Royal Caribbean raises annual profit target on strong demand, lower fuel costs

By Anuja Bharat Mistry

(Reuters) -Royal Caribbean raised its annual profit forecast on Tuesday, benefiting from strong bookings for its high-end itinerary offerings as well as easing fuel costs.

Growing interest in high-end leisure travel among consumers, especially millennials and Gen Z, has boosted the cruise industry, with bookings surpassing historical levels in the recent past.

"While broader consumer spending (has) moderated, vacation spend continues to grow as consumer sentiment around leisure vacations remains positive," CEO Jason Liberty said in the post-earnings call.

Despite macro uncertainties, Royal Caribbean's strong booking trends and disciplined cost management, among other factors, should put it in a better position, he added.

The company also benefited from easing fuel prices, which were at their peak due to escalating geopolitical tensions and significant shifts in global trade policies.

It earned an adjusted profit of $2.71 per share in the first quarter, above estimates of $2.54, according to data compiled by LSEG.

The company said it has expanded its annual forecast ranges in response to the complexity of the current macroeconomic landscape.

Its fiscal 2025 adjusted profit is now expected between $14.55 and $15.55 per share, compared with its prior forecast of $14.35 to $14.65.

"We also believe a buffer exists against potential consumer softening," with cruises being at a 20% discount compared to stay at resorts and hotels, said Sharon Zackfia, analyst with William Blair.

Shares of the company were down about 2% amid broader market declines due to concerns of tariff-related uncertainty.

Royal Caribbean witnessed record bookings during the wave season - the period from January to March when operators offer exclusive cruise deals and packages - despite its consecutive ticket price hikes.

Its quarterly revenue rose 7.3% to $4 billion from a year earlier, compared with analysts' average estimate of $4.02 billion.

(Reporting by Anuja Bharat Mistry in Bengaluru; Editing by Shinjini Ganguli)

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