Parent company of Carnival, Princess, Holland America is dialing back new cruise ship orders
It's official: The days of go-go growth at cruise giant Carnival Corporation are over — at least for a few years.
The debt-laden parent company of Carnival Cruise Line, Princess Cruises, Holland America and six other major cruise brands won't be ordering many new ships for delivery over the rest of the decade, CEO Josh Weinstein suggested on Wednesday during a conference call with Wall Street analysts.
In fact, the company soon could go an entire year without unveiling a single new vessel across any of its brands — something that has never happened in its recent history.
"We don't expect any new ships in 2026 and anticipate just one or two new-builds each year for several years thereafter," Weinstein said during the call, which came after the company reported yet another billion-dollar-plus loss for its most recent quarter.
Fewer ships on the way
Already, Carnival Corporation's pipeline of new ships on order is running thin. The company has just five ships on order for its nine brands — all ordered before the COVID-19 pandemic brought about a sharp downturn in cruising.
They include new ships for the Carnival and Seabourn brands due to begin sailing in 2023, and new ships for the Princess and Cunard brands arriving in 2024.
The company has just a single ship on order for 2025, a new vessel for Princess.
Related: The 9 most exciting new ships coming in 2023
Notably, as of now, Carnival Corporation doesn't have any ships on order for five of its nine brands including Holland America, Costa Cruises and U.K.-based P&O Cruises.
"This is our lowest order book in decades," Weinstein noted on the call with Wall Street analysts.
A pathway out of debt
The shift away from new-ship growth comes as Carnival Corporation works toward paying down the massive debt it took on to survive the last three years when cruising ground to a halt due to the pandemic and revenue at cruise lines plummeted.
On Wednesday, the company reported that its total debt stood at $34.55 billion, up from less than $12 billion at the start of 2020. For context, Carnival Corporation made about $2.9 billion in profits in its last good year (2019).
As Carnival Corporation returns to profitability over the coming years, it plans to channel much of its cash flow toward paying down this debt in lieu of capital spending on things like new ships, Weinstein suggested on Wednesday.
"Going forward, we are committed to using our expected cash flow strength to repair the balance sheet over time, and we'll be disciplined and rigorous in making new-build decisions accordingly," he said.
The company also is cutting spending on all sorts of other things, from around-the-clock pizza on ships to fuel use.
"We actively managed down our spend by over $500 million during 2022, and we've taken a hard look at 2023 and beyond and reshaped investment spending by $300 million annually for a cumulative reduction of $1.7 billion," Weinstein said.
Related: Carnival CEO won't rule out brand sales to raise cash
3 more ships to leave the company
The cutback in ship ordering at Carnival Corporation comes on top of the early retirement of 23 vessels across the company's nine brands during the pandemic as part of cost-cutting moves. The company went into the pandemic with 105 vessels in all. Even after quite a few new ship additions in the past two years (ships that already were in the pipeline), it's now down to just 92 vessels.
On Wednesday, the company revealed that it planned to retire three more vessels in the near future as part of additional cost-cutting moves, two from its Costa brand and one from an undisclosed second line.
Taken together, the ship retirements and slowing of ship orders at Carnival Corporation are creating an unprecedented period of slow growth for the company when it comes to cruise ship capacity.
During Wednesday's conference call, Carnival Corporation chief financial officer David Bernstein said the company's total fleet capacity in 2023 would only be 3.3% higher than it was in 2019.
Several of Carnival Corporation's brands including Holland America and Costa are now smaller than they were four years ago.
Cruise ships take several years to build from the time they are ordered, so even if Carnival Corporation were to soon place new orders for ships, the brands would be unlikely to return to their former sizes for some time.
A different tack than Royal Caribbean Group
Carnival Corporation's slow-the-growth strategy is in contrast to the strategies currently in motion at some of its biggest competitors.
In an exclusive interview with TPG earlier this month, Royal Caribbean Group president and CEO Jason Liberty suggested the company wouldn't dial back on orders for new cruise vessels in the coming years, despite record levels of debt on its balance sheet, too.
