Skift Take
Carnival Cruise executives don’t see the macroeconomic slowdown everybody is talking about.
Dawit Habtemariam
Carnival Cruise executives had their conference call to discuss third-quarter results Friday, and Wall Street analysts kept asking about the risk of a consumer slowdown.
The answer was always the same: “We’re trying to say it as plainly as we can. We just have not seen any sign of slowdown,” said Carnival Cruise CEO Joshua Weinstein. “The only slowdown we see is as we’re running out of inventory, it has to slow down.”
Booking volumes? Up 20% from 2019. Occupancy? At 109%. Onboard consumer spending? “Strong,” said CFO David Bernstein.
Weinstein told analysts he is confident onboard consumer spending will continue to stay strong into 2024. “Literally, they’re spending the same amount today that they were 3 quarters ago, and we haven’t seen that slowdown,” he said. “So that’s very encouraging, and that’s part of what gives us confidence when we say we’re feeling pretty good about our business in light of whatever is going on in the macro economy.”
Here’s what else you need to know about Carnival’s third-quarter earnings call:
- Revenue was an all time high. Carnival Cruise posted an all-time high revenue of $6.9 billion in its third quarter thanks to demand from North America, Europe and Australia.
- First-time customers drive growth. All of the growth in bookings are thanks to first-time customers, said Weinstein. “Loyalist” customers have been consistently booking.
- Carnival expects to drive prices in 2024. “With less remaining inventory to sell, despite a 5% increase in capacity, we are well positioned to drive pricing higher and deliver strong yield improvement in 2024,” said Weinstein.
- Ukraine War will prevent top itineraries from returning in 2024. Carnival doesn’t expect to restore the itineraries that were impacted by the Ukraine War. St. Petersburg was one of Carnival’s “top, if not the top onboard spending itineraries,” said Weinstein.
- China is still out of play. Carnival has not changed its position on staying on the sidelines in China for the next three years. “China is still a question mark for the industry,” said Weinstein. “We certainly hope that unfolds the way people are planning outside of Carnival Corporation.”
- Restriction lift in Australia brings bookings boost: Weinstein said there has been a recent “spike in bookings” from Australia after the government lifted all pandemic-era requirements on cruise ships in August.
- European Union Carbon Tax to cost millions. In January 2024, the European Union’s Emissions Trading System will be extended to cover carbon emissions from all large ships. Based on its forecasted fuel consumption, Carnival Cruise will pay $75 million in 2024, said Chief Financial Officer Daivd Bernstein.