Will Carnival's New Rewards Model Drive the Next Wave of Monetization?

Carnival Corporation & plc CCL is preparing to roll out a material change in its customer engagement strategy via a redesigned loyalty program, Carnival Rewards, set to launch in June 2026. The upcoming program moves away from the traditional cruise-day-based model and instead links tier progression to total guest spend — encompassing both onboard purchases and co-branded credit card transactions.

The company sees this pivot as a long-term differentiator, aimed at enhancing customer lifetime value and fostering deeper engagement across its fleet. While the change will be revenue-deferral intensive in the near term due to updated accounting treatment — estimated to reduce yields by approximately 50 basis points in 2026 — the program is expected to be cash flow positive from inception.

Management anticipates it will take about two years before redemptions and recognized revenues fully offset deferred amounts, rendering the program accretive to yields beyond 2028. Importantly, Carnival does not foresee incremental operating cost pressure from this transition compared to its existing loyalty construct.

Carnival’s move comes as onboard revenues continue to strengthen. In the second quarter of fiscal 2025, onboard spend exceeded expectations, driven by robust demand across food and beverage, retail, casino and other discretionary services.

With more than 93% of full-year 2025 capacity already booked and minimal new ship deliveries through 2026, maximizing per-guest revenues has become central to Carnival’s commercial playbook. The new loyalty structure is expected to reinforce that trend by incentivizing pre-cruise and onboard purchases through tangible reward progression.

CCL’s Price Performance, Valuation & Estimates

Shares of Carnival have surged 65.7% in the past three months compared with the industry’s growth of 35.6%. In the same time frame, other industry players like Royal Caribbean Cruises Ltd. RCL, Norwegian Cruise Line Holdings Ltd. NCLH and OneSpaWorld Holdings Limited OSW have gained 73.5%, 39.6% and 29%, respectively.

CCL Three-Month Price Performance

CCL stock is currently trading at a discount. It is currently trading at a forward 12-month price-to-earnings (P/E) multiple of 13.89X, well below the industry average of 20.08X. Conversely, industry players, such as Royal Caribbean, Norwegian Cruise and OneSpaWorld have P/E ratios of 20.61X, 10.46X and 20.08X, respectively.

The Zacks Consensus Estimate for Carnival’s fiscal 2025 earnings per share has been revised upward, increasing from $1.88 to $1.99 over the past 30 days. This upward trend indicates strong analyst confidence in the stock’s near-term prospects.

The company is likely to report solid earnings, with projections indicating a 40.1% rise in fiscal 2025. Conversely, industry players like Royal Caribbean, Norwegian Cruise and OneSpaWorld are likely to witness a rise of 31.4%, 10.4% and 16.5%, respectively, year over year in 2025 earnings.

CCL stock currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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