While Royal Caribbean Group has paused new ship orders since the COVID-19 pandemic began in early 2020, it still plans to roll out new vessels for all its brands at a steady clip over the coming decade, Liberty suggested during the interview.
Royal Caribbean Group is the second biggest cruise company in the world after Carnival Corporation. It's the parent company of Royal Caribbean, Celebrity Cruises and Silversea Cruises, and it also owns a partial stake in Germany's TUI Cruises and Hapag-Lloyd Cruises.
The Royal Caribean brand alone currently has four vessels on order for delivery in 2023, 2024, 2025 and 2026, respectively — three of which will be part of an all-new class of record-sized vessels. The Celebrity brand has two ships coming in 2023 and 2025. Silversea has two ships on the way for 2023 and 2024.
"Our ambitions are to continue to grow each of our brands in their segments, because we think the segments that we are focused on ... have a lot of runway to them," Liberty told TPG. "They are all very underpenetrated globally."
Carnival Corporation's two other main rivals in the cruise business, Norwegian Cruise Line Holdings and MSC Group, also have significantly more ships on order for the coming years than it does.
Norwegian Cruise Line Holdings, which is the parent company of Norwegian Cruise Line, Oceania Cruises and Regent Seven Seas Cruises, has eight vessels on order for delivery through 2027.
MSC Group, which is the parent company of MSC Cruises and Explora Journeys, has 10 ships on order. Six of the vessels are for the Explora Journeys brand, which is a new luxury brand scheduled to start up in 2023.
Ship occupancies still below normal
Weinstein's comments about ship orders on Wednesday came after Carnival Corporation reported a $1.6 billion loss for the three months ending on Nov. 30.
Occupancy on the company's ships for the quarter was 85%, which was up from 84.2% in the previous quarter but still well below normal. By comparison, occupancy at the line's brands during the same quarter in 2019 were over 100% — something that is possible when more than two people stay in some cabins.
The occupancy level for the most recent quarter was below Wall Street expectations.
That said, Weinstein was optimistic on the call that the company's brands would return to normal occupancy levels by the summer of 2023, noting that bookings for the coming year have been strong of late.
Weinstein suggested he expected a surge of bookings during the upcoming "wave season" — the traditionally strong period for cruise bookings that starts in January.
"We enjoyed a strong response to our recent Black Friday and Cyber Monday [promotions], and the momentum has continued into December, building our base occupancy and marking an early start to a strong wave season ahead," he said.
Planning a cruise? Start with these stories:
- The 5 most desirable cabin locations on any cruise ship
- 8 cabin locations on cruise ships you should definitely avoid
- Which cruise brand is best for you? A guide to the most popular lines
- 21 tips and tricks that will make your first cruise go smoothly
- 15 ways that cruising newbies waste money on their first cruise
- The 12 best cruise ships for people who never want to grow up
- Cruise packing list: The ultimate guide to what to pack for a cruise
TPG featured card
Rewards
| 4X | Earn 4X Membership Rewards® points per dollar spent on purchases at restaurants worldwide, on up to $50,000 in purchases per calendar year, then 1X points for the rest of the year. |
| 4X | Earn 4X Membership Rewards® points per dollar spent at US supermarkets, on up to $25,000 in purchases per calendar year, then 1X points for the rest of the year. |
| 3X | Earn 3X Membership Rewards® points per dollar spent on flights booked directly with airlines or on AmexTravel.com. |
| 2X | Earn 2X Membership Rewards® points per dollar spent on prepaid hotels and other eligible purchases booked on AmexTravel.com. |
| 1X | Earn 1X Membership Rewards® point per dollar spent on all other eligible purchases. |
Intro offer
Annual Fee
Recommended Credit
Why We Chose It
There’s a lot to love about the Amex Gold. It’s a fan favorite thanks to its fantastic bonus-earning rates at restaurants worldwide and at U.S. supermarkets. If you’re hitting the skies soon, you’ll also earn bonus Membership Rewards points on travel. Paired with up to $120 in Uber Cash annually (for U.S. Uber rides or Uber Eats orders, card must be added to Uber app and you can redeem with any Amex card), up to $120 in annual dining statement credits to be used with eligible partners, an up to $84 Dunkin’ credit each year at U.S. Dunkin Donuts and an up to $100 Resy credit annually, there’s no reason that foodies shouldn’t add the Amex Gold to their wallet. These benefits alone are worth more than $400, which offsets the $325 annual fee on the Amex Gold card. Enrollment is required for select benefits. (Partner offer)Pros
- 4 points per dollar spent on dining at restaurants worldwide and U.S. supermarkets (on the first $50,000 in purchases per calendar year; then 1 point per dollar spent thereafter and $25,000 in purchases per calendar year; then 1 point per dollar spent thereafter, respectively)
- 3 points per dollar spent on flights booked directly with the airline or with amextravel.com
- Packed with credits foodies will enjoy
- Solid welcome bonus
Cons
- Not as useful for those living outside the U.S.
