Norwegian Cruise lifts profit forecast on higher ticket prices, steady demand

By Ananya Mariam Rajesh and Anne Florentyna Gnanaraja Sekar

(Reuters) -Norwegian Cruise Line Holdings Ltd raised its annual profit forecast and sailed past first-quarter estimates on Monday, betting on higher ticket pricing, pent-up demand and robust on-board spending from wealthy customers, sending shares of the company up 6%.

Easing of COVID-19 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 on-board 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.

M Science analyst Michael Erstad said he expects Norwegian to keep trimming operating costs “where it can and where it does not impact the guest experience”.

Rival Carnival (NYSE:) Corp 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.

Erstad also added the wave season, an important period between January and March where 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.

The annual profit forecast raise is a reflection of better-than-expected first-quarter results, which would be partially offset by higher prices of fuel and a stronger dollar for the remainder of the year, Norwegian Cruise Chief Financial Officer Mark Kempa said in a post-earnings call.

The company expects 2023 adjusted earnings of 75 cents per share, compared with its earlier forecast of 70 cents, in what would be its first profit in three years.