By Callum Keown

While Corporate America scrambles to withdraw or cut guidance this earnings season, Royal Caribbean surprised the market by actually increasing its profit outlook for the year.

The shares jumped 5.4% to $228.05 ahead of the open Tuesday. Rivals Carnival and Norwegian Cruise Line also rose more than 2%.

Travel stocks have been crushed this year but maybe cruise operators can be a port in the storm for investors. Royal Caribbean's earnings certainly added weight to that argument early Tuesday.

The company reported adjusted earnings of $2.71 per share on sales of $4 billion. Analysts were expecting earnings of $2.55 per share from sales of $4 billion.

But the hike to full-year guidance is particularly notable given that other travel companies, including major U.S. airlines have been withdrawing their guidance this earnings season citing macroeconomic uncertainty.

Carriers have reported slowing domestic demand as consumers pull back on travel spending. In contrast, the cruise operator's "bookings for 2025 remain on track, cancellation levels are normal, and we continue to see excellent close-in demand," CEO Jason Liberty said.

Royal Caribbean now expects EPS of between $14.55 and $15.55 this year, up from its previous range of $14.35 and $14.65.

The company said better-than-expected revenue, currency exchange rates and lower fuel costs were behind the guidance hike.

Royal Caribbean's earnings were always going to be a test of the demand for cruises as uncertainty grows about the world economy.

The cruise industry has been steadfast in its view that bookings and prices remain strong. The stock market has had a different take, fearing that it is only a matter of time before the travel slowdown being reported by airlines starts to hit cruise operators.

Cruise stocks have had a tough year, though Royal Caribbean has outperformed. As of the close of trading on Monday, it had fallen 6.2% so far in 2025, compared with a 24% drop for Carnival and Norwegian Cruise Line's 32% decline . The S&P 500 was down 6%.

But Royal Caribbean's earnings may mean the market starts to shift its thinking on cruise demand.

Carnival raised its financial forecasts for the current fiscal year when it reported its first-quarter earnings last month. But that was before President Donald Trump unveiled his plan for so-called reciprocal tariffs, with a 10% levy on almost all countries and higher rates than that on many.

Royal Caribbean raising its outlook Tuesday certainly signals confidence. It stands out because major U.S. airlines, including Delta Air Lines and American Airlines, withdrew their financial guidance this month.

There are reasons to believe the cruise sector can remain more resilient than other parts of the travel industry.

The slowdown in air travel is most pronounced for domestic flights and among price-sensitive or corporate consumers, which aren't the cruise industry's typical customers. International and premium travel demand is staying robust, airline earnings have shown. That is a good sign for cruise operators.

"Cruise lines could potentially thread the needle as core leisure demand remains solid, they have a relative pricing advantage and could limit new bookings for 2026 until there is further stability," Melius Research analyst Conor Cunningham said Sunday.

Write to Callum Keown at callum.keown@dowjones.com

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April 29, 2025 08:25 ET (12:25 GMT)

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