How Carnival Cruise Line Makes Money

Most revenue is generated from global cruise operations
Published October 01, 2021
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).
KEY TAKEAWAYS

• Carnival operates a portfolio of cruise-line brands offering both year-round and seasonal cruises throughout the world.
• The company's North America & Australia cruise operations are its largest source of revenue.
• Carnival is gradually resuming guest operations on its cruise ships as the travel and tourism industry slowly recovers from the worst of the pandemic.
• The company's Seabourn brand announced the resumption of cruise operations of one of its ships beginning February 2022.

Carnival's Financials
Carnival announced in late September financial results for Q3 of its 2021 fiscal year (FY), the three-month period ended Aug. 31, 2021. While the report showed improvement, the company's revenue, net income and operating profit performance were dramatically weaker than before the COVID-19 pandemic started sweeping across the globe in early 2020. In Q3, Carnival reported a net loss of $2.8 billion, a slight improvement from the net loss of $2.9 billion reported in the year-ago quarter. Revenue rose more than 17.5 times to $546 million in the third quarter, rebounding significantly from last year. Carnival, which uses operating income as the profit metric for its individual business segments, reported an operating loss that narrowed to $2.1 billion from $2.3 billion in the same three-month period a year ago.
Carnival's core business, along with the rest of the cruise and travel and tourism industries, has been severely adversely impacted by the COVID-19 pandemic. The company halted its guest cruise operations in mid-March 2020. Eight of the company's nine brands have resumed guest cruise operations and 35% of its capacity is operating with guests on board as of Aug. 31, 2021. Carnival expects to post a net loss in both Q4 and FY 2021, which ends Nov. 30, 2021.
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 Q3 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, 2020, are: Carnival Cruise Line at 66,400 passengers and 23 ships; Princess Cruises, 42,610 passengers and 14 ships; Holland America Line, 18,820 passengers and 9 ships; P&O Cruises (Australia), 7,230 passengers and 3 ships; and Seabourn, 2,570 passengers and 5 ships.6 The NAA segment reported an operating loss of $1.3 billion in Q3 FY 2021 compared to an operating loss of $1.8 billion in the year-ago quarter. Revenue for the quarter expanded more than 18 times to $271 million, accounting for nearly 50% 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, 2020, are: Costa Cruises at 34,980 passengers and 11 ships; AIDA Cruises, 31,930 passengers and 14 ships; P&O Cruises (U.K.), 19,020 passengers and 6 ships; and Cunard, 6,830 passengers and 3 ships.6 The EA segment reported an operating loss of $696 million in Q3 FY 2021 compared to an operating loss of $465 million in the year-ago quarter. Quarterly revenue improved from -$4 million in the year-ago quarter to $232 million, comprising more than 42% 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.6 The segment reported an operating loss of $94 million in Q3 FY 2021 compared to an operating loss of $86 million in the year-ago quarter. Revenue for the quarter rose 14 times to $14 million, accounting for less than 3% 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 $10 million in Q3 FY 2021 compared to an operating loss of $11 million in the year-ago quarter. Revenue rose 40.0% year over year (YOY) to $28 million, accounting for about 5% of companywide revenue in the third quarter.
Carnival's Recent Developments
On Sept. 29, 2021, Carnival announced that the cruise ship Seabourn Encore will return to service on Feb. 19, 2022, about two months earlier than expected. The ship is part of the operations of Seabourn, the company's ultra-luxury ocean and expedition travel brand. The Seabourn Encore will offer a series of 10- and 11-day itineraries to the Canary Islands and the Mediterranean from Lisbon, Portugal. The return of Seabourn Encore will be the third ship in Seabourn's fleet to resume guest operations. 

Financial Performance 3rd Quarter 2021

Financial Performance 2020

​Financial Performance 2019

Carnival Brands
www.carnivalcorp.com/corporate-information/our-brands

Carnival Annual Report 2020
www.carnivalcorp.com/static-files/48701769-9f2c-48c6-ac4f-4772bad2ff8b

Carnival Annual Report 2019
​www.carnivalcorp.com/static-files/9ba84dfd-b96a-486f-8617-34e49820077a