After another strong finish to the fiscal year, major cruise operators find themselves in a sweet spot of strong demand and healthy cash flow. But uncertainty and foreboding headwinds are once again threatening to shake the foundations on which the industry is built.
By Alan Lam
Despite forceful headwinds from global geopolitical tensions, overtourism, high energy costs, and environmental concerns, there seems to be no end of demand for cruise products, judging by the major cruise groups’ financial performances in 2024.
On the surface, the sector seems to be sailing along gracefully, like the ships it operates, with little apparent effort needed to achieve better-than-desirable results. The reality, of course, is quite different. Behind the tranquil scenes, an army of men and women work tirelessly day and night, often making tremendous personal sacrifices, to bring in the revenues, which the chairs and CEOs of all major cruise groups repeatedly acknowledge.
“2024 was exceptional, thanks to our incredible team’s flawless execution, which drove elevated demand across our leading brands,” said Jason Liberty, president and CEO of Royal Caribbean Group.
The results are clear: record revenue performances, larger guest volumes, firmer ticket prices, stronger forward bookings, and higher profitability.
Strong finish
The major listed cruise groups ended 2024 in very strong revenue positions. For the three leading conglomerates, Carnival Corporation & plc (CCL), Royal Caribbean Group (RCG), and Norwegian Cruise Line Holdings Ltd (NCLH), collectively there was a 15.8% increase in total revenue compared to 2023.
RCG was again the strongest performer, recording an 18.6% revenue increase. The popularity and earning power of its new Icon-class ships were among the main factors in this achievement. CCL and NCLH also achieved double-digit revenue growths for the year.
Source: CCL, RCG, NCLH, VIK
“This has been an incredibly strong finish to a record year,” said Josh Weinstein, CEO of CCL. “Revenues hit an all-time high driven by a strong demand environment that we elevated throughout the year, enabling us to outperform our initial 2024 guidance by $700 million and deliver nearly $2 billion more to the bottom line, year over year.”
The newly listed Viking Holdings (VIK), winner of the North America IPO of the Year accolade in 2024, reported a 13.3% revenue rise. In February 2025, the company’s share price more than doubled since its IPO in May 2024.
Without looking at the figures for the three disruptive years 2020–2022, we can see a clear and steady year-on-year revenue growth path for a decade and longer. Between 2015 and 2024, there was a 6% CAGR (Compound Annual Growth Rate) for the three biggest listed cruise groups.
Strong financial performance means expansion. In the case of RCG, expansion no longer means just newbuildings: its Celebrity Cruises brand is branching into the lucrative river cruise business, the first of the major ocean cruise brands to do so. It is building 10 new vessels to begin with (see “Celebrity’s River Cruising Gamble” on page 101).
Obviously, the rise in passenger and passenger cruise day (PCD) numbers has been the main driver of revenue growths. But the pace of increase in passenger throughput was slower than that of revenue. The top three groups saw 9.3% and 9.5% growths for passenger and PCD numbers, respectively, between 2023 and 2024. Again, RCG was the star performer, with respective figures of 12% and 11%. The CAGR for both passenger and PCD numbers was about 3% for the 2015–2024 period, half that of revenue.
While its revenue of 2023 already surpassed the previous peak year of 2019, CCL’s passenger and PCD numbers only managed to topple the records set in that year in 2024. RCG and NCLH already achieved these in 2023. The fact that CCL’s fiscal year ended a month earlier might be a factor.
This trend suggests firm ticket prices, which normally mean persistent strong demand. But if we take inflation into account, the picture does not look nearly as rosy, as the decade in question also includes the post-pandemic years of hyper-inflation.
In any case, one undeniable fact is that 2024 occupancy rates for all top three cruise groups were excellent: CCL reported 105%, rising from 100% in 2023; RCG’s was a remarkable 108.5%, rising from 105.6% in 2023; and NCLH’s figure was 104.9%, rising from 102.9% in 2023.
The increases in passenger and PCD numbers for VIK were more moderate, at 5.2% and 6.2%, respectively. Its average occupancy was just 93.6%, actually down by 0.01 of a percentage point from 2023.
For VIK, which is also by far the biggest river cruise operator in the world, this occupancy level is desirable and natural for its fleet of smaller ships. Exceeding 100% occupancy is the domain of a more mass-market-focused megaship.
