Despite high inflation, travel companies have been raking it in as consumers have carved out part of their budget to keep spending on leisure.
Investors will get a look at the industry’s performance when Hilton Worldwide Holdings (HLT.N) and Royal Caribbean Cruises (RCL.N) release quarterly results on Wednesday and Thursday, respectively.
The hotels, resorts and cruise line sub-industry is expected to show a 407% jump in second-quarter earnings from a year ago, according to a survey.
Wall Street on average expects Royal Caribbean’s second-quarter revenue to increase 56% to $3.4 billion from a year earlier, the survey’s data showed.
Passenger ticket and onboard spending revenue is expected to increase 66% and 36%, respectively.
Carnival Corp (CCL.N) shares are up 120% year to date, while shares of Royal Caribbean Cruises have more than doubled and Norwegian Cruise Line Holdings (NCLH.N) shares have gained 72%.
In comparison, the broader S&P 500 index is up just about 19% in 2023, according to the data.
Cruise voyages have emerged as a value-driven vacation as consumers grow more price-conscious, analysts said.
The average cost of cruise cabins that sailed in the second quarter were 2% cheaper than in 2019 before the COVID-19 pandemic but 11% more expensive than 2022, according to a marketplace for cruise quotes.
Cabin bookings in the second quarter were up 58% compared to this time last year.
For Carnival, booking volumes in the second quarter were 17% higher than in 2019, Carnival CEO Josh Weinstein told investors in June.
Meanwhile, investors will be watching if record nightly rates for on-shore accommodations can offset revenue in the second quarter.
Lodging companies face softer U.S. demand in part as more consumers take advantage of a stronger dollar in Europe even as inflation cools in the United States.
Hotel and short-term rental rates were about 18% and 35% more expensive in the second quarter than in 2019, according to analytics firms.
U.S. hotel demand has been below pre-pandemic levels for four straight months, falling 2% in June year over year.
Hilton shares are up 21% this year.
The company is expected to report second quarter revenue of $2.6 billion after bringing in $2.3 billion in the first quarter on the back of strong results globally, but particularly in Europe and Asia, executives said in April.
Tags: Europe, Hotel Industry, International travel,Cruise voyages, Wall Street