- Some may have trouble using Uber and other dining credits
- You may be eligible for as high as 100,000 Membership Rewards® Points after you spend $6,000 in eligible purchases on your new Card in your first 6 months of Card Membership. Welcome offers vary and you may not be eligible for an offer. Apply to know if you’re approved and find out your exact welcome offer amount – all with no credit score impact. If you’re approved and choose to accept the Card, your score may be impacted.
- Earn 4X Membership Rewards® points per dollar spent on purchases at restaurants worldwide, on up to $50,000 in purchases per calendar year, then 1X points for the rest of the year.
- Earn 4X Membership Rewards® points per dollar spent at US supermarkets, on up to $25,000 in purchases per calendar year, then 1X points for the rest of the year.
- Earn 3X Membership Rewards® points per dollar spent on flights booked directly with airlines or on AmexTravel.com.
- Earn 2X Membership Rewards® points per dollar spent on prepaid hotels and other eligible purchases booked on AmexTravel.com.
- Earn 1X Membership Rewards® point per dollar spent on all other eligible purchases.
- $120 Uber Cash on Gold: Add your Gold Card to your Uber account and get $10 in Uber Cash each month to use on orders and rides in the U.S. when you select an American Express Card for your transaction. That’s up to $120 Uber Cash annually. Plus, after using your Uber Cash, use your Card to earn 4X Membership Rewards® points for Uber Eats purchases made with restaurants or U.S. supermarkets. Point caps and terms apply.
- $84 Dunkin' Credit: With the $84 Dunkin' Credit, you can earn up to $7 in monthly statement credits after you enroll and pay with the American Express® Gold Card at U.S. Dunkin' locations. Enrollment is required to receive this benefit.
- $100 Resy Credit: Get up to $100 in statement credits each calendar year after you pay with the American Express® Gold Card to dine at U.S. Resy restaurants or make other eligible Resy purchases. That's up to $50 in statement credits semi-annually. Enrollment required.
- $120 Dining Credit: Satisfy your cravings, sweet or savory, with the $120 Dining Credit. Earn up to $10 in statement credits monthly when you pay with the American Express® Gold Card at Grubhub, The Cheesecake Factory, Goldbelly, Wine.com, and Five Guys. Enrollment required.
- Explore over 1,000 upscale hotels worldwide with The Hotel Collection and receive a $100 credit towards eligible charges* with every booking of two nights or more through AmexTravel.com. *Eligible charges vary by property.
- No Foreign Transaction Fees.
- Annual Fee is $325.
- Terms Apply.
