Carnival says everybody’s cruising again

The world is apparently cruising again. After years of pandemic disruptions—and despite continuing economic uncertainty—Carnival Corp.'s latest earnings results show its recovery is well underway.

In fact, it’s going so well that CEO Josh Weinstein’s biggest concern is running out of cruise trips to sell.

“The only slowdown we see is as we’re running out of inventory, it has to slow down,” he said on a recent earnings call. “That’s it. So we feel quite good.”

The numbers are pretty remarkable. In its third quarter, the company posted more than a billion dollars in net income, and it’s now in position for its first profitable year since 2019.

With its business severely limited by the pandemic, the company had racked up some $26 billion in cumulative losses from 2020 to 2022. It wasn’t until March 2022 that Carnival’s US fleet was fully back on the water.

The company’s adjusted earnings are now running at 90 percent of its 2019 levels and Weinstein hopes to celebrate a full recovery in the fourth quarter as bookings continue to increase. One of its greatest sources of volatility is not customer interest, but the cost of fuel, which recently hit a high only seen one other time in the past 15 years.

So, why are so many people eager to book the floating hotels of the seas? Weinstein figures it’s part of a bigger shift in the consumer mindset.

“Now we appreciate there are heightened concerns around the state of the consumer as of late. But the fact is we just haven’t seen it in our bookings or our results, and we believe consumers are continuing to prioritize spending on experiences over material goods,” he said.

In other words, cost-conscious folks want to have a good time—maybe even more than they want to buy a new TV or car. Loyalists, as Weinstein describes them, have stuck with the company over the last four quarters, but Carnival is also welcoming hordes of newbies up the gangway.

“All of that growth that we’ve been seeing has been coming from first-to-cruise or first-to-brand,” he said.

And he figures there are plenty more fish in the sea. “If you think about the cruise industry in the context of the vacation industry, we’re casting in a really big ocean. So that bodes very well for us,” he said.