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(Reuters) -Royal Caribbean Group raised its annual profit forecast after upbeat results on Thursday, cruising on the back of higher ticket prices and pent-up leisure travel demand, sending its shares up more than 7% in early trading.
The Miami, Florida-based cruise operator projected current-quarter earnings well above Street estimates, thanks also to strong on-board spending from passengers.
While cruise liners have raised ticket prices to shield profits from the impact of rising fuel costs, that has not deterred well-to-do Americans from splurging on cruise vacations including on-board amenities such as spas and gaming after the easing of pandemic restrictions.
That has driven a sharp rebound in booking volumes and occupancy rates, propelling Royal Caribbean (NYSE:RCL) to a record-breaking “wave season”, a crucial period between January and March when cruise operators offer special deals and discounts for the year.
“We knew that demand for our business was strong and strengthening, but we have been pleasantly surprised with how swiftly demand further accelerated well above historical trends and at higher rates,” Royal Caribbean CEO Jason Liberty said.
Royal Caribbean, which owns Celebrity Cruises and Silversea Cruises, said occupancy in the first quarter was 102.1%, up from 94.9% in the previous quarter.
On-board and other revenue more than doubled to $988.6 million and made up about 34% of the total revenue.
Among cruise companies, Royal Caribbean was the most aggressive in building occupancy starting last year, and that has bolstered its results, M Science analyst Michael Erstad said.
The company now expects annual adjusted profit between $4.40 and $4.80 per share, compared with its earlier forecast of $3.00 to $3.60 per share.
Earlier this week, rival Norwegian Cruise Line (NYSE:NCLH) Holdings Ltd also raised its annual profit forecast.
Royal Caribbean reported a per-share loss of 23 cents, excluding items, for the first quarter, much smaller than estimates of 70 cents.
Revenue of $2.89 billion topped expectations of $2.82 billion.
