Despite Covid-19, Carnival Corp.'s bookings strong for 2022 and beyond

Carnival Corp. lost $2 billion during the third quarter, but executives say its ships are making money and future bookings are strong. 

Despite the higher-than-expected loss, CEO Arnold Donald said during the company’s earnings call on Friday that sailings are generating record-high guest satisfaction scores and that its “voyages are already cash-flow positive.”

“We’re viewing our restart as hugely successful,” Donald said. 

On average, ship occupancy during the third quarter was 54%, growing consistently from 39% in June to 59% in August. Occupancy was highest on its ships in North America at 68%, Donald said, due to its vaccine mandate. In Europe, occupancy was 40%. 

Carnival Corp. said that revenue per passenger cruise day during the third quarter increased from a strong 2019 despite the constraints on itinerary offerings, saying that the increase was driven in part by exceptionally strong onboard revenue.

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Donald said pricing for some brands was lower than it would normally be given destination restrictions. For example, ships in the U.K. are offering scenic cruises that don’t make port calls and are “generally priced well below the attractive destination-rich cruises we normally offer,” Donald said.

However, Carnival Cruise Line, which was able to offer more comparable itineraries to what it did in 2019, generated 20% better revenue per diem compared to 2019, despite the impact of future cruise credits and the close-in booking window, Donald said. 

“Even with the unusually short booking window and capacity limitations, the brand achieved occupancy of approximately 70%, which speaks to the strong underlying demand for our core product,” he said. 

With the spread of the Covid-19 delta variant, bookings slowed during the third quarter compared to Q2, Carnival said, reflecting the impact on overall U.S. consumer confidence resulting from heightened uncertainty. Donald said that booking volatility “to date has not had a significant impact on our ultimate plan to return the full fleet to guest operations in spring 2022.” 

As of Aug. 31, eight of Carnival Corp.’s nine brands resumed guest cruise operations, with 35% of its capacity back in service. The company plans to have 50 ships, or 61% of its capacity, back by Nov. 30 and 71 ships, or 75% of capacity, by June 2022. 

Cumulative advanced bookings for the second half of 2022 are ahead of a very strong 2019 as of Aug. 31, Carnival said. 

No need to lower cruise prices

Carnival’s Corp.’s customer deposit levels reached $630 million during the third quarter, the second consecutive quarter since March 2020 that the company has seen deposits increase. 

The company’s long-term guest deposits, Donald said, are three times their historical levels. Carnival attributes that to opening bookings for further-out cruises in 2023 and 2024, for which Donald said there is “unprecedented early demand.” Such demand is enabling the company to maintain pricing. 

“With existing demand and limited capacity, we are focused on maintaining price — even recently with heightened uncertainty from the delta variant affecting travel decisions broadly,” he said. “We opened bookings earlier for cruises in 2023 — and we’re achieving those bookings with strong demand and good pricing. And based on that success, we’ve begun to launched 2024 sailings even earlier.”

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