Royal Caribbean balances short-term cost headwinds with bold growth plans

Royal Caribbean’s shares fell about eight per cent in early trading on Tuesday (Oct. 28) after the cruise line projected fourth-quarter profits below market expectations, citing rising costs.

Although the company raised its full-year profit forecast, the updated guidance still missed analysts’ estimates—dampening what has otherwise been a strong year, with the stock up roughly 38 per cent, Reuters reported.

The company raised its full-year profit forecast, but the new outlook still missed expectations, capping an otherwise strong year in which shares climbed about 38 per cent.

Higher fuel costs, driven by global tensions, along with expenses tied to drydocking, new ship deliveries, and maintenance, have weighed on results.

Cruise lines may also be feeling pressure from a government shutdown that’s disrupting port operations, further dampening investor sentiment.

The company noted that weather-related disruptions and the extended closure of its Labadee, Haiti destination will also hurt current-quarter margins.

Royal Caribbean’s third-quarter margin increased 3.8 per cent, compared with a 13.4 per cemy rise a year earlier and an 11 per cent gain in the prior quarter, while gross cruise costs per available passenger cruise day rose 2.7 per cent.

Looking ahead, the company expects fiscal 2025 adjusted earnings per share of $15.58 to $15.63, slightly below the analysts’ average estimate of $15.68, though up from its prior forecast range of $15.41 to $15.55.

Building momentum with bold plans

Posting to his LinkedIn Tuesday, Jason Liberty, president and CEO of Royal Caribbean Group, said the company delivered a strong quarter and is “continuing to build momentum” across its brands.

As previously reported, that includes announcing Royal Beach Club Santorini, a new land destination in Greece that's set to open next year.

It will increase Royal Caribbean’s portfolio from two land-based destinations today to eight by 2028.

The company also announced Points Choice, a new loyalty enhancement launching in early 2026 that will enable guests to apply their points to the Royal Caribbean Group brand they prefer, no matter which brand they sail with.

“We’re seeing accelerated demand, all-time high guest satisfaction, and growing loyalty,” Liberty wrote. “Our flywheel is powered by our innovative ships, exclusive destinations, seamless digital experiences, and a loyalty program that keeps guests coming back.”

Bookings are “strong across the board” as the company welcomes new ships, like Star of the Seas and Celebrity Xcel.

“Looking ahead, we’re entering one of the most exciting chapters in our history with a steady pipeline of ships and destinations joining our family,” Liberty wrote. “With bold innovation and smart execution, we’re building the leading vacation company with global reach and staying power.”

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