How Carnival Cruise Line Makes Money: Cruises and Tours

Carnival Corp. (CCL) and Carnival Plc (CCL.L) operate a cruise line company that is publicly traded on the London Stock Exchange (LSE) and as an American depositary share (ADS) on the New York Stock Exchange (NYSE). The dual-listed company functions as a single economic entity through contractual agreements of the two separate legal entities. Carnival Cruise Line is the company’s leading brand, offering year-round cruises in The Bahamas, the Caribbean and Mexico, and seasonal cruises in Bermuda, the U.S., Canada, Europe, and Australia. Its eight other brands are: Princess, Holland America Line, Seabourn, Cunard, AIDA, Costa, P&O Cruises Australia, and P&O Cruises U.K.

Carnival faces direct competition within the cruise line industry from Royal Caribbean Group (RCL), Norwegian Cruise Line Holdings Ltd. (NCLH), and Lindblad Expeditions Holdings Inc. (LIND). But as part of the broader travel and tourism industry, the company also faces competition from operators of hotels, resorts, casinos, and theme parks. Carnival’s indirect competitors include The Walt Disney Co. (DIS), Las Vegas Sands Corp. (LVS), Marriott International Inc. (MAR), and Hilton Worldwide Holdings Inc. (HLT).

Carnival’s Financials

Carnival announced in December 2021 financial results for its 2021 fiscal year (FY), which ended Nov. 30, 2021. The company reported a net loss of $9.5 billion as revenue sank 65.9% compared to FY 2020. The net loss was an improvement from the net loss of $10.2 billion reported in the previous year, but reflected the ongoing challenges the company is facing amid the COVID-19 pandemic. Carnival’s annual revenue of $1.9 billion is less than one tenth what it was in FY 2019, before the onset of the pandemic. Net income in FY 2019 was $3.0 billion.

Carnival first paused its guest cruise operations in mid-March 2020 due to the pandemic. The company said that as of Jan. 13, 2022, eight of its nine brands, representing about 67% of total capacity, had resumed guest cruise operations. It added that the extent of the effects of COVID-19 on its business are uncertain but that it expects the pandemic to continue having a material negative impact on its financial results. But Carnival does expect to have its full fleet back in operation for the summer season as it continues to gradually resumes guest operations.

Carnival’s Business Segments

Carnival operates four separate business segments: North America & Australia (NAA) cruise operations; Europe & Asia (EA) cruise operations; Cruise Support; and Tour and Other. The company provides a breakdown of revenue and operating income for each of these segments. Because all four segments posted an operating loss in FY 2021, a separate pie chart for operating income was excluded from the diagram above.

North America & Australia cruise operations

The NAA cruise operations segment is comprised of five of Carnival’s nine cruise brands. Those brands, their total passenger capacity, and total number of ships as of Nov. 30, 2021, are: Carnival Cruise Line at 74,710 passengers and 25 ships; Princess Cruises, 42,610 passengers and 14 ships; Holland America Line, 22,920 passengers and 11 ships; P&O Cruises (Australia), 7,230 passengers and 3 ships; and Seabourn, 2,570 passengers and 5 ships. The NAA segment reported an operating loss of $3.9 billion in FY 2021 compared to an operating loss of $5.8 billion in the previous year. Revenue for the year fell 69.5% to $1.1 billion, accounting for about 58% of companywide revenue.

Europe & Asia cruise operations

The EA cruise operations segment is comprised of Carnival’s other four cruise brands. Those brands, their total passenger capacity, and total number of ships as of Nov. 30, 2021, are: Costa Cruises at 36,520 passengers and 11 ships; AIDA Cruises, 30,770 passengers and 13 ships; P&O Cruises (U.K.), 19,020 passengers and 6 ships; and Cunard, 6,830 passengers and 3 ships. The EA segment reported an operating loss of $2.6 billion in FY 2021 compared to an operating loss of $2.7 billion in FY 2020. Annual revenue sank 60.2% to $712 million, comprising more than 37% of Carnival’s total revenue.

Cruise Support

The Cruise Support segment is comprised of Carnival’s portfolio of port destinations and other services, which operate in support of the company’s cruise brands. The segment reported an operating loss of $477 million in FY 2021 compared to an operating loss of $313 million in the previous year. Annual revenue fell 38.2% to $42 million, accounting for about 2% of total revenue.

Tour and Other

The Tour and Other segment is comprised of Carnival’s tour company, Holland America Princess Alaska Tours, which operates in Alaska and the Canadian northwest territory of Yukon. The tour company owns and operates hotels, lodges, glass-domed railcars, and buses. It complements the company’s Alaska cruise operations. The Tour and Other segment reported an operating loss of $67 million in FY 2021 compared to an operating loss of $29 million in FY 2020. Annual revenue sank 58.2% year over year (YOY) to $46 million, accounting for more than 2% of companywide revenue for the year.

Carnival’s Recent Developments

On Jan. 13, 2022, Carnival announced that its leading brand, Carnival Cruise Line, resumed operations from Charleston, S.C., with its Carnival Sunshine cruise ship. Carnival Cruise Line is expected to have all of its ships back in operation by March 2022.

On Dec. 23, 2021, Carnival announced that Holland America Line’s Zuiderdam cruise ship returned to service from the Port of San Diego in California. It was the second of Holland America Line’s ships to resume service in San Diego since the start of the industrywide pause.