RCL's Flywheel Effect Strengthens Bookings: Can the Momentum Hold?

Royal Caribbean Cruises Ltd. RCL is sharpening its focus on the commercial flywheel — a self-reinforcing model driven by loyalty, digital adoption and destination exclusivity — to underpin sustained demand and margin expansion.

In second-quarter 2025, 40% of bookings originated from loyalty members, who spend approximately 25% more per trip than non-members. Cross-brand loyalty uptake continues to accelerate as benefits are integrated across the portfolio. Meanwhile, digital penetration is expanding rapidly, with app downloads exceeding 30 million, and nearly half of all onboard transactions are now processed through mobile compared with one-third in 2023. Guests making pre-cruise purchases typically spend 2.5x more once on board, materially enhancing yield.

The destination strategy adds another layer of monetization. Properties such as Perfect Day at CocoCay and the forthcoming Royal Beach Club Paradise Island are supporting premium pricing. Early indications are robust, with Nassau cabanas selling at up to $10,000 per day, underscoring demand for differentiated, high-end experiences. These exclusive assets reinforce brand equity while driving repeat business into the system.

Financial results illustrate the strategy’s impact. Net yields advanced 5.2% year over year in the second quarter, beating guidance by 70 basis points. Adjusted EPS came in at $4.38, surpassing estimates, and management raised its full-year 2025 adjusted EPS outlook to $15.41-$15.55, reflecting 31% growth compared with 2024 levels. With seven new ships and multiple destination projects scheduled through 2028, Royal Caribbean’s commercial flywheel is positioned to deliver incremental yield and operating leverage as it scales further.

Key Competitors Building Brand Buzz

Carnival Corporation & plc CCL is leaning heavily on large-scale marketing campaigns to reinforce its brand presence and drive bookings. During the first half of 2025, the company executed some of its most expansive promotional pushes to date, with activations tied to the Super Bowl, the Oscars and regional cultural moments like the Sanremo Music Festival in Italy. These campaigns generated significant exposure for Carnival’s flagship brands and helped deliver record bookings and record pricing in the second quarter. Onboard revenue growth was broad-based, spanning food and beverage, retail and casino, underscoring the impact of Carnival’s marketing engine on both volume and yield.

Norwegian Cruise Line Holdings Ltd. NCLH is pursuing a more experiential strategy. The company emphasized onboard product differentiation in the second quarter, including strong consumer reception to new features and amenities across its fleet. At the same time, Norwegian is advancing its private island investments, with a major waterpark at Great Stirrup Cay slated for 2027. Management also highlighted robust onboard spending trends and reiterated that advanced bookings remain ahead of 2024 levels, supporting premium pricing across its three brands. While Norwegian’s campaigns are less splashy than Carnival’s mass-market approach, its focus on curated experiences and destination enhancements is designed to strengthen brand equity and capture higher-spending guests.

RCL’s Price Performance, Valuation & Estimates

Shares of Royal Caribbean have gained 41.2% in the past three months compared with the industry’s growth of 16.5%.

From a valuation standpoint, RCL trades at a forward price-to-earnings ratio of 20.67X, above the industry’s average of 19.76X.

The Zacks Consensus Estimate for RCL’s 2025 and 2026 earnings implies a year-over-year uptick of 32.2% and 17.3%, respectively. The EPS estimates for 2025 have increased 1.2% in the past 60 days.

RCL stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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

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