Rewards Rate
| 4X | Earn 4X Membership Rewards® points per dollar spent on purchases at restaurants worldwide, on up to $50,000 in purchases per calendar year, then 1X points for the rest of the year. |
| 4X | Earn 4X Membership Rewards® points per dollar spent at US supermarkets, on up to $25,000 in purchases per calendar year, then 1X points for the rest of the year. |
| 3X | Earn 3X Membership Rewards® points per dollar spent on flights booked directly with airlines or on AmexTravel.com. |
| 2X | Earn 2X Membership Rewards® points per dollar spent on prepaid hotels and other eligible purchases booked on AmexTravel.com. |
| 1X | Earn 1X Membership Rewards® point per dollar spent on all other eligible purchases. |
Intro Offer
You may be eligible for as high as 100,000 Membership Rewards® Points after spending $6,000 in eligible purchases on your new Card in your first 6 months of Membership. Welcome offers vary and you may not be eligible for an offer.As High As 100,000 points. Find Out Your Offer.Annual Fee
$325Recommended Credit
Credit ranges are a variation of FICO® Score 8, one of many types of credit scores lenders may use when considering your credit card application.Excellent to Good
Why We Chose It
There’s a lot to love about the Amex Gold. It’s a fan favorite thanks to its fantastic bonus-earning rates at restaurants worldwide and at U.S. supermarkets. If you’re hitting the skies soon, you’ll also earn bonus Membership Rewards points on travel. Paired with up to $120 in Uber Cash annually (for U.S. Uber rides or Uber Eats orders, card must be added to Uber app and you can redeem with any Amex card), up to $120 in annual dining statement credits to be used with eligible partners, an up to $84 Dunkin’ credit each year at U.S. Dunkin Donuts and an up to $100 Resy credit annually, there’s no reason that foodies shouldn’t add the Amex Gold to their wallet. These benefits alone are worth more than $400, which offsets the $325 annual fee on the Amex Gold card. Enrollment is required for select benefits. (Partner offer)Pros
- 4 points per dollar spent on dining at restaurants worldwide and U.S. supermarkets (on the first $50,000 in purchases per calendar year; then 1 point per dollar spent thereafter and $25,000 in purchases per calendar year; then 1 point per dollar spent thereafter, respectively)
- 3 points per dollar spent on flights booked directly with the airline or with amextravel.com
- Packed with credits foodies will enjoy
- Solid welcome bonus
Cons
- Not as useful for those living outside the U.S.
- Some may have trouble using Uber and other dining credits
- You may be eligible for as high as 100,000 Membership Rewards® Points after you spend $6,000 in eligible purchases on your new Card in your first 6 months of Card Membership. Welcome offers vary and you may not be eligible for an offer. Apply to know if you’re approved and find out your exact welcome offer amount – all with no credit score impact. If you’re approved and choose to accept the Card, your score may be impacted.
- Earn 4X Membership Rewards® points per dollar spent on purchases at restaurants worldwide, on up to $50,000 in purchases per calendar year, then 1X points for the rest of the year.
- Earn 4X Membership Rewards® points per dollar spent at US supermarkets, on up to $25,000 in purchases per calendar year, then 1X points for the rest of the year.
- Earn 3X Membership Rewards® points per dollar spent on flights booked directly with airlines or on AmexTravel.com.
- Earn 2X Membership Rewards® points per dollar spent on prepaid hotels and other eligible purchases booked on AmexTravel.com.
- Earn 1X Membership Rewards® point per dollar spent on all other eligible purchases.
- $120 Uber Cash on Gold: Add your Gold Card to your Uber account and get $10 in Uber Cash each month to use on orders and rides in the U.S. when you select an American Express Card for your transaction. That’s up to $120 Uber Cash annually. Plus, after using your Uber Cash, use your Card to earn 4X Membership Rewards® points for Uber Eats purchases made with restaurants or U.S. supermarkets. Point caps and terms apply.
- $84 Dunkin' Credit: With the $84 Dunkin' Credit, you can earn up to $7 in monthly statement credits after you enroll and pay with the American Express® Gold Card at U.S. Dunkin' locations. Enrollment is required to receive this benefit.
- $100 Resy Credit: Get up to $100 in statement credits each calendar year after you pay with the American Express® Gold Card to dine at U.S. Resy restaurants or make other eligible Resy purchases. That's up to $50 in statement credits semi-annually. Enrollment required.
- $120 Dining Credit: Satisfy your cravings, sweet or savory, with the $120 Dining Credit. Earn up to $10 in statement credits monthly when you pay with the American Express® Gold Card at Grubhub, The Cheesecake Factory, Goldbelly, Wine.com, and Five Guys. Enrollment required.
- Explore over 1,000 upscale hotels worldwide with The Hotel Collection and receive a $100 credit towards eligible charges* with every booking of two nights or more through AmexTravel.com. *Eligible charges vary by property.
- No Foreign Transaction Fees.
- Annual Fee is $325.
- Terms Apply.