Royal Caribbean Sails Past Wall Street Expectations, New Launches 'Performing Extremely Well'
The global travel industry is experiencing a resurgence as consumers prioritize memorable experiences over traditional vacations. This shift in consumer behavior is benefiting companies like Royal Caribbean Group (NYSE:RCL), which has adjusted its full-year 2025 earnings guidance upward following a strong second-quarter performance.
Royal Caribbean raised its full-year 2025 earnings guidance Tuesday after posting better-than-expected second-quarter results, driven by strong demand, improved cost management, and upside from its TUI Cruises joint venture.
The cruise operator reported adjusted earnings per share of $4.38, beating the Wall Street estimate of $4.05. Sales rose to $4.538 billion, up 10.4% year over year, topping the $4.536 billion consensus.
Net income for the quarter rose to $1.2 billion, or $4.41 per share, up from $3.11 a year ago. Adjusted EBITDA climbed to $1.9 billion for the quarter, fueled by a load factor of 110%, strong close-in bookings, and robust onboard spending.
“Demand for our portfolio of brands and our industry-leading experiences continues to accelerate,” said Royal Caribbean President and CEO Jason Liberty. “We remain focused on delivering exceptional value not just today but also staying ahead of where demand is going.”
Why Royal Caribbean’s Earnings Guidance Surprised Analysts
Net yields in Q2 rose 5.3% as reported, or 5.2% in constant currency, driven evenly by new ships and existing hardware. Both ticket pricing and onboard spend contributed to growth. Gross margin yields climbed 11.0%.
Royal Caribbean said gross cruise costs per available passenger cruise day (APCD) increased just 0.8%. In comparison, net cruise costs excluding fuel rose 2.1% in constant currency, about 180 basis points better than its own guidance due to expense deferrals.
Fuel consumption was 422,000 metric tons, with bunker pricing averaging $663 per metric ton. About 66% of 2025’s fuel needs are hedged at an average cost of $482 per metric ton.
How Booking Trends Are Reshaping The Cruise Industry
Bookings accelerated since the last earnings call, especially for close-in sailings. Digital channels drove strong performance in both bookings and pre-cruise purchases. Guest spending onboard continued to outpace prior years at higher prices.
According to the company, upcoming launches such as Star of the Seas and Celebrity Xcel are “performing extremely well,” and early demand for the Royal Beach Club Paradise Island destination has been “very robust.”
Liberty said evolving consumer behavior—favoring more frequent, experience-led travel and closer-in planning—aligns with Royal Caribbean’s strategy and positions the company to grow its share in the $2 trillion global vacation market.
As of June 30, Royal Caribbean reported a liquidity position of $7.1 billion, which includes cash and undrawn revolving credit lines. During the quarter, the company upsized and extended its credit facilities to a combined $6.4 billion, with maturities now reaching 2030.
The Financial Metrics That Signal Ongoing Growth
Capital expenditures for 2025 are expected to total $5 billion, including $1.6 billion in non-new ship spending. Full-year capacity is expected to grow 5.5%, with additional increases planned through 2028
Guidance: Royal Caribbean raised its full-year adjusted EPS guidance to $15.41 to $15.55, up from a prior range of $14.55 to $15.55. The new forecast exceeds the average analyst estimate of $15.39 and implies about 31% EPS growth year over year.
Third-quarter adjusted EPS is expected to range between $5.55 and $5.65, below the current estimate of $5.97, as the company absorbs cost timing shifts and a headwind from the delivery of its new ship, Star of the Seas.
RCL Price Action: Royal Caribbean Group shares were down 5.40% at $333.00 at the time of publication on Tuesday, according to Benzinga Pro data.
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