Norwegian Cruise Line has raised its annual profit forecast and sailed past first-quarter estimates, betting on higher prices, pent-up demand and robust onboard spending from wealthy customers, sending shares of the company up 5%.
Easing of pandemic protocols on ships after long periods of restrictions has encouraged people, especially from the higher income group, to go on leisure travel while also boosting spending on various onboard facilities from casinos to spas.
Norwegian, which mostly caters to the affluent, has also been raising prices of its tickets to offset the impact from higher costs of fuel and food due to supply chain snags worsened by the Russia-Ukraine crisis.
In February, the company said it expected costs to decrease towards the end of the year which would boost margins and help it turn profitable for the first time in three years on resilient leisure travel demand.
Analyst Michael Erstad said he expected Norwegian to keep trimming operating costs “where it can and where it does not impact the guest experience”.
Rival Carnival posted a smaller-than-expected quarterly loss and beat estimates for revenue in March, shaking off worries of a slowdown in travel demand amid looming concerns of a potential recession in the United States.
Mr Erstad also added the wave season, an important period between January and March when the operators offer special deals and discounts for the year, has been strong and saw improved overall pricing during January to March across 2023 itineraries.
Onboard and other revenue during the quarter came in at €557m and made up over a third of the total revenue.
