Carnival Earnings: Resilient Demand Positions Profit Improvement for Smooth Sailing

The consumer’s appetite to travel has yet to abate, as indicated by Carnival’s fourth-quarter results and 2024 outlook. In the fourth quarter, net yields were up 6% versus 2019 on an as-reported basis, occupancy was back above 100%, and the firm carried 3.1 million passengers on holiday (up 7% from 2019). More importantly, it seems momentum in consumer interest isn’t set to slow any time soon. For 2024, Carnival has offered an outlook for net yield growth of 8.5%, above the 6% we had forecast, and the highest growth rate the company has seen since 2004. With two thirds of capacity already booked for the year ahead, we see little risk to pricing growth expectations in the near term, as consumers are still booking farther out than in the past, leaving a whopping $6.4 billion in customer deposits on hand. All components are currently aiding growth (ticket, on board, occupancy gains), and both North American and European consumers are showing up strong. The 2024 cost outlook was in line with our 4.4% increase excluding fuel, which is higher than optimal growth but is impacted by 586 drydock days and modest inflationary pressures (together around 4%).