According to numbers released by Cruise Britain, the cruise industry’s post-Covid transition year was a success with predictions for a projected record season in 2023, according to a press release.
“2022 was the first full year of cruise activity since the pandemic and really built upon the unprecedented success of the 2021 domestic season. What we are seeing now are the rewards for an industry that has consistently worked together to recover, regenerate and develop”, said Ian McQuade, chair of Cruise Britain. “Whilst Round Britain and Ireland cruise popularity continues to grow, we have now seen the successful return of itineraries where British port calls are part of a multi-country story of discovery.”
The previous record season for the UK was 2019 while in 2022, the UK welcomed a total of 2,176 cruise calls, which is a drop of 22 per cent compared to that record year. UK orts welcomed nearly 1.4 million guests, which is around 80 per cent of the 2019 numbers. In addition, visitors in 2022 brought around £100m to Britain’s coastal economies.
“Looking ahead to this year, we see a very robust projected growth of 8 per cent in terms of port calls across the UK. Some regions such as the South West, North West and Scotland are reporting likely figures in excess of this national growth rate,” added McQuade.
“This is a fantastic projection and the strength of the immediate growth trend is a testament to the increasing popularity of Britain as a cruise destination. We really can offer a port for every cruise ship currently sailing – from expedition ships to boutique and mid-range vessels up to the largest afloat.”
In the previous year, the UK welcomed 52 different cruise lines with ships visiting diverse ports including Belfast and Bristol, Portland and Portsmouth, Douglas (Isle of Man) and Dover, among others.
“The UK offers an incredibly diverse cruise holiday experience for guests and this is one of the most powerful reasons for the growth projections that we are seeing. Cruise Britain and all its members continue to work with cruise lines, industry partners and stakeholders, and government to support the development of cruise as a resilient and profitable sector of the travel industry,” concluded McQuade.
Carnival Corporation has provided its third quarter 2022 business update.
Key Highlights:
U.S. GAAP net loss of $770 million and an adjusted net loss of $688 million for the third quarter of 2022.
Adjusted EBITDA for the third quarter of 2022 was over $300 million, turning positive for the first time since the resumption of guest cruise operations and marking a significant milestone.
Revenue increased by nearly 80% in the third quarter of 2022 compared to second quarter 2022, reflecting continued sequential improvement.
Occupancy in the third quarter of 2022 increased 15 percentage points from the prior quarter.
Since the announcement of the company’s relaxed protocols in mid-August, aligning the company towards land-based vacation alternatives, booking volumes for all future sailings are considerably higher than strong 2019 levels.
The third quarter of 2022 ended with $7.4 billion of liquidity, including cash and borrowings available under the company’s revolving credit facility.
Carnival Corporation & plc’s Chief Executive Officer Josh Weinstein commented: “The well-being of the Caribbean region, Florida and other states still in the path of Hurricane Ian is very important to us. On behalf of Carnival Corporation, I would like to extend our deepest concern for those affected by Hurricane Ian and Fiona, some of whom are our own employees, travel agent partners, destination communities and loyal guests.”
Weinstein noted: “During our third quarter our business continued its positive trajectory, achieving over $300 million of adjusted EBITDA and reaching nearly 90% occupancy on our August sailings. We are continuing to close the gap to 2019 as we progress through the year, building occupancy on higher capacity and lower unit costs.”
Weinstein continued: “Since announcing the relaxation of our protocols last month, we have seen a meaningful improvement in booking volumes and are now running considerably ahead of strong 2019 levels. We expect to further capitalize on this momentum with renewed efforts to generate demand. We are focused on delivering significant revenue growth over the long-term while taking advantage of near-term tactics to quickly capture price and bookings in the interim.”
Weinstein added: “With a transformed fleet, an unmatched portfolio of well-recognized brands, unparalleled scale in an under-penetrated industry and an incredibly talented global team, we have the ability to drive durable revenue growth through pricing improvements over time. We believe this will provide significant free cash flow and accelerate our return to strong profitability and investment grade credit ratings.”
Third Quarter 2022 Results and Statistical Information
Revenue increased by nearly 80% in the third quarter of 2022 compared to the second quarter of 2022, reflecting continued sequential improvement. For the cruise segments, revenue per passenger cruise day (“PCD”) for the third quarter of 2022 decreased compared to a strong 2019.
