11th May 2022
Cruise line stocks suffered particularly acutely from the pandemic, thanks to several weeks of headlines about cruise ships with infected passengers being turned away from ports. But if you thought that signaled the end for cruise line stocks, you’d be mistaken.
Many investors rushed to buy while the market was at rock bottom, anticipating profits from its revival, and as travelers now return to the seas, many analysts see underpriced cruise stocks as an opportunity for growth.
Cruise ships took longer to recover than other travel sectors like airline stocks or hotel stocks. It didn’t help that many top cruise destinations didn’t reopen until late in 20211, just in time for Omicron to deal another blow.
In December 2021, when bookings were returning, the CDC advised avoiding cruise ships and upgraded its warning to level 4, or “very high.”2 2022 brought another unexpected hiccup in the form of the Russian invasion of Ukraine, which affected booking for Baltic and other European tours3.
That said, market experts agree that the long-term future is bright. Bookings to Alaska and the Caribbean remain strong4, and even travelers canceling their bookings are just rebooking for later in the year5. Carnival Corp. reported that bookings for H2 2022 exceeded those for 2019; at Royal Caribbean, 2022 bookings are close to 2019 levels6; P&O’s 2022 Caribbean cruise sold out within 6 hours; and Virgin Voyages and Crystal brought forward their 2023 itinerary release date in response to high demand7.
It’s estimated that passenger volume rose 96% YOY (year on year) to 13.9 million in 2021, although that’s still short of 2019’s 29.7 million, and global spending across 60 major cruise markets grew by 65% YOY to $19.4 billion in revenue.8
Leading cruise lines have been working hard to accelerate digital transformation and apply new tech to tap into data-driven insights, increase hygiene levels, and improve the customer experience.
For most cruise passengers, check-in is now contact-free; travelers scan their passport, take a selfie, and complete a digital process9. Many ships implemented Internet of Things (IoT) connectivity for smart wristbands, which track guests’ movements to reduce crowding and enable contact-free activities like ordering room service, reserving tables or spa services, opening cabin doors, and paying for on-board purchases10.
Their efforts are paying off; while the traditional “Wave” booking season hasn’t shown the same force as it did pre-pandemic, it’s still significant11.
With so much going on, many more investors are considering investing in cruise and other travel stocks. Here are 5 promising travel stocks to explore in the cruise sector.
Even investors who are convinced that travel stocks are a safe bet can feel uncertain about their ability to pick the top performers and avoid those that won’t make it. That’s why either a dedicated cruise line ETF or a broader travel ETF like Defiance’s CRUZ can be an appealing option.
With a travel ETF, you’ll be able to spread a single investment across the entire travel industry, including leading cruise line stocks as well as airline stocks, hotel stocks, and other travel-related stocks that indicate growth potential as the whole sector recovers.
CRUZ achieves this by tracking the rules-based weighted BlueStar Global Hotels, Airlines, and Cruises Index, which holds shares in companies across the cruise, air travel, and hotel industries. CRUZ has an expense ratio of 0.45% and is currently trading at $19.3212.
Carnival is the world’s largest cruise operator, and it predicts that its entire fleet of over 100 ships will be back in operation again by the end of spring 2022.
The company is recovering, with sales in Q4 2021 having reached 58% of pre-pandemic levels and advance bookings for H2 2022 and early 2023 already returning to those of 2019. As a result, Carnival forecasts that it will post a profit by Q2 2022.13
The company has a market cap of $18.4 billion, and is currently trading at $16.1814.
The second largest cruise line company is planning for a strong recovery, with a number of new ships coming on line next year. Bookings for 2023 fall within historical ranges, and demand from US travelers continues to be strong.15
Although Royal Caribbean saw share prices drop mid-December 2021, after the short seller Hindenburg Research bet against them, they rallied and continued to rise into January, even though several sailings in early 2022 had to be canceled due to the Omicron variant.16
Royal Caribbean has a market cap of $16.65 billion and is currently trading at $64.8217.
