Hurricanes cost Royal Caribbean $55M, but Q3 profit still rises

Royal Caribbean's three Oasis-class ships.

Royal Caribbean Cruises Ltd. reported an 8.6% increase in third-quarter net profit despite costs from the most destructive hurricane season in its history.

Net income rose to $752.8 million from $693.3 million. If not for five hurricanes in September, including two in the Pacific, Royal Caribbean said that net profit would have been $55 million more.

"That made it by far the most expensive hurricane season in our 45-year history," chairman Richard Fain said in a conference call with analysts.

Royal Caribbean said strong close-in demand for cruises in July and August and higher onboard spending helped it offset hurricane-related costs and lost revenue from cancelled cruises and a decrease in bookings.

Fain said demand fell "precipitously" during September, both for cruises that month and for future bookings. The softness lasted about six weeks but bookings for virtually all itineraries are back to normal now, Fain said.

Fain said he thinks that travellers have become "inured" to disruptions such as hurricanes or terror attacks so that they are affecting booking patterns for shorter time periods than in the past.

Royal Caribbean said its forecast of adjusted full-year earnings of up to $1.59 billion still holds.

In the third quarter, revenue advanced slightly to $2.57 billion from $2.56 billion a year earlier.  Onboard revenue was up 5%, led by increases in internet usage and shore excursions.