Caribbean capacity growth weighs on cruise pricing and shares

Discounted Caribbean sailings during the important January and February season have contributed to shares in Royal Caribbean, Carnival and Norwegian Cruise Line heading toward their weakest year since the pandemic, according to the report.

The report said capacity has grown faster than demand. Norwegian has added 40 per cent more space, while competitors have redeployed vessels previously intended for the Middle East. Goldman Sachs analysts estimate Caribbean capacity will increase 12 per cent this year, the largest rise in more than a decade.

Operators have also invested in private destinations. Carnival spent $600mn developing a resort on Grand Bahama, while Norwegian opened a water park on its private island the previous month. Norwegian lowered its earnings forecast for the year by more than one-third, while Carnival’s earnings were expected to remain roughly flat.

The report said Carnival was interested in Europe, where summer heatwaves had created new interest in Nordic voyages. UBS estimated that about one-third of the roughly 40mn people cruising worldwide this year were first-time passengers.

Royal Caribbean chief Jason Liberty said passengers who return for another cruise tend to spend about one-quarter more than first-time guests.