Shares in Carnival Corp have sunk to a 52-week low over fears about the impact of inflationary pressures on discretionary spending.
The world’s largest cruise ship operator saw its shares hit $13.52 on Wednesday, despite upbeat comments from chief executive Arnold Donald.
“Generally speaking, pricing is stronger than it was, say back even in the 2019 pre-Covid period,” he told Yahoo Finance.
“But you are not going to see the same level of price increases that you have seen in some other sectors of the economy and some sectors of travel and leisure.
“But pricing is at this point strong, and we expect it to continue to be,” he said.
Donald added that consumer spending onboard Carnival’s ships “remains very strong” despite higher prices for amenities such as alcohol and wifi.
At the beginning of May, the cruise company said its Carnival Cruise Lines subsidiary had restarted its entire fleet becoming the first major cruise line in the US to achieve that milestone.
“Of our other brands, we have over 75% of our total fleet back. But as you know, there are places in the world that still are not open yet,” Arnold told Yahoo Finance.
“China is, of course, on lockdown. Australia is just beginning to open. We are excited Canada finally opened up. In Japan, there’s limited opportunity at this point in time, but that’s changing as well. So we’re on the upswing.”
A survey in March by US financial consumer company Bankrate found that 69% of those planning summer holidays this year say they are altering plans due to inflationary considerations.
About 25% of those surveyed said they would take fewer trips while 23% noted they would seek out cheaper activities.
Inflation in the US was 8.3% in April as supply-side disruptions such as Russia’s war in Ukraine and China’s Covid lockdowns created shortages and stoked costs.
Earlier this week, Norwegian Cruise Line Holdings chief executive Frank Del Rio promised that the cruise line would produce record profits off its passengers come next year as long as the industry stops having “black swan events” such as Covid-19 variants and military invasions that keep derailing efforts to overcome the pandemic, he said.
“First it was delta, then it was omicron and then there was the Ukraine-Russia situation,” he told analysts on Tuesday during a first-quarter earnings call.
“So, we have tempered all our remarks by saying, as long as there are no additional black swan events, we’re seeing fantastic pricing strength,” he said.
“Promise me no more black swan events, and I’ll promise you record net yields.”