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

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(Reuters) -Royal Caribbean raised its annual profit forecast on Tuesday, benefiting from strong bookings and lower fuel costs, sending the cruise operator’s shares up about 5% in premarket trading.

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

Royal Caribbean 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 range in response to the complexity of the current macroeconomic landscape.

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

“While we appreciate the uncertainty surrounding the broader consumer demand, we believe structural factors are driving accelerated growth trends at Royal Caribbean,” said Sharon Zackfia, analyst with William Blair.

“We also believe a buffer exists against potential consumer softening,” with cruises being at a 20% discount compared to stay at resorts and hotels, Zackfia added.

Royal Caribbean witnessed record bookings during the wave season – the period from January to March when operators offer exclusive cruise deals and packages – despite taking 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)