Royal Caribbean raises annual profit forecast, flags modest booking hit from Middle East

By Sanskriti Shekhar

July 28 (Reuters) - Royal ‌Caribbean raised its ​annual ​profit forecast on Tuesday after beating quarterly estimates, sending its shares up 5%, even as it factored in a modest ‌hit to bookings due to the travel disruptions caused by the ⁠Middle East conflict.

Geopolitical uncertainty linked to the U.S.-Iran conflict has made some travelers wary ‌of booking cruises, hurting demand ‌for certain itineraries and adding to fuel-cost pressures for operators.

Royal Caribbean said bookings for some sailings, including Mediterranean itineraries, have been modestly hit, ​primarily in the third quarter.

"When you include a cruise plus the airfare (to get to the ports), it's a little bit more costly (for American ⁠consumers)," CEO Jason Liberty said, adding travelers are either putting off their trips to next year ​or opting for the Caribbean instead of Europe.

While the cruise operator trimmed its revenue growth outlook to about 9% ​from about 10%, it raised annual adjusted ‌profit to $17.73 to $17.87 per share, from its prior forecast of $17.10 to $17.50.

Demand from higher-income travelers has helped cruise operators like ⁠Royal Caribbean weather broader consumer caution, while strong pricing and onboard spending have helped offset pressure from higher fuel costs.

"Royal Caribbean could be relatively well positioned given ⁠the strength of its flagship brand and its above-average exposure to higher-income consumers...even if ​the macro environment becomes more challenging," said Michael Gunther, analyst at Consumer Edge.

The Miami, Florida-based company reported a 27% rise in quarterly fuel expenses to $355 million from a ‌year earlier. However, it reduced its full-year fuel expense forecast to about $1.34 billion from its previous forecast of $1.35 ‌billion.

For the quarter ended June 30, it earned $4.21 per share on an adjusted ⁠basis, compared with analysts' estimates ‌of $3.98, according to data ​compiled by LSEG.

Its quarterly revenue rose 6% to $4.83 billion, beating estimates of $4.82 billion.

(Reporting by Sanskriti Shekhar in Bengaluru ; Editing by ‌Tasim Zahid)

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