Cruise stocks expect tailwind gains as credit card travel spending…

Cruise stocks expect tailwind gains as credit card travel spending…


Carnival Corp. CCL, Norwegian Cruise Line Holdings Ltd. NCLHAnd Royal Caribbean Cruises Ltd. RCL should benefit from an increase in spending in the coming months.

The trend should help these companies recoup the losses they have inherited from the Covid-19 outbreak.

See also: Analyst Ratings for Carnival; Analyst Ratings for Norwegian Cruise Lines

What happened: Credit card spending for cruise vacations has reportedly seen an upswing in recent months Bank of America. This contrasts with demand for other travel categories, which have seen a faster recovery from the pandemic. For example, accommodation has already peaked.

Cruises saw the largest year-over-year and four-year increases in credit card spend in April, up 22% and 36%, respectively.

Spending on cruises is also high. The six-month increase from October 2022 to April 2023 was 13%, compared to a modest 2% increase for airlines and a 2% decrease for accommodation.

Overall, cruises accounted for 6.1% of total travel spend this year, surpassing the pre-pandemic share of 5.8% in 2019.

With summer just around the corner, cruise lines could beat expectations for revenue and earnings in the quarters to come.

Why it matters: Cruise stocks need a boost. They’re still trading 40% to 80% lower than they were in early 2020 – just before the start of the Covid-19 outbreak.

The figure below shows the percentage change in cruise inventories since January 2020.

Royal Caribbean Cruises and Lindblad Expeditions Holdings Inc. LINDS have recovered almost half of their post-Covid-19 losses. However, more heavily indebted cruise lines like Carnival Corporation and Norwegian Cruise Line are still not far from the lows set in March 2020 when the lockdown measures were put in place.

The Defiance Hotel, Airline & Cruise ETF CRUZ provides investors with access to a wide range of companies involved in the travel industry.

Next: Cruise lines see calmer seas on the horizon as profitability returns


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