Here's Why Investors Should Retain OneSpaWorld Stock for Now

OneSpaWorld Holdings Limited OSW is likely to benefit from new ship additions, strong service demand and strategic partnerships. Also, the focus on a data-driven approach to enhance the guest experience bodes well. However, fluctuations in fuel and commodity prices are a concern.

Growth Drivers for OneSpaWorld Stock

OneSpaWorld is well-positioned for continued growth, driven by expanding cruise line partnerships, robust demand for wellness services, a diversified service portfolio and disciplined execution.

The key growth catalyst for OneSpaWorld is its expanding fleet presence. The company operated wellness centers on 199 ships at the end of 2024, up from 193 a year earlier, with further expansion planned in fiscal 2025. Its ability to efficiently onboard and staff new vessels also highlights its operational agility and scalability.

Productivity gains and a growing mix of high-value wellness services are also driving growth. OneSpaWorld continues to see strong demand for premium offerings such as Medi-Spa, IV therapy, cryotherapy and LED facial treatments. During the fourth quarter of 2024, same-spa revenues jumped over 30% year over year, while key efficiency metrics like revenue per staff member and revenue per passenger per day showed notable improvement. This growth was supported by a larger base of experienced and returning service professionals, improved sales training and higher guest prebooking activity.

The company’s data-driven approach to enhancing the guest experience is another competitive advantage. Customers who prebook services spend over 30% more than those who don’t, and prebooked revenues accounted for 22% of total services, even as the company continues to onboard new cruise partners. These trends point to sustained demand and pricing power across its service lines.

Looking ahead, OneSpaWorld expects continued momentum in fiscal 2025, supported by new ship additions, strong service demand and deep cruise line relationships. Its focus on wellness innovation, operational efficiency and shareholder returns positions it well to navigate industry tailwinds and macroeconomic uncertainty. Shares of OneSpaWorld have declined 4.7% in the past six months compared with the industry’s 14.6% fall.

OneSpaWorld’s Concerns

OneSpaWorld’s operations remain vulnerable to fluctuations in fuel and commodity prices, which can significantly impact its cost structure and financial performance. It relies heavily on commercial airlines to transport shipboard employees to and from cruise vessels, incurring substantial annual airfare expenses. During periods of elevated fuel prices — as observed in previous years — airlines have passed on these costs through higher ticket prices, increasing the company's overall transportation spend.

Higher fuel prices also have the potential to drive up the cost of shipping products to cruise ships and other destinations where OneSpaWorld operates. Moreover, rising fuel costs indirectly affect consumer travel expenses, increasing the cost for guests to reach cruise ports and resort destinations. This can reduce discretionary spending on wellness services and impact visitation levels at the company's land-based health and wellness centers. Additionally, utility costs at these centers tend to rise during such inflationary periods, further straining margins.

OSW’s Zacks Rank & Stocks to Consider

OneSpaWorld currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks from the Zacks Consumer Discretionary sector are  Life Time Group Holdings, Inc. LTH, American Outdoor Brands, Inc. AOUT and Ralph Lauren Corporation RL.
 
Life Time Group presently sports a Zacks Rank of #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
 
The company delivered a trailing four-quarter earnings surprise of 21.6%, on average. The stock has gained 132.5% in the past year. The consensus estimate for Life Time Group’s 2025 sales and earnings per share (EPS) implies growth of 12.9% and 37.9%, respectively, from the year-ago levels.
 
American Outdoor sports a Zacks Rank #2 (Buy) at present. The company delivered a trailing four-quarter earnings surprise of 79.6%, on average. The stock has gained 29.3% in the past year.
 
The Zacks Consensus Estimate for American Outdoor’s fiscal 2025 sales and EPS indicates growth of 3.7% and 93.8%, respectively, from the year-ago levels.
 
Ralph Lauren presently sports a Zacks Rank of #2. The company delivered a trailing four-quarter earnings surprise of 6.5%, on average. The stock has gained 27.6% in the past year.
 
The consensus estimate for Ralph Lauren’s fiscal 2025 sales and EPS implies growth of 5.8% and 16.5%, respectively, from the year-ago levels.

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

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