Source: CCL, RCG, NCLH, VIK
In any event, all cruise lines continue to report strong demand and rising booking numbers. “The company continues to experience strong consumer demand for its offerings across itineraries and brands throughout 2025 and into 2026. As a result, the company remains at its optimal booked position on a 12-month forward basis,” stated NCLH, reflecting the sentiments of all its peers.
Enviable profitability
The most astonishing aspect of the 2024 financial performance of the top three listed cruise groups was the 220% increase in their collective full-year net income, from $1.8 billion to $5.7 billion.
In 2023, CCL’s net result was still a loss of $74 million; a year later it reported a net profit of more than $1.9 billion. In the same period, NCLH experienced a 469% leap in net profit.
By comparison, the 59% increase in the trio’s total full-year operating income in 2024 seems moderate, and the 37% improvement in adjusted EBITDA was almost a disappointment. But we must also remember that only two years earlier, in 2022, all operating results and most EBITDA figures were still deep in the red.
VIK saw its operating result improve by 32% in 2024. The company also turned its 2023 net loss of $1.85 billion into a net income of a moderate but meaningful $153 million in 2024.
One of the key reasons for the fast improvement in profitability is the ability to control costs. The four major listed cruise groups reported an average of under 9% increase in operating expenses in 2024. NCLH has been most effective, experiencing an increase of only 4% in this regard.
Source: CCL, RCG, NCLH, VIK
*CCL figures include tour costs
Source: CCL, RCG, NCLH, VIK
Source: CCL, RCG, NCLH, VIK
How quickly have fortunes turned? The 2024 full-year results will not only further build confidence but also enable the sector to dream big. This bodes well for the future.
We believe the cruise industry hereafter will take a more aggressive and creative stance in investment and expansion. Up till now, caution and limitation have dictated strategies. The sector’s investment has been primarily in building new ships and maintaining old ones. The target will be much bigger from now on. Already we are witnessing an incursion into the river cruise segment and enhanced investment programmes in private island resort developments. This may just be the beginning, as the sector is becoming more proactive in fashioning its future.
“We are never satisfied with the status quo, and we are obsessed with delivering the best vacation experiences in the world and driving exceptional shareholder returns,” said Liberty. “Today’s launch of Celebrity River Cruises is an example of our commitment to deliver on that promise and ultimately capture a greater share of the $2 trillion global vacation market.”
Sweet spot
At the end of the 2024 fiscal year, the long-term debt of the three cruise majors was still more than 133% higher than the 2019 figure. This may sound terrifying, but we must remember that at its peak in 2022, it stood at 173%.
By using available refinancing tools and other effective means in an increasingly less challenging debt-servicing market, the major cruise groups were able to bring down their collective long-term debts by a further 7% in 2024. VIK was able to reduce its non-current liabilities by an impressive 46%.
Steadily and surefootedly, the debts are being eroded to more manageable levels. “With the benefit of well managed near-term maturity towers and improved leverage metrics, we expect to opportunistically capitalise on improved interest rates while proactively managing our maturity towers for 2027 and beyond,” said David Bernstein, CFO of CCL. “In 2025, interest expense is currently expected to be over $200 million lower than 2024 and over $500 million lower compared to 2023. We are laser-focused on continuing our efforts to further reduce interest expense and rebuilding an investment-grade balance sheet.”
Source: CCL, RCG, NCLH, VIK
As the memories of the recent bitter experience have faded, the cruise industry hit the “sweet spot” in 2024, as Giles Hawke, Celebrity Cruises’ vice president and managing director for the UK, Ireland, and EMEA, put it. All the indications suggest that 2025 will be another fantastic year for cruise business.
Cautious note
A note of caution must be struck, however, for there are many unfavourable factors at play. The political landscape in the USA, the biggest cruise market in the world, has radically changed since January 2025, as the Trump administration is proposing to impose more taxes on cruise ships. Europe, the second biggest cruise market, is now transitioning from welfare states to warfare states by rearming, which will be financed by hefty borrowing, thus severely tightening the global credit market. Mexico, one of the biggest cruise destinations, and many others are mulling over the idea of hiking tourist taxes. Overtourism is becoming a major issue again, and restrictions are being placed on cruise calls and passenger numbers at several popular destinations.
Cruise business is vulnerable to any one of these hostile developments. All of them combined could spell disaster. But cruise industry is never without challenges. In the end, its innate resilience will be relied upon to sail through the coming storms.
In the final analysis, despite the potentially adverse circumstances, it is hard to imagine the current trend reversing in the near term, judging by the demand. The sector will remain in that sweet spot for a while yet.