Onboard and other revenue per PCD for the third quarter of 2022 increased significantly compared to a strong 2019.
PCDs for the third quarter of 2022 were 17.7 million, representing a 55% increase from the prior quarter.
Occupancy in the third quarter of 2022 increased 15 percentage points from the prior quarter.
Available lower berth days (“ALBD”) for the third quarter of 2022 were 21.0 million, which represents 92% of total fleet capacity, increasing from 74% in the second quarter of 2022.
Adjusted EBITDA for the third quarter of 2022 was over $300 million, turning positive for the first time since the resumption of guest cruise operations and marking a significant milestone.
Total customer deposits were $4.8 billion as of August 31, 2022, approaching $4.9 billion as of August 31, 2019, which was a record third quarter. New bookings during the third quarter of 2022 primarily offset the historical third quarter seasonal decline in customer deposits (a $0.3 billion decline in the third quarter of 2022 compared to a $1.1 billion decline for the same period in 2019).
Guest Cruise Operations
Weinstein said: “With our return to guest cruise operations essentially complete, we are now relentlessly focused on driving top line growth and returning to strong profitability. We believe the strategic changes we have already made to our fleet resulting in a younger and more efficient fleet, coupled with our recent portfolio optimization efforts including COSTA by CARNIVAL, will provide strong tailwinds along our path to profitability.”
As of September 30, 2022, approximately 95 per cent of the company’s capacity is serving guests. The company expects eight of its nine brands will have their entire fleet serving guests by the end of the fourth quarter of 2022.
According to a press release, given Costa Cruises’ significant presence in Asia, particularly China, which remains closed to cruising, the brand continues to evaluate deployment options and fleet optimization alternatives beyond the previously announced transfers of Costa Luminosa to Carnival Cruise Line as well as Costa Venezia and Costa Firenze to the COSTA by CARNIVAL concept.
The company’s brands continue to responsibly relax their COVID-19-related protocols aligning the company towards land-based vacation alternatives.
This generally includes greatly reduced or eliminated testing requirements and significantly broadens the demand pool by welcoming unvaccinated guests. These relaxed protocols generally became effective throughout September and are subject to local destination regulations.
The company saw a continuation of its 2022 sequential improvement in adjusted cruise costs excluding fuel per ALBD in constant currency in the third quarter of 2022 and said it expects to see continued improvement in the fourth quarter of 2022 with a low double-digit increase as compared to the fourth quarter of 2019 driven in part by higher advertising expense to drive 2023 revenue.
While the company’s year-to-date adjusted cruise costs excluding fuel per ALBD during 2022 have benefited from the sale of smaller-less efficient ships and the delivery of larger-more efficient ships, this benefit is offset by a portion of its fleet being in pause status for part of the year, restart related expenses, an increase in the number of dry dock days, the cost of maintaining enhanced health and safety protocols, inflation and supply chain disruptions. The company anticipates that many of these costs and expenses will end in 2022.
Given the seasonality of its business, the company expects a net loss and breakeven to slightly negative adjusted EBITDA for the fourth quarter ending November 30, 2022. Having achieved over $300 million in adjusted EBITDA in the third quarter, the company anticipates positive adjusted EBITDA for the second half of 2022 despite the seasonality of its business and the increasing investment in advertising to drive yields in 2023. Additionally, on a year-over-year basis, the company expects an improvement in adjusted EBITDA and occupancy, with occupancy returning to historical levels during 2023.
Bookings
Booking volumes for all future sailings during the third quarter of 2022 saw a continuation of the accelerated booking volumes during the second quarter of 2022, closing the gap to strong 2019 levels. Since the announcement of the company’s relaxed protocols in mid-August, aligning the company towards land-based vacation alternatives, booking volumes for all future sailings are considerably higher than strong 2019 levels. (The company’s current booking trends will be compared to booking trends for 2019 sailings as it is the most recent full year of guest cruise operations.)
Cumulative advance bookings for the fourth quarter of 2022 are below the historical range and at lower prices, primarily due to future cruise credits (“FCCs”), as compared to 2019 sailings.
