As indicated by the typical company data, the demand for cruise line has been strong in the past several years. The increased demand has been driven by positive changes in macro-economy.

Sector’s Current, Trend, Causes behind trend, and Future

Current and Trend

1. It seems that the demand for cruise line has been stable in the past several years as we have seen the continuingly rising ticket price and increasing capacity in this sector.

2. Increased price and lower fuel costs have helped improve companies’ profitability.

Causes behind the trend

1. The upward trend in this industry may be consistent with what is happening in other entertainment and leisure industries, which should have been driven by improvement in economy situation and thus spending in leisure activities.

Industry Future

1. As upward trend in this industry continues, companies may be able to continue to see growth in their revenue as macro economy recovers gradually.

General Financial Performance of Companies In the Sector

It seems that the demand for cruise line has been getting stronger since 2016 as indicated by increased ticket price (average 2-5% in 2017 and 2018) and capacity for most of companies in this sector. Spending on board has been seen growing as well during the same period (average 4% in 2017 and 2018.

It seems that the rising price and the saving on fuel costs has helped companies to improve their gross margin as revenue increased. We have seen the increased gross margins and EBI/sales ratio from those companies since 2015 by about 300 and 200 basis points respectively. The typical gross margin is about 32%, SG&A is about 16%, operating margin is about 19%, and EBI/sales is about 13% in 2018.

The typical enterprise price/EBI (adjusted with tax field) ratio is 27.

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