Can Carnival's Caribbean Expansion Unlock Its Next Yield Upswing?

Carnival Corporation & plc CCL is deepening its commitment to destination-led growth — a strategic pivot aimed at monetizing guest experience rather than fleet expansion. With capacity growth projected to remain below 1% in fiscal 2026, the company is leaning into its portfolio of exclusive Caribbean properties to fuel yield gains and margin improvement. The result is a shift from scale-driven growth toward a more sustainable, high-ROI model centered on differentiated vacation experiences.

At the forefront of this initiative is Celebration Key, Carnival’s newest private island and the cornerstone of its “Paradise Collection.” Opened in mid-2025, the destination has already drawn nearly half a million visitors and generated over 1.5 billion media impressions, underscoring its powerful brand halo. CEO Josh Weinstein described early performance as “meeting and exceeding expectations,” noting that itineraries, including Celebration Key, commanded ticket price premiums and drove incremental onboard spend. The company is fast-tracking plans to expand the site’s pier capacity to accommodate up to four ships simultaneously, enabling year-round utilization across 20 vessels and 12 home ports.

The broader destination strategy includes a pier expansion at RelaxAway (Half Moon Cay) and further upgrades at Isla Tropicale (Mahogany Bay) — enhancements that strengthen Carnival’s ability to deliver consistent, high-value experiences. Collectively, these locations are expected to attract over 8 million guest visits in 2026, nearly matching the rest of the cruise industry combined. Management believes this footprint creates an unmatched platform for yield acceleration, particularly as beaches remain the most preferred vacation type among U.S. travelers.

By integrating these properties into its core operating model, Carnival is effectively blurring the line between cruise and resort economics. This approach allows the company to capture more revenue per passenger while driving marketing synergies across its brands. In fiscal 2025, net yields rose 4.6% year over year, outpacing guidance and reaching record highs on a same-ship basis. With almost half of 2026 bookings already locked in at higher prices and a full-year benefit from Celebration Key ahead, Carnival’s destination portfolio could serve as a durable engine for yield growth in the upcoming periods.

How It Stacks Up to Competitors

Royal Caribbean Cruises Ltd. RCL continues to lead the industry in destination-driven growth, with its Perfect Day series and upcoming Royal Beach Club projects reinforcing its edge in the Caribbean. RCL emphasized that private destinations now represent a major portion of the company’s deployment mix, helping to sustain pricing strength and premium positioning across its brands. The pipeline remains robust — the Royal Beach Club at Paradise Island is set to open in 2025, followed by destinations in Cozumel and Mexico by 2027. In the second quarter of 2025, Royal Caribbean reported constant-currency net yield growth of 5.2%, exceeding guidance, as demand for its private island experiences and differentiated itineraries remained exceptionally strong. For the full year, the company is guiding for net yield growth of 3.5-4%, supported by favorable demand trends, destination-led pricing and disciplined capacity expansion.

Norwegian Cruise Line Holdings Ltd. NCLH is following a similar trajectory, investing aggressively in Great Stirrup Cay to transform it into a more fully realized resort experience. The company plans to expand capacity at the island from approximately 400,000 guests to over 1 million by 2026, supported by new amenities such as family zones, waterparks and luxury beach clubs. Norwegian Cruise expects the upgrades to deliver measurable financial benefits, projecting a 25-basis-point yield lift in 2026 and up to a 1% cumulative increase by 2027 from Great Stirrup Cay alone. For 2025, Norwegian Cruise is guiding for net yield growth in the 2-3% range, driven by pricing discipline, enhanced onboard monetization and expanded Caribbean deployment.

CCL’s Price Performance, Valuation & Estimates

Shares of Carnival have gained 56.1% in the past six months compared with the industry’s growth of 23%.

CCL Six-Month Price Performance

From a valuation standpoint, CCL trades at a forward price-to-earnings ratio of 11.96X, significantly below the industry’s average of 16.99X.

The Zacks Consensus Estimate for CCL’s fiscal 2025 and 2026 earnings implies a year-over-year uptick of 49.3% and 12.4%, respectively. The EPS estimates for fiscal 2025 and 2026 have increased in the past 60 days.

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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