Norwegian is one of the first cruise lines to return to something approaching pre-pandemic operations, having announced that its entire fleet will be back in service by April 2022. It’s one of the most safety-conscious cruise lines, requiring both proof of vaccine and a negative test for every passenger, so it’s hoped that this will protect it from unexpected cancellations.18
The company announced third quarter revenue of $153.08 million, up 2,248% YOY since Q3 2020 saw $0 revenue as the ships were grounded19. It predicts a 753.2% rise in revenue in 2022, together with a return to profitability at $1.42 EPS. It has a cash stockpile of $1.9 billion and a healthy balance sheet, so it’s set up well to make it through any bumps in the near future.20
Norwegian has a market capitalization of $6.77 billion, and is currently trading at $16.4221.
Lindblad is relatively small, but it has a strong audience in its niche market, with 40% of bookings from repeat customers22. Its focus is on adventure expeditions to exotic destinations like the Galapagos Islands, Antarctica, and French Polynesia, which are likely to appeal to the post-covid thirst for excitement and growing demand for ecology tours.
Although passenger volumes are still below pre-pandemic levels, Lindblad’s net loss narrowed to $25.7 million from $27.8 million in Q3 2020; its revenue has grown more than 63 times;23 and bookings are already up by 51% YOY. The company predicts that revenue will skyrocket by 160.4% in 2022.24
Lindblad has a market cap of $727.49 million, and is currently trading at $14.1425.
For current performance and holdings, please visit defianceetfs.com/CRUZ
1 “Transport Canada Lifts Cruise Ship Ban, Effective November 1, 2021” July 16, 2021 https://www.travelagentcentral.com/cruises/transport-canada-lifts-cruise-ship-ban-effective-november-1-2021
2 “CDC lowers its risk advisory for cruises from ‘very high’ to ‘high'” February 16, 2022 https://edition.cnn.com/travel/article/cdc-lowers-cruise-travel-warning/index.html
3 “An untraditional booking climate during traditional Wave season” February 1, 2022 https://www.travelweekly.com/Cruise-Travel/Insights/How-are-cruises-selling-wave
4 “An untraditional booking climate during traditional Wave season” February 1, 2022 https://www.travelweekly.com/Cruise-Travel/Insights/How-are-cruises-selling-wave
5 “Agency Groups Optimistic About 2022 Cruise Sales Despite Omicron” January 6, 2022 https://www.travelmarketreport.com/articles/Agency-Groups-Optimistic-About-2022-Cruise-Sales-Despite-Omicron
6 “What’s it like to go on a cruise now? Here’s how COVID changed the onboard experience” November 3, 2021 https://www.latimes.com/business/story/2021-11-03/covid-changed-cruises-cruise-ship-safety-protocols-what-to-know
7 “Cruises set for strong demand post-Covid” December 15, 2021 https://www.ship-technology.com/comment/cruises-demand-post-covid-19/
8 “Cruise in 2022: the state of the industry” February 21, 2022 https://www.ship-technology.com/features/cruise-in-2022-the-state-of-the-industry/
