Smooth Sailing or Rough Seas Ahead? What Royal Caribbean's Numbers Reveal About 2026

Royal Caribbean Cruises (NYSE: RCL) has charted an impressive course through the post-pandemic recovery, but the real question is whether its momentum can sustain throughout 2026. Despite trailing Carnival in passenger volume, the cruise operator’s $80 billion market valuation tells a different story—outpacing its larger competitor and demonstrating the market’s confidence in its operational execution.

The Capacity Story Tells Everything

The cruise line is running at maximum capacity. Third-quarter 2025 occupancy hit 112%—meaning the company isn’t just filling ships, it’s overbooking them. This wasn’t by accident. Royal Caribbean strategically launched two vessels (August and November 2025) to capture surging demand, a move that signals management’s confidence in booking trends extending well into 2026.

Here’s the kicker: 2026 advance bookings are already outpacing where 2025 bookings stood at this same time last year. Translation? The company is selling cabins without heavy discounting, which directly improves profitability. Revenue climbed to nearly $14 billion in the first nine months of 2025—a 7% increase year-over-year—while the company successfully managed cost growth.

The Financial Turnaround Nobody Expected

While revenue growth looks solid, the real story hiding in the numbers is the dramatic shift in interest expenses. Royal Caribbean slashed interest costs by 45% during the same period, transforming a $2.3 billion net income into $3.5 billion—a 51% year-over-year jump. For a company that carried massive debt burdens through COVID-19 lockdowns, this improvement matters enormously.

That said, the debt situation remains complicated. The $20.8 billion liability barely budged from $21.4 billion a year prior, suggesting capital allocation remains tight as the company funds new ship construction. Against $10.3 billion in book value, the debt load is still substantial. However, the treasury’s ability to refinance at better rates and pay down principal through operational improvements signals improving financial flexibility.

The Competitive Pressure Nobody’s Talking About

Comparing Royal Caribbean’s performance to the broader cruise industry reveals nuance. The company outpaced both Carnival and Norwegian Cruise Line Holdings over the trailing year. Yet Viking Holdings—an upstart that went public only in May 2024—has stolen some investor attention despite commanding under 1% of cruise passengers.

How? Viking captures over 4% of industry revenue with a much smaller footprint, punching well above its weight by targeting affluent travelers. This insulates Viking from economic downturns that could derail mainstream operators. While Royal Caribbean trades at a 20 P/E ratio (reasonable by industry standards), Viking’s 34 earnings multiple reflects investor belief in its defensible positioning.

What Happens When the Economy Shifts?

The cruise sector has proven resilient through economic uncertainty so far. But that immunity could evaporate if discretionary spending takes a hit. Royal Caribbean’s success depends on middle and upper-middle-income consumers maintaining vacation budgets—a vulnerability Viking doesn’t share to the same degree.

However, the company’s financial trajectory suggests management has earned breathing room. Interest expense reductions provide a cushion even if bookings soften, and the modest 20 P/E valuation leaves room for upside if execution remains clean.

The 2026 Outlook

Royal Caribbean appears positioned for steady gains rather than explosive growth in 2026. The combination of record occupancy rates, strengthening 2026 bookings, and improved interest coverage creates a supportive backdrop. The headwinds are real—elevated debt and potential economic slowdown—but not immediately threatening.

The company’s ability to pass through price increases without sacrificing occupancy, paired with disciplined capital allocation, suggests management can navigate the year successfully. While it may struggle to match Viking’s growth trajectory or capture the investor enthusiasm around higher-end travel, Royal Caribbean’s fundamentals point toward continued steady appreciation rather than stagnation.