By Granth Vanaik and Doyinsola Oladipo
(Reuters) -Royal Caribbean Group projected 2024 profit above Wall Street expectations after robust demand for cruise vacations and steeper ticket prices helped it beat fourth-quarter earnings estimates on Thursday.
With travelers opting for cruises instead of more expensive land-based vacation options, operators are experiencing record levels of bookings compared to pre-pandemic levels, giving them enough room to mark up ticket prices.
"2023 was an exceptional year, propelled by unmatched demand for our brands from new and loyal guests," said CEO Jason Liberty, adding 2024 was poised to be "another robust year".
The cruise operator's fourth-quarter revenue rose nearly 28% to $3.33 billion, slightly below analysts' forecast of $3.36 billion, according to LSEG data. Occupancy also increased year-over-year, though remained below 2019 levels.
Shares of the cruise company, which recently launched the largest cruise ship in the world, were marginally higher in early trading.
It reported adjusted earnings of $1.25 per share for the quarter, ahead of estimates of $1.13 per share.
"Unlike the prior several quarters where the earnings beat was primarily from revenues, this past quarter was from lower than expected costs," Truist equity analyst Patrick Scholes said in a note.
The Celebrity and Silversea Cruises operator carried over 7.6 million passengers in 2023, a nearly 17% increase from pre-pandemic levels.
Rival Carnival (NYSE:CCL) on Tuesday flagged an "early and robust" start to the wave season, a period stretching from January through March when cruise operators offer great deals to travelers.
Royal Caribbean (NYSE:RCL) also said the wave season was off to a record start, as it forecast 2024 adjusted profit between $9.50 and $9.70 per share, above estimates of $9.19 per share.
The earnings per share outlook is over 40% higher than last year's figure, said Peter Ahluwalia, manager at Belinvest Global Equity Fund that holds Royal Caribbean stocks and chief investment officer at Swiss Partners Group.
"They are not going to issue a statement like that unless they think that they can comfortably beat it," Ahluwalia added.
Shares of rivals Norwegian Cruise Line (NYSE:NCLH) and Carnival rose 2.2% and 1.8% respectively.