If Royal Caribbean is the cruise industry’s Usain Bolt, sprinting toward global dominance and outperforming expectations along the way, Norwegian Cruise Line Holdings is a former world champion who keeps glancing up at the scoreboard.
During back-to-back second quarter earnings reports, Royal Caribbean leaders touted “continued strength and demand for our leading vacation brands” and dismissed geopolitical headwinds as modest. Norwegian leadership attributed declining net yields to a “challenging backdrop” and bemoaned demand challenges that it blamed on marketing.
Both companies actually beat expectations for the quarter itself. The divergence is in what comes next.
Royal Caribbean raised its full-year forecast on the strength of close-in bookings, with ships sailing at 110 percent occupancy, and expects net yields — essentially what a line earns per passenger, per day — to rise between roughly 2 and 3 percent for the year. Norwegian cut its full-year forecast and expects net yields to fall about 5 percent. Revenue climbed at both lines, up 6 percent at Royal Caribbean and just under 5 percent at Norwegian, so the quarter wasn't the problem for either. The forecast was.
One analyst put the question on everyone’s minds in blunt terms: Has Norwegian failed to keep pace with an industry that’s been expanding ship and private destination offerings, and can it ever catch up? Or will global issues and Norwegian’s promotional activities finally put a stumbling block in front of the untouchable Royal Caribbean?
Let’s get you up to speed.
Headwinds and Tailwinds
When you boil it down, Royal Caribbean is giving vacationers what they want and cruisers know it. Norwegian trails behind in both its offerings and its marketing.
Royal Caribbean has been busy enhancing Perfect Day at CocoCay and opening beach clubs around the world, and cruisers are loving it. The combination of amenity-laden ships and private destinations are enabling the line to attract repeat cruisers, sell shorter sailings at high premiums, and increase, not discount, pricing for vacationers booking close in. Plus, the company is seeing higher sign-ups and cardholder spend from its new credit cards than anticipated, another sign of customer loyalty.
“We're getting more reps out of our guests, and I think that helps in short and long-term demand for our business,” said Jason Liberty, Royal Caribbean Group’s chairman and CEO.
It’s also helping the company weather some softness in demand for 2026 Europe cruises and remain bullish for next year.
Royal’s biggest setback this year was its plans for a private destination in Mahahual, Mexico, falling through due to local outcry over environmental concerns. Yet the line remains committed to building a better port experience in the region and claims there’s community support for the project.
Norwegian Cruise Line will complete the reimagining of its private island, Great Stirrup Cay, when its Great Tides Water Park opens at the end of the summer. The company hopes this will stir up demand for its Caribbean cruises, but CEO John Chidsey acknowledged that previously “the island did not fully deliver the breadth of the experience that premium families are looking for.”
Even once the island’s new attractions are open, Norwegian still lags behind Royal with just one amenity-filled island compared to Royal’s portfolio. In addition, the company needs to fix its pricing structure to create early demand, adjust European itineraries to reduce open-jaw and overly long sailings, and amp up its marketing, according to Chidsey. But the CEO continues to be optimistic despite declining yields into 2027.
“We have the right product and are focused on the right consumer,” he assured analysts. “Our hardware is definitely competitive.”
Advisors know how to sell Royal Caribbean, but now’s the time to approach more cost-conscious travelers about Norwegian’s offerings. Its modern ships and redone island are clearly the place to start.
Luxury Cruises are Above the Fray
The good news for advisors is that the two companies’ luxury and river cruise vacations are seemingly immune to the headwinds impacting big-ship sailings.
“The luxury traveler has traveled a lot, and their experiences tell them issues such as hantavirus (now in the rearview mirror) are ‘not that big of a deal,’” says Truist analyst Patrick Scholes. “Upper-end cruisers generally book a year in advance and believe ‘this [short term issue] too will pass’ by the time of their cruise next summer.”
At NCLH, Chidsey was clear that Oceania and Regent Seven Seas Cruises are doing well. The company continues to emphasize Oceania’s luxury positioning, reimagining Oceania Nautica into the all-suite Oceania Aurelia and transferring the older Oceania Sirena out of the fleet in 2028. Regent’s Explorer Class trio will reduce capacity during 2027 and 2028 dry docks, from 373 to 344 suites, replacing the cramped entry-level 307-square-foot Veranda Suites with some of the industry’s largest entry level suites measuring between 415 and 464 square feet.
Royal Caribbean is bullish on its new river product, launching next summer, which is garnering interest from Celebrity and Royal Caribbean loyalists alike. “We have this incredible database of set of customers that trust their vacation experience with us and have been seeking an elevated experience on river,” said Liberty. He notes that pricing so far has been higher than its river cruise competitors.
Advisors can tout these new and reimagined ships from both brands as reasons for clients to come back to these brands and book again.
Promotional Pitfalls
Norwegian was clear that the second half of 2026 and early 2027 are suffering from a lack of customer demand. While the line is putting new pricing measures in place to encourage more early bookings and reduce the need for last-minute discounting, those measures have not yet taken effect.
The team is working to balance load factors (how full ships sail) with price protection, but the analysts have noticed there are deals to be had.
“While it is mainly Norwegian at this point with outsized promotions, since last summer we have observed an uptick in promotional activity across the mass-market/contemporary brands,” says Scholes. He compared Norwegian’s recent semi-annual sale to a Black Friday promotion in terms of its aggressive discounting.
But cruise pricing does not exist in a vacuum, so continued promotions from competitors might ultimately force Royal Caribbean to increase its discounting as well.
Now is the time for travel advisors to negotiate special, non-public offers with cruise lines looking to fill ships without advertising fare drops. Both lines are hungry for close-in bookings but tell your clients to snap up any Norwegian deals quickly because, if all goes to plan in 2027, both lines will be most affordable when booked early.
Waiting until the last minute will just be a race to the bottom.
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