Cruises have long been a popular way to vacation. The biggest cruise companies own several cruise lines, with each of the major cruise companies taking a unique approach to keeping its customers loyal. If you want to invest in cruise line stocks, then you have several attractive options.
Cruise line industry trends
The COVID-19 pandemic caused 2020 to be a terrible year for the cruise industry. While many travel companies were impacted by the pandemic, cruise lines were some of the most severely affected. Cruise ships were docked for more than a year, causing their owners to miss out on billions of dollars in earnings. Revenue for each of the three largest cruise lines declined by between 73% and 80% in 2020.
The recovery process hasn't exactly been smooth sailing. Cruises are gradually occurring again while the cruise lines determine how to manage a mix of vaccinated and unvaccinated passengers. Relaunched cruise ships have already experienced outbreaks of COVID-19.
Cruise line companies are reporting strong sales for upcoming cruises, which indicates rebounding demand. The effects of the pandemic could affect cruise lines for years to come, but these vacation travel companies have already survived the most difficult period.
Top cruise line stocks
These are our picks for the best cruise line companies:
1. Royal Caribbean
Royal Caribbean (NYSE:RCL) is distinguished as being one of the most innovative cruise lines. Its ships are packed with state-of-the-art amenities, including virtual balconies, massive water slides, skydiving at sea, and even Broadway shows.
Amenities aren't the only way Royal Caribbean excels, having also expanded its fleet. The cruise line has invested in ships powered by clean energy to reduce its carbon footprint, and, since the mid-2000s, has been prioritizing international expansion.
Royal Caribbean was consistently expanding its revenue before the COVID-19 pandemic, increasing sales by 15% year-over-year in 2019.The company's first cruise from a U.S port since the pandemic's onset has set sail, and its bookings for the first half of 2022 are within historic ranges — but are commanding higher prices.
Carnival (NYSE:CCL) is the largest cruise company in the world. It was also one of the first to offer cruises in the price range of the average traveler. Although affordable cruises are more common now, the market previously was dominated by luxury voyages.
This cruise line is still known for its reasonable prices and ability to offer a fun time for everyone. Carnival cruises are popular among families and groups of friends alike, including those from the younger generations. Carnival excels in customer satisfaction, winning the 2021 USA Today Readers' Choice Awards for best ocean cruise line.
In 2019, Carnival increased its year-over-year revenue by 10.3%. Its sales forecasts are promising, with advance bookings for 2022 already representing growth over 2019's performance.
3. Norwegian Cruise Line Holdings
Norwegian Cruise Line Holdings (NYSE:NCLH) is a hit among casual cruisers and known for its laid-back atmosphere. Norwegian offers what it calls "freestyle cruising," meaning its cruises have no dress codes, no set dining times, and no assigned seating.
Norwegian offers a variety of cabin categories, which enables it to accommodate every type of traveler. It was the first cruise line to offer studios exclusively for solo travelers, and it has lodging fit for everyone from those sailing on their own to large families.
This cruise line has implemented some of the strictest measures to avoid COVID-19 outbreaks as its cruises resume service. It has a 100% vaccination policy with limited medical and religious exemptions, and all passengers are required to provide a negative COVID-19 test before boarding.
Pent-up demand could help this cruise line to bounce back from the effects of the pandemic. When Norwegian announced its winter 2022-2023 itineraries for its luxury Oceania Cruise brand, it set a single-day booking sales record. Norwegian expects to have all its ships sailing again by the spring of 2022.
4. Lindblad Expeditions
Lindblad Expeditions (NASDAQ:LIND) isn't your typical cruise company, and that could make it a safer play than most cruise line stocks. While others carry thousands of passengers per ship, Lindblad specializes in smaller, more expensive adventure cruises. The maximum capacities for these cruises are typically between 48 and 148 passengers, depending on the trip.
The main competitive advantage that Lindblad enjoys is its ability to offer premium, one-of-a-kind experiences. Travelers with Lindblad can book exciting expeditions all over the world, including to Antarctica, the Caribbean coast, Patagonia, and much more. Because of the types of trips this cruise company offers, Lindblad has built a loyal base of wealthy customers.
According to Lindblad, the vast majority of its passengers who were scheduled for cruises that had to be rescheduled due to the pandemic have rebooked their trips. Lindblad is increasing its booking numbers rapidly, even compared to the years before the pandemic. As of April 2021, bookings for 2022 were 39% ahead of booking numbers at the same time in 2020 and 32% ahead of booking numbers at the same time in 2019.
Investing in cruise line stocks in 2021
Considering how much the pandemic continues to affect cruise lines, investing in them is relatively risky. The cruise line business has high operating costs, and many cruise companies have lost a lot of money. Investors in search of safe stocks may want to stay away from this industry right now.
Cruise lines tend to have a passionate customer base with plenty of repeat passengers. Over the long term, cruise line stocks may be a good value investment provided that you are comfortable with some volatility.