ROYAL Caribbean Group has seen cruise demand recover already from the disruption of the Iran war, but flagged in its Q1 results the impact of higher fuel costs due to stalled Middle Eastern supply.
Demand remains resilient despite geopolitical tensions, Royal Caribbean said, with bookings currently running at a higher pace than last year, and the company posting a record wave season.
Reservations for Royal Caribbean’s Mediterranean cruises rebounded strongly, now also running at a higher pace than the same time last year, after slightly moderating in March and April due to the conflict.
However, the second and third quarters are more exposed to premium itineraries hit by the conflict, with some spillover into Q3, Royal Caribbean said.
Rising fuel costs have also prompted the company to cut its annual profit forecast to between US$17.10 and US$17.50 for the year, down from its prior forecast of US$17.70 to US$18.10.
Royal Caribbean still expects annual revenue to grow roughly 10%, in line with its prior forecast of double-digit growth.
The company expects fuel costs to be about US$1.3 billion (approximately A$1.8 billion) higher than its earlier full-year forecast of around $1.17 billion (approximately A$2.4b), based on current prices and after hedging.
Royal Caribbean secured about 59% of its fuel needs for the rest of 2026 at rates below current market prices.
“Our strong first quarter results and record wave season demonstrate the exceptional appeal and compelling value proposition of our trusted brands, industry-leading ships, and destinations,” chair & chief executive Jason Liberty said.
“Demand for our experiences continues to be strong, and we remain focused on delivering the best vacations responsibly, accelerating revenue growth, and managing costs, all while continuing to invest in our future and drive further differentiation.
“We expect another year of double-digit revenue and earnings growth, driven by consumers’ preference for our leading brands and expanding portfolio – all supported by our strong booked position, leading margin profile, and fortified balance sheet.”
