Somewhere on Carnival’s balance sheet sits $7.6 billion belonging to holidays nobody has taken yet.
That is the figure for customer deposits cruise companies published on 29 September, documenting this record for the third quarter and about $500 million more than a year ago. It is money handed over months in advance, for a cabin, a sea view and a week of somebody else doing the cooking. If you want to know whether people are still spending on experiences, you could read a dozen surveys. Or you could look at who has already paid.
What Carnival reported
The headline numbers were records all round. Revenue for the three months to the end of August came in at $8.435 billion, net income at $1.9 billion, and the company said it had beaten its own June guidance by more than $100 million. It raised its full-year profit forecast to about $3.08 billion. Bookings for 2027 are at record levels for both occupancy and price.
The market liked it. Shares rose close to 12 per cent on the day, and Royal Caribbean and Norwegian rose in sympathy. That sounds like a triumph until you notice where the shares had started. Before the results, they were down more than a quarter for the year. A record quarter did not make Carnival a winner in 2026. It made it less of a loser. This was a useful reminder that a share price measures expectations, not effort.
The number I had to look up
Occupancy was 111.8 per cent. I read that twice; you can’t, (as far as I know), sell more than all of a ship.
You can, as it turns out, because the cruise industry counts a cabin as full at two people. Add children on a sofa bed or a third adult in a suite, and you go over a hundred. So the figure is not an accounting trick. It is families, and it tells you who is on board: not only couples treating themselves, but households choosing to put the whole holiday budget into one prepaid week.
Management also said spending on board had picked up. The drinks package, the excursion and the speciality restaurant are holding up as well as the ticket.
The bill that came with it
Now the part that didn’t make the celebratory headlines. Carnival’s fuel cost rose to $826 a tonne from $607 a year earlier, an increase of about 36 per cent, and the company does not hedge its fuel; it expects fuel to remove $150 million from this year’s result. Its answer is to burn less, with consumption down 26 per cent since 2019, which is sensible and also slow.
There is a rival problem too. Management told analysts that cruise capacity in the Caribbean is growing by roughly 37 per cent across the industry over three years. More ships chasing the same beaches tends to do to prices what you would expect.
And then there is the debt. Carnival borrowed heavily to survive the years when its ships sat empty, and its borrowings peaked at around $36 billion in 2023. Currently, below $24 billion, the company has an investment-grade credit rating. It returned nearly $2 billion to shareholders this year through buybacks and dividends. That is the real story of this quarter. Not one record summer, but three years of quietly paying down a very large bill. I wrote about what debt at that scale does to everyone downstream in $350 trillion in the red, and Carnival is the small, floating version of the same lesson.
What it says about the rest of us
Two things stay with me.
People are protecting experiences. Fuel is dear, mortgages are dear, and households are still paying months ahead for a week away. That fits what I see around me. People will trim the weekly shop before they cancel the thing they have been looking forward to since January.
The second is quieter. When you pay a deposit, you are lending a company your money for free until the day you travel. Carnival is holding $7.6 billion of it. There is nothing wrong with that, and booking early often buys a better price. But it is worth knowing which side of the arrangement you are on. A holiday paid for from savings is a treat. A holiday on a credit card at today’s rates is a loan to a cruise line, funded by a bank loan, with you in the middle paying interest on both ends of the fun.
Where I land
I am not buying or selling Carnival on the back of this, and I would not suggest anyone read one good quarter as a signal. What I take from it is simpler. The appetite for experiences is real, the companies selling them have costs they cannot fully control, and the customers who come out best are the ones who pay ahead with money they already have. I would rather be that customer than the one still paying for August in February.
The Jacqueline Brand — knowledge builds confidence, and confidence builds wealth. This is editorial commentary for information and education only. It is not financial, investment or professional advice, and nothing here is a recommendation to buy or sell any investment. The Jacqueline Brand is not authorised or regulated by the Financial Conduct Authority. The value of investments can fall as well as rise, and past performance is not a guide to future returns. Figures were correct at the time of publication. Always do your own research and consider speaking to a regulated adviser. Where cryptoassets are discussed, they are high risk and largely unregulated in the UK, and you could lose all the money you invest. The Collection
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