Cruise line preview: The 2025 Wave Season is expected to be strong for the industry

The 2025 Wave Season is expected to be exceptionally strong for the cruise line industry, with a record-breaking number of global passenger numbers expected. Some forecasts indicate a 20% increase in cruise line passengers in the year ahead to exceed 30 million for the first time ever.

Major cruise lines are already reporting robust advance bookings for 2025. Royal Caribbean (RCL) indicated that 2025 bookings are outpacing those of 2024, with current booked load factors in line with historical levels at higher pricing. Early indications from travel agency groups also tipped off strong 2025 sales.

Meanwhile, aggregated credit and debit card data from Bank of America showed monthly cruise spending in November increased 11.9% year-over-year and was up 55.9% vs. the pre-pandemic year of 2019. The firm pointed out that sequential trends were also strong at +14.2% vs October, which was noted to be well ahead of the 2015-2019 average of down -2.9%. “We believe this strength bodes well for CCL (Carnival) when it reports fourth quarter earnings on Friday, 20 December, and we are confident about our 2025 EBITDA forecast of $6.6B, driven by nearly 1% capacity growth, 3.4% net yield growth and 2% unit cost growth,” updated analyst Andrew Didora.

Wave season in the cruise line industry typically begins in January and continues through the end of March. Despite the traditional start to the season in January, cruise lines have been increasingly launching deals even earlier, with some promotions beginning as early as November and December during Black Friday and Cyber Monday sales. This year, cruise lines are actively promoting 2025 departures, with many consumers seeing ads for products starting in the latter half of 2024, indicating a shift in the booking curve towards future sailing.

What to watch: Carnival (NYSE:CCL) is due to report earnings on December 20 and give investors in the cruise line sector an update on booking trends. The Miami-based company is expected to report Q4 revenue of $5.92 billion and EPS of $0.07. Carnival (CCL) has topped EPS expectations with its last eight quarterly earnings reports. Options trading implies a 7% share price swing for CCL after it reports on Friday.

The cruise line sector showed gains in early trading on Monday, including Norwegian Cruise Line Holdings Ltd. (NCLH) +0.2%, Royal Caribbean Cruises Ltd. (RCL) +1.1%, Carnival Corporation (CCL) +1.2%, Viking Holdings (VIK) +1.8%, and Lindblad Expeditions Holdings. (LIND) +2.6%.