Back to top

Image: Bigstock

Carnival Bets on Private Island Strategy: Can it Fuel Yield Growth?

Read MoreHide Full Article

Key Takeaways

  • CCL debuts Celebration Key with lagoons, dining, retail and capacity for 2M+ annual visitors.
  • CCL ramps up marketing as itineraries with Celebration Key secure strong booking premiums.
  • CCL guides to 5% FY25 net yield growth despite cost pressures and safety challenges.

Carnival Corporation & plc (CCL - Free Report) is sharpening its focus on high-margin, experience-led assets with the debut of Celebration Key, a $600 million exclusive Caribbean destination designed to enhance pricing power and deepen guest engagement. The resort features 275,000 square feet of freshwater lagoons, the world’s largest swim-up bar, an iconic “Suncastle” attraction and more than 30 dining and retail venues spread across five themed zones. Built to host over two million visitors annually — with expansion plans that could double capacity by 2028 — the project underscores the company’s ambition to turn private islands into durable yield drivers.

Early signals are encouraging. Celebration Key quickly became one of the most searched cruise destinations on Google, and itineraries featuring the new port are already securing booking premiums in line with management’s expectations. Carnival has also committed incremental marketing spend to build brand heat, reinforcing Celebration Key as a marquee differentiator in an increasingly competitive Caribbean market.

The company is also expanding its broader “Paradise Collection” of private destinations, including RelaxAway (Half Moon Cay) and Isla Tropicale (Mahogany Bay). These enhancements are designed to increase guest throughput, improve infrastructure and elevate experiences through amenities such as beach clubs, expanded pools and upgraded berthing facilities. By strengthening this curated network of exclusive stops, Carnival aims to capture more onboard and pre-cruise spending while creating a pricing umbrella across itineraries.

The strategy carries risks. Celebration Key’s operating expenses are expected to pressure near-term cost comparisons, while safety concerns following two drowning incidents in August underscore the operational complexities of managing large-scale water attractions. Still, Carnival has maintained its outlook for roughly 5% net yield growth in fiscal 2025, supported by record bookings and robust per-passenger spend. Successful execution could position its private island portfolio as a durable catalyst for yield expansion, strengthening the company’s competitive edge in the experience-led cruise market.

How It Stacks Up to Competitors Like RCL & NCLH

Royal Caribbean Cruises Ltd. (RCL - Free Report) continues to focus on private-island monetization. Management projects 2025 net yield growth of 3.5%-4%, explicitly crediting the “continued success of our private destinations” as a key driver. RCL is broadening its land-based portfolio with Royal Beach Club Paradise Island (2025), Royal Beach Club Cozumel (2026) and Perfect Day Mexico (2027), in addition to the Costa Maya port acquisition. These projects, described as “engineered to generate premium yields,” build on the proven halo effect of Perfect Day at CocoCay.

Norwegian Cruise Line Holdings Ltd. (NCLH - Free Report) is repositioning its island strategy with a major refresh of Great Stirrup Cay, highlighted by Great Tides, a 6-acre waterpark scheduled for summer 2026. Supporting upgrades include expanded piers, pools, clubs and beach capacity — all designed to boost both guest throughput and onboard capture. Management forecasts 1 million visitors in 2026, climbing to 1.2 million in 2027. Executives framed the island build-out as a “return on experience” initiative — an investment in both guest satisfaction and long-term revenue per passenger, aimed at narrowing NCLH’s competitive gap with RCL and Carnival.

CCL’s Price Performance, Valuation & Estimates

Shares of Carnival have rallied 33.3% in the past three months compared with the industry’s growth of 12%.

Zacks Investment Research
Image Source: Zacks Investment Research

From a valuation standpoint, CCL trades at a forward price-to-earnings ratio of 14.45X, significantly below the industry’s average of 19.63X.

Zacks Investment Research
Image Source: Zacks Investment Research

The Zacks Consensus Estimate for CCL’s fiscal 2025 and 2026 earnings implies a year-over-year uptick of 40.9% and 13%, respectively. The EPS estimates for fiscal 2025 and 2026 have increased in the past 60 days.

Zacks Investment Research
Image Source: Zacks Investment Research

CCL stock currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.


See More Zacks Research for These Tickers


Normally $25 each - click below to receive one report FREE:


Carnival Corporation (CCL) - free report >>

Royal Caribbean Cruises Ltd. (RCL) - free report >>

Norwegian Cruise Line Holdings Ltd. (NCLH) - free report >>

Published in