Carnival's Loyalty Overhaul Takes Shape: Will It Lift Long-Term Demand?

Carnival Corporation & plc CCL is embarking on a significant transformation of its customer loyalty strategy with the upcoming launch of “Carnival Rewards” in June 2026. The new initiative reflects the cruise line’s broader pivot toward boosting long-term guest engagement and value through data-driven personalization and monetization.

Unlike the traditional loyalty model based on cumulative cruise days, Carnival’s new program will reward guests based on total spend, encompassing onboard expenditures and spending on the company’s co-branded credit card. This transition aligns with modern consumer behavior and mirrors strategies used successfully in the airline industry, where spend-based reward systems have proven to be strong drivers of retention and revenue growth.

The program will have a positive cash flow from the outset, but due to accounting treatments, it will introduce a temporary drag on the reported yield. Carnival expects an approximate 50 basis point reduction in yields in 2026, moderating in 2027, and turning accretive by 2028. Importantly, the company does not anticipate any significant increase in costs relative to the current program.

By incentivizing guests to spend more, both during and between cruises, Carnival is positioning itself to enhance pricing power and share of wallet without over-relying on capacity growth. The company is optimistic and anticipates the initiative to capture value from its loyal guest base.

How It Stacks Up to Competitors

Royal Caribbean Cruises Ltd. RCL, by comparison, operates a unified cross-brand loyalty program with a strong focus on vacation frequency and experiential engagement. Members of Royal Caribbean’s loyalty system represented 40% of total bookings in 2024 and spent 25% more per trip than non-members. However, loyalty status in Royal Caribbean's ecosystem still hinges largely on cruise activity rather than total wallet share. While the company continues to see success with digital personalization, app bookings, and Net Promoter Score gains, its loyalty innovation is geared more toward deepening repeat travel than expanding earning touchpoints beyond the cruise.

Norwegian Cruise Line Holdings Ltd. NCLH is prioritizing operational refinement and experiential upgrades over a fundamental redesign of its loyalty structure. While Norwegian Cruise continues to enhance its fleet and destination offerings, it is yet to introduce a spend-based loyalty framework. Norwegian Cruise’s loyalty proposition remains rooted in cruise frequency, not total guest spend.

CCL’s Price Performance, Valuation & Estimates

Shares of Carnival have gained 22.8% in the past three months compared with the industry’s growth of 8.5%.

CCL Three-Month Price Performance

From a valuation standpoint, CCL trades at a forward price-to-earnings ratio of 12.70X, significantly below the industry’s average of 18.32X.

The Zacks Consensus Estimate for CCL’s fiscal 2025 and 2026 earnings implies a year-over-year uptick of 32.4% and 13.7%, respectively. The EPS estimates for fiscal 2025 have increased in the past 30 days.

CCL 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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