Carnival Corporation’s first quarter earnings were driven by rises in both ticket pricing and onboard spending, while the company also faced higher fuel and currency expenses.
Revenues for the first quarter of 2017 were $3.8 billion, compared to $3.7 billion last year.
Ticket pricing jumped to $2.8 billion from $2.7 billion the year prior, while onboard revenue rose to $978 million compared to $923 million in Q1 of 2016.
Despite higher fuel and currency expenses, Arnold Donald, president and CEO, said operational improvements contributed to the bottom line, as did containing costs.
“Looking forward, growth is a combination of well executed business plans and innovation that makes a difference,” said Donald.
He noted demand was running ahead of supply growth.
New revenue management tools are driving yields across brands, while bringing together revenue management teams at the brands as well, noted Donald.
“There’s no question it’s helping us on yield right now,” he said.
Continued earnings performance will be based partly on innovation, such as the company’s new Ocean Medallion technology, as well as marketing, such as Carnival’s set of four TV shows.
David Bernstein, CFO, noted that capacity in the first quarter was up four percent, and five percent in North America.
“Since December both booking volumes and prices for the remainder of 2017 have been running ahead of the prior year,” Bernstein said. Across the board, pricing is up, said Bernstein, as well as occupancy.
Donald underlined the company remains committed to measured capacity growth, meaning that older and less profitable ships will be retired as necessary.
On the subject of China, Donald said the company had replaced calls in South Korea with other ports or a “great experience onboard.” He still anticipates China will become the largest cruise market in the world in time.
“China is still more of a B2B business,” Donald said. “A lot of the movement happens at the distribution level.”
He said itineraries have been modified with both second port calls into Japan or sea days.
Bernstein noted China bookings were ahead by the Korea adjustments have created some caution in future guidance.
