Caribbean cruises are seeing discounted fares due to an oversupply of ships, pressuring shares of major operators. Capacity in the region is set to rise 12% this year, the most in over a decade, according to Goldman Sachs analysts. Norwegian Cruise Line has added 40% more space, while rivals have redeployed vessels from the Middle East.
The glut has led to weak share performance for Royal Caribbean, Carnival and Norwegian Cruise Line, heading for their worst year since the pandemic. Carnival has invested $600mn in a private resort on Grand Bahama, and Norwegian opened a water park on its private island. Despite the downturn, cruise lines retain flexibility to shift vessels to more favorable regions, such as Europe, where summer heatwaves have boosted interest in Nordic voyages.
Industry experts note that overcapacity cycles are not new, citing a similar glut in 2014 that lasted into 2015. Long-term growth remains supported by new passengers, with one-third of the 40 million global cruisers this year being first-timers, per UBS. Returnees spend about 25% more than newcomers, according to Royal Caribbean CEO Jason Liberty, suggesting enduring demand.
Source: Financial Times Companies · Summarized by HeadlinesBriefing