Strong Performance and Financial Stability

In 2024, leading cruise brands consistently exceeded quarterly and annual guidance, driven by strong demand, higher pricing, and increased onboard spending. This sustained momentum has further strengthened balance sheets, marking a return to financial stability.

Carnival reported that ships operating in both 2023 and 2024 saw nearly a 10% year-over-year increase in revenues. This highlights stronger earnings from the existing fleet, even without adding new ships. This was across all major brands and trades.

Additionally, Carnival’s Return on Invested Capital (ROIC) reached 11% by year-end, exceeding its cost of capital and indicating that the company is generating value rather than just covering costs. With a target of 12% for next year, Carnival aims to further strengthen profitability and investment returns.

“In under two years, we have paid down over $8 billion of debt off our peak and significantly reduced interest expense, which, coupled with our improving EBITDA, has improved our leverage metrics tremendously. Our current 2025 guidance will put us at 3.8 times net debt to EBITDA, closing in on our expectation to reach investment-grade leverage metrics in 2026.”
– Josh Weinstein, President, CEO, and Chief Climate Officer. Carnival Corporation

RCG’s strong performance led to an upgrade to BBB- by S&P Global Ratings, the lowest tier of investment-grade status. S&P projects RCG’s net debt to EBITDA will improve to around 3.0 times net debt to EBITDA in 2025, well below its 3.75x threshold. This marks a significant recovery from pandemic-era debt levels, with S&P stating that RCG’s “credit measures represent sufficient cushion to our thresholds to withstand a moderate to severe cyclical downturn.” This positions the company for further upgrades, which could lower borrowing costs even more.

NCLH is heading in the right direction, with ROIC reaching just under 11% by year-end and net leverage decreasing by two full points, from 7.3x to 5.3x. The company confirmed it is on track to reduce net leverage to 5.0x by the end of 2025 and achieve its mid-4x target by 2026. NCLH’s continued financial progress has caught the attention of S&P and Moody’s, both of which recently upgraded the company’s credit ratings with a positive outlook.

Doubling Down on the Caribbean, Significant Growth Anticipated

With financials improving, operators are back to considering smart investments to support the industry’s growth trajectory. RCG is developing several private destinations within the Caribbean, including a Royal Beach Club on Paradise Island (opening late 2025) and in Cozumel (2026), as well as a Perfect Day Mexico (2027). In 2025, over 70% of RCI guests on Caribbean itineraries will visit a private destination. This percentage is expected to rise to 90% by 2027, with the opening of these three new destinations.

More specifically, when asked how many passengers Perfect Day Mexico could eventually support, Bayley responded,

“I mean, obviously, we're thinking big... We think that ultimately the volume that we will take to Perfect Day Mexico will far exceed what we're taking into CocoCay.”
– Michael Bayley, President and CEO, Royal Caribbean International

Similarly, Carnival confirmed that in 2024, their six owned and operated destinations captured 6.5 million guest visits. With the opening of Celebration Key in July 2025, the company anticipates initially attracting two million guests per year (over 15% of total sailings), growing to four million guests annually by 2028 once fully operational.

This projection does not include the upgrades and new pier currently underway at Half Moon Cay, soon to be called RelaxAway, opening in 2026. Currently, guests are brought ashore via tendering operations. These enhancements will allow Carnival’s largest ships to visit the private island for the first time, likely leading to significant increases in passenger numbers. While not disclosed on the call, BA estimates around 970,000 passengers will visit Half Moon Cay in 2025 (pre-enhancements).

NCLH is also developing a new two-ship pier at their private island, Great Stirrup Cay, set to open by late 2025. Currently a tender port, this new pier will significantly enhance guest access.

What could this mean in terms of total passengers coming to the Caribbean as these destinations come online? RCG confirmed they expect 3.5 million guests at CocoCay in 2025 and 1.5 million guests at the Paradise Island Royal Beach Club once fully operational. Assuming similar levels at the Cozumel Beach Club and comparable numbers at Perfect Day Mexico, RCG will soon welcome more than 10 million guests across these Caribbean destinations alone.

Once the Celebration Key and RelaxAway projects are complete, Carnival plans to welcome more than 11 million guests across its Caribbean destinations alone. Carnival also confirmed that “many of Carnival Cruise Lines itineraries will feature both RelaxAway and Celebration Key.”

NCLH confirmed that 400,000 guests visited the island in 2024, and with the new pier in place along with their 2026 deployment finalized, the company anticipates welcoming over 1 million guests to Great Stirrup Cay in 2026 —representing approximately 30% of all NCLH guests visiting the island that year.

A cruise itinerary is a composition of several destinations. While these figures show the volumes anticipated at these companies' private destinations— totaling more than 22.5 million guest visits, with new destinations coming online between now and 2028 contributing around 12 million of those guests—they also highlight the significant number of guests and ships that will be deployed within the Caribbean region by 2028. This presents a ripe opportunity for other destinations in the Caribbean to capture a share of the pie.

Additional Investments for Growth

RCG’s announcement that “we remain focused on winning a greater share of the $2 trillion vacation market,” welcoming the introduction of Celebrity River Cruises, with two river ships scheduled for delivery in 2027, and four a year following. They placed an initial order for 10 transformative ships, though very clearly highlighted the word “initial”. “Our ambitions, however, go far beyond that,” stating that “this is not a hobby for us… You're not going to wait till 2027 to order more… We see river cruising as an exciting growth opportunity that aligns with our strategy of turning the vacation of a lifetime into a lifetime of vacations, expanding our ecosystem of vacation offerings, and broadening our reach into adjacent lines of businesses.”

This comes on the heels of RCG confirming a sixth Edge-class ship set to be delivered to Celebrity Cruises in 2028.

When NCLH was asked about their river cruise ambitions, while they confirmed that they “are very happy with our current strategy and direction,” and have no plans to enter the river cruise market, they reminded listeners that they are currently undergoing “a historic fleet expansion program” with a total of 13 ships in order.