9 “5 WAYS ROYAL CARIBBEAN’S APP CHANGES CRUISING” March 11, 2021 https://www.royalcaribbean.com/blog/5-ways-royal-caribbeans-app-changes-cruising/
How Technology Will Help Cruise Lines Restart Operations Post-Pandemic” https://www.easemytrip.com/blog/future-of-cruise-post-pandemic
10 “What You Need To Know About The Internet Of Things And Cruise Ships” September 27, 2021 https://www.tracesafe.io/newsroom/what-you-need-to-know-about-the-internet-of-things-and-cruise-ships
11 “An untraditional booking climate during traditional Wave season” February 1, 2022 https://www.travelweekly.com/Cruise-Travel/Insights/How-are-cruises-selling-wave
13 “3 Best Cruise Stocks to Buy on Any Covid Variant Volatility” January 17, 2022 https://investorplace.com/2022/01/3-best-cruise-stocks-to-buy-on-any-covid-variant-volatility/
15 “3 Best Cruise Stocks to Buy on Any Covid Variant Volatility” January 17, 2022 https://investorplace.com/2022/01/3-best-cruise-stocks-to-buy-on-any-covid-variant-volatility/
16 “3 Best Cruise Stocks to Buy on Any Covid Variant Volatility” January 17, 2022 https://investorplace.com/2022/01/3-best-cruise-stocks-to-buy-on-any-covid-variant-volatility/
17 Accessed March 7, 2022 https://www.google.com/search?q=royal+caribbean+stock&ei=ISgmYr7FHIiblwTdkaawCg&oq=carnival+stock+price&gs_lcp=Cgdnd3Mtd2l6EAEYATIHCAAQRxCwAzIHCAAQRxCwAzIHCAAQRxCwAzIHCAAQRxCwAzIHCAAQRxCwAzIHCAAQRxCwAzIHCAAQRxCwAzIHCAAQRxCwAzIHCAAQsAMQQzIHCAAQsAMQQ0oECEEYAEoECEYYAFAAWABghRloAnABeACAAQCIAQCSAQCYAQDIAQrAAQE&sclient=gws-wiz
18 “3 Best Cruise Stocks to Buy on Any Covid Variant Volatility” January 17, 2022 https://investorplace.com/2022/01/3-best-cruise-stocks-to-buy-on-any-covid-variant-volatility/
19 “3 Best Cruise Stocks to Buy on Any Covid Variant Volatility” January 17, 2022 https://investorplace.com/2022/01/3-best-cruise-stocks-to-buy-on-any-covid-variant-volatility/
20 “Reviewing The Three Best Cruise Line Stocks To Buy Now” February 11, 2022 https://www.stockinvestor.com/52807/reviewing-the-three-best-cruise-line-stocks-to-buy-now/
21 Accessed March 7, 2022 https://www.google.com/search?q=norwegian+cruise+stock&ei=XSkmYpDWL4uWlwSH4o74Dg&oq=royal+caribbean+stock&gs_lcp=Cgdnd3Mtd2l6EAEYADIHCAAQRxCwAzIHCAAQRxCwAzIHCAAQRxCwAzIHCAAQRxCwAzIHCAAQRxCwAzIHCAAQRxCwAzIHCAAQRxCwAzIHCAAQRxCwAzIHCAAQsAMQQzIHCAAQsAMQQzoECAAQR0oECEEYAEoECEYYAFAAWABgitk7aAJwAngAgAEAiAEAkgEAmAEAyAEKwAEB&sclient=gws-wiz
22 “Reviewing The Three Best Cruise Line Stocks To Buy Now” February 11, 2022 https://www.stockinvestor.com/52807/reviewing-the-three-best-cruise-line-stocks-to-buy-now/
23 “Top Cruise Line Stocks for Q1 2022” January 10, 2022 https://www.investopedia.com/top-cruise-line-stocks-5078432
25 Accessed March 7, 2022 https://www.google.com/search?q=lindblad+stock+price&ei=ZC0mYuCOLZnk7_UP6P-N2Ak&ved=0ahUKEwjg0JnRsLT2AhUZ8rsIHeh_A5sQ4dUDCA4&uact=5&oq=lindblad+stock+price&gs_lcp=Cgdnd3Mtd2l6EAMyBQgAEIAEMgUIABCABDIGCAAQFhAeOgcIABBHELADOgYIABAHEB46BQgAEJECOgYIABAFEB5KBAhBGABKBAhGGABQrQJYqg9gyxBoAnABeACAAZkBiAGJCJIBAzAuN5gBAKABAcgBCMABAQ&sclient=gws-wiz