Cumulative advance bookings for the full year 2023 are slightly above the historical average and at considerably higher prices, as compared to 2019 sailings, normalized for FCCs.
Financing and Capital Activity
During the third quarter of 2022, the company completed a $1.15 billion public equity offering of its common stock. The company expects to use the net proceeds from the offering for general corporate purposes, which could include addressing 2023 debt maturities. In addition, the company invested $0.5 billion in capital expenditures, repaid $0.4 billion of debt principal and incurred $0.4 billion of interest expense, net during the quarter. The company ended the third quarter of 2022 with $7.4 billion of liquidity, including cash and borrowings available under the revolving credit facility.
Additionally, the company exchanged $339 million in aggregate principal amount of its outstanding Convertible Senior Notes due 2023 (the “Existing Notes”) for the same amount of Convertible Senior Notes due 2024, extending maturities at the existing rate of 5.75%. The New Notes have the same initial conversion price as the Existing Notes, representing no dilution to shareholders at scheduled maturity versus the Existing Notes, the same coupon and no upfront cost to the company.
Princess Cruises has revealed the brand’s largest ship, a bespoke ship platform that will run on dual-fuel LNG and accommodate more than 4,000 guests
Currently under construction at the Fincantieri shipyard and scheduled to debut in early 2024, the 175,500-tonne vessel is the largest Princess ship ever constructed and embraces Italian heritage by featuring a next-level Piazza and The Dome, an entertainment space inspired by the terraces of Santorini. Sun Princess will also feature Princess Medallion, extending Princess’s position in delivering personalised experiences.
“Sun Princess is a new and bespoke ship platform, designed to simultaneously embrace Princess heritage while boldly pressing into the future with iconic, elegant and pure lines unique to our brand,” said Princess Cruises president John Padgett. “A show-stopping, first-of-its-kind Dome on the top deck and suspended glass Piazza in the centre of Sun Princess offer innovative designs showcasing expansive ocean views for incredible opportunities to connect with the sea.”
The cruise line also announced Sun Princess will sail an inaugural spring/summer season of Mediterranean cruises followed by western and eastern Caribbean voyages out of Port Everglades, Florida in Q3 2024.
The line’s Piazza spans three stories, forming an architectural feature offering guests an outward-looking suspended space with comfortable seating and areas to enjoy the ocean views in every direction. An LED screen is also showcased in the centre of the Piazza that can be moved and configured to deliver live entertainment. Adjacent to the Piazza Atrium will be Coffee Currents coffee shop, Bellini’s Cocktail Bar, along with Princess favourites like Crooners’ Bar and Alfredo’s Pizzeria.
The other stand-out structure onboard Sun Princess is The Dome. Princess Cruises said, “Inspired by the terraces of Santorini, it is a multi-level covered deck and the first true glass-enclosed dome ever constructed on a cruise ship. During the day, the Dome features an indoor/outdoor pool and unique water features in a comfortable and relaxed space. At night, the pool becomes a stage, and the Dome transforms into an entertainment venue with a South Beach vibe, state-of-the-art lighting effects and the ability to deliver stunning aerial performances.”
With 2,157 staterooms, including 50 suites and 100 connecting rooms, 21-deck Sun Princess features more outdoor balcony space and all-balcony accommodations feature an in-room sofa.
Also launching exclusively on Sun Princess will be a new level of suite accommodations, the Signature Collection. In addition to premium stateroom amenities, Signature Collection suites include access to the Signature Restaurant, Signature Lounge and Signature Sun Deck, a private area of the Sanctuary.
With Sun Princess, Club Class accommodations on board this ship, and all Princess ships will now be called Reserve Collection, which is the best-located mini-suite staterooms. Within the Reserve, Collection will be Reserve Collection Cabana rooms, resort-style staterooms that offer a balcony and private cabana, and extra-large outdoor lounge space. These premium accommodations also include access to the Reserve Collection Restaurant.
Sun Princess is part of Carnival Corp’s green cruising focus and is one of 11 new ships in the corporate fleet powered by LNG fuel technology.
A second, next-generation Sphere-class ship is also on order, slated to be delivered by Fincantieri in Q2 2025.
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