The Carnival (CCL) share price dropped nearly 2% in pre-market trading today as a new report forecasted that U.S. cruise travel growth was set to slow in 2025.
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Record Number of U.S.Passengers, but Growth to Slow
The report from travel insurance group AAA revealed that a best-ever 19 million U.S. passengers would go cruising this year, up 4.5% on 2024.
That would mark the third straight year of record passenger numbers and mark a 34% increase on the 14.2 million people who went aboard in the pre-Covid pandemic year of 2019. However, the growth would also be a slowdown on the 7.7% rise recorded last year and the 42% growth of 2023 as travel began to return to normal as pandemic lockdowns ended.
The report said the numbers for 2025 will be driven by the use of bigger cruise ships throughout the industry, shorter 3-4 night trips and visits to private islands. It also found that despite economic pressures passengers are also more likely to prioritize travel spending and trips to sunny destinations over other discretionary purchases.
The most popular trips for U.S. cruise fans are the Caribbean and the Mediterranean, but there is also a sizeable number looking for some chill time in Alaska.
Shares in Cruise Companies Start to Leak
Shares in all the main listed cruise lines, Carnival, Norwegian Cruise Line (NCLH) and Royal Caribbean (RCL) were all down in pre-market trading. The industry has worked hard to recover ground following the impact of the pandemic with share prices for all three performing well in 2024.
Royal Caribbean, which reports Q4 earnings this week, has seen its share price climb 83% over the last 12 months, with Norwegian up 45% and Carnival up 53%. They’ve been helped by factors such as increasing investment in new ships and more demand from Gen Z cruisers.
Is CCL a Good Buy?
On TipRanks, CCL has a Moderate Buy consensus with 12 Buy, 3 Hold and 1 Sell rating. The highest price target is $34, with CCL’s stock consensus price target coming in at $30.07. This implies an 18.3% upside.
