Last month, we wrote a story about how the cruise industry was winning wallet-share from destination theme parks as consumers sought out greater value (one of our frequent themes). This week, Carnival Corporation reported quarterly results and “wave season” bookings for the year. Reflective of the share gains, revenue is now trending 50% above pre-pandemic levels, as shown in the table below.
On bookings, the company's press release read, "We are very pleased with the continued acceleration of demand for 2025 and beyond, which builds upon the fantastic achievements in 2024 thus far...The company continues to experience strong bookings momentum driven by record booking volumes for 2025 sailings. While still early, the cumulative advanced booked position for the full year 2025 ($8B) is even higher than 2024 (by $1.2B)...The company's cumulative booked position for the remainder of 2024 continues to be the best on record, with occupancy still nicely above 2023 levels.” On its update call, Carnival management noted, “[The] North America booking curves is higher than it's ever been.” The strong demand and share gains are also the result of a refreshed offering (upgraded ships and amenities, and new itineraries, including private islands and more West Coast) and modernized technology for the customer (the mobile app). These upgrades attract new consumers and deliver more spend per passenger, which we explored in our previous story.
Carnival CEO Josh Weinstein said, “[This] is the compounding effect of building increased consideration in our cruise brands over time and improvement in our yield management techniques to translate that demand into higher ticket prices and it is further evidence of the strength of our consumer. Encouragingly, we're enjoying consistent growth in both repeat guests and new guests with each segment up 10% this quarter over last year...Everybody is engaging differently than they did 5-10 years ago because everybody is getting more comfortable with everything digital and everything online. So that's a shift that's not just about millennials, it's about society. And when it comes to our mix, we've got brands that might be 1-2 years younger average age than they were before the pandemic. We've got some that might be a year older. In the grand scheme of things, it's not a huge swing. You also have to remember with us, we've got brands that really do cater to a younger generation like a Carnival, like an AIDA and they're going to be outsized in our portfolio mix when it comes to attracting millennials. We don't just want millennials. I can't say it strongly enough, a brand like Holland America, a brand like Cunard, it is playing in a place where they need and want people that have time and money, which generally leads to an older crowd or a crowd that has time on their hands because maybe they're not working anymore. And so, I'm very happy that we're getting a broad church because we are across the board. But make no mistake, we're happy with our mix, and we're happy to take many folks in the boomer generation and Gen X, Gen Y, Gen Z, you name it. So we want it all.”
Below we show the trade area profile for Carnival’s Terminal F in Miami, which was upgraded in 2022 to accommodate Carnival’s larger ships (which have been added to the fleet since the pandemic’s end). That accommodation has resulted in a 70% increase in visitation during the last 6 months vs. the same period in 2019. Per the “broadening out” comments, one can see this in using Experian Mosaic data paired with Placer visitation data to see a significant increase in trade areas with Singles & Starters and Suburban Style lifestyles. How are destination theme parks responding to this renewed competition? Of course, they're upgrading and adding new attractions, resorts, restaurants, and the like. All told, a nice outcome for commercial real estate.
