Cruise lines are thriving despite inflation and higher booking costs
Even during a tumultuous economic time, with inflation still sitting well above the Federal Reserve's target, cruise lines are thriving.
In the first quarter of the fiscal year, executives across the industry boosted their full-year profit forecasts as they saw record-breaking demand.
Norwegian Cruise Line reported seeing record bookings, while Carnival noted it is "capturing more new guests than ever before."
"The demand for cruise vacations continues to be at an all-time high, as evidenced by record bookings, record book decisions and record advanced ticket sales," Norwegian CEO Harry Sommer told analysts on an earnings call earlier this month.
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The company's advanced ticket sales balance increased 30% year over year, reaching a record $3.8 billion.
The company raised its full-year profit forecast Monday for the second time in the last three weeks as it "continued to see very strong demand and record bookings," Norwegian CFO Mark Kempa said.
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Royal Caribbean Cruises CEO Jason Liberty told analysts on the company's most recent earnings call demand for its "vacation experiences continues to accelerate" even as some prices rose.
Liberty explained that bookings throughout the first quarter, including April, consistently outpaced last year.
However, "European bookings are outpacing last year's levels at higher prices," he said.
"We see strong demand across all products and markets. North America continues to be extremely robust, where approximately 80% of this year's guests are sourced," Liberty said.
The company raised its annual profit forecast in April.
Carnival Cruises also raised its annual profit forecast during its first-quarter earnings amid record bookings.
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The company's "record book position and activity did not just happen, and it is not the result of pent-up demand for repeat guests built up during the pause, which is now years in the rearview mirror," CEO Josh Weinstein said.
"It is because we have been creating more consideration and broad-based demand for cruise travel in all of our source markets across our well-balanced portfolio."
Weinstein noted the demand came as prices remained elevated. He noted that prices "ran considerably higher for our peak summer period in (the third quarter), and they were also considerably higher for (the fourth quarter)."
Travelmation founder Adam Duckworth told FOX Business the demand for cruises has increased significantly in recent years as travelers realize they can get more value with these types of trips.
"Most cruise lines will include all meals, and they are a one-stop shop to endless entertainment and activities for travelers of all ages," Duckworth said, adding these types of trips also eliminate the need to drive or fly between cities.
Though a "more luxury vessel may cost you more than a land vacation," Duckworth noted that "often times, you get so much value for your money that it truly is a great deal. Even if you go super luxe, you typically have all meals, drinks, entertainment, excursions and sometimes even flights included."
The Points Guy senior cruise writer Ashley Kosciolek agreed that while they are still "commanding some of the highest fares ever, they're still a great value."
"If you were to island hop around the Caribbean or travel from town to town in Alaska, you'd pay quite a bit more to do it on your own than if you cruised to those locations, especially when you consider transportation costs, as well as hotel stays and meals," Kosciolek noted.