry Sommer, president and CEO, Norwegian Cruise Line Holdings Ltd. 'This strategy has already been set in motion with initiatives such as our recent announcement regarding eight transformational newbuilds for our three brands and infrastructure improvements for our private island in the Bahamas, Great Stirrup Cay." --- (NCLH, press release, 2024/05/20)

"The strategic collaboration also includes curated destination-focused playlist collections, free in-stateroom content, and an exclusive offer for guests SEATTLE, April 4, 2024 /CNW/ -- Holland America Line is working with Audible, a leading creator and provider of premium audio storytelling, as the first cruise line to offer a co-branded book club with celebrated authors across different genres." --- (AMZN, press release, 2024/04/04)

"Mark Kempa: Thank you, Harry, and good morning, everyone. I want to echo Harry's excitement about the new build order and peer development at Great Stirrup K. These strategic investments will secure our growth trajectory, significantly boost our earnings profile and enhance our shareholder value well into the future." --- (NCLH, event transcript, 2024/04/09)

"The strategic collaboration also includes curated destination-focused playlist collections, free in-stateroom content, and an exclusive offer for guests SEATTLE, April 4, 2024 /PRNewswire/ -- Holland America Line is working with Audible, a leading creator and provider of premium audio storytelling, as the first cruise line to offer a co-branded book club with celebrated authors across different genres." --- (AMZN, press release, 2024/04/04)

"By enhancing our capacity and elevating our product to create the best, largest, and most efficient vessels in our fleet, we are honoring our 57-year history of innovation that has always driven our growth and continues to be at the forefront of what we do, continued Sommer." --- (NCLH, press release, 2024/05/01)